{"operation":"document","citation":"0900006480e8509b","title":"U.S. DOT/PHMSA - Regulatory Evaluation (August 2006)","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"The document: (1) defines proposed regulatory scope and specific safety requirements to be applied to “regulated rural onshore gathering lines” and “regulated rural onshore low stress lines;” (2) estimates impacted mileage (599 miles gathering; 684 miles low-stress; total 1,283 miles); (3) presents monetized benefits ($3.3 million/year for low-stress lines; present value $49 million over 20 years at 3% discount) and estimated compliance costs (initial ≈ $4.9 million, later annual costs ≈ $1.0–2.0 million; present value $21 million over 20 years at 3%); and (4) concludes the proposed rule is cost‑beneficial with a benefit–cost ratio between about 2.1 and 2.3. The analysis notes limited data on unregulated lines and states many assumptions (including mileage and existing industry practices) used to estimate impacts and invites public comment on those assumptions.","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e8509b.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e8509b.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e8509b","source_url":"https://downloads.regulations.gov/PHMSA-RSPA-2003-15864-0036/attachment_1.pdf","body":"<<<PAGE 1>>>\n\nU.S. Department of Transportation\nPipeline and Hazardous Materials Safety Administration\nRegulatory Evaluation\nAugust 2006\nPipeline Safety:\nProtecting Unusually Sensitive Areas from Rural Onshore Hazardous Liquid\nGathering Lines and Low Stress Lines\nDocket No. RSPA-2003-15864\nRegulatory Analysis\n1. INTRODUCTION\nRural onshore hazardous liquid gathering lines and low stress lines are exempt from most\nof the Pipeline and Hazardous Materials Safety Administration’s (PHMSA’s) safety rules\nfor the transportation of hazardous liquids by pipeline. Although these pipelines may\npose little risk overall, some lines are inherently riskier than others because a spill from\none of them could potentially cause substantial harm to environmentally sensitive areas.\nPHMSA is proposing to extend the safety rules for the transportation of hazardous liquids\nby pipeline to rural onshore gathering lines and low stress lines that are within 440 yards\nof an unusually sensitive area (USA).1 With respect to rural onshore gathering lines,\nPHMSA is proposing the following changes to 49 CFR Part 195:\n• Include the higher-risk rural onshore gathering lines in a new definition of\n“regulated rural onshore gathering lines;” 2\n• Require operators of “regulated rural onshore gathering lines” to follow safety\nrules for design, construction, testing, and maximum operating pressure;\n• Require operators of “regulated rural onshore gathering lines” to protect those\npipelines from corrosion and excavation damage;\n• Require operators of “regulated rural onshore gathering lines” to install and\nmaintain line markers;\n1 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.”\n2 Certain gathering lines are currently regulated. Those gathering 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.\n1\n\n<<<PAGE 2>>>\n\n• Require operators of “regulated rural onshore gathering lines” to undertake public\neducation programs;\n• Require operators of “regulated rural onshore gathering lines” to demonstrate\nOperator Qualification(OQ) compliance; and\n• Require operators of “regulated rural onshore gathering lines” to report accidents\nand safety-related conditions and to make annual reports.\nSimilarly, with respect to rural onshore low stress lines, PHMSA is proposing the\nfollowing changes to 49 CFR Part 195.\n• Include the higher-risk rural onshore low stress lines in a new definition of\n“regulated rural onshore low stress lines;”\n• Require operators of “regulated rural onshore low stress lines” to follow safety\nrules for design, construction, testing, and maximum operating pressure;\n• Require operators of “regulated rural onshore low stress lines” to protect those\npipelines from corrosion and excavation damage;\n• Require operators of “regulated rural onshore low stress lines” to install and\nmaintain line markers;\n• Require operators of “regulated rural onshore low stress lines” to undertake public\neducation programs;\n• Require operators of “regulated rural onshore low stress lines” to demonstrate OQ\ncompliance;\n• Require operators of “regulated rural onshore low stress lines” to report accidents\nand safety-related conditions and to make annual reports;\n• Require operators of “regulated rural onshore low stress lines” to establish an\nintegrity assessment program; and\n• Require operators of “regulated rural onshore low stress lines” to establish a leak\ndetection program based on American Petroleum Institute’s standard 1130 (API\n1130).\nThe proposed changes summarized above are intended to improve public confidence in\nthe safety of rural onshore hazardous liquid gathering and low stress lines.