{"operation":"document","citation":"0900006480e836ac","title":"U.S. DOT/PHMSA - Final Regulatory Flexibility Analysis","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"The document explains the need for an integrity management program for gas distribution pipelines, summarizes who will be affected, estimates numbers of small entities, presents estimated compliance costs and recordkeeping requirements, notes uncertainty about small operators' revenues and possible significant impacts on very small entities, and describes steps PHMSA will take to minimize impacts on small operators (including tailored requirements, guidance, and tools). Scope is limited to the information and estimates PHMSA had at the time (including Dun & Bradstreet data and cost estimates); the analysis states PHMSA did not have information on revenues for small operators and therefore \"can not conclude with certainty that there will not be a significant impact on small entities.\" The analysis does not state legal effect or final agency conclusions beyond the material presented.","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e836ac.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e836ac.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e836ac","source_url":"https://downloads.regulations.gov/PHMSA-RSPA-2004-19854-0254/attachment_1.pdf","body":"<<<PAGE 1>>>\n\nFinal Regulatory Flexibility Analysis\nPipeline Safety: Integrity Management Program for Gas Distribution\nPipelines\nPHMSA-RSPA-2004-19854\nOffice of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration (PHMSA)\nU.S. Department of Transportation\nOctober 29,2009\n\n<<<PAGE 2>>>\n\nFinal Regulatory Flexibility Analysis\nPipeline Safety: Integrity Management Program for\nGas Distribution Pipelines\nIntroduction\nThe Regulatory Flexibility Act (RFA) was originally passed in 1980 (P. L. 96-354). The\nAct was amended by the Small Business Regulatory Enforcement Fairness Act of 1996\n(P.L. 104-121). The RFA requires Federal agencies to conduct a separate analysis of the\neconomic impact of rules on small entities and to take small entities' particular concerns\ninto account when developing, writing, publicizing, promulgating, and enforcing\nregulations. This Final Regulatory Flexibility Analysis (FRFA) required by Section\n604(a) includes:\n(1) (2) (3) (4) (5) A succinct statement of the need for, and objectives of, the rule.\nA summary of the significant issues raised by the public comments in response\nto the Initial Regulatory Flexibility Analysis (IRFA), a summary of the\nassessment of the agency of such issues, and a statement of any changes made\nin the proposed rule as a result of such comments.\nA description of and an estimate of the number of small entities to which the\nrule will apply or an explanation of why no such estimate is available.\nA description of the projected reporting, recordkeeping, and other compliance\nrequirements of the rule, including an estimate of the classes of small entities\nthat will be subject to the requirements and the type of professional skills\nnecessary for preparation of the report or record.\nA description of the steps the agency has taken to minimize the significant\neconomic impact on small entities consistent with the stated objectives of\napplicable statutes, including a statement of the factual, policy, and legal\nreasons for selectmg the alternatives adopted in the final rule and why each one\nof the other significant alternatives to the rule considered by the agency which\naffect the impact on small entities was rejected.\nA discussion of these requirements follows.\n1. A succinct statement of the need for, and objectives of, the rule.\nIn 2004, the U.S. Department of Transportation (DOT) Inspector General (IG) pointed\nout that recent accident trends for gas distribution pipelines were unfavorable and\nsuggested that the application of integrity management principles could help improve the\nsafety of distribution pipelines.\n\n<<<PAGE 3>>>\n\nThe IG recommended to Congress that DOT define an approach for requiring operators\nof distribution pipeline systems to implement some form of integrity management or\nenhanced safety program with elements similar to those required in hazardous liquid and\ngas transmission pipeline integrity management programs (IMPs). The Appropriations\nCommittee then asked PHMSA \"to report to the House and Senate Committees on\nAppropriations by May 1, 2005, detailing the extent to which integrity management\nprogram elements may be applied to the natural gas distribution pipeline industry in order\nto enhance distribution system safety.\"^ PHMSA submitted the report \"Assuring the\nIntegrity of Gas Distribution Pipeline Systems\" to Congress in June 2005, which\ndescribes the program used to identify opportunities for improving the safety of\ndistribution pipeline systems.\nPHMSA proceeded to develop the IMP for gas distribution pipelines in two phases.\nPhase 1 identified the nature of requirements that might be imposed and any additional\nguidance or consensus standards that might be needed to assist operators in implementing\nany integrity management requirements. Phase 2 included development of appropriate\nrequirements by PHMSA and preparation of guidance/standards by appropriate bodies.