{"operation":"document","citation":"PI-22-0007","title":"New Fortress Energy — Pipeline Safety Interpretation","source_type":"guidance","agency":"Pipeline and Hazardous Materials Safety Administration","status":"guidance","official":true,"published_on":"2022-06-14","effective_on":null,"summary":"PI-22-0007 response to New Fortress Energy concerning 192.1.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-22-0007.json","markdown":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-22-0007.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-interpretation-pi-22-0007","source_url":"https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/standards-rulemaking/pipeline/interpretations/76546/new-fortress-energy-pi-22-0007-6-10-2022-part1921.pdf","body":"<<<PAGE 1>>>\n\nU.S. Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety\nAdministration\n1200 New Jersey Avenue, SE\nWashington, DC 20590\nJune 10, 2022\nMr. Brannen McElmurray\nNew Fortress Energy\n111 W 19th Street, 8th Floor\nNew York, NY 10011\nDear Mr. McElmurray:\nIn a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA), dated\nMarch 28, 2022, you requested an interpretation of the Federal pipeline safety regulations in\n49 Code of Federal Regulations (CFR) Part 192 with respect to the applicability of § 192.1 for a\npipeline connecting a micro-fuel handling facility (facility) to the Puerto Rico Electric Power\nAuthority power plant in San Juan, Puerto Rico.\nYou stated that the facility receives liquefied natural gas (LNG) from a vessel and then vaporizes\nthe LNG into gas which flows through a 75-foot length pipeline that connects the facility to the\npower plant. The 75-foot length pipeline operates at a hoop stress of greater than 20 percent of\nspecified minimum yield strength (SMYS), and there is no LNG storage within the facility. You\nreferred to an August 2010 PHMSA interpretation letter to the Illinois Commerce Commission to\nsupport your opinion that the 75-foot length pipeline from the source of natural gas to the power\nplant is not regulated by the Federal pipeline safety regulations. You ask PHMSA’s\ninterpretation whether your 75-foot length pipeline is subject to the 49 CFR Part 192\nrequirements.\nIn response to your request the following definitions from § 192.3 are reprinted:\nOperator means a person who engages in the transportation of gas.\nTransmission line means a pipeline, other than a gathering line, that:\n(1) Transports gas from a gathering line or storage facility to a distribution center,\nstorage facility, or large volume customer that is not down-stream from a distribution\ncenter;\n(2) operates at a hoop stress of 20 percent or more of SMYS; or\n(3) transports gas within a storage field.\nNOTE: A large volume customer may receive similar volumes of gas as a distribution\ncenter, and includes factories, power plants, and institutional users of gas.\nThe Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR\nParts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts\npresented by the person requesting the clarification. Interpretations are not generally applicable, do not create legally-enforceable rights or\nobligations, and are provided to help the specific requestor understand how to comply with the regulations.\n\n<<<PAGE 2>>>\n\n2\nYour interpretation request heavily relies on PHMSA’s 2010 interpretation to the Illinois\nCommerce Commission. As we noted in that interpretation, the letter reflected the agency's\ncurrent application of the regulations to the specific facts presented by the person requesting the\nclarification without legally enforceable rights or obligations. The 2010 interpretation addressed\nquestions regarding the ultimate consumer and pipelines within the consumer’s properties,\nincluding in-plant piping. PHMSA is consistent in applying regulatory requirements to pipelines\nup to the point where pressure control changes from the pipeline operator to the consumer\nfacility which can be on the grounds of the facility.\nUnlike the facts presented in the 2010 interpretation, New Fortress Energy is not the end user of\nthe gas, and its pipeline is not used to move gas between its own facilities. New Fortress Energy\nis transporting gas from its source to the ultimate consumer (i.e., the power plant) who purchases\nthe gas. Therefore, New Fortress Energy is engaged in the transportation of gas by pipeline.