# U.S. DOT/PHMSA - Regulatory Impact Analysis and Initial Regulatory Flexibility Act Analysis: Proposed Rule

**Citation:** 0900006481b78740  
**Type / status:** rulemaking / current  
**Agency:** Pipeline and Hazardous Materials Safety Administration  
**Effective:** Not stated  
**Published:** Not stated

Regulatory Impact Analysis and Initial Regulatory Flexibility Act Analysis: Proposed Rule Pipeline Safety: Operator Qualification, Cost Recovery and other Pipeline Safety Proposed Changes PHMSA-2013-0163 Office of Pipeline Safety Pipeline and Hazardous Materials Safety Administration (PHMSA) U.S. Department of Transportation June 1, 2015 1 April 30, 2014 Executive Summary This package of proposed regulatory changes would address errors and inconsistencies in the current regulations, provide additional clarifications, incorporate industry standards, and update certain regulatory requirements. The proposed changes also address statutory requirements from...

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Regulatory Impact Analysis
and
Initial Regulatory Flexibility Act Analysis: Proposed Rule
Pipeline Safety: Operator Qualification, Cost Recovery and other Pipeline Safety Proposed Changes
PHMSA-2013-0163
Office of Pipeline Safety
Pipeline and Hazardous Materials Safety Administration (PHMSA)
U.S. Department of Transportation
June 1, 2015
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Executive Summary
This package of proposed regulatory changes would address errors and inconsistencies in the
current regulations, provide additional clarifications, incorporate industry standards, and update
certain regulatory requirements. The proposed changes also address statutory requirements from
the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (Public Law 112-90)
and safety recommendations from the NTSB, as well as petitions for rulemaking. Many of the
proposed revisions are small changes that would not lead to substantial changes in regulatory
requirements, operator practices, or overall costs and benefits.
Benefit-Cost Analysis
Annual compliance costs are estimated at $3.1 million, less savings to be realized from the
removal of farm taps from the DIMP requirements. Annual safety benefits cannot be quantified
as readily due to data limitations, but are in the range of $1.6 million per year in avoided incident
costs, plus numerous intangible benefits from the improved clarity and consistency of regulations
and improved abilities to conduct post-incident investigations. Although the quantified benefits
do not exceed the estimated costs, PHMSA believes that these non-quantified benefits are
significant enough to outweigh the costs of compliance. In particular, improvements to Operator
Qualification and post-incident investigation may prevent a future high-consequence event. At
an annual compliance cost of $3.1 million, the proposed new Operator Qualification and post-
accident testing requirements would be cost-effective if they prevented a single fatal incident
over a 3-year period.
Regulatory Flexibility Act Analysis
The Initial Regulatory Flexibility Analysis found that the proposed rule could affect a substantial
number of small entities because of the market structure of the gas and hazardous liquids
pipeline industry, which includes many small entities. However, these impacts would not be
significant. The Operator Qualification provision would entail new costs for small entities in the
range of $160 per employee per year, or about 0.3% of salary for a typical pipeline employee.
The post-accident drug testing provision would add $74 in documentation costs per reportable
incident. The other provisions would not add appreciable costs, and at least one provision (Farm
Taps) would yield compliance cost savings.
Unfunded Mandates Act Analysis
PHMSA determined that the rule would not impose annual expenditures on State, local, or tribal
governments of the private sector in excess of $153 million, and thus does not require an
Unfunded Mandates Act analysis.1
1 The Unfunded Mandates Act threshold was $100 million in 1995. Using the non-seasonally adjusted CPI-U (Index
series CUUR000SA0), that number is $153 million in 2013 dollars.
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1 Introduction
The Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing a package
of changes to the pipeline safety regulations. On January 3, 2012, President Obama signed into
law the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (“the Act”).
2 The
proposed changes would address Sections 9 and 13 of the Act, correct errors, address
inconsistencies, and respond to rulemaking petitions.
Requirements in several subject matter areas would be affected, including telephonic or
electronic notifications of accidents and incidents, cost recovery for design reviews, Operator
Qualification requirements, the renewal of expiring special permits, farm taps, reversal of flow or
change in product, control room team training, editorial changes, provide standards for
assessment tools via incorporation by reference in Part 195, modify the criteria used to make
decisions about conducting post-accident drug and alcohol tests and additional testing in Part
199, requiring electronic reporting of drug and alcohol testing results in Part 199, and requiring
post-accident drug and alcohol testing in Part 199.
This report analyzes the benefits and costs of the proposed regulatory changes as required by
Section 1 of Executive Order 12866 (as amended by E.O.’s 13258 (2002), 13422 (2007), and
13497 (2009)) and Section 1 of Executive Order 13563. 3 Executive Orders 12866 and 13563
require agencies regulate in the “most cost-effective manner” make a “reasoned determination
that the benefits of the intended regulation justify its costs,” and develop regulations that
“impose the least burden on society.”
Analysis of the potential impacts on small entities is also required by the Regulatory Flexibility
Act. The initial Regulatory Flexibility Act analysis is also included in this document (see
Section 8).
2 Background
PHMSA, pipeline operators, and others have identified certain errors, inconsistencies, updates to
standards incorporated by reference, and other deficiencies in the Pipeline Safety Regulations.
As such, PHMSA is proposing to make a set of miscellaneous changes to the Pipeline Safety
regulations concerning the following subjects, which are described in more detail in sections 3.1
to 3.12 below:
 Accident and Incident Notification
 Cost Recovery for Design Reviews
 Operator Qualification Requirements for Parts 192 and 195
2 Public Law 112-90
3 The text of E.O. 12866 can be found here: http://www.archives.gov/federal-register/executive-
orders/pdf/12866.pdf and E. O. 13563 here:
http://www.whitehouse.gov/sites/default/files/omb/inforeg/eo12866/eo13563_01182011.pdf
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 Special Permit Renewal
 Farm Taps
 Reversal of Flow or Change in Product
 Control Room Team Training
 Editorial Amendments
 Assessment tools by Incorporation by Reference
 modifying the criteria used to make decisions about conducting post-accident drug and
alcohol tests
 Electronic Reporting of Drug and Alcohol Testing Results
 Post-Accident Drug and Alcohol Testing
3 Identification of the Problem and the Need for the Rule
Under the Federal Pipeline Safety Laws, 49 U.S.C. 60101 et seq., the Secretary of Transportation
must prescribe minimum safety standards for pipeline transportation and for pipeline facilities.
The Secretary has delegated this authority to the PHMSA Administrator (49 CFR 1.97(a)). The
proposed rule would create changes in the regulations consistent with the protection of persons
and property while changing unduly burdensome or nonsensical requirements.
Executive Order 12866 states that "Federal agencies should promulgate only such regulations as
are required by law, are necessary to interpret the law, or are made necessary by compelling
need, such as material failures of private markets to protect or improve the health and safety of
the public, the environment, or the well-being of the American people ... ." The mission of the
PHMSA is to ensure the safety of the natural gas and hazardous liquids pipeline system.
Pipeline operators do not always bear the full costs of an incident. Even in cases where they
provide compensation for losses that can be monetized, those monetary penalties or settlements
do not necessarily capture the full impact on affected parties, especially when a death or injury
occurs. As a result, there is a negative externality present in which the company may not take the
full societal cost of a possible incident into account in its decision-making. The negative
externality alters the company’s decision about safety precautions, leading to a need for
government to set minimum levels of safety precautions. Pipeline safety regulations are
designed to address this potential market failure. The rulemaking package analyzed here is more
specifically intended to improve compliance with these regulations by updating references and
technical standards, providing clarification, and removing conflicting language. Some of the
provisions also promote improved pipeline integrity and safety by addressing small gaps in the
current regulations, as discussed in more detail below.