\nPHMSA determined that in order to address safety threats to distribution pipelines and\ndevelop a sensible strategy to reduce threats, the Agency needed to involve a number of\nkey stakeholder groups, including State and Federal regulators, representatives from the\nspectrum of distribution operators, interested members of the public, and representatives\nof our Nation's fire service. The study group gathered and analyzed data to help focus the\neffort and ultimately identify options for attaining improved safety.\n2. A summary of the significant issues raised by the public comments in response to the\nInitial Regulatory Flexibility Analysis, a summary of the assessment of the agency of such\nissues, and a statement of any changes made in the proposed rule as a result of such\ncomments.\nAlthough there were comments on the Preliminary Regulatory Impact Analysis (RIA),\nnone of the comments were relevant for the Regulatory Flexibility Analysis conclusions.\nComments received regarding the RIA are summarized in the rule.\n3. A description of and an estimate of the number of small entities to which the rule\nwould apply or an explanation of why no such estimate is available.\nThe rule will affect operators of (1) local gas distribution utilities and (2) master meter\nand liquefied petroleum gas (LPG) systems. The impacted operators are all entities in\nNorth American Industry Classification System (NAICS) 221210, Natural Gas\nDistribution. In accordance with size standards published by the Small Business\n' \"Progress and Challenges in Improving Pipeline Safety,\" Statement of the Honorable Kenneth M. Mead,\nInspector General, U.S. Department of Transportation, before the Committee on Energy and Commerce,\nSubcommittee on Energy and Air Quality, U.S. House of Representatives, July 20, 2004.\n^ U.S. House of Representatives, Report 108-792, November 20, 2004.\n\n<<<PAGE 4>>>\n\nAdministration, a business with 500 or fewer employees is considered a small entity in\nthis NAICS.^\nPHMSA expects 1,291 local gas distribution utilities and approximately 8,000 master\nmeter and LPG systems to be impacted by the rule. Based on information from Dun &\nBradstreet (August 2006) on firms in NAICS 221210, PHMSA estimates that 78 percent\nof the local gas distribution utilities have 500 or fewer employees. That is, PHMSA\nestimates that 1,007 of the local gas distribution utilities impacted by the rule will have\n500 or fewer employees. Furthermore, PHMSA assumes that all master meter and LPG\nsystems will have 500 or fewer employees.\nThe rule divides the local gas distribution utilities into two groups; those with greater\nthan 12,000 services were designated large, and those with 12,000 or fewer services were\ndesignated as small. Of the 1,291 gas distribution operators, 201 are large and 1,090 are\nsmall. In addition to the 1,090 small gas distribution operators, the approximately 8,000\nmaster meter operators and LPG systems are small. Although all of the LPG operators are\nsmall, 52 of these operators are subject to the same requirements as the gas distribution\noperators with 12,000 or fewer services.\n4. A description of the projected reporting, recordkeeping, and other compliance\nrequirements of the rule, including an estimate of the classes of small entities that would\nbe subject to the requirements and the type of professional skills necessary for preparing\nthe report or record.\nOperators are required to develop and implement an IMP, mitigate risks, report on\nperformance measures in the annual reports, keep records, and manage the program.\nDetails of the individual costs are in the Regulatory Impact Analysis on the docket.\nThere are approximately 1,090 small gas distribution operators and 8,000 master meter\nand LPG operators, 52 of which have 100 or more customers and are subject to the same\nrequirements as the gas distribution operators with 12,000 or fewer services. The costs to\nthe small operators are listed in the table below.\nhttp://www.sba.gov/size/sizetable2002.pdf.\n\n<<<PAGE 5>>>\n\n•\nSUMMARY OF COSTS ASSOCIATED WITH THE DISTRIBUTION\nINTEGRITY MANAGEMENT PROGRAM TO SMALL AND MASTER METER\nOPERATORS\nType of Optegor and Cost Total Areal Cost inTo Wear and COnt\n($Million) 3\n(Millions)\nSmall Operators, including 52 LPG operators\nDeveloping program\n$15.3\nMienienting an IMP\n$15.4\n$5.8\nNominal\nNominal\nRecordkeeping\nNominal\nNominal\nManagement\n$7.7\nSMALL OPERATOR TOTAL\n$38.4\nMaster Meter and LPG Systems\nDeveloping program\n$11.2\n$1.6\nImplementing an IMP\n$2.4\n$1.2\nMitigation\n$1.5\nReporting\nNominal\nRecordkeeping\nNominal\nNominal\nManagement\n$9.6\n$4.8\nMASTER METER AND LPG\n$23.2\n$9.1\nSYSTEM TOTAL\nThe total cost of an integrity management program for each small operator will be\napproximately $33,600 ($38.4 million/1,142) in the first year and $15,400 ($17.6\nmillion/1,142) in each subsequent year,\nand the cost for each master meter and LPG\nsystem will be approximately $2,900 ($23.2 million/8,000) in the first year and $1,100\n($9.1 million/8,000) in each subsequent year.