\nIn this report, the benefits and costs of the proposed regulatory changes are examined.\nThe report also includes other mandatory analyses, including the analysis required by the\nRegulatory Flexibility Act.\n2. BACKGROUND\n2.1 Hazardous Liquid Gathering Lines\nHazardous liquid gathering lines are primarily pipelines transporting crude oil from 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\n2\n\n<<<PAGE 3>>>\n\nPipelines (AOPL) that between 30,000 and 40,000 miles of crude oil gathering lines are\ncurrently in operation in oil producing states.3\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, natural 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 from 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 operating pressures, PHMSA expects that major\npipeline firms operate the rural onshore gathering lines that might be impacted by the\nproposed rule.\n2.2 Low Stress Lines\nLow stress lines are hazardous liquid pipelines operating at 20% or less of the specified\nminimum yield strength (SMYS) of the line pipe. These pipelines are currently exempted\nfrom compliance with 49 CFR Part 195 by 49 CFR § 195.1(b)(3).\nMost pipelines moving large volumes of petroleum or petroleum product do so at high\npressures (i.e., in excess of 20% of SMYS). The economics of pipeline operation, and\nthe physical characteristics and condition of a pipeline may result, however, in a pipeline\noperating at 20% or less of SMYS. Short-distance pipelines, such as those associated\nwith petrochemical complexes, refineries, and terminals, may not require high pressures\nto move relatively small quantities of liquids. The lifetime of pipelines that are old or are\nin poor condition may be extended by operation at lowered pressures. Finally, low-\npressure operation may result from market conditions or reduced volumes of pipeline\nthroughput.\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 from 1986 through 1990. The questionnaire also\n3 See “How Many Pipelines are There?” at http://www.pipeline101.com/Overview/energy-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.\n3\n\n<<<PAGE 4>>>\n\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 Docket PS-117.\nIt should be noted that, because these pipelines often transport jet fuel and other refined\nproducts, PHMSA expects that major pipeline firms operate the rural onshore low stress\nlines that might be impacted by the proposed rule.\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.\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.4\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 known risks of a\nsignificant scale.\n4 H.R. Report No. 102-247, Part 1, 102nd Congress, 1st Session, 23 (1991).\n4\n\n<<<PAGE 5>>>\n\nIn association with 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\nis representative of the safety situation with respect to rural gathering lines. This belief is\nstrengthened 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.5\nAs a consequence of Congress’ safety concerns, comments received from stakeholders,\nand accident data, PHMSA believes that the potential for future 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 proposed rulemaking\naims to fulfill 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).\nRecent accidents have demonstrated the need to regulate low stress pipelines near USAs.\nFor instance, on March 2, 2006, a spill from BP’s 34-inch unregulated low stress pipeline\nin North Slope Borough, Alaska, released 5,000 barrels of crude oil, impacting the artic\ntundra and covering approximately 2 acres of permafrost. On March 23, 2006, a spill\nfrom BP’s 36-inch low stress pipeline in Toledo, Ohio, released 200 barrels of unleaded\ngasoline, some of which found its way into Shantee Creek, which flows to Lake Erie. On\nAugust 6, 2006, BP found corrosion and leaks in its unregulated low stress pipeline in\nNorth Slope Borough, Alaska. The discovery of severe corrosion and the leaks caused\nBP to shut the pipeline down. As a consequence of these discoveries, part of the massive\nPrudhoe Bay oilfield had to be shutdown.\nThese and previous accidents on low stress lines caused PHMSA to decide to take\nregulatory action to address rural onshore low stress lines. Low stress lines, it should be\nnoted, are lines operating in their entirety at a stress level of 20% or less of specified\n5 This report is available on the Internet at http://osfm.fire.ca.gov/lowpressrpt.html.