Executive Orders 12866 and 13563 direct all Federal agencies to consider the costs and benefits
of “significant regulatory actions.” Federal agencies are directed to develop a formal Regulatory
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Impact Analysis consistent with Office of Management and Budget (OMB) Circular A-4 for all
“economically significant” rules, or those rules estimated to have an impact of $100 million in
1995 dollars or more in any one year. The Order also requires a determination as to whether a
rule could adversely affect the economy in terms of productivity and employment, the
environment, public health, safety, or State, local, or tribal governments. This requirement
applies to rulemakings that rescind or modify existing rules as well as to those that establish new
requirements. The goal of the analysis is to provide decision makers with a clear indication of the
most efficient alternative – that is, the alternative that generates the largest net benefits to society
ignoring distributional effects.
This proposed rule has been considered a non-significant regulatory action under Section 3(f) of
Executive Order 12866 (58 FR 51735), and therefore is not reviewed by OMB. This proposed
rule is non-significant under the Regulatory Policies and Procedures of the Department of
Transportation (44 FR 11034). It falls below the $100 million per year in annual impact
threshold.
This regulatory analysis:
 Identifies the target problem, including a statement of the need for the action.
 Identifies available alternative approaches
 Defines the baseline.
 Defines the scope and parameters of the analysis.
 Defines and evaluates the costs and benefits of the action and the main alternatives
identified by the analysis.
 Compares the costs and benefits.
 Interprets the cost and benefit results.
Subsections 3.1 to 3.13 describe the proposed regulatory changes in detail and the specific needs
to which each regulatory change responds.
3.1 Accident and Incident Notification
Currently, PHMSA requires pipeline owners and operators to notify the National Response
Center by telephone or electronically at the earliest practicable moment following discovery
(§§ 191.5 and 195.52). In an advisory notice (67 FR 57060) dated September 6, 2002, PHMSA
advised owners and operators of gas and hazardous liquids pipeline systems and liquefied natural
gas (LNG) facilities that at the earliest practicable opportunity usually means 1 to 2 hours after
discovery of the incident.
Section 9 of the Act requires PHMSA to require a specific time limit for telephonic or electronic
reporting of pipeline accidents and incidents.
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In this rulemaking, PHMSA proposes to revise the pipeline safety regulations to establish time
limits for telephonic or electronic notification of an accident or incident to require such
notification at the earliest practicable moment following the confirmed discovery of an accident
or incident, not later than 1 hour following the time of such confirmed discovery. Owners and
operators would also be required to revise their initial telephonic or electronic notice to the
Secretary and the National Response Center with an estimate of the amount of the product
released, an estimate of the number of fatalities and injuries, if any, and any other information
determined appropriate by the Secretary. This information must be reported within 48 hours of
the accident or incident, to the extent practicable.
Owners and operators of gas and hazardous liquid pipelines and LNG facilities are already
required to report an incident to the NRC in Washington, DC, at the earliest practicable
opportunity (usually one to two hours after discovering the incident). However, under Section
9(b)(1) of the Act, PHMSA is required to issue regulations requiring owners and operators to
notify the NRC no later than one hour of discovery of a pipeline accident or incident. Therefore,
PHMSA is proposing that pipeline operators report accidents and incidents within one hour of
confirmed discovery.
3.2 Cost Recovery for Design Reviews
This proposed rulemaking action would amend the Federal pipeline safety regulations to
prescribe a fee structure and assessment methodology for recovering Agency costs associated
with design reviews of new gas and hazardous liquid pipelines with overall design and
construction costs totaling at least $2,500,000,000 or that contain new and novel technologies.
PHMSA has no method for recovering design review costs from the operator of the pipeline
incurred by the agency while conducting these reviews.
Section 13 of the Act requires PHMSA to recover costs associated with design reviews. Section
13 of the Act allows PHMSA to prescribe a fee structure and assessment methodology for
recovering costs associated with design reviews. Specifically, cost recovery can apply to any
project that : 1) has costs totaling at least $2,500,000,000 as adjusted by the Secretary to take into
account changes in CPI, 2) uses new or novel technologies or design, as determined by the
Secretary. The Act also requires the Secretary of Transportation to issue guidance to clarify the
meaning of the term "new or novel technologies" one year after the date of enactment.
As directed, in January 2013, PHMSA issued guidance on its website to clarify the meaning of
the term ‘‘new or novel technologies or design’’ as meaning, “any products, designs, materials,
testing, construction, inspection, or operational procedures that are not addressed in Title 49 CFR
Part 192, 193, or 195 due to technology or design advances and innovation.”
PHMSA conducts facility design safety reviews in connection with proposals to construct,
expand, or operate gas or hazardous liquid pipelines or liquefied natural gas pipeline facilities.
Reviews include design, construction, and operational inspections and oversight. These reviews
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divert a significant amount of PHMSA’s limited resources from the agency’s pipeline safety
enforcement responsibilities. Currently, PHMSA has no method for recovering design review
costs from the operator of the pipeline that are incurred by the agency while conducting these
reviews. The proposed rule would prescribe a fee structure and assessment methodology for
recovering the costs associated with design reviews. Section 13 of the Act permits the agency to
require the entity or individual proposing the project to pay the costs incurred by PHMSA
relating to such reviews. PHMSA is proposing to exercise the cost recovery authority described
in Section 13(a) of the Act by prescribing a fee structure and assessment methodology that is
based on the costs of providing these reviews. PHMSA has developed a sample master cost
recovery agreement for use by PHMSA and the applicant for a project proposal meeting the
criteria of proposed 49 CFR Part 190, Subpart D requirements. The sample master cost recovery
agreement will be posted on PHMSA’s website and in Docket No. PHMSA-2013-0163.
3.3 Operator Qualification Requirements for Parts 192 and 195
This proposed rulemaking action would amend the Federal pipeline safety regulations in 49 CFR
Parts 192 and 195. The amendments would include: expanding the scope of the regulations to
cover new construction and certain operation and maintenance tasks and including requirements
for program effectiveness review and recordkeeping in the Operator Qualification (OQ) program.
The recommended changes would enhance the OQ requirements by clarifying existing
requirements and making necessary changes to address findings and shortcomings in the interest
of public safety. This proposed rule would address the National Transportation Safety Board’s
(NTSB) recommendation that would clarify OQ requirements to control rooms (Safety
Recommendation P-12-8). In addition, PHMSA is extending the program requirements to
operators of regulated Type B onshore gas gathering lines.
On July 25, 2012 the National Transportation Safety Board (NTSB) recommended to PHMSA to
extend Operator Qualification requirements in Title 49 CFR Part 195 Subpart G to all hazardous
liquid and gas transmission control center staff involved in pipeline operational decisions.
PHMSA determined that requiring only a description of the processes used to qualify personnel
instead of qualification methods for each individual that is allowed to perform tasks on Type A
gas gathering in Class 2 locations and regulated hazardous liquids gathering in rural locations
fails to provide necessary ability to ensure that individuals possess requisite abilities.
The proposed action would amend the Federal Pipeline Safety Regulations in 49 CFR parts 192
and 195. The Amendments would include:
 Standardization of the format used in OQ
 Changing the scope of OQ rule in §§ 192.801 and 195.501 so that the method of
determining a "covered task" is changed to a technically justified method instead of the
negotiated "4-part test" originally in the rule. In particular, a “covered task” would now
include new construction rather than just operations and maintenance.
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 Established dates in General Sections of §§ 192.809 and 195.509 no longer affect
implementation requirements for operators and are renumbered as §§ 192.803 and
195.503
 In §§ 192.809 and 195.509 enhancements are being included to clarify requirements, one
training requirement date is deleted while clarifying the needs for training, a new
Paragraph J has been added to establish requirements for evaluators including necessary
training
 New program effectiveness requirements are added in §§ 192.806 and 195.506
 In §§ 192.807 and 195.507, record requirements that would address evaluators and
program effectiveness have been added that are normally reviewed during inspection of
OQ programs
 After additional definitions have been added to guide the operators in the regulation, §§
192.803 and 195.503 have been added into general definition in §§ 192.3 and 195.2
respectively
 Sections 192.9 and 195.11 have been modified to have and administer an Operator
Qualification program covering personnel that perform work on regulated Type B
onshore gas gathering lines and regulated hazardous liquids gathering in rural locations
respectively.
