A federal appeals court overturned four gas pipeline safety standards from the US Pipeline and Hazardous Materials Safety Administration that were challenged by the pipeline sector, finding the agency's cost-benefit analysis to be lacking.
The Pipeline and Hazardous Materials Safety Administration's (PHMSA) cost-benefit analysis of the standards failed to properly account for the added costs associated with more frequent repairs of cracks in pipelines and a lower limit on the pressure of pipelines when cracks are discovered, the US Court of Appeals for the DC Circuit said in an Aug. 16 decision.
The agency also did not adequately support a requirement for more frequent assessments when a dent is discovered that does not pose a safety hazard, the court said. It vacated the "dent safety factor" standard and sent it back to PHMSA.
Safety standards
The four vacated standards were part of an August 2022 PHMSA rule that was challenged by the Interstate Natural Gas Association of America. That rule was years in formation and largely based on lessons learned following a deadly pipeline rupture in San Bruno, Calif., in 2010. It established new standards for pipeline operators to use in identifying threats, potential failures and worst-case scenarios, with enhanced inspection and monitoring for corrosion and other pipeline integrity weaknesses.
But for three of the standards vacated by the court, PHMSA did not analyze the costs of the requirements, the court said (INGAA v. PHMSA and US Department of Transportation, 23-1173). For the other standard, involving the maximum allowable operating pressure (MAOP) for a pipeline when a metal anomaly or crack is discovered, PHMSA changed what was in a proposed rule to a tougher standard in the final rule without fully supporting the move as called for in a cost-benefit analysis.
In the latter standard, PHMSA required pipeline operators to immediately repair any metal anomaly or crack when the predicted failure pressure is less than 1.25 times the MAOP. A proposed rule called for repairs when the predicted failure pressure is less than or equal to 1.1 times the MAOP, meaning that the threshold for repairs in the final rule would have operators repairing more cracks or anomalies, the court said.
"We conclude that PHMSA failed to provide a reasoned final cost-benefit analysis for this standard, as required" by its regulations, the court said.
While PHMSA asserted that the MAOP figure is a reasonable safety standard, it did not analyze the costs to pipeline operators, according to the opinion, written by Judge Florence Pan for a three-judge panel. "The agency should have considered the costs of changing the predicted failure pressure at which operators would be required to repair cracks and crack-like anomalies," the court said.
Similar reasoning was applied to the other three standards. These covered the types of welds that would have to be examined when a crack is discovered; assessments of corrosive constituents in gas, such as carbon dioxide and water, which can corrode metal in pipelines when combined with other substances; and the dent-safety factor.
The dent-safety factor standard in the final rule altered the timing for when an engineering analysis should be conducted when a dent is discovered that does not pose an immediate safety risk. The standard calls for more frequent assessments to ensure that conditions have not worsened, but it was not included in the proposed rule and was added to the final rule, the court noted.
"We must vacate the dent-safety factor standard because the agency failed to analyze its costs: There is simply no discussion of the costs of this standard in the final rule" or in the regulatory impact analysis to support the rule, the court said.
The Interstate Natural Gas Association of America was pleased with the outcome of the case, said Ben Kochman, the group's director of pipeline safety policy. "We look forward to working with PHMSA on continuing our efforts to improve pipeline safety, building upon the alternatives we proposed throughout the rulemaking process," Kochman said in an Aug. 19 statement.
Senate bill
The court decision noted that PHMSA has more demanding requirements than other agencies that have to follow the Administrative Procedure Act when they adopt new rules. Besides following the Administrative Procedure Act, PHMSA must publish two cost-benefit analyses, one when it proposes a pipeline safety standard and another when it issues a final rule. The August 2022 final rule included the regulatory impact analysis on costs and benefits of the final rule, the court said.
Pipeline safety advocates have asserted in testimony to Congress that the requirement to perform two cost-benefit analyses hamstrings PHMSA from adopting safety standards. Sen. Edward Markey (D-Mass.) on Aug. 1 introduced a pipeline safety bill that would remove the cost-benefit analyses requirement. The bill, dubbed the Pipeline Accountability, Safety and Environmental Standards Act, differed from legislation in the House of Representatives to reauthorize PHMSA and adopt changes for the agency. There was no estimate of when the Senate bill will be addressed by the Senate Commerce, Science and Transportation Committee.
The Pipeline Safety Trust advocacy group said the court decision showed that PHMSA is hindered by the cost-benefit analysis requirement. "We hope that moving forward, the agency can more clearly articulate the benefits that are derived from its proposals, and that Congress will see pipeline safety as more of a priority and remove this burdensome requirement," Erin Sutherland, the group's policy and program director, said in a statement.
