# Pipeline Safety: Pipeline Damage Prevention Programs

- **operation:** document
- **citation:** 77 FR 19800
- **title:** Pipeline Safety: Pipeline Damage Prevention Programs
- **source type:** rulemaking
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** proposed
- **official:** true
- **published on:** 2012-04-02
- **effective on:** Not available
- **summary:** This Notice of Proposed Rulemaking (NPRM) seeks to revise the Pipeline Safety Regulations to: Establish criteria and procedures for determining the adequacy of state pipeline excavation damage prevention law enforcement programs; establish an administrative process for making adequacy determinations; establish the Federal requirements PHMSA will enforce in states with inadequate excavation damage prevention law enforcement programs; and establish the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. Pursuant to the Pipeline Inspection, Protection, Enforcement, and Safety (PIPES) Act of 2006, establishment of review criteria for state excavation damage prevention law enforcement programs is a prerequisite should PHMSA find it necessary to conduct an enforcement proceeding against an excavator in the absence of an adequate enforcement program in the state where the violation occurs. The development of these criteria and the subsequent determination of the adequacy of state excavation damage prevention law enforcement programs is intended to encourage states to develop effective excavation damage prevention law enforcement programs to protect the public from the risk of pipeline ruptures caused by excavation damage, and allow for Federal administrative enforcement action in states with inadequate enforcement programs.
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Federal Register, Volume 77 Issue 63 (Monday, April 2, 2012) [Federal Register Volume 77, Number 63 (Monday, April 2, 2012)] [Proposed Rules] [Pages 19800-19834] From the Federal Register Online via the Government Publishing Office [ www.gpo.gov ] [FR Doc No: 2012-7550] [[Page 19799]] Vol. 77 Monday, No. 63 April 2, 2012 Part III Department of Transportation ----------------------------------------------------------------------- Pipeline and Hazardous Materials Safety Administration ----------------------------------------------------------------------- 49 CFR Parts 196 and 198 Pipeline Safety: Pipeline Damage Prevention Programs; Proposed Rule Federal Register / Vol. 77 , No. 63 / Monday, April 2, 2012 / Proposed Rules [[Page 19800]] ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration 49 CFR Parts 196 and 198 [Docket No. PHMSA-2009-0192] RIN 2137-AE43 Pipeline Safety: Pipeline Damage Prevention Programs AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation (DOT). ACTION: Notice of Proposed Rulemaking. ----------------------------------------------------------------------- SUMMARY: This Notice of Proposed Rulemaking (NPRM) seeks to revise the Pipeline Safety Regulations to: Establish criteria and procedures for determining the adequacy of state pipeline excavation damage prevention law enforcement programs; establish an administrative process for making adequacy determinations; establish the Federal requirements PHMSA will enforce in states with inadequate excavation damage prevention law enforcement programs; and establish the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. Pursuant to the Pipeline Inspection, Protection, Enforcement, and Safety (PIPES) Act of 2006, establishment of review criteria for state excavation damage prevention law enforcement programs is a prerequisite should PHMSA find it necessary to conduct an enforcement proceeding against an excavator in the absence of an adequate enforcement program in the state where the violation occurs. The development of these criteria and the subsequent determination of the adequacy of state excavation damage prevention law enforcement programs is intended to encourage states to develop effective excavation damage prevention law enforcement programs to protect the public from the risk of pipeline ruptures caused by excavation damage, and allow for Federal administrative enforcement action in states with inadequate enforcement programs. DATES: Persons interested in submitting written comments on this NPRM must do so by June 1, 2012. ADDRESSES: Comments should reference Docket Number PHMSA-2009-0192 and may be submitted in the following ways: Web Site: Comments should be filed at the Federal eRulemaking Portal, http://www.regulations.gov . Follow the online instructions for submitting comments. Fax: 1-202-493-2251. Mail: Docket Operations Facility (M-30), U.S. Department of Transportation, West Building, 1200 New Jersey Avenue SE., Washington, DC 20590. Hand Delivery: Docket Operations Facility, U.S. Department of Transportation, West Building, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590 between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Instructions: Identify the docket number, PHMSA-2009-0192, at the beginning of your comments. If you mail your comments, we request that you send two copies. To receive confirmation that PHMSA received your