In consideration of the NTSB recommendations in this area, PHMSA also proposes requiring
each operator to define the roles and responsibilities and qualifications of others who have the
authority to direct or supersede the specific technical actions of controllers (a change to 49 CFR
192.631(b) and 49 CFR 195.446(b)).
3.4 Special Permit Renewal
This proposed rulemaking action would amend 49 CFR 190.341 of the Federal pipeline safety
regulations to add procedures for renewing a special permit.
As defined in Section 190.341(a), a special permit is an order by which PHMSA waives
compliance with one or more of the pipeline safety regulations. In order to grant a request for a
special permit, PHMSA must determine that granting the permit would “not be inconsistent with
pipeline safety.” Special permits are authorized by statute in 49 USC § 60118(c), and the
application process is set forth in 49 CFR 190.341. PHMSA performs extensive technical
analysis on special permit applications and typically conditions a grant of a special permit on the
performance of alternative measures that will provide an equal or greater level of safety.
PHMSA is committed to public involvement and transparency in special permit proceedings and
publishes notice of every special permit application received in the Federal Register for
comment.
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In the past, PHMSA has included an expiration date for certain special permits depending on the
nature of the permit. Starting in 2009, PHMSA began adding an expiration date to all new
permits. By doing so, PHMSA is able to ensure that each special permit will be re-reviewed no
later than the expiration date. This process ensures that a special permit will not continue to be
used if it is no longer in the best interest of public safety.
Since the special permits that were issued with expiration dates in 2009 will start expiring in
2014, PHMSA is proposing to add renewal procedures to the pipeline safety regulations.
PHMSA acknowledges that not all active special permits have expiration dates. Therefore,
PHMSA may seek to modify any existing special permit without an expiration date through the
“order to show cause” process described in 190.341(h)(2).
3.5 Farm Taps
This proposed rulemaking action would amend the Federal pipeline safety regulations in 49 CFR
Part 192. The amendment would include adding a new section (§ 192.740) to cover regulators
and over-pressure protection equipment for an individual service line that originates from a
transmission, gathering, or production pipeline, and would revise § 192.1003 to exclude farm
taps from the requirements of pipeline Distribution Integrity Management Program (DIMP).
A “farm tap” is industry jargon for a pipeline that branches from a transmission, gathering, or
production pipeline to deliver gas to a farmer or other landowner. PHMSA has recognized farm
taps as distribution lines for many years. Historically, PHMSA and its predecessor agencies
have held that farm taps are service lines—a subset of distribution pipelines. Rulemaking
proceedings and responses to requests for interpretation have recognized this fact on numerous
occasions, dating as far back as 1971.
On Friday, December 4, 2009, PHMSA published the DIMP final rule for gas distribution
pipelines (74 FR 63906). That rule applies integrity management requirements to all distribution
pipelines. Unlike the integrity management requirements for hazardous liquid or gas
transmission pipelines, the DIMP requirements do not focus on a subset of pipelines in “high
consequence areas,” but instead apply to all distribution pipelines. Therefore, little consideration
was given to the potential impact or appropriateness of subjecting farm taps to DIMP
requirements.
Farm taps are mostly located in less-populated areas (Class 1 and 2 locations). The risk to the
public from farm taps is generally low, but the risk is dependent upon the service in which the
farm tap is employed, the environment in which it operates, and the consequence of an over-
pressurization event. DIMP is written to identify needed risk control practices for threats
associated with distribution systems, whereas threats to typical farm taps are limited, and most
are already addressed within Part 192. Therefore, PHMSA is proposing to amend Part 192 to
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exempt farm taps from the requirements of Part 192, Subpart P - Gas Distribution Pipeline
Integrity Management. However, to better protect customers served by these lines, PHMSA is
proposing to amend Part 192, Subpart M - Maintenance by adding a new section that prescribes
inspection activities for pressure regulators and over-pressurization protection equipment on
service lines that originate from transmission, gathering, or production pipelines.
3.6 Control Room Team Training
In response to NTSB recommendation P-12-7, PHMSA is proposing a small addition to the
regulations related to Control Room Management (49 CFR 192.631 and 195.446). Specifically,
PHMSA’s proposed language would reinforce the need for team training and exercises that
include not only controllers, but other individuals, such as supervisors, that controllers would
reasonably be expected to interface with during normal, abnormal, and emergency conditions..
3.7 Reversal of Flow or Change in Product
On November 26, 2010, PHMSA published a final rule (75 FR 72878) that established and
required participation in the National Registry of Pipeline and LNG Operators. This final rule
amends the Federal pipeline safety regulations to require operators to notify PHMSA
electronically of the occurrence of certain events no later than 60 days before the events occur.
In this NPRM, PHMSA proposes to expand the scope of reportable events in §§191.22 and
195.64 to include the reversal of flow of product or change in product in a mainline pipeline.
This notification is not required for pipeline systems already designed for bi-directional flow, or
when the reversal is not expected to last for a duration of 30 days or less. The proposed rule
would require operators to notify PHMSA electronically no later than 60 days before there is a
reversal of the flow of product through a pipeline, and also in the instance that there is a change
in the product flowing through a pipeline. Examples include, but may not be limited to,
changing a transported product from liquid to gas, from crude oil to highly volatile liquids
(HVL), and vice versa. In addition, a modification is proposed to §§ 192.14 and 195.5 to reflect
the 60 days notification.
3.8 Editorial Amendments
In this NPRM, PHMSA is also proposing to make the following editorial amendments to the
pipeline safety regulations:
On July 13, 1998, the Research and Special Programs Administration (RSPA) issued a final rule
(63 FR 37500) to provide metric equivalents to the English units. RSPA provided the metric
equivalents for informational purposes only. Operators were required to continue using the
English units for purposes of compliance and enforcement. RSPA provided a metric equivalent
for § 192.175(b) as follows: RSPA removed C=(3DxPxF/1,000) and replaced it with
C=(DxPxF/48.33) (C=(3DxPxF/1,000)). However, the replacement formula was in error. The
correct formula is: C = (3D*P*F)/1000) (C = (3D*P*F*)/6,895).
Where, C = (3D*P*F)/1000) is in inches (English unit), and
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(C = (3D*P*F*)/6,895) is in millimeters (metric conversion).
On November 26, 2010, PHMSA published a final rule (75 FR 72878), which established the
National Registry of Pipeline and LNG Operators. In this rule, PHMSA inadvertently omitted
the inclusion of carbon dioxide in the operating commodity types. In an effort to maintain
consistency with the rest of Part 195, this proposed rule would amend the language in §
195.64(a) and § 195.64(c)(1)(ii) to correct the term “hazardous liquid” to read “hazardous liquid
or carbon dioxide.”
In § 195.248, the correct conversion to 100 feet is mistakenly stated as 30 millimeters.
Therefore, the phrase “100 feet (30 millimeters)” is replaced to read “100 feet (30.5 meters).”
In § 195.452, a new paragraph (a)(4) is added to clarify the applicability of § 195.452 to low
stress pipelines as described in § 195.12.
3.9 Pipeline Assessment Tools
The National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113; March 7,
1996) directs Federal agencies to use voluntary consensus standards and design specifications
developed by voluntary consensus standard bodies instead of government-developed voluntary
technical standards, when applicable. OMB Circular A-119: “Federal Participation in the
Development and Use of Voluntary Consensus Standards and in Conformity Assessment
Activities” sets the policy for Federal use and development of voluntary consensus standards.
As defined in OMB Circular A-119, voluntary consensus standards are technical standards
developed or adopted by organizations, both domestic and international. These organizations use
agreed upon procedures to update and revise their published standards every 3 to 5 years to
reflect modern technology and best technical practices.