\n5\n\n<<<PAGE 6>>>\n\nminimum yield strength (SMYS). As mentioned previously, in association with its\nresponse to comments on the need to regulate rural gathering lines, AOPL submitted\nincident data from a limited number of gathering line operators showing corrosion\ndamage and excavation damage to be the leading causes of pipeline spills. These\nfindings are consistent with PHMSA’s accident data covering regulated hazardous liquid\npipelines. They are also consistent with the findings of a 1997 report by California’s\nOffice of the State Fire Marshal, “An Assessment of Low-Pressure Crude Oil Pipelines\nand Gathering Lines,” which examined the accident record of rural gathering lines and\nother pipelines in California exempt from Part 195.6 Furthermore, PHMSA sees no\nreason to expect unregulated low stress lines to be less vulnerable to corrosion,\nexcavation damage, and other integrity threats than higher pressure regulated lines. Low\nstress lines may be even more vulnerable because they have not been subject to Federal\nsafety 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 low stress lines is clear. Low stress lines have the same leading causes\nof accidents as the hazardous liquid pipelines that PHMSA regulates. Therefore,\nPHMSA believes the current exemption of some low stress lines from nearly all safety\nregulations in Part 195 is no longer appropriate.\n4. RATIONALE FOR REGULATORY ASSESSMENT\nExecutive Order (EO) 12866 directs all Federal agencies to develop both preliminary and\nfinal regulatory analyses if their proposed regulations are likely to be “significant\nregulatory actions” that may have an annual impact on the economy of $100 million. EO\n12866 also requires a determination as to whether a proposed rule could adversely affect\nthe economy or a section of the economy in terms of productivity, employment, the\nenvironment, public health, safety, or State, local or tribal governments. In accordance\nwith the regulatory philosophy and principles provided in sections 1(a) and (b) and\nsection 6(a)(3)(C) of EO 12866, an economic analysis of the proposed regulatory changes\nmust be conducted. Furthermore, the Regulatory Flexibility Act of 1980, as amended,\nrequires Federal agencies to conduct a separate analysis of the economic impact of\nproposed rules on small entities, and the Unfunded Mandates Act also requires economic\nimpact analysis.\nIn accordance with the above directives, PHMSA has performed a preliminary evaluation\nof the potential compliance costs of the proposed rule and feasible regulatory options and\nidentified those benefits that can be expressed in monetary terms. To the extent possible,\nthis is based on the available data and information from a range of sources including\nPHMSA’s Incident Reporting Database and comments received from stakeholders.\nPHMSA estimates that the impact of implementing the proposed rule would not be\ngreater than $100 million annually, nor would the proposed rule adversely affect the\neconomy or a section of the economy in terms of productivity, employment, the\nenvironment, public health, safety, or State, local or tribal governments. PHMSA has\n6 This report is available online at http://osfm.fire.ca.gov/lowpressrpt.html.\n6\n\n<<<PAGE 7>>>\n\nalso determined, as required by the Regulatory Flexibility Act, that the proposed rule\nwould not have a significant economic impact on a substantial number of small entities in\nthe United States. Additionally, it was determined that the proposed rule would not\nimpose annual expenditures of $120.7 million or more on State, local, or tribal\ngovernments or the private sector (and thus would not require an Unfunded Mandates Act\nanalysis).\n5. ALTERNATIVES CONSIDERED\nPHMSA considered several alternatives to assure the necessary protection from potential\nincidents on rural onshore gathering lines and low stress lines. These alternatives were:\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.\nIt should be noted that a “no action” alternative would not have been responsive to the\nCongressional mandate concerning gathering lines. For that reason, a “no action”\nalternative was not considered by PHMSA. The evaluations for the alternatives\nconsidered by PHMSA are presented below.\n5.1 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 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 further.\n5.2 Apply all Part 195 regulations to the rural onshore lines.\n7\n\n<<<PAGE 8>>>\n\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 further.\n5.3 Implement limited operation and maintenance rules, along with\nimplementing reporting rules for accidents and safety-related conditions.\nAOPL recommended the approach covered by this alternative for gathering lines, while\nAPI and AOPL jointly submitted a similar approach for low stress 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 alternative 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 the alternative proposed for gathering lines is that it does not include\nthe installation and maintenance of line markers, OQ program requirements, or drug and\nalcohol requirements. The use of line markers to warn excavators of the presence of\nhazardous liquid pipelines is a well-established safety practice within the hazardous\nliquid pipeline industry. Regarding OQ, Congress mandated that PHMSA establish\nregulations for OQ on pipelines. Congress also directed pipeline operators to develop\nand adopt a qualification program should DOT fail to prescribe standards and criteria.