\nThe regulatory requirement for the pipeline operator ends at the point where the gas transmission\npipeline delivers gas or transfers gas to an end user (customer or power plant) at the power\nplant’s facility which could be on the grounds of the power plant facility. The New Fortress\nEnergy pipeline from the source of gas (vaporizers outlet piping) to the point where it delivers\ngas to the power plant facility is regulated by the Federal pipeline safety regulations as a\ntransmission line based on the § 192.3 ((2) operates at a hoop stress of 20 percent or more of\nSMYS) definition of a transmission line.\n1\nIf we can be of further assistance, please contact Tewabe Asebe at 202-366-5523.\nSincerely,\nJohn A. Gale\nDirector, Office of Standards\nand Rulemaking\n1 New Fortress Energy stated in its interpretation request to PHMSA that the pipeline operates at or above 20 percent\nSMYS.\nThe Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR\nParts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts\npresented by the person requesting the clarification. Interpretations are not generally applicable, do not create legally-enforceable rights or\nobligations, and are provided to help the specific requestor understand how to comply with the regulations.\n\n<<<PAGE 3>>>\n\n111 W 19TH STREET, 8TH FLOOR\nNEW YORK, NY 10011\nMarch 28, 2022\nVia Email and FedEx\nAlan Mayberry\nAssociate Administrator, Office of Pipeline Safety\nU.S. Department of Transportation\nPipeline and Hazardous Materials Safety\nAdministration\n1200 New Jersey Avenue, SE\nWashington, DC 20590\nRe: Request for Part 192 Jurisdiction Interpretation\nDear Mr. Mayberry:\nThis is a request for an interpretation regarding NFEnergía LLC’s (“NFE”) 75-foot piping\nconnecting the Micro-Fuel Handling Facility (the “Facility”) located in San Juan, Puerto Rico to\nthe Puerto Rico Electric Power Authority (“PREPA”) San Juan Power Plant that is geographically\ncontiguous.\nPursuant to 49 C.F.R. 190.11(b), we hereby submit a request for an interpretation from the\nPipeline and Hazardous Materials Safety Administration (“PHMSA”) that the 75-foot piping that\nconnects our vaporizers to the geographically contiguous PREPA property is not subject to 49\nC.F.R. Part 192 because the delivery of vaporized natural gas to PREPA’s San Juan Power Plant\nis not a “transportation of natural gas” as PHMSA has historically interpreted that term. As\nPHMSA requested, NFE is simultaneously submitting a notification under 49 C.F.R. 191.22\nseeking an operator identification number for the Facility, and it looks forward to engaging with\nyour team on that process while PHMSA considers our request for an interpretation.\nRegulatory Language Assessment\nBy way of background, NFE notes that the term “Pipeline Facilities” means new and\nexisting pipelines, rights-of-way, and any equipment, facility, or building used in the\ntransportation of gas or in the treatment of gas during the course of transportation (49 CFR 192.3).\nA pipeline means all parts of those physical facilities through which gas moves in transportation,\nincluding pipes, valves, and other appurtenances attached to pipe, compressor units, metering\nstations, regulator stations, delivery stations, etc. (49 CFR 192.3). The regulations define\ntransportation to mean the gathering, transmission, or distribution of gas by pipeline or the storage\nof gas, in or affecting interstate or foreign commerce (49 CFR 192.3).\nFrom our discussions with Director McDaniel of the Southwest Region, we understand that\nPHMSA is asserting that the 75-foot line connecting the Facility to the immediately adjacent San\nJuan Power Plant is a transmission line within the meaning of 49 C.F.R. 192.3. A transmission\n\n<<<PAGE 4>>>\n\n111 W 19TH STREET, 8TH FLOOR\nNEW YORK, NY 10011\nline is a pipeline, other than a gathering line, that (1) transports gas from a gathering line or storage\nfacility to a distribution center, storage facility, or large volume customer that is not down-stream\nfrom a distribution center; (2) operates at a hoop stress of 20 percent or more of specified minimum\nyield stress (“SMYS”); or (3) transports gas within a storage field (49 CFR 192.3). As we\nexplained, the Facility receives LNG from a vessel, has no on-site storage, and is not located within\na “storage field”; however, the line does currently operate at a hoop stress of more than 20 percent\nof SMYS.