The legal effect of incorporation by reference is that the material is treated as if it were published
in the Federal Register and Code of Federal Regulations (CFR). This material, like any other
properly issued rule, has the force and effect of law. Congress authorized incorporation by
reference to reduce the volume of material published in the Federal Register and CFR (See 5
U.S.C. 552(a) and 1 CFR Part 51). Congress granted authority to the Director of the Federal
Register to determine whether a proposed incorporation by reference serves the public interest.
Section 24 of the Act amended 49 U.S.C. 60102 by adding a new requirement on documents
incorporated by reference after January 3, 2013. The law states, “Beginning 1 year after the date
of enactment of this subsection, the Secretary may not issue guidance or a regulation pursuant to
this chapter that incorporates by reference any documents or portions thereof unless the
documents or portions thereof are made available to the public, free of charge, on an Internet
Web site.’’ To meet this requirement, PHMSA negotiated agreements with the majority of the
standards-setting organizations with documents incorporated by reference in the pipeline safety
regulations. The American Petroleum Institute (API), the American Society for Nondestructive
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Testing (ASNT), and the National Association of Corrosion Engineers (NACE) International
have signed such agreements with PHMSA.
This proposed rule would incorporate by reference consensus standards for assessing the
physical condition of in-service hazardous liquids pipelines using in-line inspection (ILI) and
stress corrosion cracking direct assessment (SCCDA). Periodic assessment of hazardous liquids
pipelines is required by § 195.452. These sections allow use of the inspection techniques
addressed in these standards. Incorporation of the consensus standards would assure better
consistency, accuracy and quality in pipeline assessments conducted using these techniques. In
addition, the incorporation of these standards would address part of the NTSB Recommendation
P-12-3 by identifying crack defects and seam corrosion using crack tools and circumferential
tools. PHMSA proposes to incorporate by reference the following consensus standards into 49
CFR Part 195: API STD 1163, “In-Line Inspection Systems Qualification Standard” (August
2005); NACE Standard Practice RP0102-2010 “Inline Inspection of Pipelines;” NACE SP0204-
2008 “Stress Corrosion Cracking Direct Assessment;” and ANSI/ASNT ILI-PQ-2005, “In-line
Inspection Personnel Qualification and Certification” (2005). Also, PHMSA proposes to allow
pipeline operators to conduct assessments using tethered or remote control tools not explicitly
discussed in NACE SP0102-2010, provided the operators comply with applicable sections of
NACE SP0102-2010.
Note that this proposed rulemaking action addresses only Part 195, but PHMSA will consider
making a similar proposed rule for 49 CFR Part 192 under a separate rulemaking action.
3.10 Electronic Reporting of Drug and Alcohol Testing Results
PHMSA’s pipeline safety regulations at 49 CFR 191.7 and 49 CFR 195.58 require electronic
reporting of most pipeline safety reports through the PHMSA Portal. PHMSA proposes to also
require electronic reporting for anti-drug testing results required under § 199.119 and alcohol
testing results required under § 199.229. Pipeline operators with less than 50 covered employees
are required to submit these reports only when PHMSA provides written notice. PHMSA
proposes to modify these regulations to specify that PHMSA will provide notice to operators in
the PHMSA Portal.
3.11 Post-Accident Drug and Alcohol Testing
PHMSA's regulations require documentation of decisions not to administer a post-accident
alcohol test. The requirement to document a decision not to administer a post-accident drug test
is implied in the regulations, but not explicitly required. PHMSA proposes to add a section to the
post-accident drug testing regulation to require documentation of such a decision.
The NTSB issued the following safety recommendation (NTSB Recommendation P-11-12):
"Amend 49 CFR 199.105 and 49 CFR 199.225 to eliminate operator discretion with regard to
testing covered employees. The revised language should require drug and alcohol testing of each
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employee whose performance either contributed to the accident or cannot be completely
discounted as a contributing factor to the accident."
Accordingly, PHMSA also proposes to modify 49 CFR 199.105 and 49 CFR 199.225 by
restating and further defining the existing requirement to conduct post-accident drug and alcohol
testing of all employees except those for whom sufficient information establishes that they had
no role in the accident.
4 Identification of Available Alternative Approaches
4.1 No Action
This was used as the baseline against which PHMSA compared all other alternatives.
Regulatory analyses typically consider an alternative in which the agency would not take any
action, because it would maintain the status quo. No new requirements would be levied. No costs
would be incurred to implement new requirements. No new benefits would result.
PHMSA has an obligation to ensure the safe and effective transportation of hazardous liquids
and gases by pipeline. The changes proposed in this NPRM serve that purpose by clarifying the
pipeline safety regulations, eliminating conflicting provisions, responding to new statutory
mandates, and eliminating unduly burdensome requirements. A failure to undertake these
actions would allow for the continued imposition of unnecessary compliance costs without
increasing public safety. Accordingly, PHMSA rejected the “no action” alternative.
4.2 Proposed Revisions
This alternative was determined by PHMSA as the preferred regulatory option and is compared
in the document with the baseline “no action” alternative.
PHMSA is proposing to make certain amendments, corrections, and editorial changes to the
pipeline safety regulations. These revisions would eliminate inconsistencies and respond to
several petitions for rulemaking and recommendations from our stakeholders, thereby facilitating
the safe and effective transportation of hazardous liquids and gases by pipeline. The changes
proposed in this NPRM serve that purpose by clarifying the pipeline safety regulations and
eliminating unduly burdensome requirements.
5 Industry Information
The affected industry comprises owners and operators of regulated natural gas and hazardous
liquid pipelines. These include a mix of large and small businesses, as well as publically owned
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utilities, municipalities, and other organizations. Using a combination of PHMSA 2011 Annual
Report data and the Dun and Bradstreet company database, there are approximately 3,000
regulated entities when all corporate subsidiaries are separately counted, with a total of roughly
150,000 onsite employees. There are wide variations across entities with respect to the share of
employees actually engaged in pipeline operations, especially for public agencies.
Among these entities, common industry (NAICS) codes are 211111, Crude Petroleum and
Natural Gas Extraction; 221210, Natural Gas Distribution; 324110, Petroleum Refineries;
486910, Pipeline Transportation of Refined Petroleum Products; 486210, Pipeline Transportation
of Natural Gas; and 424720, Petroleum and Petroleum Products Merchant Wholesalers.
Many of the specific provisions in this rulemaking would apply only to specific subsets of this
population, such as operators of gas gathering lines, as described in more detail in Section 6
below.
6 Definition and Evaluation of the Benefits and Costs
6.1 Data Sources and Limitations
Cost information is taken from PHMSA databases and external datasets as detailed more
specifically below. In many cases the proposed changes are so small as to entail little to no
quantifiable costs.
6.2 Costs
In the sub-sections below, each provision of the rulemaking is analyzed individually for potential
cost implications.
6.2.1 Accident and Incident Notification
There is an existing requirement to notify the NRC by telephone of incidents at the “earliest
practicable moment” after discovery. This provision would clarify the existing rule and
accompanying guidance by providing additional specificity on the expected timeframe. As a
clarification to an existing requirement, this section does not entail any significant changes in
compliance costs.
6.2.2 Cost Recovery for Design Reviews
Under this provision, PHMSA would conduct design reviews for certain large-scale pipeline
projects on a cost-recovery basis rather than at the agency’s own expense. The cost recovery
provision would represent a transfer between parties, with no net societal costs or benefits.
Particularly for projects meeting the project cost criterion, the relatively small cost of the design
review is unlikely to hinder innovation in design techniques.
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April 30, 2014
6.2.3 Operator Qualification Requirements for Parts 192 and 195
Operator Qualification (OQ) programs are designed to ensure that each worker conducting
pipeline activities, such as operations and maintenance, has the appropriate knowledge and skills
to perform that function. OQ programs are already required and in place for most pipeline
operators, with some exceptions.
The proposed revisions to the OQ requirements include rearranging/renumbering with
clarification to existing requirements and a number of small editorial changes and clarifications.