comments, include a self-addressed stamped postcard. Note: Comments are posted without changes or edits to http://www.regulations.gov , including any personal information provided. There is a privacy statement published on http://www.regulations.gov . FOR FURTHER INFORMATION CONTACT: Sam Hall, Program Manager, PHMSA by email at [email protected] or by telephone at (804) 556-4678 or Larry White, Attorney Advisor, PHMSA by email at [email protected] or by telephone at (202) 366-9093. SUPPLEMENTARY INFORMATION: I. Executive Summary This NPRM proposes to amend the Federal Pipeline Safety Regulations to: (1) Establish criteria and procedures PHMSA will use to determine the adequacy of state pipeline excavation damage prevention law enforcement programs. Such determination is a prerequisite should PHMSA find it necessary to conduct an administrative enforcement proceeding against an excavator for violation of the Federal requirements proposed in this NPRM in the absence of adequate state enforcement of state excavation damage prevention laws; (2) establish an administrative process for states to contest notices of inadequacy from PHMSA should they elect to do so; (3) establish the Federal requirements PHMSA will enforce in states with inadequate excavation damage prevention law enforcement programs; and (4) establish the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. In the absence of regulations specifying the criteria that PHMSA will use to evaluate a state's excavation damage prevention law enforcement program, PHMSA would take no enforcement action. Executive Orders 12866 and 13563 require agencies to regulate in the ``most cost-effective manner,'' to make a ``reasoned determination that the benefits of the intended regulation justify its costs,'' and to develop regulations that ``impose the least burden on society.'' The expected benefit of this rulemaking action is an increased deterrent to violations of one-call requirements (though requirements vary by state, a one-call system allows excavators to call one number in a given state in order to ascertain the presence of underground utilities) requirements and the attendant reduction in pipeline incidents and accidents caused by excavation damage. Based on incident reports submitted to PHMSA, failure to use an available one-call system is a known cause of pipeline accidents. PHMSA analyzed the costs and benefits of the proposed rule. To determine the benefits, PHMSA was able to obtain data for three states over the course of the establishment of their excavation damage prevention programs (additional information about these states can be found in the regulatory analysis that is in the public docket). Each of the three states had a decrease of at least 63 percent in the number of excavation damage incidents occurring after they initiated their enforcement programs. While many factors can contribute to the decrease in state excavation damage incidents, PHMSA found these states to be a helpful starting point on which to estimate the benefits of this rulemaking. PHMSA utilized three separate effectiveness rates to conservatively evaluate the benefits of this rulemaking. The rates are based on the reduction of incidents of the three states studied and more conservative effective rates because state pipeline programs vary widely, which may lead to a lower effective rate than the three states analyzed. In addition, we compared the overall costs of this rule to the average costs associated with a single excavation damage incident. PHMSA expects the total cost of this rule to be $1.2 million while the benefits are $23 million.\1\ --------------------------------------------------------------------------- \1\ These numbers are discounted over 10 years at 7%. --------------------------------------------------------------------------- This rulemaking has three separate potential cost impacts. The costs to excavators to comply with the Federal excavation standard, the cost to states to have their enforcement programs reviewed, to appeal a determination of ineffectiveness and to ask for reconsideration, and the cost impact on the Federal government to enforce the Federal excavation standard. With [[Page 19801]] regard to the potential cost impacts on excavators, PHMSA believes that excavators will not incur any additional costs because the Federal excavation standard, which is also a self-executing standard, mirrors the excavation standard in each state and does not impose any additional costs on excavators. The cost impacts on states are those costs associated with having their enforcement programs reviewed (estimated to be $20,000 per year), to appeal a determination of ineffectiveness (estimated to be a one time cost of $125,000) and to ask for reconsideration (estimated to be a one-time cost of $350,000). Therefore, the total estimated first year cost impacts on states are (($20,000 (annually) + (14 x $25,000) + (5 x $25,000)) = $495,000. The annual cost impacts on states in subsequent years are estimated to be $20,000. The annual cost impacts on the Federal government are estimated to be approximately $80,000. Therefore, the total