# U.S. DOT/PHMSA - Regulatory Evaluation (August 2006)

- **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:** Not available
- **effective on:** Not available
- **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.
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- **source url:** https://downloads.regulations.gov/PHMSA-RSPA-2003-15864-0036/attachment_1.pdf
**body:**

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U.S. Department of Transportation
Pipeline and Hazardous Materials Safety Administration
Regulatory Evaluation
August 2006
Pipeline Safety:
Protecting Unusually Sensitive Areas from Rural Onshore Hazardous Liquid
Gathering Lines and Low Stress Lines
Docket No. RSPA-2003-15864
Regulatory Analysis
1. INTRODUCTION
Rural onshore hazardous liquid gathering lines and low stress lines are exempt from most
of the Pipeline and Hazardous Materials Safety Administration’s (PHMSA’s) safety rules
for the transportation of hazardous liquids by pipeline. Although these pipelines may
pose little risk overall, some lines are inherently riskier than others because a spill from
one of them could potentially cause substantial harm to environmentally sensitive areas.
PHMSA is proposing to extend the safety rules for the transportation of hazardous liquids
by pipeline to rural onshore gathering lines and low stress lines that are within 440 yards
of an unusually sensitive area (USA).1 With respect to rural onshore gathering lines,
PHMSA is proposing the following changes to 49 CFR Part 195:
• Include the higher-risk rural onshore gathering lines in a new definition of
“regulated rural onshore gathering lines;” 2
• Require operators of “regulated rural onshore gathering lines” to follow safety
rules for design, construction, testing, and maximum operating pressure;
• Require operators of “regulated rural onshore gathering lines” to protect those
pipelines from corrosion and excavation damage;
• Require operators of “regulated rural onshore gathering lines” to install and
maintain line markers;
1 A USA is defined in 49 CFR § 195.6 as “drinking water or ecological resource area that is unusually
sensitive to environmental damage from a hazardous liquid pipeline release.”
2 Certain gathering lines are currently regulated. Those gathering lines are sometimes collectively referred
to as “regulated gathering lines” (see, for example, PHMSA’s file on the Internet containing the 2004
annual reports for hazardous liquid pipelines at http://ops.dot.gov/stats/DT98.htm). This, however, is a
term of art and is not currently defined in the Federal pipeline safety regulations pertaining to hazardous
liquid pipelines.
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• Require operators of “regulated rural onshore gathering lines” to undertake public
education programs;
• Require operators of “regulated rural onshore gathering lines” to demonstrate
Operator Qualification(OQ) compliance; and
• Require operators of “regulated rural onshore gathering lines” to report accidents
and safety-related conditions and to make annual reports.
Similarly, with respect to rural onshore low stress lines, PHMSA is proposing the
following changes to 49 CFR Part 195.
• Include the higher-risk rural onshore low stress lines in a new definition of
“regulated rural onshore low stress lines;”
• Require operators of “regulated rural onshore low stress lines” to follow safety
rules for design, construction, testing, and maximum operating pressure;
• Require operators of “regulated rural onshore low stress lines” to protect those
pipelines from corrosion and excavation damage;
• Require operators of “regulated rural onshore low stress lines” to install and
maintain line markers;
• Require operators of “regulated rural onshore low stress lines” to undertake public
education programs;
• Require operators of “regulated rural onshore low stress lines” to demonstrate OQ
compliance;
• Require operators of “regulated rural onshore low stress lines” to report accidents
and safety-related conditions and to make annual reports;
• Require operators of “regulated rural onshore low stress lines” to establish an
integrity assessment program; and
• Require operators of “regulated rural onshore low stress lines” to establish a leak
detection program based on American Petroleum Institute’s standard 1130 (API
1130).
The proposed changes summarized above are intended to improve public confidence in
the safety of rural onshore hazardous liquid gathering and low stress lines.
In this report, the benefits and costs of the proposed regulatory changes are examined.
The report also includes other mandatory analyses, including the analysis required by the
Regulatory Flexibility Act.
