{"operation":"document","citation":"0900006480e85092","title":"U.S. DOT/PHMSA - Regulatory Evaluation ","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"m. O f impomm -..-, „,, U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration ' ^ \" \" Regulatory Evaluation September 2007 Pipeline Safety: Protecting Unusually Sensitive Areas from Rural Onshore Hazardous Liquid Gathering Lines and Low-Stress Pipelines Docket No. PHSMA-2003-158f i - ^- 1- ! Regulatory Analysis For Final Rule I. INTRODUCTION... 104-304), Congress amended the requirement to define \"regulated gathering lines\" by adding the words \"if appropriate.\" Congress also gave DOT the authority to collect information from gathering line operators related to deciding whether and to what extent to regulate rural gathering lines. Congress recognized that some...","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e85092.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e85092.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e85092","source_url":"https://downloads.regulations.gov/PHMSA-RSPA-2003-15864-0085/attachment_1.pdf","body":"<<<PAGE 1>>>\n\nm. O f impomm\n-..-, „,,\nU.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration ' ^ \" \"\nRegulatory Evaluation\nSeptember 2007\nPipeline Safety:\nProtecting Unusually Sensitive Areas from Rural Onshore Hazardous Liquid\nGathering Lines and Low-Stress Pipelines\nDocket No. PHSMA-2003-158f\ni - ^-\n1- !\nRegulatory Analysis\nFor Final Rule\nI. INTRODUCTION\nCurrently, rural onshore hazardous liquid gathering lines and rural onshore hazardous\nliquid low-stress pipelines are exempt from most of the Pipeline and Hazardous Materials\nSafety Administration's (PHMSA's) safety rules for transportation of hazardous liquids\nby pipeline. A spill from one of these could cause substantial harm to an unusually\nsensitive environmental area.\n1.1 Rural Onshore Hazardous Liquid Gathering Lines\nPHMSA is applying limited operation and maintenance requirements, along with\nreporting requirements for accidents and safety related conditions, and requiring the use\nof line markers to certain currently unregulated rural onshore hazardous liquid gathering\nlines. Specifically, the gathering lines impacted by this regulatory change are those\nlocated in or within 1/4 mile of an unusually sensitive area (USA) as defined in 49 CFR §\n195.6' that\n• Have a nominal diameter fi-om 6 5/8 to 8 5/8 inches, and\n• Operate at a stress level of more than 20% of SMYS during normal operation or,\nif the stress level is unknown or the pipeline is not constructed using steel pipe, at\na pressure of more than 125 psig.\nFor these rural onshore hazardous liquid gathering lines, PHMSA is making the\nfollowing changes to 49 CFR Part 195:\n' A USA is defined in 49 CFR § 195.6 as \"drinking water or ecological resource area that is unusually\nsensitive to environmental damage from a hazardous liquid pipeline release.\"\n\n<<<PAGE 2>>>\n\nIncluding the gathering lines in a new definition of \"regulated rural onshore\ngathering lines;\" ^\nRequiring operators of \"regulated rural onshore gathering lines\" to follow safety\nrules for design, construction, testing, and maximum operating pressure;\nRequiring operators of \"regulated rural onshore gathering lines\" to protect those\npipelines from corrosion and excavation damage;\nRequiring operators of \"regulated rural onshore gathering lines\" to install and\nmaintain line markers;\nRequiring operators of \"regulated rural onshore gathering lines\" to undertake\npublic education programs;\nRequiring operators of \"regulated rural onshore gathering lines\" to demonstrate\nOperator Qualification (OQ) compliance; and\nRequiring operators of \"regulated rural onshore gathering lines\" to report\naccidents and safety-related conditions and to make annual reports.\nDevelop a program to monitor and mitigate operating conditions that could lead to\ninternal corrosion.\n1.2 Rural Onshore Hazardous Liquid Low-Stress Pipelines\nPHMSA is extending the safety rules for the transportation of hazardous liquids by\npipeline contained in 49 CFR Part 195 to certain rural onshore low-stress pipelines.\nSpecifically, the low-stress pipelines impacted by this regulatory change are those located\nin or within 1/2 mile of a USA as defined in 49 CFR § 195.6 that\n• Have a nominal diameter of 8 5/8 inches or more, and\n• Operate at a stress level of 20% or less of SMYS during normal operation or, if\nthe stress level is unknown or the pipeline is not constructed using steel pipe, at a\npressure of 125 psig or less.\nAdditionally, PHMSA is requiring operators of all unregulated rural low-stress lines to\nfile annual, accident, and safety-related condition reports.\n1.3 Intent of PHMSA's Regulatory Changes\nThe changes summarized above are to improve the safety of rural onshore hazardous\nliquid pipelines and to help protect USAs. Furthermore, they are intended to be\nresponsive to the requirements relating to hazardous liquid pipelines included in the\nPipeline Inspection, Protection, Enforcement, and Safety (PIPES) Act of 2006 (Pub. L.\nNo. 109-468) and other laws.