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PHMSA gas pipeline safety rule forthcoming

Highlights

Tackles several issues ordered addressed by Congress in 2011

First of three separate final rules to be released soon

Washington — Federal regulators expected the first of long-awaited natural gas pipeline safety rules to go public early next week, giving the pipeline industry the certainty over regulation that it has been counting on since the rulemaking began in 2011.

The release will mark the beginning of the end of the major rulemaking. The sweeping overhaul of federal gas transmission safety regulations proved so challenging that the US Pipeline and Hazardous Materials Safety Administration, or PHMSA, decided in 2018 to issue three separate final rules.

The first rule is expected to be placed on public display Sunday and be published in the Federal RegisterTuesday. It will amend current regulations on how pipeline operators test and confirm the maximum pressure at which their lines can operate and require companies to report when pressure spikes above that level. It will also obligate companies to conduct certain types of pipeline integrity assessments beyond current requirements and account in risk assessments for the frequency of earthquakes.

"The natural gas pipeline industry is pleased to see the completion of this major update to PHMSA's pipeline safety regulations," Don Santa, president and CEO of the Interstate Natural Gas Association of America, said in a statement.

Santa said the rule "constitutes the most significant enhancement to PHMSA natural gas transmission pipeline safety regulations since the federal code was created in 1970."

The rule will address several issues that Congress ordered PHMSA to tackle in the 2011 Pipeline Safety, Regulatory Certainty and Job Creation Act. Lawmakers crafted the 2011 legislation after a deadly gas pipeline explosion in San Bruno, California, which raised concerns about the effectiveness of then-current pipeline regulations, as well as federal and state oversight, prompting Congress to issue 42 orders to PHMSA.

PRESSURE REQUIREMENTS

One of the most significant mandates ordered PHMSA to create a rule requiring pipeline operators to confirm the maximum allowable operating pressure, or MAOP, on their lines. MAOP is the maximum pressure at which natural gas can flow through a pipeline or segment of the line.

MAOP regulations came under scrutiny following the San Bruno disaster, in which a sudden pressure increase caused a rupture in a defective pipe. The line was built in 1956, which meant it was covered by grandfather clauses in California state and federal regulations. Those clauses exempted the owner, PG&E, from conducting periodic tests to re-determine MAOP. Instead PG&E was allowed to establish MAOP based on decades-old data.

The National Transportation Safety Board concluded that pressure testing required on newer lines "would likely have exposed the defective pipe that led to this accident." The NTSB warned that the grandfather clause applied to 61% of onshore US gas pipelines, or 180,000 miles of pipe.

PHMSA's final rule is expected to address the grandfather clause by setting requirements for many pipelines to reconfirm MAOP through diagnostic tests if they have not already conducted the assessments or do not have adequate records.

That means the rule will have the greatest impact on pipeline operators with older assets, said Keith Coyle, an attorney at Babst Calland and former PHMSA adviser. Many companies have already begun identifying lines in their system that will require the tests, but until the rule is published, they do not have enough information to begin the work, he said.

"The exact nature of the times when [the rule] might apply -- that's what PHMSA is going to flesh out," he said. "It's probably going to be focused on these higher-risk or higher-consequence areas, and then it is a question of what methods or avenues is PHMSA going to give operators to reconfirm MAOP."

RECORD-KEEPING, ASSESSMENTS

Another expected provision will require operators to keep reliable pipe records in their systems. This regulatory update is closely related to the new MAOP requirements and arises from NTSB's investigation into PG&E and the San Bruno disaster.

"It turned out that there was some substandard pipe that they had in the system, and they didn't know that because the records they had on that pipe didn't reveal that it was poor-quality pipe," Coyle said.

The new record-keeping mandates will likely require companies to perform tests to determine the properties of older lines that would otherwise be unknown, but as with the MAOP rule, operators do not yet know the scope of the rule, Coyle said.

The final rule is also expected to require operators to conduct pipeline integrity assessments in areas where safety tests were not previously needed. Integrity testing involves running diagnostic tools through lines to check for corrosion, cracks and other deficiencies.

PHMSA previously required integrity assessments only in certain areas, including high-population places where a critical pipeline failure would cause serious harm. Companies have already begun extending integrity management programs to so-called moderate consequence areas, but PHMSA's rule will offer clarity on where the assessments will be mandated.

-- Tom DiChristopher, S&P Global Market Intelligence, newsdesk@spglobal.com

-- Edited by Bill Montgomery, newsdesk@spglobal.com