2. BACKGROUND
2.1 Hazardous Liquid Gathering Lines
Hazardous liquid gathering lines are primarily pipelines transporting crude oil from wells
to downstream locations, such as refineries. These pipelines can be found in rural and
non-rural areas as well as onshore and offshore. It is estimated by the Association of Oil
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Pipelines (AOPL) that between 30,000 and 40,000 miles of crude oil gathering lines are
currently in operation in oil producing states.3
The Federal safety regulation found in 49 CFR Part 195 defines a “gathering line” as a
pipeline with a nominal outside diameter of 8 5/8 inches or less that transports petroleum
from a production facility. “Petroleum,” as defined in Part 195, means crude oil,
condensate, natural gasoline, natural gas liquids, and liquefied natural gas. A “rural area”
is defined as a location outside the limits of any incorporated or unincorporated city,
town, village, or any other designated residential or commercial area, such as a
subdivision, a business or shopping center, or community development.
Federal safety regulations covering the transportation of hazardous liquids by pipeline
found at 49 CFR Part 195 apply to both offshore and onshore hazardous liquid gathering
lines. Onshore gathering lines in rural areas, however, are currently exempt from all Part
195 regulations, except those relating to inspection and burial in Gulf of Mexico inlets
(i.e., 49 § CFR 195.1(b)(4)).
It should be noted that, because of their operating pressures, PHMSA expects that major
pipeline firms operate the rural onshore gathering lines that might be impacted by the
proposed rule.
2.2 Low Stress Lines
Low stress lines are hazardous liquid pipelines operating at 20% or less of the specified
minimum yield strength (SMYS) of the line pipe. These pipelines are currently exempted
from compliance with 49 CFR Part 195 by 49 CFR § 195.1(b)(3).
Most pipelines moving large volumes of petroleum or petroleum product do so at high
pressures (i.e., in excess of 20% of SMYS). The economics of pipeline operation, and
the physical characteristics and condition of a pipeline may result, however, in a pipeline
operating at 20% or less of SMYS. Short-distance pipelines, such as those associated
with petrochemical complexes, refineries, and terminals, may not require high pressures
to move relatively small quantities of liquids. The lifetime of pipelines that are old or are
in poor condition may be extended by operation at lowered pressures. Finally, low-
pressure operation may result from market conditions or reduced volumes of pipeline
throughput.
On October 31, 1990, an Advance Notice of Proposed Rulemaking (ANPRM) entitled
“Transportation of a Hazardous Liquid in Pipelines Operating at 20 Percent or Less of
Specified Minimum Yield Strength” was published in the Federal Register. The
ANPRM included a questionnaire designed to elicit information about the existence of
pipelines operating at 20% of SMYS or less including their age, condition, length, and
use, as well as their failure records from 1986 through 1990. The questionnaire also
3 See “How Many Pipelines are There?” at http://www.pipeline101.com/Overview/energy-pl.html. This
estimate is for oil producing states. Consequently, it might not include mileage in Outer Continental Shelf
(OCS) waters outside of state control.
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requested information about whether the pipelines were currently being operated in
compliance with Part 195, and, if not, what the one-time and continuing costs of bringing
them into compliance would be. The responses by industry to the ANPRM questionnaire
can be found in Docket PS-117.
It should be noted that, because these pipelines often transport jet fuel and other refined
products, PHMSA expects that major pipeline firms operate the rural onshore low stress
lines that might be impacted by the proposed rule.
3. STATEMENT OF THE PROBLEM
3.1 Gathering Lines
With the Pipeline Safety Act of 1992 (Pub. L. 102-508), Congress granted the U.S.
Department of Transportation (DOT) the authority to regulate a class of rural gathering
lines called “regulated gathering lines.” Congress left the definitions of “gathering lines”
and “regulated gathering lines” to DOT to develop (see 49 U.S.C. 60101(b)(1)(A) and 49
U.S.C. 60101(b)(2)(A)). In the Accountable Pipeline Safety and Partnership Act (Pub. L.