\n^ Certain gathering lines are currently regulated. Those gathermg lines are sometimes collectively referred\nto as \"regulated gathering lines\" (see, for example, PHMSA's file on the Internet containing the 2004\nannual reports for hazardous liquid pipelines at http://ops.dot.gov/stats/DT98.htm). This, however, is a\nterm of art and is not currently defined in the Federal pipeline safety regulations pertaining to hazardous\nliquid pipelines.\n\n<<<PAGE 3>>>\n\n1.4 Purpose of this Report\nIn this report, the benefits and costs of the regulatory changes included in the final rule\nare examined. The report also includes other mandatory analyses, including the analysis\nrequired by the Regulatory Flexibility Act.\n2. BACKGROUND\n2.1 Hazardous Liquid Gathering Lines\nHazardous liquid gathering lines are primarily pipelines transporting crude oil fi\"om wells\nto downstream locations, such as refineries. These pipelines can be found in rural and\nnon-rural areas as well as onshore and offshore. It is estimated by the Association of Oil\nPipelines (AOPL) that between 30,000 and 40,000 miles of crude oil gathering lines are\ncurrently in operation in oil producing states.^\nThe Federal safety regulation found in 49 CFR Part 195 defines a \"gathering line\" as a\npipeline with a nominal outside diameter of 8 5/8 inches or less that transports petroleum\nfrom a production facility. \"Petroleum,\" as defined in Part 195, means crude oil,\ncondensate, natural gasoline, natiaral gas liquids, and liquefied natural gas. A \"rural area\"\nis defined as a location outside the limits of any incorporated or unincorporated city,\ntown, village, or any other designated residential or commercial area, such as a\nsubdivision, a business or shopping center, or community development.\nFederal safety regulations covering the transportation of hazardous liquids by pipeline\nfound at 49 CFR Part 195 apply to both offshore and onshore hazardous liquid gathering\nlines. Onshore gathering lines in rural areas, however, are currently exempt fi-om all Part\n195 regulations, except those relating to inspection and burial in Gulf of Mexico inlets\n(i.e., 49 § CFR 195.1(b)(4)).\nIt should be noted that, because of their higher operating pressures, PHMSA expects that\nmajor pipeline firms operate the rural onshore gathering lines impacted by the final rule.\n2.2 Low-Stress Pipelines\nLow-stress pipelines are hazardous liquid pipelines operating at 20% or less of the\nspecified minimum yield strength (SMYS) of the line pipe. Most pipelines moving large\nvolumes of petroleum or petroleum product do so at high pressures (i.e., over 20% of\nSMYS). The economics of pipeline operation, and the physical characteristics and\ncondition of a pipeline may result, however, in a pipeline operating at 20% or less of\nSMYS. For instance, the lifetimes of pipelines that are in poor condition may be\nextended by operation at lowered pressures. Furthermore, low-pressure operation may\nresult fi-om market conditions or reduced volumes of pipeline throughput. Safety\n^ See \"How Many Pipelines are There?\" at http://www.pipeline 101 .com/Overview/energv-pl.html. This\nestimate is for oil producing states. Consequently, it might not include mileage in Outer Continental Shelf\n(OCS) waters outside of state control.\n\n<<<PAGE 4>>>\n\nregulations for hazardous liquid pipelines, contained in 49 CFR Part 195, had not\npreviously been applicable to pipelines operating at low-stress outside populated areas,\nexcept for those that cross navigable waterways (49 CFR § 195.1(b)(3)).''\nOn September 6, 2006, PHMSA published a Notice of Proposed Rulemaking (NPRM)\nproposing to apply limited, threat-focused pipeline safety requirement to larger-diameter\nrural onshore low-stress hazardous liquid pipelines within a defined buffer of USAs (71\nFR 52504). USAs are non-populated areas requiring extra protection because of the\npresence of sole-source drinking water resources, endangered species, or other ecological\nresources that could be adversely affected by accidents or leaks occurring on hazardous\nliquid pipelines. The proposed requirements were limited to those that would address the\nmost common threats to these rural low-stress pipelines.\nAfter PHMSA had issued the NPRM, the PIPES Act was signed into law on December\n29,2006. Section 4 of the PIPES Act requires PHMSA to \"issue regulations subjecting\nlow-stress hazardous liquid pipelines to the same standards and regulations as other\nhazardous liquid pipelines\" with some limited exceptions. The Act allows the new\nregulations to be phased in.\nIn response to the PIPES Act requirement, on May 18,2007, PHMSA published a\nSupplemental Notice of Proposed Rulemaking (SNPRM) to apply all of Part 195 to the\nlow-stress pipelines proposed for coverage in the NPRM, except that the buffer was\nextended fi-oml/4 mile to 1/2 mile (72 FR 28008).