\nThe rule also requires that each operator impacted by that rule keep certain records. At a\nminimum, those records must include:\n• A written integrity management program.\n• Documents supporting threat identification.\nA written procedure of ranking threats.\n• Documents supporting any decision, analysis, or process developed and used to\nimplement and evaluate each element of the integrity management program.\n• Records identifying changes made to the integrity management program or its\nelements, including a description of the changes and the reasons they were made.\nOperators must keep the records for 10 years.\n4\n\n<<<PAGE 6>>>\n\nPHMSA estimates some of the required records will be kept electronically, while others\nwill be kept on paper. In the case of those kept electronically, the required recordkeeping\nwill necessitate a company clerk entering data and, in some cases, scanning materials. In\nthe case of the paper records, the required recordkeeping will necessitate a company clerk\nplacing materials in file folders, storing them, and retrieving files, when needed. It may\nalso necessitate a system for signing materials in and out. Finally, in some cases,\nphysical recordkeeping may necessitate the acquisition of file cabinets and supplies by\nsome operators.\nThere is no expectation that the recordkeeping would require operators to hire additional\npersonnel. Neither is there an expectation that the recordkeeping would require operators\nto acquire new computers or peripherals. PHMSA assumes that the rule does not add\nsignificantly to the distribution operators' current recordkeeping requirements,\nparticularly since the rule would remove the excess flow valve (EFV) customer\nnotification requirement.\nPHMSA did not have at the time the NPRM was issued, and does not now have,\ninformation on revenues for small operators, LPG operators, or master meter operators.\nSmall entities did not provide PHMSA with information on their level of revenues, so we\ncan not conclude with certainty that there will not be a significant impact on small\nentities. The rule could result in a significant adverse economic impact for some of the\nvery small entities if the estimated average yearly costs attributed to the rule exceed 1\npercent of their annual revenues.\n5) A description of the steps the agency has taken to minimize the significant economic\nimpact on small entities consistent with the stated objectives of applicable statutes,\nincluding a statement of the factual, policy, and legal reasons for selecting the\nalternatives adopted in the final rule and why each one of the other significant\nalternatives to the rule considered by the agency which affect the impact on small entities\nwas rejected.\nThe RFA directs agencies to establish exceptions and differing compliance standards for\nsmall businesses, where it is possible to do so and still meet the objectives of applicable\nregulatory statutes.\nFor this rule, PHMSA will be taking a number of steps to meet safety objectives without\nunduly burdening small business.\n• PHMSA does not require master meter and LPG systems to comply with all of the\nrequirements of the rule. PHMSA estimates that it is possible to do this without\ncompromising safety because of the nature of the master meter and LPG systems.\nThe written plan for the master meters and propane operators will be a very\nsimple checklist which PHMSA will prepare and put in the docket for guidance.\nBy completing the checklist, master meter and LPG systems will comply with the\nplan requirements.\n\n<<<PAGE 7>>>\n\n• PHMSA will modify its Guidance Manual for Operators of Small Natural Gas\nSystems to include information that makes it easier for these entities to comply\nwith the distribution integrity management program requirements. A manual has\nbeen developed by PHMSA to provide an overview of pipeline compliance\nresponsibilities under the Federal pipeline safety regulations for the non-\ntechnically trained person who operates a master meter system, a small municipal\nsystem, or small independent system.\n• The Gas Pipeline Technology Committee (GPTC) will prepare guidance material\nto assist gas distribution operators, including master meter and LPG system\noperators, with development of an integrity management program.\n• The American Public Gas Association (APGA) Security and Integrity Foundation\n(SIF) will develop a risk-based model Distribution Integrity Management\nProgram to assist small utilities in developing integrity management programs\nmeeting the requirements of the rule. APGA has been working on a program,\n\"SHRIMP,\" to help small operators that are members, but not master meter or\nLPG operators, comply with integrity management issues, including risk ranking.\n' ^ The Guidance Manual for Operators of Small Natural Gas Systems can be found on the PHMSA website\nat http://ops.dot.gov/regs/smal] ng/SmallNaturalGas.htm:\nhttp://www.phmsa.dot.gov/portal/site/PHMSA/menuitem.ebdc7a8a7e39f2e55cf2031050248a0c/7vgnextoid\n=a7c6ca 170a57411 OVgnVCM 1000009ed07898RCRD&vgnextchannel=67027e2cd44d311 OVgnVCM 1000\n009ed07898RCRD&vgnextfmt=print.","truncated":false,"body_characters":13992}