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 rural gathering lines might pose risks warranting Federal
safety regulation. As a consequence, it gave DOT authority to regulate a class of rural
gathering lines called “regulated gathering lines” based on risk-related physical
characteristics, such as diameter, pressure, location, and length of line. In its report on
H.R. 1489, a bill that led to the Pipeline Safety Act of 1992, the House Committee on
Energy and Commerce stated that:
DOT should find out whether any gathering lines present a risk to people
or the environment, and if so how large a risk and what measures should
be taken to mitigate the risk.4
PHMSA believes that this instruction shows that Congress wanted DOT to limit
“regulated gathering lines” to lines posing a significant risk and to limit regulation of
those lines to suitable risk-reduction measures.
Seeking more information specifically about rural gathering lines, DOT asked the public
about whether these pipelines pose a risk warranting Federal safety regulation and, if so,
what those regulations should be. Most commenters recognized the need for Federal
safety regulation, and most felt that the regulations should address known risks of a
significant scale.
4 H.R. Report No. 102-247, Part 1, 102nd Congress, 1st Session, 23 (1991).
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In association with its comments, the AOPL provided incident data showing that
corrosion and excavation damage are the leading causes of spills on gathering lines
overall (i.e., for both rural and non-rural gathering lines). It should also be noted that
there is no reason to expect that rural gathering lines are any less vulnerable to corrosion,
excavation damage, or other integrity threats than non-rural gathering lines.
Consequently, PHMSA believes that it is reasonable to assume that AOPL’s incident data
is representative of the safety situation with respect to rural gathering lines. This belief is
strengthened by the findings of a 1997 report by California’s Office of the State Fire
Marshal entitled, “An Assessment of Low-Pressure Crude Oil Pipelines and Gathering
Lines,” which found that the leading causes of pipeline incidents from 1993 to 1995 on
rural gathering lines and other pipelines exempt from Part 195 were corrosion and
excavation damage.5
As a consequence of Congress’ safety concerns, comments received from stakeholders,
and accident data, PHMSA believes that the potential for future harm to people and the
environment from rural gathering lines is clear. Furthermore, based on the foregoing,
PHMSA believes that the present exemption of rural gathering lines from nearly all
safety regulations in 49 CFR Part 195 is no longer appropriate. The proposed rulemaking
aims to fulfill Congress’ statutory mandate as it relates to rural onshore gathering lines by
amending 49 CFR Part 195.
3.2 Low Stress Lines
Beginning in 1991, Congress paid greater attention to the risks that hazardous liquid and
natural gas pipelines pose to the environment. In the Pipeline Safety Act of 1992 (Pub.
L.102-508), Congress gave DOT greater authority to protect the environment from the
risks that pipelines pose. Congress continued to emphasize the need to better protect the
environment from pipeline risks in the Accountable Pipeline Safety and Partnership Act
of 1996 (Pub. L.104-304).
Recent accidents have demonstrated the need to regulate low stress pipelines near USAs.
For instance, on March 2, 2006, a spill from BP’s 34-inch unregulated low stress pipeline
in North Slope Borough, Alaska, released 5,000 barrels of crude oil, impacting the artic
tundra and covering approximately 2 acres of permafrost. On March 23, 2006, a spill
from BP’s 36-inch low stress pipeline in Toledo, Ohio, released 200 barrels of unleaded
gasoline, some of which found its way into Shantee Creek, which flows to Lake Erie. On
August 6, 2006, BP found corrosion and leaks in its unregulated low stress pipeline in
North Slope Borough, Alaska. The discovery of severe corrosion and the leaks caused
BP to shut the pipeline down. As a consequence of these discoveries, part of the massive
Prudhoe Bay oilfield had to be shutdown.