\nOn October 31,1990, an Advance Notice of Proposed Rulemaking (ANPRM) entitled\n\"Transportation of a Hazardous Liquid in Pipelines Operating at 20 Percent or Less of\nSpecified Minimum Yield Strength\" was published in the Federal Register. The\nANPRM included a questionnaire designed to elicit information about the existence of\npipelines operating at 20% of SMYS or less including their age, condition, length, and\nuse, as well as their failure records fi-om 1986 through 1990. The questionnaire also\nrequested information about whether the pipelines were currently being operated in\ncompliance with Part 195, and, if not, what the one-time and continuing costs of bringing\nthem into compliance would be. The responses by industry to the ANPRM questionnaire\ncan be found in the docket.\n3. STATEMENT OF THE PROBLEM\n3.1 Gathering Lines\nWith the Pipeline Safety Act of 1992 (Pub. L. 102-508), Congress granted the U.S.\nDepartment of Transportation (DOT) the authority to regulate a class of rural gathering\nlines called \"regulated gathering lines.\" Congress left the definitions of \"gathering lines\"\nand \"regulated gathering lines\" to DOT to develop (see 49 U.S.C. 60101(b)(1)(A) and 49\nU.S.C. 60101(b)(2)(A)). In the Accountable Pipeline Safety and Partnership Act (Pub. L.\n\" * For a full discussion of the background concerning historical treatment of low-stress rural pipelines and\nthe decision to apply safety regulations at this time, see the September 6, 2006, notice.\n\n<<<PAGE 5>>>\n\n104-304), Congress amended the requirement to define \"regulated gathering lines\" by\nadding the words \"if appropriate.\" Congress also gave DOT the authority to collect\ninformation from gathering line operators related to deciding whether and to what extent\nto regulate rural gathering lines.\nCongress recognized that some rural gathering lines might pose risks warranting Federal\nsafety regulation. As a consequence, it gave DOT authority to regulate a class of rural\ngathering lines called \"regulated gathering lines\" based on risk-related physical\ncharacteristics, such as diameter, pressure, location, and length of line. In its report on\nH.R. 1489, a bill that led to the Pipeline Safety Act of 1992, the House Committee on\nEnergy and Commerce stated that:\nDOT should find out whether any gathering lines present a risk to people\nor the environment, and if so how large a risk and what measures should\nbe taken to mitigate the risk.^\nPHMSA believes that this instruction shows that Congress wanted DOT to limit\n\"regulated gathering lines\" to lines posing a significant risk and to limit regulation of\nthose lines to suitable risk-reduction measures.\nSeeking more information specifically about rural gathering lines, DOT asked the public\nabout whether these pipelines pose a risk warranting Federal safety regulation and, if so,\nwhat those regulations should be. Most commenters recognized the need for Federal\nsafety regulation, and most felt that the regulations should address knovm risks of a\nsignificant scale.\nIn association v^th its comments, the AOPL provided incident data showing that\ncorrosion and excavation damage are the leading causes of spills on gathering lines\noverall (i.e., for both rural and non-rural gathering lines). It should also be noted that\nthere is no reason to expect that rural gathering lines are any less vulnerable to corrosion,\nexcavation damage, or other integrity threats than non-rural gathering lines.\nConsequently, PHMSA believes that it is reasonable to assume that AOPL's incident data\nare representative of the safety situation with respect to rural gathering lines. This belief\nis strengthened by the findings of a 1997 report by California's Office of the State Fire\nMarshal entitled, \"An Assessment of Low-Pressure Crude Oil Pipelines and Gathering\nLines,\" which found that the leading causes of pipeline incidents from 1993 to 1995 on\nrural gathering lines and other pipelines exempt from Part 195 were corrosion and\nexcavation damage.^\nAs a consequence of Congress' safety concerns, comments received from stakeholders,\nand accident data, PHMSA believes that the potential for fiiture harm to people and the\nenvironment from rural gathering lines is clear. Furthermore, based on the foregoing,\nPHMSA believes that the present exemption of rural gathering lines from nearly all\nsafety regulations in 49 CFR Part 195 is no longer appropriate. The final rule aims to\nH.R. Report No. 102-247, Part 1, 102\"\" Congress, T' Session, 23 (1991).\n6\nThis report is available on the Internet at http://osfin.fire.ca.gov/lowpressrpt.html.\n\n<<<PAGE 6>>>\n\nfiilfill Congress' statutory mandate as it relates to rural onshore gathering lines by\namending 49 CFR Part 195.\n3.2 Low Stress Lines\nBeginning in 1991, Congress paid greater attention to the risks that hazardous liquid and\nnatural gas pipelines pose to the environment. In the Pipeline Safety Act of 1992 (Pub.\nL. 102-508), Congress gave DOT greater authority to protect the environment from the\nrisks that pipelines pose. Congress continued to emphasize the need to better protect the\nenvironment from pipeline risks in the Accountable Pipeline Safety and Partnership Act\nof 1996 (Pub. L. 104-304). With the PIPES Act of 2006, Congress went ftirther and\ninstructed DOT to subject low-stress hazardous liquid pipelines to the same regulatory\nstandards as other hazardous liquid pipelines regulated under Part 195.