first year cost of this rulemaking is estimated to be $547,688 ($470,000 + $77,688). The following years the costs are estimated to be approximately $100,000 per year. The total cost over ten years, with a 3% discount rate is $1,331,876 and at a 7% discount rate is $1,182,602. PHMSA is specifically asking for comments on whether it has adequately captured the scope and size of the costs of this rulemaking. The average annual benefits range from $10,939,602 to $3,445,975. Evaluating just the lower range of benefits over ten years results in a total benefit of over $29,000,000, with a 3% discount rate, and over $23,000,000, with a 7% discount rate. In addition, over the past 22 years, the average reportable incident caused $272,200 in property damage alone. Therefore, if this proposed regulatory action prevents just one average reportable incident per year, this rulemaking would be cost beneficial. Interested readers should refer to the Regulatory Evaluation that is posted in the docket for additional information. II. Objective Based on incident data PHMSA has received from pipeline operators, excavation damage is a leading cause of natural gas and hazardous liquid pipeline failure incidents.\2\ Better, more effective enforcement of state excavation damage prevention laws is a key to reducing pipeline excavation damage incidents. Though all states have a damage prevention program, not all states adequately enforce their state damage prevention laws. Pursuant to the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 (PIPES Act), PHMSA is proposing criteria and procedures for determining whether a state's enforcement of its excavation damage prevention laws is adequate. As mandated by the PIPES Act, such determination is a prerequisite should PHMSA find it necessary to conduct an administrative enforcement proceeding against an excavator for violating Federal excavation standards. This NPRM also proposes to establish the administrative process for states to contest notices of inadequacy PHMSA issues, the Federal requirements PHMSA will enforce in states with inadequate enforcement programs, and the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. --------------------------------------------------------------------------- \2\ Data from the U.S. Department of Transportation, PHMSA Office of Pipeline Safety, Incident and Accident Reports of Gas Distribution, Gas Transmission & Gathering and Hazardous Liquid Pipeline Systems. Pipeline incident and accident summaries are available on PHMSA Stakeholders Communication Web site at: http://primis.phmsa.dot.gov/comm/Index.htm?nocache=3320 . --------------------------------------------------------------------------- III. Background A. Pipeline Incidents Caused by Excavation Damage Excavation damage is a leading cause of natural gas and hazardous liquid pipeline failure incidents. For the period from 1988 to 2010, 1,613 incidents, 185 fatalities, 697 injuries, and $438,785,552 in estimated property damages were reported as being caused by excavation damage on all PHMSA regulated pipeline systems in the United States, including onshore and offshore hazardous liquid, gas transmission, and gas distribution lines, except gathering lines.\3\ --------------------------------------------------------------------------- \3\ Data from the U.S. Department of Transportation, PHMSA Office of Pipeline Safety, Incident and Accident Reports of Gas Distribution, Gas Transmission & Gathering and Hazardous Liquid Pipeline Systems. Pipeline incident and accident summaries are available on PHMSA Stakeholders Communication Web site at: http://primis.phmsa.dot.gov/comm/Index.htm?nocache=3320 . --------------------------------------------------------------------------- While excavation damage is the cause in a significant portion of all pipeline failure incidents, it is cited as the cause in a relatively higher portion of natural gas distribution incidents. To look at this issue, PHMSA initiated and sponsored in 2005 an investigation of the risks and threats to gas distribution systems. This investigation was conducted through the efforts of four joint work/study groups, each of which included representatives of the stakeholder public, the gas distribution pipeline industry, state pipeline safety representatives, and PHMSA. The areas of their investigations included excavation damage prevention. The Integrity Management for Gas Distribution, Report of Phase I Investigations (DIMP Report) was issued in December 2005.\4\ As noted in the DIMP Report, the Excavation Damage Prevention work/study group reached four key conclusions. --------------------------------------------------------------------------- \4\ This report is available in the rulemaking docket. --------------------------------------------------------------------------- Excavation damage poses by far the single greatest threat to distribution system safety, reliability and integrity; therefore, excavation damage prevention presents the most significant opportunity for distribution pipeline safety improvements. States with comprehensive damage prevention programs that include effective enforcement have a substantially lower probability of excavation damage to pipeline facilities than states that do not. The lower probability of excavation damage translates to a substantially lower risk of serious incidents and consequences resulting from excavation damage to pipelines. A comprehensive damage prevention program requires nine important elements be present and functional for the program to be effective. All stakeholders must participate in the excavation damage prevention process. The elements are: 1. Enhanced communication between operators and excavators. 