These smaller changes do not involve any significant compliance costs because they largely re-
state existing requirements and resolve perceived ambiguities in the regulatory text, rather than
impose substantively new requirements. Notable among these is a revision in scope that
responds to NTSB Recommendation P-12-8; it specifies that pipeline operators’ OQ plans must
define the roles, responsibilities, and qualifications of any employees who have the authority to
direct or supersede pipeline controllers’ actions. As NTSB noted, it is inconsistent with safe
operating principles to have controllers’ actions guided or overridden by employees who do not
necessarily have the same level of operator qualification. This change makes explicit that an
employee who guides or overrules a pipeline controller is also effectively acting as a controller,
even if he/she has another job title. PHMSA is making this change in response to NTSB’s
recommendation and to make the regulations as clear as possible. However, PHMSA already
addresses this issue through its Frequently Asked Questions for the OQ program and its
definition of “controller” (49 CFR 192.3 and 195.2), which includes anyone who monitors and
controls the safety-related operations of a pipeline from a control room. Supervisors already fall
under this functional definition to the extent that they direct first-line controllers, though this
may not be clear to all operators. This clarification explicitly reinforces that point. As a
clarification of an existing requirement, there are no incremental compliance costs.
PHMSA is also proposing a small revision to OQ programs to explicitly require a “management
of change” component, i.e. that operators inform their employees if there are changes to their
OQ-covered tasks. This proposed change again provides additional clarity to the regulations.
However, PHMSA believes that there are little to no costs associated with the change, because
communicating changes in employees’ responsibilities is a normal business practice.
PHMSA’s proposed OQ-related provisions also include two more substantive changes that may
entail changes to operator practices and incremental compliance costs:
 OQ would be extended to three additional pipeline categories that currently avail of a
modified recordkeeping approach that does not require individualized documentation:
o Type A gas gathering lines in Class 2 locations
o Type B onshore gas gathering lines
o Regulated hazardous liquid gathering lines in rural areas
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April 30, 2014
 The definition of “covered task” for OQ purposes would be revised to include new
construction, rather than just operations and maintenance as under the current definition.
This change would mean that some pipeline employees would be newly subject to the
OQ requirements – that is, those who perform new construction activities, but not
operations or maintenance.
The proposed rule would require that each affected firm (1) create and a follow a written OQ
plan, (2) conduct yearly reviews of the effectiveness of the program, and (3) maintain records for
each qualified individual. Their OQ plans would need to identify covered tasks and ensure
through evaluation that each employee who performs a covered task has the required
qualifications.
PHMSA has previously estimated that establishing a new OQ program entails costs of
approximately $1,200 per employee over a 10-year period, or the annualized equivalent of about
$160 per employee per year (using a 7% discount rate).4
PHMSA does not have precise counts of the number of firms and employees who would be
affected by this proposed regulatory change. However, the number can be estimated using a
combination of Annual Report filings5 and external data.
Among gas pipeline operators with Type B gathering lines or Type A gathering lines in Class 2
locations, most are already subject to OQ provisions because they also have transmission lines
and/or Type A gathering lines in Class 1 locations. However, a total of 78 gas operators listed in
the 2011 Annual Report would be newly subject to the OQ requirements. Dun and Bradstreet
company data for these 78 operators estimate they have a combined total of 7,365 onsite
employees. Among hazardous liquid pipeline operators, there 31 operators listed in the 2011
Annual Report who operate rural gathering lines but not non-rural gathering lines, and thus
would be newly subject to the full-fledged OQ provisions. Dun and Bradstreet data on these 31
operators list a total of 1,143 onsite employees.
The number of firms and employees who would be affected by the revised definition of “covered
task” – that is, those who conduct new construction activities but not operations and maintenance
– cannot be generated from these data sources. Instead, PHMSA estimated this figure based on
industry experience. In general, most firms that perform new construction also conduct
operations and maintenance, but there are exceptions. Pipeline operators registered with
PHMSA have a combined total of about 150,000 onsite employees according to the Dun and
Bradstreet company data. A reasonable estimate is that 5% of these, or 7,500 employees, will
fall into this newly regulated category because they perform new construction but not operations
4 DOT Office of the Chief Information Officer, Supporting Statement to OMB Control No. 2137-0600. See also
Federal Register Volume 76, Number 205 (Monday, October 24, 2011), pp. 65778-65779.
5 PHMSA, http://www.phmsa.dot.gov/pipeline/library/data-stats
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April 30, 2014
or maintenance. This rough estimate appears to be fairly conservative, given that the Bureau of
Labor Statistics estimates total employment of Plumbers, Pipefitters, and Steamfitters (SOC code
472152) in the main relevant industries (Oil and Gas Extraction, Natural Gas Distribution, and
Pipeline Transportation) at 6,120 persons.6 Moreover, these figures likely include employees
who also perform maintenance and are thus already covered by OQ requirements.
Overall, then, operators with a total of about 16,008 employees (that is, 7,365 + 1,143 + 7,500)
would potentially be newly subject to the requirement to participate in an OQ plan, either
because of the provisions related to gathering lines or because of the change in covered tasks to
include new construction. For cost estimation purposes, we assume conservatively that all of
these employees would be subject to OQ, even though not all of them necessarily work on
“covered tasks” as that term is defined in the proposed regulations, and that there is no overlap in
the employees affected by the different provisions. Therefore, incremental compliance costs for
this OQ provision are in the range of $2.6 million per year (i.e., 16,008 employees * $160 per
employee per year).
6.2.4 Special Permit Renewal
This section establishes a new set of administrative procedures to handle Special Permit
renewals. Since Special Permits previously did not carry expiration dates, this change is
necessary to have a defined process for renewals. This proposal deals solely with agency
procedures and has little or no direct costs.
6.2.5 Farm Taps
In this provision, farm taps would be removed from the DIMP program in favor of a less
stringent set of inspection activities and over-pressurization protection equipment. This change
would yield cost savings for operators. The overall cost savings could not be quantified because
PHMSA’s database does not record the number of farm taps. However, it was previously
estimated that implementing a DIMP program and conducting required mitigation would cost the
affected industry approximately $78 million per year after start-up. Removing farm taps from
DIMP would relieve a small portion of these costs.
6.2.6 Control Room Team Training
Many pipeline operators already conduct team training and exercises that include both
controllers and others staff (e.g. supervisors) that controllers may interface with during normal,
abnormal, and emergency situations. For these operators, the proposed revision will have little
to no impact on their training approach or compliance costs. For operators who currently do not
conduct this type of team training, an additional training module will be required. PHMSA
6 Bureau of Labor Statistics, Occupational Employment Statistics query system, May 2012, SOC code 472152.
http://data.bls.gov/oes/datatype.do
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April 30, 2014
previously estimated that there are approximately 524 control room supervisors for hazardous
liquids pipelines and 631 for gas pipeline (1,155 total); that these supervisors’ average hourly
wages (including overhead) were around $75; and that similar types of control room training
require 4 hours per person per year in labor costs plus $100 per person for the training itself.7
Putting these figures together, and assuming very conservatively that no operators are already
conducting this type of team training, the annual compliance cost is $462,000 (that is, 1,155 * 4
* $75 = $346,500 for the opportunity cost of the supervisors’ time, plus 1,155* $100 = $115,500
for the cost of the training itself)
6.2.7 Reversal of Flow or Change in Product
There would be relatively few notifications under this proposed section since it excludes
temporary changes and pipelines designed for bidirectional flow. Moreover, PHMSA’s intention
is that changes in batched petroleum products (e.g. gasoline, diesel, jet fuel) would not constitute
a reportable “change in product” as these are commonplace. Overall, based on historical
information, PHMSA estimates that it will receive approximately 8 notifications per year. Only
a simple notification would be required, which could be handled electronically, so total
compliance costs would be minimal.
6.2.8 Editorial Amendments
These editorial changes address errors in formulae and other small discrepancies in the pipeline
safety regulations. There are no changes to substantive requirements or associated compliance
costs.