\nRecent accidents have demonstrated the need to regulate the safety of low-stress\npipelines, particularly those near USAs. For instance, on March 2, 2006, a spill from\nHP's 34-inch unregulated low-stress pipeline in North Slope Borough, Alaska, released\n5,000 barrels of crude oil, impacting the artic tundra and covering approximately 2 acres\nof permafrost. On March 23, 2006, a spill from BP's 36-inch low-stress pipeline in\nToledo, Ohio, released 200 barrels of unleaded gasoline, some of which found its way\ninto Shantee Creek, which flows to Lake Erie, On August 6, 2006, BP found corrosion\nand leaks in its unregulated low-stress pipeline in North Slope Borough, Alaska. The\ndiscovery of severe corrosion and the lesJcs caused BP to shut the pipeline down.\nBecause of this, production from part of the massive Prudhoe Bay oilfield also had to be\nshutdovm.\nPHMSA sees no reason to expect unregulated low-stress pipelines to be less vulnerable to\ncorrosion, excavation damage, and other integrity threats than higher pressure regulated\nlines. Low-stress pipelines may be even more vulnerable because they have not been\nsubject to Federal safety regulation to ensure their continued integrity.\nBased on Congress' and PHMSA's safety concerns, public comments, and available\naccident data, PHMSA believes the potential for future harm to people and the\nenvironment from unregulated rural low-stress pipelines is clear. These pipelines have\nthe same leading causes of accidents as the hazardous liquid pipelines that PHMSA\nregulates. Therefore, PHMSA believes it is no longer appropriate to exempt these lines\nfrom Part 195 coverage. This is sfrengthened by Congress's recent mandate.\n4. RATIONALE FOR REGULATORY ASSESSMENT\nExecutive Order (EO) 12866 directs Federal agencies to develop both preliminary and\nfinal regulatory analyses if their new or revised regulations are likely to be \"significant\nregulatory actions\" tihat may have an annual impact on the economy of $100 million. EO\n12866 also requires a determination about whether a new or revised rule could adversely\naffect the economy or a section of the economy in terms of productivity, employment, the\nenvironment, public health, safety, or State, local or tribal governments. Under the\n\n<<<PAGE 7>>>\n\nregulatory philosophy and principles provided in sections 1(a) and (b) and section\n6(a)(3)(C) of EO 12866, an economic analysis of the new or revised rule must be\nconducted. Furthermore, the Regulatory Flexibility Act of 1980, as amended, requires\nFederal agencies to conduct a separate analysis of the economic impact of new or revised\nrules on small entities, and the Unfimded Mandates Act also requires economic impact\nanalysis.\nUnder the above directives, PHMSA has performed an evaluation of the potential\ncompliance costs of the regulatory change and feasible regulatory options and identified\nthose benefits that can be expressed in monetary terms. To the extent possible, this is\nbased on the available data and information from several sources including PHMSA's\nIncident Reporting Database and comments from stakeholders. PHMSA estimates the\nimpact of implementing the regulatory changes would not be greater than $100 million\nannually, nor would the regulatory changes adversely affect the economy or a section of\nthe economy in terms of productivity, employment, the environment, public health,\nsafety, or State, local or tribal governments. PHMSA has also determined, as required by\nthe Regulatory Flexibility Act, that the regulatory changes would not have a significant\neconomic impact on a substantial number of small entities in the United States.\nAdditionally, the regulatory changes would not impose annual expenditures of $120.7\nmillion or more on State, local, or tribal governments or the private sector (and thus\nwould not require an Unfunded Mandates Act analysis).\n5. ALTERNATIVES CONSIDERED\n5.1 Gathering Lines\nPHMSA considered several alternatives to assure the necessary protection from potential\nincidents on rural onshore gathering lines. These alternatives were:\n• No action.\n• Collect more information about the potential hazards of the rural onshore\ngathering lines before proposing any specific safety regulations;\n• Apply all Part 195 regulations to the rural onshore gathering lines;\n• Implement limited operation and maintenance regulations, along with\nimplementing reporting regulations for accidents and safety-related conditions, to\nthe rural onshore gathering lines;\n• Develop a completely new set of safety regulations for rural onshore gathering\nlines; and\n• Implement limited operation and maintenance regulations, along with\nimplementing reporting regulations for accidents and safety-related conditions\nand requiring the use of line markers. In this alternative, include regulations for\ndesign, construction, and testing of new, relocated, replaced, or otherwise\nchanged lines.\nThe evaluations for the alternatives considered by PHMSA are presented below.\n\n<<<PAGE 8>>>\n\n5.1.1 No Action\nCongress has mandated that action be taken concerning gathering lines. Not taking\naction would be unresponsive to the Congressional mandate. For that reason, this\nalternative is not considered any further in this analysis.