2. Fostering support and partnership of all stakeholders in all phases (enforcement, system improvement, etc.) of the program. 3. Operator's use of performance measures for persons performing locating of pipelines and pipeline construction. 4. Partnership in employee training. 5. Partnership in public education. 6. Enforcement agencies' role as partner and facilitator to help resolve issues. 7. Fair and consistent enforcement of the law. 8. Use of technology to improve all parts of the process. 9. Analysis of data to continually evaluate/improve program effectiveness. Federal legislation is needed to support the development and implementation of damage prevention programs that include effective enforcement as a part of the state's pipeline safety program. This is consistent with the objectives of the state pipeline safety programs, which are to ensure the safety of the public by addressing threats to the distribution [[Page 19802]] infrastructure. The legislation will not be effective unless it includes provisions for ongoing funding such as federal grants to support these efforts. This funding is intended to be in addition to, and independent of, existing federal funding of state pipeline safety programs. Another recent report (Mechanical Damage Report) prepared on behalf of PHMSA \5\ concluded that excavation damage continues to be a leading cause of serious pipeline failures and that better one-call enforcement is a key gap in damage prevention. In that regard, the Mechanical Damage Report noted that most jurisdictions have established laws to enforce one-call notification compliance; however, the report noted that many pipeline operators consider lack of enforcement to be degrading the effectiveness of one-call programs. The report cited that in Massachusetts, 3,000 violation notices were issued from 1986 to the mid-1990s, contributing to a decrease of third-party damage incidents on all types of facilities from 1,138 in 1986 to 421 in 1993. The report also cited findings from another study that enforcement of the one-call notification requirement was the most influential factor in reducing the probability of pipeline strikes and that the number of pipeline strikes is proportionate to the degree of enforcement. --------------------------------------------------------------------------- \5\ Mechanical Damage Final Report, Michael Baker Jr., Inc., April 2009. --------------------------------------------------------------------------- With respect to the effectiveness of current regulations, the Mechanical Damage Report stated that an estimated two-thirds of pipeline excavation damage is caused by third parties and found that the problem is compounded if the pipeline damage is not promptly reported to the pipeline operator so that corrective action can be taken. It also noted ``when the oil pipeline industry developed the survey for its voluntary spill reporting system--known as the Pipeline Performance Tracking System (PPTS)--it recognized that damage to pipelines, including that resulting from excavation, digging, and other impacts, is also precipitated by operators (``first parties'') and their contractors (``second parties'')''. Finally, the report found that for some pipeline excavation damage data that was evaluated, ``in more than 50 percent of the incidents, one-call associations were not contacted first'' and that ``failure to take responsible care, to respect the instructions of the pipeline personnel, and to wait the proper time accounted for another 50 percent of the incidents.'' B. State Damage Prevention Programs There is considerable variability among the states in terms of physical geography, population density, underground infrastructure, excavation activity, and economic activity. For example, South Dakota is a rural, agricultural state with a relatively low population density. In contrast, New Jersey is more densely populated and is host to a greater variety of land uses, denser underground infrastructure, and different patterns of excavation activity. These differences between states equate to differences in the risk of excavation damage to underground infrastructure, including pipelines. Denser population often means denser underground infrastructure; more rural and agricultural states will have different underground infrastructure densities and excavation patterns than more urbanized states. There is no single, comprehensive national damage prevention law. On the contrary, all 50 states in the United States have a law designed to prevent excavation damage to underground utilities. However, these