\nFinally, requirements on testing for the presence of prohibited drugs and alcohol apply to\noperators of a pipeline facility subject to Part 195.\nWith respect to low stress lines, the approach would subject such lines that have a\ndiameter greater than 8 5/8 inches, operate at 20 %of SMYS, and are located within a\nquarter mile of an unusually sensitive area to certain regulatory requirements. Those\nrequirements include the reporting requirements of Part 195, subpart B, the corrosion\ncontrol rules in Part 195, subpart H, the damage prevention rules in § 195.442, and the\ninstallation of line markers as required in §195.410. The API/AOPL approach also\nincludes leak detection, assessment, and limited OQ requirements. The benefit of this\nalternative would be that it would focus on the leading threats to rural onshore low stress\nlines – corrosion and excavation damage.\nDisadvantages of the API/AOPL approach include its failure to address other significant\nsafety issues related to pipeline design, construction, and testing. It does not include the\ndrug and alcohol requirements of Part 199 or the public awareness requirements of\n§ 195.440. Furthermore, the approach does not fully address the OQ requirements.\nCongress mandated PHMSA to establish regulations for OQ programs on pipelines.\n8\n\n<<<PAGE 9>>>\n\nCongress also directed pipeline operators to develop and implement qualification\nprograms should DOT fail to prescribe standards and criteria. PHMSA believes that the\nAPI/AOPL approach is too limited because it only addresses one of the multiple facets of\nOQ requirements.\nBecause of the gaps noted by PHMSA, this alternative was not considered any further.\n5.4 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 and low stress lines would not be\nas effective if applied to rural gathering lines. PHMSA’s experience indicates that Part\n195 regulations can be expected to work well for rural gathering and low stress lines\nbecause the integrity threats involved are similar for all the lines. Consequently, the\nalternative of developing a new set of safety regulations applicable to the rural onshore\ngathering lines was not evaluated further.\n5.5 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 5.3. For gathering lines, this modified version of that alternative would add the\nline marker rules in 49 CFR § 195.410, the qualification requirements in subpart G for\noperator personnel, and drug testing and alcohol misuse prevention requirements in Part\n199 to the other regulations. Line markers are a traditional way of altering excavators to\nthe presence of a hazardous liquid pipeline. Under 49 U.S.C. 60131, DOT must require\npipeline operators to develop and adopt qualification programs complying with the\nstandards DOT develops. Furthermore, any operator subject to 49 CFR Part 195 is\nrequired under 49 CFR Part 199 to test covered employees for the presence of prohibited\ndrugs and alcohol. In addition, this modified alternative would require operators to\nestablish a maximum operating pressure for each steel line according to 49 CFR\n§195.406, and to design and construct new lines according to applicable Part 195\nregulations. A maximum operating pressure with accompanying pressure control would\nguard against the danger of accidental overpressure. The design and construction\nregulations in 49 CFR Part 195 would ensure a minimum standard of integrity for all\nnew, replaced, and relocated rural onshore gathering lines designated as “regulated rural\nonshore gathering lines” PHMSA proposed similar rules on markers, operating pressure,\nand design and construction for rural gas gathering lines in a final rule published March\n15, 2006 (see 71 FR 13289). These additions to the approach suggested by AOPL for\nshould not be too burdensome, because similar safety requirements are included in\n(American Society of Mechanical Engineers) ASME B31.4, a consensus standard\nfollowed widely throughout the hazardous liquid pipeline industry.\n9\n\n<<<PAGE 10>>>\n\nPHMSA’s modified approach to the API/AOPL suggestion for rural onshore low stress\nlines would add the drug testing and alcohol misuse prevention requirements of 49 CFR\nPart 199, the public awareness requirements of 49 CFR §195.440, and a modified version\nof the OQ requirements. Because these operators would be regulated under 49 CFR Part\n195, they would be required under 49 CFR Part 199 to test a percentage of covered\nemployees for the presence of prohibited drugs and alcohol. These operators are also\nrequired under 49 U.S.C. 60102(a) to have a public awareness program. Under 49 U.S.C.