\n5.1.2 Collect more information about the potential hazards of the rural onshore\nlines before proposing any specific safety regulations\nThis alternative received some support from industry, and Congress did grant DOT\nspecific authority to collect more information about hazards before proposing any safety\nregulations. This alternative was rejected, however, because PHMSA feels that there is\ncurrently a demonstrated need for safety regulation. Also, based on PHMSA experience\nwith hazardous liquid pipelines, collecting more information about the rural onshore\ngathering lines would be unlikely to change the current understanding concerning the\npotential risks these lines pose. For these reasons, collecting more information about the\npotential hazards of the rural onshore lines was evaluated no ftirther.\n5.1.3 Apply all Part 195 regulations to the rural onshore lines\nThis alternative would impose significant costs on the industry for little safety benefit.\nAlso, the costs could have a significant effect on U.S. oil supplies by causing production\nto cease at marginal wells connected to the lines. For these reasons, applying the\nregulations from Part 195 to rural onshore lines was not evaluated ftirther.\n5.1.4 Implement limited operation and maintenance rules, along with\nimplementing reporting rules for accidents and safety-related conditions\nAOPL recommended the approach covered by this aUemative for gathering lines.\nWith respect to gathering lines, the operation and maintenance rules to be implemented\nwould be the public education rules in 49 CFR § 195.440, the excavation damage\nprevention rules in 49 CFR § 195.442, and the corrosion control rules in subpart H of Part\n195. The reporting rules would be provisions of subpart B of Part 195 relating to\naccidents and safety-related conditions. The benefit of this ahemative would be that it\nwould avoid excessive safety regulation by focusing on the leading threats to rural\ngathering lines - corrosion and excavation damage. Also, the information collected\nthrough application of the reporting rules would enable PHMSA to recognize safety\nproblems and evaluate the effectiveness of adopting only limited safety rules.\nOne disadvantage of this alternative is that it does not include the installation and\nmaintenance of line markers, OQ program requirements, or drug and alcohol\nrequirements. The use of line markers to warn excavators of the presence of hazardous\nliquid pipelines is a well-established safety practice within the hazardous liquid pipeline\nindustry. Regarding OQ, Congress mandated that PHMSA establish regulations for OQ\non pipelines. Congress also directed pipeline operators to develop and adopt a\n\n<<<PAGE 9>>>\n\nqualification program should DOT fail to prescribe standards and criteria. Finally,\nrequirements on testing for the presence of prohibited drugs and alcohol apply to\noperators of a pipeline facility subject to Part 195.\nBecause of the gaps noted by PHMSA, this alternative was not considered any ftirther.\n5.1.5 Develop a completely new set of safety rules for the rural onshore gathering\nlines\nPHMSA rejected this alternative because there is no reason to believe that the Part 195\nsafety regulations now in effect for non-rural gathering lines would not be as effective if\napplied to rural gathering lines. PHMSA's experience indicates that Part 195 regulations\ncan be expected to work well for rural gathering lines because the integrity threats\ninvolved are similar for all the lines. Consequently, the alternative of developing a new\nset of safety regulations applicable to the rural onshore gathering lines was not evaluated\nfiarther.\n5.1.6 Implement limited operation and maintenance rules, along with\nimplementing reporting rules for accidents and safety-related conditions and\nrequiring the use of line markers\nFinally, PHMSA considered a modified version of the alternative discussed above in\nSection 5.1.4. The modified version of that alternative would add the line marker rules in\n49 CFR § 195.410, the qualification requirements in subpart G for operator personnel,\nand drug testing and alcohol misuse prevention requirements in Part 199 to the other\nregulations. Line markers are a traditional way of alerting excavators to the presence of a\nhazardous liquid pipeline. Under 49 U.S.C. 60131, DOT must require pipeline operators\nto develop and adopt qualification programs complying with the standards DOT\ndevelops. Furthermore, any operator subject to 49 CFR Part 195 is required under 49\nCFR Part 199 to test covered employees for the presence of prohibited drugs and alcohol.\nIn addition, this modified alternative would require operators to establish a maximum\noperating pressure for each steel line according to 49 CFR § 195.406, and to design and\nconstruct new lines according to applicable Part 195 regulations. A maximum operating\npressure with accompanying pressure control would guard against the danger of\naccidental overpressure. The design and construction regulations in 49 CFR Part 195\nwould ensure a minimum standard of integrity for all new, replaced, and relocated rural\nonshore gathering lines designated as \"regulated rural onshore gathering lines\" PHMSA\nproposed similar rules on markers, operating pressure, and design and construction for\nrural gas gathering lines in a final rule published March 15, 2006 (see 71 FR 13289).