state laws vary considerably and no two state laws are identical. Therefore, excavation damage prevention stakeholders in each state are subject to different legal and regulatory requirements. Variances in state laws include excavation notice requirements, damage reporting requirements, exemptions from the requirements of the laws for excavators and/or utility operators, provisions for enforcement of the laws, and many others. PHMSA has developed a reference for understanding the variability in these state laws at http://primis.phmsa.dot.gov/comm/DamagePreventionSummary.htm . C. PHMSA Damage Prevention Efforts PHMSA has made extensive efforts over many years to improve excavation damage prevention as it relates to pipeline safety. These efforts have included outreach, grants, and funding of cooperative agreements with a wide spectrum of excavation damage prevention stakeholders including: Public and community organizations. Excavators and property developers. Emergency responders. Local, state and Federal government agencies. Pipeline and other underground facility operators. Industry trade associations. Consensus standards organizations. Environmental organizations. These initiatives are described in detail in the ANPRM on this subject that PHMSA published in the Federal Register on October 29, 2009 (74 FR 55797). The ANPRM can be viewed at http://www.regulations.gov , Docket ID PHMSA-2009-0192. These initiatives appear to have contributed to an overall decline in the rate of excavation damages to pipelines and other underground utilities, but PHMSA is unaware of any studies of the direct effect of these initiatives on the national excavation damage rate to pipelines. PHMSA invites comments regarding any studies that might have evaluated the effectiveness of these initiatives. D. The Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 On December 29, 2006, the PHMSA's pipeline safety program was reauthorized by enactment of the PIPES Act. The PIPES Act provides for enhanced safety and environmental protection in pipeline transportation, enhanced reliability in the transportation of the Nation's energy products by pipeline, and other purposes. Major portions of the PIPES Act were focused on damage prevention including additional resources and clear program guidelines as well as additional enforcement authorities to encourage states in developing effective excavation damage prevention programs. The PIPES Act identifies nine elements that effective damage prevention programs should include. These are, essentially, identical to those nine elements noted in the DIMP Report discussed in the previous subsection. The PIPES Act also provided PHMSA with limited authority to conduct administrative civil enforcement proceedings against excavators who damage pipelines in a state that has failed to adequately enforce its excavation damage prevention laws. Specifically, Section 2 of the PIPES Act provides that the Secretary of Transportation may take civil enforcement action against excavators who: 1. Fail to use the one-call notification system in a state that has adopted a one-call notification system before engaging in demolition, excavation, tunneling, or construction activity to establish the location of underground facilities in the demolition, excavation, tunneling, or construction area; 2. Disregard location information or markings established by a pipeline facility operator while engaging in demolition, excavation, tunneling, or construction activity; and 3. Fail to report excavation damage to a pipeline facility to the owner or operator of the facility promptly, and report to other appropriate authorities [[Page 19803]] by calling the 911 emergency telephone number if the damage results in the escape of any flammable, toxic, or corrosive gas or liquid that may endanger life or cause serious bodily harm or damage to property. The PIPES Act limited the Secretary's ability to take civil enforcement action against these excavators, unless the Secretary has determined that the state's enforcement of its damage prevention laws is inadequate to protect safety. The following is the applicable citation from the PIPES Act: SEC. 2. PIPELINE SAFETY AND DAMAGE PREVENTION. (a) ONE CALL CIVIL ENFORCEMENT.-- (1) PROHIBITIONS.--Section 60114 is amended by adding at the end the following: (d) PROHIBITION APPLICABLE TO EXCAVATORS.--A person who engages in demolition, excavation, tunneling, or construction-- (1) May not engage in a demolition, excavation, tunneling, or construction activity in a state that has adopted a one-call notification system without first using that system to establish the location of underground facilities in the demolition, excavation, tunneling, or construction area; (2) May not engage in such demolition, excavation, tunneling, or construction activity in disregard of location information or markings established by a pipeline facility operator pursuant to subsection (b); and (3) Who causes damage to a pipeline facility that may endanger life or cause serious bodily harm or damage to property-- (A) May not fail to promptly report the damage to the owner or operator of the facility; and (B) If the damage results in the escape of any flammable, toxic, or corrosive gas or liquid, may not fail to promptly report to other appropriate authorities by calling the 911 emergency telephone number. (e) PROHIBITION APPLICABLE TO UNDERGROUND PIPELINE FACILITY OWNERS AND OPERATORS.