6.2.9 Pipeline Assessment Tools
This section clarifies existing requirements for the inspection of hazardous liquids pipelines by
citing specific technical standards for those inspections and incorporating the standards by
reference. This proposed rule would address in part NTSB recommendation P-12-3 by
incorporating by reference consensus standards for assessing the physical condition of in-service
hazardous liquids pipelines using ILI and SCCDA. Incorporation of the consensus standards
would assure better consistency, accuracy and quality in pipeline assessments conducted using
these techniques.
PHMSA had asked the Standards Developing Organizations to develop these standards, and now
that they are developed, PHMSA is proposing to adopt them to bring consistency throughout the
7 PHMSA, Pipeline Safety: Control Room Management/Human Factors, Revision of Implementation Period,
Regulatory Evaluation, June 2011.
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April 30, 2014
industry. These standards provide tables to guide tool section choices and help select the right
tool for the right anomaly. .
Overall, these consensus standards and their guidance on tool selection should not entail
additional costs for pipeline operators. The standards reflect widespread industry practices, so
PMHSA does not expect any incremental compliance costs.. The cost of the standards
documents themselves has also been relieved by PHMSA’s arranging for these documents to be
freely available online.
6.2.10 Retention of Samples and Additional Testing
This change addresses a discrepancy between two sections of the regulations and does not entail
any change in compliance costs.
6.2.11 Electronic Reporting of Drug and Alcohol Testing Results
This section requires electronic reporting of testing results through the same PHMSA portal that
is used for other reporting. This change should yield small cost savings for operators and for
PHMSA compared to hard-copy documentation.
6.2.12 Post-Accident Drug and Alcohol Testing
Under the provisions of this section, operators would be required to document any decisions not
to administer post-accident drug testing to a particular employee, as is required for post-accident
alcohol testing. Although this requirement is somewhat implied by the current regulations, it is
not explicitly stated and may not be a universal practice. There would therefore be small
recordkeeping and documentation costs associated with the provision.
The regulation does not specify a precise form that the documentation must take, and no specific
estimate of the preparation time is available. Given the requirements, a reasonable estimate
would be 2 hours per incident to prepare documentation on any decision not to administer drug
testing. According to the Bureau of Labor Statistics, the average wage rate of a Human
Resources Specialist (Occupation Code 13-1071) in the Oil and Gas Extraction industry (NAICS
211100) is $37.12. (The figures are similar for other job series and industries that may be
relevant.)
Over the past 5 years, there has been an average of 609 reported pipeline incidents per year.
Although many firms may already document their decisions since this is required for post-
accident alcohol testing and may be useful for company records, we assume conservatively that
each incident would require some new documentation. The total compliance cost is on the order
of $45,000 per year (609 incidents * 2 hours * $37.12/hour).
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April 30, 2014
6.2.13 Cost Summary
Overall, these changes are largely minor provisions with little or no substantive change to
industry practices or compliance costs. For the three provisions with quantifiable costs, these are
estimated at $2.6 million per year for the Operator Qualification provisions, $45,000 per year for
the Post-Accident Testing provisions, and $462,000 per year for the Control Room Management
training provisions. These estimates are generally upper bounds, in that they assume that
pipeline operators are not already in compliance with the proposed regulations.
Some of these cost increases would be offset by the reduction in DIMP-related costs associated
with the Farm Tap provisions, though these could not be estimated due to data limitations.
6.3 Benefits
Pipeline incidents can result in death, injury, property damage, and environmental damage. The
benefits of the proposed regulatory changes stem primarily from improvements to regulatory
clarity and from upgraded safety requirements that are intended to reduce the number of pipeline
incidents and their severity.
Estimates of avoided incident costs are calculated using information on fatalities, injuries, and
property damage (including lost product). Fatalities and injuries are converted to dollar terms
using values from departmental guidance documents, $9.1 million per fatality and $955,500 for
an injury.
8 [Based on departmental guidance, the injury and fatality figures rise 1.07% per year
to account for wage increases over time.]
In the sub-sections below, the expected benefits of each provision of the rulemaking are analyzed
individually.
6.3.1 Accident and Incident Notification
This is a clarification of an existing regulation and is not expected to generate quantifiable safety
benefits. However, improving the clarity of the regulations with an objective standard is likely to
improve overall compliance and timeliness. In addition, there are inherent safety benefits in
having timely information on incidents, both for emergency response and for incident
investigation.
8 Trottenberg, Polly and Robert Rivkin. “Guidance on Treatment of the Economic Value of a Statistical Life (VSL)
in U.S. Department of Transportation Analyses.” February 28, 2013. The injury number is equivalent to a “serious”
injury on the Abbreviated Injury Scale and is 10.5% of the VSL.
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April 30, 2014
6.3.2 Cost Recovery for Design Reviews
Cost recovery represents a transfer between parties and does not entail societal benefits.
However, PHMSA believes that this change will promote safety by allowing the agency to
conserve its limited resources for other high-priority activities.
6.3.3 Operator Qualification Requirements for Parts 192 and 195
The societal benefits of this provision will take the form of greater pipeline integrity and a
potential reduction in pipeline incidents related to the actions of under-qualified personnel.
Ensuring that pipeline operations and maintenance personnel have the appropriate job skills and
training is a fundamental safety requirement.
Quantifying these safety benefits with precision is hindered by limitations in PHMSA’s incident
databases. Notably, human error by under-qualified pipeline personnel can be the root cause of
incidents that are formally classified across a number of causation codes, including incorrect
operation, corrosion, material/weld/equipment failure, and other. Expected benefits of the key
OQ provisions are discussed individually below.
Clarification on scope
Clarifying the scope of the OQ requirements to include control room supervisors and others who
may direct or supersede the actions of pipeline controllers responds to NTSB Recommendation
P-12-008. The proposed revision makes current requirements more explicit and removes
potential inconsistencies in the OQ coverage of supervisors and other personnel. While the
safety benefits cannot be readily quantified, NTSB noted that the lack of a clear OQ requirement
for all control room personnel was a contributing factor to the July 2010 pipeline rupture incident
in Marshall, Michigan, which involved cleanup costs in excess of $700 million.9
New Construction
The expansion of OQ requirements to new construction helps to reduce incidents that occur
during the construction and installation process, by ensuring that workers conducting these tasks
have the appropriate skills and do not make avoidable errors. Having appropriately trained staff
at installation can also reduce certain types of incidents that are ultimately related to defects in
manufacturing, as some of these defects can be identified by qualified personnel and remedied
before installation.
Many operators already employ OQ for new construction, even for tasks that are not covered by
the current regulations, simply because it is prudent to do so, and ultimately cost-effective when
compared against the cost of future incidents and disruptions. However, PHMSA staff are aware
of numerous cases in which non-qualified personnel have been used, without adequate training,
9 National Transportation Safety Board, Pipeline Accident Report NTSB/PAR-12/01,
http://www.ntsb.gov/doclib/reports/2012/par1201.pdf
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April 30, 2014
for safety-critical pipeline installation tasks such as handling and bending of pipe, coating,
padding, and backfilling. PHMSA’s inspectors have gathered extensive records of installation
errors, including improper welding techniques, improper use of coatings and epoxy, failure to
screen backfill material, inadequate use of sidebooms for lowering pipe, and insufficient burial
depth. There have also been more fundamental problems such as failure to use the local “one-
call” notification system during excavation, which can lead to hitting other underground utilities.
While not all of these installation errors will necessarily result in an incident, they are deviations
from best practice that can be addressed through an OQ program.
Errors made during new construction can result in immediate incidents, and may also set the
stage for future incidents. As one example, the Tennessee Regulatory Authority investigated a
transmission line rupture in 2012 and found that it was ultimately caused by improper handling
during construction in 1982, which caused a crack that grew over time. In 2007, investigation of
the Plains All-American Pipeline found a section of pipe that was dented due to its having been
placed on top of a large rock, an obvious installation error that almost certainly would have been
detected if qualified personnel were used for this portion of construction.