\nThese additions to the approach suggested by AOPL should not be too burdensome,\nbecause similar safety requirements are included in (American Society of Mechanical\nEngineers) ASME B31.4, a consensus standard followed widely throughout the\nhazardous liquid pipeline industry.\nFor the reasons outlined above, this alternative was selected for gathering lines.\n\n<<<PAGE 10>>>\n\n5.2 Low-Stress Pipelines\nPHMSA considered three alternatives to assure the necessary protection from potential\nincidents on rural onshore low-stress pipelines. These alternatives were:\n• No action.\n• Complete the currently outstanding rulemaking relating to low-stress pipelines\nand then apply Part 195 to all rural onshore low-stress pipelines at the same time.\n• Apply Part 195 to rural onshore low-stress pipelines in two phases, with the initial\nphase covering those lines posing the greatest risk to the environment.\nEvaluations of these alternatives are presented below.\n5.2.1 No Action\nSection 4 of the PIPES Act of 2006 requires Part 195 to apply to all low-stress pipelines,\nwith certain limited exceptions. Not taking action would be unresponsive to the\nCongressional mandate. For that reason, this alternative is not considered any ftirther in\nthis analysis.\n5.2.2 time\nComplete the currently outstanding rulemaking relating to low-stress\npipelines and then apply Part 195 to all rural onshore low-stress lines at the same\nAs mentioned above, on September 6, 2006, PHMSA published an NPRM proposing\nextending limited threat-focused requirements to larger-diameter rural onshore low-stress\nhazardous liquid pipelines within a defined buffer of USAs. Those limited threat-focused\nrequirements are less than \"the same standards and regulations as [apply to] other\nhazardous liquid pipelines\" required by the PIPES Act. Finalizing that proposal without\nchange would impose some requirements on affected pipelines, only to be followed by\nadditional regulations imposing ftirther requirements. PHMSA considers such sequential\napplication of requirements to be inefficient and to pose an unnecessary additional burden\non pipeline operators. Therefore, this alternative is not considered any ftirther in this\nanalysis.\n5.2.3 Apply Part 195 to the rural onshore low-stress pipelines in two phases, with\nthe initial phase covering those lines posing the greatest risk to the\nenvironment\nThe September 2006 NPRM proposed limited threat-focused requirements for certain\nrural onshore low-stress hazardous liquid pipelines within a defined buffer of USAs. The\nlow-stress pipelines covered by the rule are those where additional safety regulation is\nmost important - larger-diameter pipelines that can have adverse impacts on USAs.\nPHMSA believes the most appropriate and expeditious means of implementing the\nPIPES Act mandate is to act in phases.\n10\n\n<<<PAGE 11>>>\n\nIn phase 1, PHMSA undertook to modify the NPRM via a SNPRM to add to the\nrequirements to be applied to the low-stress pipelines covered by the NPRM. Pipelines\naffected by the phase 1 rulemaking are those low-stress pipelines 8 5/8 inches and greater\nin diameter. PHMSA believes that most operators of these larger low-stress pipelines\nalso operate pipeline at higher stresses or operate regulated low-stress pipe within\npopulated areas. PHMSA thus has a regulatory relationship with those operators.\nIn phase 2, PHMSA will initiate a separate rulemaking to apply Part 195 to all remaining\nunregulated rural low-stress pipelines.\nFor the reasons mentioned above, this alternative was selected for low-stress pipelines.\n6. ECONOMIC ANALYSIS\nThe benefits and costs of the regulatory changes included in the final rule are addressed\nin this section of this report. The analysis of benefits and costs takes the following\napproach: (1) the mileage impacted by the regulatory changes is identified and estimated,\n(2) the potential benefits of the regulatory changes are examined, (3) the potential costs\nof the regulatory changes are examined, and (4) a discussion of the expected benefits\nversus the expected costs are presented. Unless otherwise specified, all dollar amounts in\nsection 6 of this report are given in constant 2005 dollars.^\nBecause PHMSA has not regulated the pipelines covered by the final rule, PHMSA has\nonly limited information about the pipelines, their location, operating characteristics, and\nsafety performance. Consequently, a number of assumptions have been made in this\neconomic analysis.\n6.1 Impacted Mileage\nBoth rural onshore gathering lines and rural onshore low-stress pipelines will be impacted\nby the regulatory changes included in the final rule. The impacted mileages for each of\nthese two types of pipeline are estimated below.