--Any owner or operator of a pipeline facility who fails to respond to a location request in order to prevent damage to the pipeline facility or who fails to take reasonable steps, in response to such a request, to ensure accurate marking of the location of the pipeline facility in order to prevent damage to the pipeline facility shall be subject to a civil action under section 60120 or assessment of a civil penalty under section 60122. (f) LIMITATION.--The Secretary may not conduct an enforcement proceeding under subsection (d) for a violation within the boundaries of a state that has the authority to impose penalties described in section 60134(b)(7) against persons who violate that state's damage prevention laws, unless the Secretary has determined that the state's enforcement is inadequate to protect safety, consistent with this chapter, and until the Secretary issues, through a rulemaking proceeding, the procedures for determining inadequate state enforcement of penalties. E. Advance Notice of Proposed Rulemaking On October 29, 2009, PHMSA published an Advance Notice of Proposed Rulemaking (ANPRM) to seek feedback and comments regarding the development of criteria and procedures for determining whether states are adequately enforcing their excavation damage prevention laws, and for conducting Federal administrative enforcement, if necessary. The ANPRM also outlined PHMSA's excavation damage prevention initiatives and described the requirements of the PIPES Act, which authorizes PHMSA to conduct this rulemaking action. The ANPRM may be viewed at http://www.regulations.gov by searching for Docket ID PHMSA-2009-0192. Specifically, the ANPRM sought comments on the following subjects: 1. Criteria for determining the adequacy of state excavation damage prevention law enforcement programs; 2. The administrative procedures available to a state for contesting a notice of inadequacy should it receive one; 3. The Federal requirements for excavators that PHMSA would be enforcing in a state that PHMSA has determined to have an inadequate enforcement program; 4. The adjudication process that PHMSA would use if PHMSA cited an excavator for failure to comply with the Federal requirements for excavators PHMSA establishes through this rulemaking; and 5. The adequacy of PHMSA's existing requirements for pipeline operators to participate in one-call organizations, respond to dig tickets, and perform their locating and marking responsibilities. A summary of comments and our response to those comments are provided later in the document. F. Notice of Proposed Rulemaking This NPRM proposes to respond to the Congressional mandate specified in Section 2 of the PIPES Act to: 1. Establish criteria and procedures PHMSA will use to determine the adequacy of state pipeline excavation damage prevention law enforcement programs. Such determination is a prerequisite should PHMSA find it necessary to conduct an administrative enforcement proceeding against an excavator for violation of the Federal requirements proposed in this NPRM in the absence of adequate state enforcement of state excavation damage prevention laws. 2. Establish an administrative process for states to contest notices of inadequacy from PHMSA should they elect to do so. 3. Establish the Federal requirements PHMSA will enforce in states with inadequate excavation damage prevention law enforcement programs. 4. Establish the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. G. Summary of the Proposed Rulemaking A. Standards for Effective State Damage Prevention Enforcement Programs This NPRM proposes to establish the criteria by which PHMSA will evaluate state excavation damage prevention law enforcement programs for minimum adequacy to protect public safety. PHMSA is seeking comments on using the following criteria to evaluate the effectiveness of a state's damage prevention enforcement program: 1. Does the state have the authority to enforce its state excavation damage prevention law through civil penalties? 2. Has the state designated a state agency or other body as the authority responsible for enforcement of the state excavation damage prevention law? 3. Is the state assessing civil penalties for violations at levels sufficient to ensure compliance and is the state making publicly available information that demonstrates the effectiveness of the state's enforcement program? 4. Does the enforcement authority (if one exists) have a reliable mechanism (e.g., mandatory reporting, complaint-driven reporting, etc.) for learning about excavation damage to underground facilities? 5. Does the state employ excavation damage investigation practices that are adequate to determine the at-fault party when excavation damage to underground facilities occurs? 