These and previous accidents on low stress lines caused PHMSA to decide to take
regulatory action to address rural onshore low stress lines. Low stress lines, it should be
noted, are lines operating in their entirety at a stress level of 20% or less of specified
5 This report is available on the Internet at http://osfm.fire.ca.gov/lowpressrpt.html.
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minimum yield strength (SMYS). As mentioned previously, in association with its
response to comments on the need to regulate rural gathering lines, AOPL submitted
incident data from a limited number of gathering line operators showing corrosion
damage and excavation damage to be the leading causes of pipeline spills. These
findings are consistent with PHMSA’s accident data covering regulated hazardous liquid
pipelines. They are also consistent with the findings of a 1997 report by California’s
Office of the State Fire Marshal, “An Assessment of Low-Pressure Crude Oil Pipelines
and Gathering Lines,” which examined the accident record of rural gathering lines and
other pipelines in California exempt from Part 195.6 Furthermore, PHMSA sees no
reason to expect unregulated low stress lines to be less vulnerable to corrosion,
excavation damage, and other integrity threats than higher pressure regulated lines. Low
stress lines may be even more vulnerable because they have not been subject to Federal
safety regulation to ensure their continued integrity.
Based on Congress’ and PHMSA’s safety concerns, public comments, and available
accident data, PHMSA believes the potential for future harm to people and the
environment from low stress lines is clear. Low stress lines have the same leading causes
of accidents as the hazardous liquid pipelines that PHMSA regulates. Therefore,
PHMSA believes the current exemption of some low stress lines from nearly all safety
regulations in Part 195 is no longer appropriate.
4. RATIONALE FOR REGULATORY ASSESSMENT
Executive Order (EO) 12866 directs all Federal agencies to develop both preliminary and
final regulatory analyses if their proposed regulations are likely to be “significant
regulatory actions” that may have an annual impact on the economy of $100 million. EO
12866 also requires a determination as to whether a proposed rule could adversely affect
the economy or a section of the economy in terms of productivity, employment, the
environment, public health, safety, or State, local or tribal governments. In accordance
with the regulatory philosophy and principles provided in sections 1(a) and (b) and
section 6(a)(3)(C) of EO 12866, an economic analysis of the proposed regulatory changes
must be conducted. Furthermore, the Regulatory Flexibility Act of 1980, as amended,
requires Federal agencies to conduct a separate analysis of the economic impact of
proposed rules on small entities, and the Unfunded Mandates Act also requires economic
impact analysis.
In accordance with the above directives, PHMSA has performed a preliminary evaluation
of the potential compliance costs of the proposed rule and feasible regulatory options and
identified those benefits that can be expressed in monetary terms. To the extent possible,
this is based on the available data and information from a range of sources including
PHMSA’s Incident Reporting Database and comments received from stakeholders.
PHMSA estimates that the impact of implementing the proposed rule would not be
greater than $100 million annually, nor would the proposed rule adversely affect the
economy or a section of the economy in terms of productivity, employment, the
environment, public health, safety, or State, local or tribal governments. PHMSA has
6 This report is available online at http://osfm.fire.ca.gov/lowpressrpt.html.
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also determined, as required by the Regulatory Flexibility Act, that the proposed rule
would not have a significant economic impact on a substantial number of small entities in
the United States. Additionally, it was determined that the proposed rule would not
impose annual expenditures of $120.7 million or more on State, local, or tribal
governments or the private sector (and thus would not require an Unfunded Mandates Act
analysis).
5. ALTERNATIVES CONSIDERED
PHMSA considered several alternatives to assure the necessary protection from potential
incidents on rural onshore gathering lines and low stress lines. These alternatives were:
• Collect more information about the potential hazards of the rural onshore
gathering lines before proposing any specific safety regulations;
• Apply all Part 195 regulations to the rural onshore gathering lines;
• Implement limited operation and maintenance regulations, along with
implementing reporting regulations for accidents and safety-related conditions, to
the rural onshore gathering lines;
• Develop a completely new set of safety regulations for rural onshore gathering
lines; and
• Implement limited operation and maintenance regulations, along with
implementing reporting regulations for accidents and safety-related conditions
and requiring the use of line markers. In this alternative, include regulations for
design, construction, and testing of new, relocated, replaced, or otherwise
changed lines.