\n6.1.1 Gathering Lines\nThe rural onshore gathering line mileage that will be impacted by the regulatory changes\nis unknown and must be estimated. The impacted mileage would be operated as\nregulated rural onshore gathering lines. Such regulated rural onshore gathering lines\n^ Where necessary, dollars are converted fi-om nominal values to real 2005 values using the Implicit Price\nDeflators for Gross Domestic Product. The source of these deflators is the annual data version of Table\n1.1.9 Implicit Price Deflators for Gross Domestic Product, which is located on the Bureau of Economic\nAnalysis website at http://www.bea.gov/bea/dn/nipaweb/SelectTable.asp?Selected=N.\n11\n\n<<<PAGE 12>>>\n\n• Have a nominal diameter from 6 5/8 to 8 5/8 inches;\n• Operate at a stress level of more than 20 %of SMYS (specified minimum yield\nstrength) during normal operation or, if the stress level is unknovm or the pipeline\nis not constructed using a steel pipe, at a pressure of more than 125 psig; and\n• Are within 1/4 mile of a USA as defined in 49 CFR § 195.6.\nInformation about the mileage of gathering lines in the U.S. is somewhat sketchy. AOPL\nestimates that there are between 30,000 and 40,000 miles of crude oil gathering lines in\nthis country. ^ This estimated mileage includes both onshore and offshore gathering lines\nas well as both rural and non-rural gathering lines. A mileage breakdovm between\nonshore and offshore lines and rural and non-rural gathering lines is not available.\nPHMSA does have information indicating that pipeline operators have 2,573 miles of\ncrude oil gathering lines that are currently regulated under Part 195. Some of this\nmileage may be non-rural. Other mileage, however, may be rural mileage located in the\ninlets of the Gulf of Mexico and subject to 49 CFR § 195.413.\nIt is also known that interstate common-carrier pipelines that are required to file Form 6\nwith the U.S. Federal Energy Regulatory Commission (FERC) operate approximately\n15,000 miles of crude gathering lines.^ Common carrier pipelines are those that charge a\nfee for their service. There is a filing threshold for Form 6 that is based on pipeline\noperating revenues, and some common carrier pipelines may have revenues below that\nthreshold and consequently may not be reporting their gathering system mileage to\nFERC.'°\nFor the purposes of this analysis, the gathering line mileage that would be impacted by\nthe regulatory changes included in the final rule was estimated as follows.\nAs mentioned before, AOPL, an industry group representing pipeline operators, estimates\nthat there are between 30,000 and 40,000 miles of gathering lines in the U.S.\" The\nmidpoint of AOPL's range, 35,000 miles, is used as the point estimate for the total\nnumber of miles of gathering lines in the U.S.\nAlso as mentioned before, DOT currently regulates the safety of approximately 2,600\nmiles of gathering lines.'^ Those lines, which include all non-rural gathering lines.\n* The Association of Oil Pipelines estimates that there are between 30,000 and 40,000 miles of gathering\nlines in the U.S. This includes the mileage of onshore and offshore crude gathering lines (see \"How Many\nPipelines are There?\" at http://www.pipeline 101 .com/Overview/energv-pl.htmn.\n' In Warren R. True and Jeannie Stell, \"Special Report: Pipeline Economics,\" Oil & Gas Journal Data\nBook, 2005 Edition, PennWell Corp., Tulsa, OK, 2005, p. 80, it is reported that these pipelines operated\n14,187 miles of gathering lines in 2003, while the pipelines operated 16,214 miles of gathering lines in\n2002.\n'\" True and Stell, p. 66.\n\" AOPL's estimate is for oil producing states. It might not include mileage in waters of the OCS outside of\nstate control. Consequently, the actual rural gathering line mileage might be higher than estimated here.\n'^ This includes all crude oil gathering lines subject to Part 195, including those on the OCS.\n12\n\n<<<PAGE 13>>>\n\noffshore gathering lines, and some rural onshore gathering lines, will continue to be\nregulated, and furthermore, it is assumed that the regulatory changes included in the final\nrule will not impact them. Consequently, an estimated 32,400 (= 35,000 - 2,600) miles\nof rural gathering lines are currently unregulated.\nThe 32,400 mile estimate includes both onshore and offshore mileage. PHMSA assumes\nthat 50% of all rural gathering line mileage is onshore. Thus, an estimated 16,200 (= 0.5\nX 32,400) miles of rural onshore gathering lines are currently unregulated.\nFurthermore, based on comments by AOPL,''' PHMSA assumes that no more than 20%\nof all onshore gathering line mileage that is currently unregulated meets the following\nconditions: (1) has a nominal diameter of 6 5/8 inches or greater and (2) operates at\ngreater than 20% of SMYS (or alternatively at a pressure of 125 psig or greater). Thus,\nPHMSA expects that no more than 3,240 (= 0.2 x 16,200) miles of rural onshore\ngathering lines (1) have a nominal diameter of 6 5/8 inches or greater and (2) operate at\ngreater than 20% of SMYS (or at a pressure of 125 psig or greater).