6. At a minimum, does the state's excavation damage prevention law require the following? a. Excavators may not engage in excavation activity without first using an available one-call notification system to establish the location of underground facilities in the excavation area. b. Excavators may not engage in excavation activity in disregard of the marked location of a pipeline facility as established by a pipeline operator. c. An excavator who causes damage to a pipeline facility: i. Must report the damage to the owner or operator of the facility at the earliest practical moment following discovery of the damage; and, ii. If the damage results in the escape of any flammable, toxic, or corrosive gas [[Page 19804]] or liquid that may endanger life or cause serious bodily harm or damage to property, must promptly report to other appropriate authorities by calling the 911 emergency telephone number or another emergency telephone number. 7. Does the state limit exemptions for excavators from its excavation damage prevention law? A state must provide to PHMSA a written justification for any exemptions for excavators from state damage prevention requirements. PHMSA will make the written justifications available to the public. PHMSA may also consider individual enforcement actions taken by a state in evaluating the effectiveness of a state's damage prevention enforcement program. PHMSA requests comments on this issue. PHMSA invites comments on the proposed criteria. In particular, are these criteria sufficient to assess the adequacy of state excavation damage prevention law enforcement programs? Do these criteria strike the right balance between establishing standards for minimum adequacy of state enforcement programs without being overly prescriptive? B. Administrative Process for States This NPRM proposes the administrative procedures that would be available to a state that elects to contest a notice of inadequacy. The proposed procedures involve a paper hearing where PHMSA finds the state's excavation damage prevention law enforcement inadequate and documents the basis for that finding (i.e., following its annual review of the state's pipeline safety program). Then, the state would have an opportunity to submit written materials and explanations. PHMSA would then make a final written determination including the reasons for the decision. PHMSA proposes to make publicly available all notices, findings and determinations. The proposed administrative procedures also provide for an opportunity for the state to petition for reconsideration of the decision. If the state's enforcement program is ultimately deemed inadequate, direct Federal administrative enforcement against an excavator who damaged a pipeline in that state could proceed. The procedures also give a state the opportunity to demonstrate at a later time that it has improved its excavation damage prevention law enforcement program to an adequate level and upon such showing, request that PHMSA discontinue Federal administrative enforcement in that state. PHMSA will respond to such requests and perform an adequacy review in a timely manner and no later than the next annual review. PHMSA invites further comments on these proposed administrative procedures. In particular, does this process strike the right balance between Congress' direction to undertake Federal administrative enforcement, where necessary, while providing a state with a fair and efficient means of showing that the state's enforcement program is adequate? PHMSA is proposing to evaluate state excavation damage prevention law enforcement programs consistent with the criteria proposed in Section 198.55 below. For states that have been deemed to have inadequate enforcement programs in their most recent annual reviews and in accordance with the established process, PHMSA could conduct Federal administrative enforcement against excavators without further state process. A state with an inadequate program will have five years from the date of the finding to make program improvements that meet PHMSA's criteria for minimum adequacy. A state that fails to establish an adequate enforcement program in accordance with 49 CFR 198.55 within five years of the finding of inadequacy may be subject to reduced grant funding established under 49 U.S.C. 60107. The amount of the reduction will be determined using the same process PHMSA currently uses to distribute the grant funding; PHMSA will factor the findings from the annual review of the excavation damage prevention enforcement program into the 49 U.S.C. 60107 grant funding distribution to state pipeline safety programs. The amount of the reduction in 49 U.S.C. 60107 grant funding shall not exceed 10% of prior year funding. If a state fails to implement an adequate enforcement program within five years of a finding of inadequacy, the Governor of that state may petition the Administrator of PHMSA, in writing, for a temporary waiver of the penalty, provided the petition includes a clear plan of action and timeline for achieving program adequacy. Even though the proposed rule does not require states to take any actions, the states have several incentives for enforcing their own excavation damage prevention laws. First, states