It should be noted that a “no action” alternative would not have been responsive to the
Congressional mandate concerning gathering lines. For that reason, a “no action”
alternative was not considered by PHMSA. The evaluations for the alternatives
considered by PHMSA are presented below.
5.1 Collect more information about the potential hazards of the rural onshore
lines before proposing any specific safety regulations.
This alternative received some support from industry, and Congress did grant DOT
specific authority to collect more information about hazards before proposing any safety
regulations. This alternative was rejected, however, because PHMSA feels that there is
currently a demonstrated need for safety regulation. Also, based on PHMSA experience
with hazardous liquid pipelines, collecting more information about the rural onshore
gathering lines would unlikely to change the current understanding concerning the
potential risks these lines pose. For these reasons, collecting more information about the
potential hazards of the rural onshore lines was evaluated no further.
5.2 Apply all Part 195 regulations to the rural onshore lines.
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This alternative would impose significant costs on the industry for little safety benefit.
Also, the costs could have a significant effect on U.S. oil supplies by causing production
to cease at marginal wells connected to the lines. For these reasons, applying the
regulations from Part 195 to rural onshore lines was not evaluated further.
5.3 Implement limited operation and maintenance rules, along with
implementing reporting rules for accidents and safety-related conditions.
AOPL recommended the approach covered by this alternative for gathering lines, while
API and AOPL jointly submitted a similar approach for low stress lines.
With respect to gathering lines, the operation and maintenance rules to be implemented
would be the public education rules in 49 CFR § 195.440, the excavation damage
prevention rules in 49 CFR § 195.442, and the corrosion control rules in subpart H of Part
195. The reporting rules would be provisions of subpart B of Part 195 relating to
accidents and safety-related conditions. The benefit of this alternative would be that it
would avoid excessive safety regulation by focusing on the leading threats to rural
gathering lines – corrosion and excavation damage. Also, the information collected
through application of the reporting rules would enable PHMSA to recognize safety
problems and evaluate the effectiveness of adopting only limited safety rules.
One disadvantage of the alternative proposed for gathering lines is that it does not include
the installation and maintenance of line markers, OQ program requirements, or drug and
alcohol requirements. The use of line markers to warn excavators of the presence of
hazardous liquid pipelines is a well-established safety practice within the hazardous
liquid pipeline industry. Regarding OQ, Congress mandated that PHMSA establish
regulations for OQ on pipelines. Congress also directed pipeline operators to develop
and adopt a qualification program should DOT fail to prescribe standards and criteria.
Finally, requirements on testing for the presence of prohibited drugs and alcohol apply to
operators of a pipeline facility subject to Part 195.
With respect to low stress lines, the approach would subject such lines that have a
diameter greater than 8 5/8 inches, operate at 20 %of SMYS, and are located within a
quarter mile of an unusually sensitive area to certain regulatory requirements. Those
requirements include the reporting requirements of Part 195, subpart B, the corrosion
control rules in Part 195, subpart H, the damage prevention rules in § 195.442, and the
installation of line markers as required in §195.410. The API/AOPL approach also
includes leak detection, assessment, and limited OQ requirements. The benefit of this
alternative would be that it would focus on the leading threats to rural onshore low stress
lines – corrosion and excavation damage.
Disadvantages of the API/AOPL approach include its failure to address other significant
safety issues related to pipeline design, construction, and testing. It does not include the
drug and alcohol requirements of Part 199 or the public awareness requirements of
§ 195.440. Furthermore, the approach does not fully address the OQ requirements.
Congress mandated PHMSA to establish regulations for OQ programs on pipelines.
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Congress also directed pipeline operators to develop and implement qualification
programs should DOT fail to prescribe standards and criteria. PHMSA believes that the
API/AOPL approach is too limited because it only addresses one of the multiple facets of
OQ requirements.
Because of the gaps noted by PHMSA, this alternative was not considered any further.
5.4 Develop a completely new set of safety rules for the rural onshore gathering
lines.