\nNevertheless, the delivery of the natural gas within 75 feet of process piping to the property\nline of the PREPA San Juan Power Plant does not move in “transportation” within the meaning of\nthat term as PHMSA has historically applied it. Indeed, as we discussed, PHMSA advised a state\nregulator in 2010 that its Part 192 regulations did not reach piping operated in very similar\ncircumstances. NFE acknowledges your view that the circumstances at issue for the Facility are\nnot similar to what was at issue in that 2010 letter. What follows will explain NFE’s view as to\nwhy this interpretation applies to the movement of the vaporized natural gas 75 feet from NFE’s\nvaporizers to the connection with the San Juan Power Plant’s process piping.\nAssessment of PHMSA’s Statement to the Illinois Commerce Commission\nWe have re-reviewed the August 11, 2010 PHMSA letter responding to the Illinois\nCommerce Commission’s request regarding the United States Steel Corporation’s Granite City\nWorks (“GCW”) steelmaking complex. This letter of interpretation evinces PHMSA’s policy\nregarding the application of the pipeline safety laws to piping that runs between industrial facilities.\nThe factual situation presented by GCW goes well beyond the Facility’s configuration:\nThe [United States Steel] natural gas piping system contains several service lines,\neach service line transporting gas from a common source of supply (a main) to an\nindividual customer. All the customers are owned by USS, but each customer is\nresponsible for the amount of gas it uses.\nSee Attachment “A.” Thus, the GCW complex involved the movement of gas from a central\nlocation to other facilities owned and operated by other customers, several of whom metered their\ndeliveries. These facts make it clear that these facilities were likely run by separate entities (albeit\naffiliates) and that some manner of compensation or accounting tracked these gas deliveries. The\nGCW operation actually much more resembles “transportation” than the Facility does here as it\ndelivered gas to multiple facilities including several that were not located on contiguous properties\nas Attachment A demonstrates.\nIn the statement, PHMSA explained that “its typical rule” was that a “pipeline transporting\ngas to a destination facility such as a large volume customer is subject to the pipeline safety laws\nand regulations up to the point where pressure control changes from the pipeline operator to the\ndestination facility operator.” This letter further explained that “beyond that point, piping operated\nby the facility operator entirely on the grounds of the facility is considered ‘in-plant piping’ and\nwould not be subject to the pipeline safety regulations, although it may be subject to State building\ncodes or other regulations.” The situation addressed by the 2010 letter, however, involved\n\n<<<PAGE 5>>>\n\n111 W 19TH STREET, 8TH FLOOR\nNEW YORK, NY 10011\npipelines that “are not located entirely on the geographically contiguous grounds of a facility.” In\nfact, such pipelines crossed public areas for “relatively short distances.”\nPHMSA advised the state that such lines are “subject to” pipeline safety laws because they\ncross public areas but that PHMSA’s policy was not to apply its laws to such piping. As PHMSA\nexplained:\nHistorically, PHMSA has elected not to apply the Federal gas pipeline safety\nregulations to such lines if they are associated with the plant, meaning that they are\noperated by plant personnel, run between plant buildings, and are less than one mile\nin length.\nHere, the Facility’s 75-feet of process piping delivers natural gas to a single enterprise located\nacross the fence line that is owned and operated by the San Juan Power Plant. The deliveries to a\nsingle, geographically contiguous neighbor are obviously less extensive than the multiple\ncustomers involved in the GCW complex who were not on geographically contiguous properties.