with effective enforcement programs have lower rates of excavation damages to underground utilities, including pipelines. Lower damage rates translate to increased public and worker safety and decreased repair and outage costs for pipeline operators. This proposed rule provides several additional incentives for states to enforce their own excavation damage prevention laws. First, in the comments to the ANPRM on this subject, stakeholders expressed their desire for states to maintain control over their own excavation damage prevention programs, including the enforcement of damage prevention laws. Stakeholders agree that damage prevention is a local and state issue and would prefer to avoid Federal involvement in enforcement. Second, this NPRM proposes to reduce PHMSA base grant funding for state pipeline safety programs if states do not implement effective enforcement programs within five years of findings of inadequacy (see proposed section 198.53). The potential reduction in grant funding will provide incentive to the state to address enforcement gaps in the excavation damage prevention laws and programs. PHMSA specifically requests comments on the adequacy of these incentives and the need for additional incentives for states to enforce their own excavation damage prevention laws. Currently, states are reevaluating their pipeline safety laws. Several states, including Washington and Maryland, made significant changes to their damage prevention laws subsequent to the ANPRM on this subject. In addition, the following states are in various stages of legislative efforts to incorporate effective enforcement into their laws (these efforts range from stakeholder meetings, to building support for drafting legislation, to actually having a bill before the state legislatures): California, Ohio, Michigan, Alabama, Mississippi, Montana, Florida, Kentucky, and Delaware. C. Federal Excavation Standard This NPRM proposes to add a new Part 196 to Title 49, Code of Federal Regulations that prescribes standards for excavators to follow in conducting excavation activities in areas where underground gas or hazardous liquid pipelines may be located and the administrative enforcement process to address violations of the standards. The Federal requirements PHMSA is proposing to be contained in this Part are the standards that PHMSA would enforce against excavators in states determined to have inadequate damage prevention law enforcement programs pursuant to the procedures proposed in this rulemaking. The standard that PHMSA is proposing are effectively equivalent to the standard in 49 U.S.C. 60114(d) which states: (d) Prohibition applicable to excavators.--A person who engages in demolition, excavation, tunneling, or construction-- (1) May not engage in a demolition, excavation, tunneling, or construction [[Page 19805]] activity in a state that has adopted a one-call notification system without first using that system to establish the location of underground facilities in the demolition, excavation, tunneling, or construction area; (2) May not engage in such demolition, excavation, tunneling, or construction activity in disregard of location information or markings established by a pipeline facility operator pursuant to subsection (b); and (3) Who causes damage to a pipeline facility that may endanger life or cause serious bodily harm or damage to property-- (A) May not fail to promptly report the damage to the owner or operator of the facility; and (B) If the damage results in the escape of any flammable, toxic, or corrosive gas or liquid, may not fail to promptly report to other appropriate authorities by calling the 911 emergency telephone number. The NPRM proposes to add new excavation standards that include requirements to use an available one-call system before digging, to excavate with proper regard for location information or markings established by a pipeline operator, to promptly report any damage to the pipeline operator, and to report any emergency release of hazardous products to appropriate authorities by calling 911 immediately. PHMSA is seeking comment in this NPRM on whether or not it should establish an upper limit on the time frame to report any damage to pipeline operators, such as two hours following discovery. D. Adjudication Process for Excavators PHMSA is proposing to use the same adjudication process established for pipeline safety violations set forth in 49 CFR Part 190. Under this process, excavators would have the same right as pipeline operators to: Receive written notice of the allegations including a description of the factual evidence the allegations are based on, file a written response to the allegations, request a hearing, be represented by counsel if the excavator so chooses, examine the evidence, submit relevant information and call witnesses on the excavator's behalf, and otherwise contest the allegations of violation. PHMSA proposes that hearings would be held as they are now for pipeline operators at one of PHMSA's regional offices or via teleconference. An excavator would also have the same op
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