\nSome the mileage will not be impacted because it already operates in compliance with\nPart 195, even though that is not currently required. No information is readily available\nfor gathering lines, but information is available from the 1990 ANPRM questionnaire\nmentioned earlier on the percentage of low-stress pipelines operating in compliance with\nPart 195. Though this information is from 1990, it is still relevant, because the energy\nsector has been predominately stable for the periods of 1990 through 2003 with limited\ngrowth in infrastructure or changes in operation. Responses from this questionnaire\nindicated that approximately 16% of the low-stress mileage of the respondents was\noperated in compliance with Part 195, while approximately 84% were not.'''\nGiven the situation in 1990 with low stress pipelines, PHMSA assumes that 16% of the\nrural onshore gathering lines currently operate in compliance with Part 195, while 84%\ndo not. That means an estimated 2,722 (= 0.84 x 3,240) miles of rural onshore gathering\nlines do not operate in compliance with Part 195.\nTo complete the estimation of the gathering line mileage impacted by the rule,\ninformation is needed on the proximity of gathering lines to USAs.\nAccording to information contained in the National Pipeline Mapping System,\napproximately 22% of all regulated hazardous liquid pipeline mileage is within 1/4 mile\nof a USA.'^ PHMSA assumes for the purposes of this analysis that 22% of the 2,722\nmiles of onshore gathering lines are within 1/4 mile of a USA. That is, PHMSA assumes\nthat 599 (= 2,722 x 0.22) miles of onshore gathering lines are within 1/4 mile of a USA.\n\" According to AOPL, \"gathering lines generally operate...at lo w pressure....\" Lines operating at greater\nthan 20% of SMYS , as the NPR M notes, are not operating at lo w pressure.\n'^ For more detail on this, see p. 8 of \"Economic Evaluarion of Regulating Certain Hazardous Liquid\nPipelines Operating at 20% or Less of Specified Minimu m Yield Strength,\" July 21,1992, which can be\nfoun d in Docket PS-117.\n'^ Communication fi-om Richard Hinton, PHMSA , June 19,2006.\n13\n\n<<<PAGE 14>>>\n\nSince these lines operate at greater than 20% of SMYS, PHMSA assumes that major\npipeline firms operate all of these lines.\n6.1.2 Low-Stress Pipelines\nThe rural onshore low-stress line mileage that will be affected by the regulatory changes\nis unknown and must be estimated. Some of the affected low-stress mileage would be\nbrought under the safety regulations of Part 195 by the regulatory changes. That mileage\nconsists of low-stress pipeline with the following characteristics:\n• Have a nominal diameter of 8 5/8 inches or more,\n• Operate at a stress level of 20% or less of SMYS during normal operation or, if\nthe stress level is unknown or the pipeline is not constructed using steel pipe, at a\npressure of 125 psig or less and\n• Are in or within 1/2 mile of a USA as defined in 49 CFR § 195.6.\nAdditionally, the operators of all unregulated low-stress pipelines would be required by\nthe rule to file annual, accident, and safety-related condition reports with PHMSA for\nthose pipelines.\nLow-Stress Mileage Brought Under Part 195\nPHMSA assumes that approximately 200,000 miles of hazardous liquid pipeline are\nbeing used in the transport of petroleum and petroleum products in the U.S. '^ PHMSA\nregulates approximately 160,000 miles of that pipeline. ' The difference between these\ntwo numbers, 40,000 (= 200,000 - 160,000) miles, represents the total unregulated\nhazardous liquid pipeline mileage currently in operation. This unregulated mileage is\nmade up primarily of low-stress pipelines and rural gathering lines.\nThe Association of Oil Pipelines (AOPL), an industry group representing pipeline\noperators, estimates that there are between 30,000 and 40,000 miles of gathering lines in\nthe U.S.'^ The midpoint of AOPL's range, 35,000 miles, is used as the point estimate for\nthe total number of miles of gathering lines in the U.S. '^ DOT currently regulates the\nsafety of approximately 2,600 miles of gathering lines.^^ Consequently, an estimated\n32,400 (=35,000 - 2,600) miles of rural gathering lines are currently unregulated.\nRemoving these from the 40,000-mile estimate of unregulated pipelines leaves 7,600\n(=40,000 - 32,400) miles of pipeline as the estimate for unregulated low-stress lines.\n'* Richard A. Rabinow, \"The Liquid Pipeline Industry in the United States: Where It's Been, Where It's\nGoing,\" A report prepared for the Association of Oil Pipelines, April 2004, p. 4.\n\" PHMSA, \"Liquid Pipeline Operator Total National Mileage,\" located at http://ops.dot.gov/stats/lpo.htm.\n'* This includes the mileage of onshore and offshore crude gathering lines (see \"How Many Pipelines are\nThere?\" at http://www.pipelinel01.comyOverview/energv-pl.htmn.\n\" AOPL's estimate is for oil producing states. It might not include mileage in waters of the OCS outside of\nstate control. Consequently, the actual rural gathering line mileage might be higher than estimated here.\n^ ° This includes all crude oil gathering lines subject to Part 195, including those on the OCS.\n14\n\n<<<PAGE 15>>>\n\nOnly part of the 7,600 miles of pipeline will be impacted by the changes in the final rule.\nSome of low-stress pipelines will not be impacted because they are less than one mile\nlong and consequently not covered by the changes. Respondents to the 1990 ANPRM\nquestionnaire mentioned earlier in this report were asked about their lo","truncated":true,"body_characters":125446}