In addition to these qualitative information from these inspection-based reports, PHMSA’s
incident summary10 for the 20-year period from 1993 to 2012 shows a total of 72 incidents
attributed to “construction, installation or fabrication-related” causes, with no injuries and a total
of $26 million in property damage. An additional 41 incidents were attributed to “manufacturing
related” causes, with 8 fatalities, 51 non-fatal injuries, and $404 million in property damage.
Clearly, not all of these incident costs are related to human error by under-qualified personnel,
and human error can never be fully eliminated, even with the most stringent qualification
requirements. PHMSA does not have data on the rate of avoidable human error in new pipeline
construction or the effectiveness rate of OQ programs. However, based on the above-cited
incident investigations and other experience, PHMSA staff believe that (a) human error is a
contributing factor to many incidents, and (b) having a systematic approach to ensuring the
qualifications of pipeline personnel is an effective means of reducing human-error incidents.
Based on this experience, a safety effectiveness rate of 20% is believed to be reasonable for
estimating benefits with respect to avoiding relevant installation-related incidents. For
manufacturing-related incidents, a lower rate of 5% is assumed, since not all manufacturing-
related defects can be identified even by skilled installation personnel.
10 http://primis.phmsa.dot.gov/comm/reports/safety/AllPSIDet_1993_2012_US.html?nocache=307
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April 30, 2014
Pipeline Incidents Related to New Construction, 1993-2012, with Estimated Benefits for
New Operator Qualification Provisions
Non-
Assumed
Fatal
Fatal
Report
Safety
Incide
Injuries
Injuries
ed
Effective
nt
(Moneti
(Moneti
Proper
Total
ness Rate
Costs
Incident
Incide
zed
zed
ty
Incide
for this
Avoid
Annual
Cause
nt
Societal
Societal
Damag
nt
Cause
Code
ed, 20
Equival
Count
Cost)
Cost)
e
Costs
Code
Years
ent
Constructio
n,
installation
or
fabrication-
0
$25.9
related
72
($O)
($0)
$25.9m
Manufactur
8
51
m
20%
$5.2m
$0.3m
$404.3
$525.
$26.3
ing-related
41
($72.8m)
($48.7m)
m
8m
5%
m
$1.3 m
TOTAL
$1.6m
Using a these safety effectiveness rate for benefits calculation, the extension of OQ requirements
to new construction would yield safety benefits in the range of $1.6 million per year in avoided
incident costs, as calculated in the table above.
Gathering Lines
Data prior to 2010 do not distinguish Type A from Type B gas gathering lines, so there is limited
data for the provision that extends OQ requirements to these lines. Using the available data from
2010-2012, there were 5 incidents involving the affected categories of onshore gas gathering
lines (Type A in Class 2 locations and Type B) during this period, with no injuries and a total of
$469,000 in property damage, or an average of about $156,000 per year.
As with the new construction provision, the precise share of incident consequences that could be
avoided through the extension of OQ programs is not known, but is believed to be significant
based on incident investigation experience. Using a 20% safety effectiveness rate for an
illustrative calculation, the OQ provisions related to gathering lines would prevent $31,200 in
incident consequences ($156,000 * 0.20) per year.
The OQ requirements may also help to prevent a high-consequence, low-probability event
caused by an error made by under-qualified personnel. While there have been no fatal incidents
with gathering lines in recent years, future years may experience greater risk exposure with
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April 30, 2014
onshore gathering lines, for example with the recent increases in gas and oil extraction activity in
areas such as North Dakota.
General
In addition to the specific benefits quantified above, there are numerous non-quantifiable
benefits to pipeline operations associated with general OQ requirements. These benefits, as
described in a 1999 Research and Special Programs Administration (RSPA) Final Rule,
11
include:
 Eliminating and correcting inadequate operating and maintenance procedures, thereby
potentially reducing system downtime
 Increasing the formal communications between operator and workers
 Increasing the attention and oversight on safety-related procedures
 Improving the documentation that ensures a qualified workforce
 Potentially lower costs for insurance and workers’ compensation, and reduced liability
exposure due to formalized qualification procedures.
While these benefits cannot be readily quantified, they could have a real impact in improving
both the safety and the efficiency of pipeline operations. Preventative measures to avoid high-
consequence incidents also help to maintain the public’s trust with the pipeline industry.
6.3.4 Special Permit Renewal
This section establishes a new set of administrative procedures to handle the renewal of Special
Permits. This is an agency procedural change with little or no quantifiable benefits.
6.3.5 Farm Taps
This section would remove farm taps from DIMP in favor of an alternative, less stringent
inspection program that is better suited to the relatively low risks associated with farm taps.
Because farm taps are already covered by Part 192 regulations and by the proposed new
maintenance requirements, PHMSA expects that there will be no adverse change in safety
outcomes from this change.
6.3.6 Reversal of Flow or Change in Product
Although this provision is expected to be used only infrequently, it is important for PHMSA to
be informed of any major changes to products transported and the direction of flow. In the event
of an incident, emergency responders need basic information about the commodity and the
direction of the flow in order to mitigate consequences and protect the public. Therefore, this
provision is expected to yield small safety benefits.
11 US DOT RSPA 1999 Docket No. RSPA–98–3783; Amendment 192–86; 195–67
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6.3.7 Control Room Team Training
Team training and exercises are well-established techniques that help to ensure that all control
center staff have the training, skills, incident protocols, and working relationships needed to
avoid incidents and to respond appropriately when incidents do occur. By explicitly requiring
that this training include not only controllers but also supervisors and others with whom they
may interface, PHMSA expects that safety benefits will accrue in the form of avoided pipeline
incidents and mitigated damages. These benefits are not readily quantifiable because PHMSA’s
incident database does not specifically track incidents related to control room interactions.
However, NTSB noted in its report on the July 2010 pipeline rupture in Marshall, Michigan, that
the lack of team training was a contributing factor to the severity of the incident. According to
NTSB, the operator in this case “failed to train control center staff in team performance, thereby
inadequately preparing the control center staff to perform effectively as a team when effective
team performance was most needed.”12
6.3.8 Editorial Amendments
This is minor correction with no direct safety benefits, though the improved clarity of regulations
helps to improve compliance.
6.3.9 Pipeline Assessment Tools
Safety benefits of this section stem from adopting specific technical standards to help operators
interpret existing requirements. This aids with compliance and ensures consistency across the
industry.
6.3.10 Electronic Reporting of Drug and Alcohol Testing Results
This is a change in the method of reporting and is not expected to yield quantifiable safety
benefits. However, electronic transmission and notification allows PHMSA to more readily
incorporate testing results into its safety analyses and investigations, and allows scarce resources
to be allocated to other activities rather than managing hardcopy filings.
6.3.11 Post-Accident Drug and Alcohol Testing
This change responds to NTSB recommendation P-11-12 to ensure that post-accident drug and
alcohol testing is administered where appropriate. In addition to slightly restating the existing
requirements, it also requires that operators document any decision not to administer a post-
accident drug test (as is required for alcohol tests). The safety benefits from this change relate to
incident investigation and root-cause analysis. Having documentation of why a drug test was not
administered in a particular case will provide incident investigators with more of the toxicology
12 National Transportation Safety Board, Pipeline Accident Report NTSB/PAR-12/01,
http://www.ntsb.gov/doclib/reports/2012/par1201.pdf
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information needed to identify the likely cause(s) of incidents that occur. This, in turn, helps to
identify trends and prevent future pipeline incidents.
6.3.12 Benefits Summary
As discussed in the sub-sections above, many of the proposed changes are too minor to support
quantification of benefits. However, PHMSA believes that updating regulations, removing
inconsistencies, providing clarification, and incorporating industry standards all help to improve
compliance with pipeline safety regulations and to reduce the likelihood of a serious pipeline
incident.