\n60131(e)(5) and (f), Congress allowed DOT and State pipeline safety agencies to waive\nor modify and OQ requirement if not inconsistent with the pipeline safety laws. PHSMA\nbelieves an approach similar to the modified approach used for gas gathering would be\nappropriate for low stress lines. This modification would allow operators to describe the\nprocesses they have in place to ensure personnel performing operations and maintenance\nactivities are qualified.\nAdditionally, the modified version would require operators to establish a maximum\noperating pressure for each steel line according to 49 CFR § 195.406, and to design,\nconstruct, and test lines according to applicable 49 CFR Part 195 regulations. A\nmaximum operating pressure would guard against the danger of accidental overpressure.\nThe 49 CFR Part 195 design, construction, and testing regulations would ensure a\nminimum standard of integrity for all new, replaced, and relocated “regulated rural\nonshore low stress lines.” Lastly, the modified version would require an operator to\nestablish a leak detection program based on API’s recommended practice API 1130,\n“Computational Pipeline Monitoring,” which is currently being used by industry and is\nincorporated by reference into our existing regulations. Because API 1130 only\naddresses pipelines transporting a stable single phase product, operators transporting\nother products will need to develop another appropriate leak detection method.\nFor the reasons outlined above, this alternative was selected.\n6. ECONOMIC ANALYSIS\nPHMSA is proposing changes to 49 CFR Part 195 for (1) rural onshore hazardous liquid\ngathering lines and (2) rural onshore hazardous liquid low stress lines. With respect to\nrural onshore gathering lines, PHMSA is proposing the following changes:\n• Include the higher-risk rural onshore gathering lines in a new definition of\n“regulated rural onshore gathering lines;”\n• Require operators of “regulated rural onshore gathering lines” to follow safety\nrules for design, construction, testing, and maximum operating pressure;\n• Require operators of “regulated rural onshore gathering lines” to protect those\npipelines from corrosion and excavation damage;\n• Require operators of “regulated rural onshore gathering lines” to install and\nmaintain line markers;\n• Require operators of “regulated rural onshore gathering lines” to undertake public\neducation programs;\n10\n\n<<<PAGE 11>>>\n\n• Require operators of “regulated rural onshore gathering lines” to demonstrate OQ\ncompliance; and\n• Require operators of “regulated rural onshore gathering lines” to report accidents\nand safety-related conditions and to make annual reports.\nWith respect to rural onshore low stress lines, PHMSA is proposing the following\nchanges:\n• Include the higher-risk rural onshore low stress lines in a new definition of\n“regulated rural onshore low stress lines;”\n• Require operators of “regulated rural onshore low stress lines” to follow safety\nrules for design, construction, testing, and maximum operating pressure;\n• Require operators of “regulated rural onshore low stress lines” to protect those\npipelines from corrosion and excavation damage;\n• Require operators of “regulated rural onshore low stress lines” to install and\nmaintain line markers;\n• Require operators of “regulated rural onshore low stress lines” to undertake public\neducation programs;\n• Require operators of “regulated rural onshore low stress lines” to demonstrate OQ\ncompliance;\n• Require operators of “regulated rural onshore low stress lines” to report accidents\nand safety-related conditions and to make annual reports;\n• Require operators of “regulated rural onshore low stress lines” to establish an\nintegrity assessment program; and\n• Require operators of “regulated rural onshore low stress lines” to establish a leak\ndetection program based on API 1130.\nThe benefits and costs of the proposed regulatory changes are addressed in this section of\nthis report. The analysis of benefits and costs takes the following approach: (1) the\nmileage impacted by the proposed regulatory changes is identified and estimated; (2) the\npotential benefits of the proposed rule are examined; (3) the potential costs of the rule are\nexamined; and (4) a discussion of the expected benefits versus the expected costs are\npresented. It should be noted that, unless otherwise specified, all dollar amounts in\nsection 6 of this report are given in constant 2005 dollars.7\nIt should also be noted that the gathering and low stress lines impacted by the proposed\nregulatory changes are not currently regulated by PHMSA. As a consequence, PHMSA\nhas only limited information about the pipelines, their location, operating characteristics,\nand safety performance. Because of this, a number of assumptions have been made in\nthis economic analysis. Therefore the public is invited to comment on those assumptions.\n7 Where necessary, dollars are converted from 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\n6.1 Impacted Mileage\nBoth rural onshore gathering lines and rural onshore low stress lines will be impacted by\nthe proposed regulatory changes. The impacted mileages for each of these two types of\npipeline are estimated below.