\nUnlike the GCW complex, however, the Facility’s 75-feet of process piping does not cross\npublicly accessible roads or highways once, let alone multiple times. Nor does the Facility service\nmultiple customers. Instead, it runs a single set of process piping up to the delivery point to the\nSan Juan Power Plant, which is on the NFE property. See Attachment “B.” Moreover, the delivery\npoint is within the NFE property. See Attachment “C.” Accordingly, up to this delivery point, the\npipeline is located on the “geographically contiguous grounds” of the Facility. At that point, it is\naccepted by PREPA and carried in the piping the short distance to the San Juan Power Plant\nburners. See Attachment “D.”\nAdditionally, NFE plant personnel are responsible for operating the pipeline and managing\nthe delivery of the natural gas to the delivery point. From that point on, the management of the\nnatural gas is handled by a separate operator, PREPA. Although NFE and PREPA share\ninformation regarding natural gas pressures, volume and other metrics, operations are separate\nbetween the piping on NFE and PREPA’s property. Finally, the pipe is far, far less than one mile\nin length. The piping that connects the Facility to its immediately adjacent neighbor thus satisfies\nall of the main elements of the test that PHMSA set out to the Illinois Commerce Commission: the\npiping is operated by plant personnel; it runs between the Facility and the San Juan Power Plant\nand it is far less than one mile in length.\nIn fact, the Facility and San Juan Power Plant are indistinguishable from the piping at issue\nin the 2010 letter. All of the piping at issue here is process piping and is located entirely within\neach party’s respective property boundaries of the two immediately adjacent industrial facilities.\nNFE designed the piping to PREPA’s process piping standards and much of the piping on the\nFacility is already subject to other regulatory regimes, including oversight by the United States\nCoast Guard, territorial authorities (including the Puerto Rico Department of Transportation and\nPublic Works) and the state fire marshal. Regardless of whether NFE and PREPA are affiliated\nlike the entities at issue in GCW, all of the objective facts show that the location, management,\nand use of the pipelines meet the standard that PHMSA set out to the Illinois Commerce\nCommission. Moreover, even though they are not affiliates, NFE and PREPA have a written\n\n<<<PAGE 6>>>\n\n111 W 19TH STREET, 8TH FLOOR\nNEW YORK, NY 10011\nagreement for the delivery of the gas via the process piping. These enforceable contractual rights\nestablish a commercial relationship that reflects many of the same obligations that companies\nmight impose internally or on their affiliates.\nLikewise, the fact that the piping operates at more than 20% SMYS should not change the\noutcome because in PHSMA’s own view, it is irrelevant to whether the piping can be said to be\nsubject to pipeline safety laws. Indeed, PHMSA issued its interpretation in 2010 without knowing\nthe pressure at which the piping operated or discussing any SMYS threshold. PHMSA explained\nthat whether the piping qualified as “a transmission line or a distribution line” was immaterial to\nthe outcome:\nPHMSA has not taken a position on that since we currently do not regulate such\nlines as stated above.\nInterestingly, PHMSA has also reached this conclusion without any analysis of where any pressure\ncontrols may have been located at the GCW facilities that received the gas. NFE’s dealings with\nthe PHMSA Southern region in 2019 and 2020 plainly track the historical interpretation discussed\nin this letter. On each of these occasions, NFE explained to PHMSA the configuration of the\npiping connecting the Facility to the San Juan Power Plant. In neither instance did NFE hear\nanything further from PHMSA about the regulation of these lines. As a result, it is clear that\nPHMSA should reach a similar conclusion here.\nWe look forward to further discussion of this matter. Should you have any additional\nquestions or if it would be helpful to further discuss any of the above information, please feel free\nto contact me at 516-268-7413 or bmcelmurray@newfortressenergy.com. We may also be\ncontacted at our return address, 111 W 19th Street, 8th Floor, New York, NY 10011.\nSincerely,\nNFEnergía LLC\n__________________________\nBrannen McElmurray\nAuthorized Signatory\nCC:\nJohn A. Gale\nDirector, Office of Standards and Rulemaking\nOffice of Pipeline Safety\nU.S. Department of Transportation,\nPipeline and Hazardous Materials Safety Administration\n1200 New Jersey Avenue, SE\nWashington, DC 20590","truncated":false,"body_characters":16887}