The proposed Operator Qualification (OQ) provisions more specifically ensure that pipeline
construction personnel and operations and maintenance personnel have the appropriate skills for
the functions they are performing. This would reduce the likelihood of human error-related
incidents, with benefits roughly estimated at $1.6 million per year for new construction and
$31,200 per year for gathering lines. OQ also has a range of intangible benefits including
improved operations and communications, as described in more detail above.
The proposed changes related to drug and alcohol testing also assist PHMSA, NTSB, and other
investigators in their efforts, by providing additional documentation of testing decisions. These
investigation help to prevent future pipeline incidents by identifying the causes of incidents that
occur.
7 Summary and Conclusion
This package of proposed regulatory changes would address errors and inconsistencies in the
current regulations, provide additional clarifications, and incorporate industry standards. The
proposed changes also address statutory requirements from the Pipeline Safety, Regulatory
Certainty, and Job Creation Act of 2011 (Public Law 112-90) and safety recommendations from
the NTSB, as well as petitions for rulemaking. Many of the proposed revisions are small
changes that would not lead to substantial changes in regulatory requirements, operator practices,
or overall costs and benefits.
Combining all of the proposed changes, annual compliance costs are estimated at approximately
$3.1 million, less savings to be realized from the removal of farm taps from the DIMP
requirements. Annual safety benefits cannot be quantified as readily due to data limitations, but
are in the range of $1.6 million per year in avoided incident costs, plus numerous intangible
benefits from the improved clarity and consistency of regulations and improved abilities to
conduct post-incident investigations. Although the quantified benefits do not exceed the
quantified costs, PHMSA believes that these non-quantified benefits are significant enough to
outweigh the costs of compliance. In particular, improvements to Operator Qualification and
post-incident investigation may prevent a future high-consequence event. At an annual
compliance cost of $3.1 million, the proposed new Operator Qualification and post-accident
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testing requirements would be cost-effective if they prevented a single fatal incident over a 3-
year period.
8 Initial Regulatory Flexibility Act Analysis
8.1 Reasons for Agency Action
PHMSA works to ensure the safety of the nation’s gas and hazardous liquid pipelines.
Government regulation of pipeline safety standards addresses the market failure of negative
externalities, namely the costs that pipeline incidents impose on other parties for which there
may be no market compensation. PHMSA’s safety regulations require periodic updating to
remove errors and inconsistencies, update technical standards that are incorporated by reference,
modify agency administrative procedures, and address gaps in existing safety requirements. The
proposed rule comprises a set of miscellaneous changes to the Pipeline Safety regulations, with
the goal of improving clarity, compliance, and overall safety.
8.2 Objectives of, and legal basis for, the proposed rule
The proposed rule is designed to enhance pipeline safety through a set of small improvements to
the Pipeline Safety Regulations. The ultimate objective is to lessen the frequency and societal
consequences of pipeline incidents, including property damage, environmental degradation,
personal injury, and loss of life. PHMSA’s overall mandate to regulate pipeline safety is set by
federal law under 49 USC 60102 et seq. More specifically, the proposed rule addresses several
statutory requirements from the Pipeline Safety, Regulatory Certainty, and Job Creation Act of
2011 (Public Law 112-90). Several provisions also address safety recommendations from the
National Transportation Safety Board, an independent Federal agency charged with investigating
serious transportation accidents and making safety recommendations.
8.3 Description and estimate of the number of small entities to which the proposed rule
would apply; projected reporting, recordkeeping and other compliance
requirements of the proposed rule and their impact on small entities
Affected entities for this proposed rule are owners and operators of gas and hazardous liquid
pipelines. Of the roughly 3,000 separate entities represented in PHMSA’s 2011 Annual Report,
about 2,700 would be considered small entities using the Small Business Administration (SBA)
size standard of having 500 employees or fewer.13
13 This is an estimate based on external Dun and Bradstreet company data, using SBA standards for the most
common North American Industry Classification System (NAICS) codes represented among PHMSA registrants,
including oil and gas extraction and gas distribution. The SBA standards vary by industry and include a mixture of
revenue-based and headcount-based standards. Moreover, the ability to classify an entity as small is constrained by
the limitations of the available data and the complexities of corporate structure; many registrants are owned by other
companies or are subdivisions of public agencies.
27

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April 30, 2014
As detailed in Section 6 above, several of the proposed changes affect only small subsets of the
overall pipeline industry. Others provisions affect the pipeline industry more broadly, but
consist of minor changes with little to no impact on overall compliance costs for affected entities.
The two provisions with quantifiable costs are Operator Qualification (OQ) and documentation
of post-accident drug tests.
The OQ provision is estimated to entail compliance costs in the range of $160 per employee per
year. Based on Bureau of Labor Statistics employment data, the average wage for pipefitters
(occupation code 47-2152) in the natural gas distribution industry is $26.76 per hour, or $55,660
per year. Therefore the OQ requirements would represent a 0.3% increase in labor costs, or
slightly less if other non-wage costs such as payroll taxes and benefits are included. Of the 109
registrants that would be newly subject to the OQ provisions for gathering lines, 94 have fewer
than 500 employees, and thus are considered “small entities” using the SBA standards for the
most common industries represented. The number of small entities that would be subject to the
OQ provisions for new construction cannot be estimated due to the limitations of the registration
data.
The post-accident drug testing provision would entail recordkeeping costs in the range of $74 per
incident. All 2,700 small entities would potentially be affected by this change. However,
pipeline incidents are relatively rare events and additional recordkeeping would only be required
in the event of a decision not to administer a post-accident drug test, so overall compliance costs
would be minimal.
8.4 Federal rules which may duplicate, overlap or conflict with the proposed rule
PHMSA believes that no other Federal rules duplicate, overlap, or conflict with the proposed
rule. In fact, many of the provisions are designed to eliminate inconsistencies in the existing
regulations.
8.5 Alternatives considered
In addition to the proposed package of regulatory updates, PHMSA considered a no-action
alternative in which no changes would be implemented. The no-action alternative was rejected
because it would not respond to the statutory requirements of the Act or to NTSB
recommendations, would allow for continued inconsistencies in regulations, and would result in
the continued imposition of unnecessary compliance costs without increasing public safety.
Because the proposed rule is focused on ensuring safety, has very small incremental compliance
costs, and does not have a significant economic impact on small entities, PHMSA did not
consider establishing different compliance or reporting requirements or timetables for small
entities.
8.6 Effect on the cost of credit
The proposed rule is not projected to increase the cost of credit for small entities in any way.
28

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April 30, 2014
8.7 Summary and conclusion
The proposed rule responds to requirements in the Pipeline Safety, Regulatory Certainty, and Job
Creation Act of 2011 and to NTSB recommendations. It would address errors and
inconsistencies in the current Pipeline Safety Regulations, update technical standards that are
incorporated by reference, modify agency administrative procedures, and address gaps in
existing safety requirements. The proposed rule could affect a substantial number of small
entities because of the market structure of the gas and hazardous liquids pipeline industry, which
includes many small entities. Approximately 2,700 small entities could be affected by at least
one portion of the rulemaking, with smaller numbers affected by particular provisions.
Estimated compliance costs indicate that these impacts would not be significant. The Operator
Qualification provision would entail new costs for small entities in the range of $160 per
employee per year, or about 0.3% of salary for a typical pipeline employee. The post-accident
drug testing provision would add $74 in documentation costs per reportable incident. The other
provisions would not add appreciable costs, and at least one provision (Farm Taps) would yield
compliance cost savings.
29

## Provenance

- Official: Yes
- Source: <https://downloads.regulations.gov/PHMSA-2013-0163-0004/attachment_1.pdf>
- Source ID: `regulations-gov`
- SHA-256: `d33dd43546aaf1f5d547d8c0fe91c7195c6598c2fc4e6b0387154a2710c4da9c`
- Retrieved: 2026-08-20T02:22:46.679Z
- Exported: 2026-08-27T08:31:31.729Z
- Document slug: `regulations-gov-attachment-0900006481b78740`

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