\n6.1.1 Gathering Lines\nThe rural onshore gathering line mileage that will be impacted by the proposed regulatory\nchange is unknown and must be estimated. The impacted mileage would be operated as\nregulated rural onshore gathering lines, as defined in the proposed regulatory change.\nSuch regulated rural onshore gathering lines\n• Have a nominal diameter of 6 5/8 inches or more;\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 unknown or the pipeline\nis not constructed using a steel pipe, at a pressure of more than 125 psig; and\n• Are within 440 yards (i.e., 1/4 mile) of an unusually sensitive area (USA) as\ndefined 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. 8 This estimated mileage includes both onshore and offshore gathering lines\nas well as both rural and non-rural gathering lines. A mileage breakdown between\nonshore and offshore lines and rural and non-rural gathering lines are 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.9 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.10\n8 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.pipeline101.com/Overview/energy-pl.html).\n9 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.\n10 True and Stell, p. 66.\n12\n\n<<<PAGE 13>>>\n\nFor the purposes of this analysis, the gathering line mileage that would be impacted by\nthe proposed regulatory changes 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. 11 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.12 Those lines, which include all non-rural gathering lines,\noffshore gathering lines, and some rural onshore gathering lines, will continue to be\nregulated, and furthermore, it is assumed that the proposed regulatory changes will not\nimpact them. Consequently, an estimated 32,400 (= 35,000 – 2,600) miles of rural\ngathering 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,13 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 lines operating in compliance with Part\n195. Responses indicated that approximately 16% of the low-stress mileage of the\nrespondents was operated in compliance with Part 195, while approximately 84% were\nnot.14\nGiven the situation in 1990 with low stress pipelines, PHMSA assumes that 16% of the\nrural onshore gathering lines currently operates 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.\n11 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.\n12 This includes all crude oil gathering lines subject to Part 195, including those on the OCS.\n13 According to AOPL, “gathering lines generally operate…at low pressure….” Lines operating at greater\nthan 20% of SMYS, as the NPRM notes, are not operating at low pressure.\n14 For more detail on this, see p. 8 of “Economic Evaluation of Regulating Certain Hazardous Liquid\nPipelines Operating at 20% or Less of Specified Minimum Yield Strength,” July 21, 1992, which can be\nfound in Docket PS-117.\n13\n\n<<<PAGE 14>>>\n\nTo complete the estimation of the gathering line mileage impacted by the proposed 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 440 yards\nof a USA.15 PHMSA assumes for the purposes of this analysis that 22% of the 2,722\nmiles of onshore gathering lines are within 440 yards of a USA. That is, PHMSA\nassumes that 599 (= 2,722 x 0.22) miles of onshore gathering lines are within 440 yards\nof a USA. Since these lines operate at greater than 20% of SMYS, PHMSA assumes that\nmajor pipeline firms operate all of these lines.\nPHMSA acknowledges that this mileage figure is an estimate. Determining the actual\nnumber of miles of gathering lines that would become regulated as a consequence of the\nproposed regulatory changes requires the application of the criteria in the proposed rule\nto each unregulated rural onshore gathering line and its local environment. Since\nPHMSA does not have information about the location and environment of unregulated\nrural onshore gathering lines that would allow explicit determination of whether any\nportion of any particular gathering line would be regulated pipeline operators must make\nthese determinations. PHMSA invites public comment on the reasonableness of its\nestimate.\n6.1.2 Low Stress Lines\nThe rural onshore low stress line mileage that will be impacted by the proposed\nregulatory change is unknown and must be estimated. The impacted mileage will be that\noperated as “regulated rural onshore low stress lines,” as defined in the proposed\nregulatory change. Such low stress lines\n• Have a nominal diameter of 8 5/8 inches or more;\n• Operate at a stress level of less than 20% 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 less than 125 psig; and\n• Are within 440 yards of an unusually sensitive area as defined in 49 CFR § 195.6\nand could affect that area.\nPHMSA assumes that approximately 200,000 miles","truncated":true,"body_characters":100312}