PHMSA rejected this alternative because there is no reason to believe that the Part 195
safety regulations now in effect for non-rural gathering and low stress lines would not be
as effective if applied to rural gathering lines. PHMSA’s experience indicates that Part
195 regulations can be expected to work well for rural gathering and low stress lines
because the integrity threats involved are similar for all the lines. Consequently, the
alternative of developing a new set of safety regulations applicable to the rural onshore
gathering lines was not evaluated further.
5.5 Implement limited operation and maintenance rules, along with
implementing reporting rules for accidents and safety-related conditions and
requiring the use of line markers.
Finally, PHMSA considered a modified version of the alternative discussed above in
Section 5.3. For gathering lines, this modified version of that alternative would add the
line marker rules in 49 CFR § 195.410, the qualification requirements in subpart G for
operator personnel, and drug testing and alcohol misuse prevention requirements in Part
199 to the other regulations. Line markers are a traditional way of altering excavators to
the presence of a hazardous liquid pipeline. Under 49 U.S.C. 60131, DOT must require
pipeline operators to develop and adopt qualification programs complying with the
standards DOT develops. Furthermore, any operator subject to 49 CFR Part 195 is
required under 49 CFR Part 199 to test covered employees for the presence of prohibited
drugs and alcohol. In addition, this modified alternative would require operators to
establish a maximum operating pressure for each steel line according to 49 CFR
§195.406, and to design and construct new lines according to applicable Part 195
regulations. A maximum operating pressure with accompanying pressure control would
guard against the danger of accidental overpressure. The design and construction
regulations in 49 CFR Part 195 would ensure a minimum standard of integrity for all
new, replaced, and relocated rural onshore gathering lines designated as “regulated rural
onshore gathering lines” PHMSA proposed similar rules on markers, operating pressure,
and design and construction for rural gas gathering lines in a final rule published March
15, 2006 (see 71 FR 13289). These additions to the approach suggested by AOPL for
should not be too burdensome, because similar safety requirements are included in
(American Society of Mechanical Engineers) ASME B31.4, a consensus standard
followed widely throughout the hazardous liquid pipeline industry.
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PHMSA’s modified approach to the API/AOPL suggestion for rural onshore low stress
lines would add the drug testing and alcohol misuse prevention requirements of 49 CFR
Part 199, the public awareness requirements of 49 CFR §195.440, and a modified version
of the OQ requirements. Because these operators would be regulated under 49 CFR Part
195, they would be required under 49 CFR Part 199 to test a percentage of covered
employees for the presence of prohibited drugs and alcohol. These operators are also
required under 49 U.S.C. 60102(a) to have a public awareness program. Under 49 U.S.C.
60131(e)(5) and (f), Congress allowed DOT and State pipeline safety agencies to waive
or modify and OQ requirement if not inconsistent with the pipeline safety laws. PHSMA
believes an approach similar to the modified approach used for gas gathering would be
appropriate for low stress lines. This modification would allow operators to describe the
processes they have in place to ensure personnel performing operations and maintenance
activities are qualified.
Additionally, the modified version would require operators to establish a maximum
operating pressure for each steel line according to 49 CFR § 195.406, and to design,
construct, and test lines according to applicable 49 CFR Part 195 regulations. A
maximum operating pressure would guard against the danger of accidental overpressure.
The 49 CFR Part 195 design, construction, and testing regulations would ensure a
minimum standard of integrity for all new, replaced, and relocated “regulated rural
onshore low stress lines.” Lastly, the modified version would require an operator to
establish a leak detection program based on API’s recommended practice API 1130,
“Computational Pipeline Monitoring,” which is currently being used by industry and is
incorporated by reference into our existing regulations. Because API 1130 only
addresses pipelines transporting a stable single phase product, operators transporting
other products will need to develop another appropriate leak detection method.
For the reasons outlined above, this alternative was selected.
6. ECONOMIC ANALYSIS
PHMSA is proposing changes to 49 CFR Part 195 for (1) rural onshore hazardous liquid
gathering lines and (2) rural onshore hazardous liquid low stress lines. With respect to
rural onshore gathering lines, PHMSA is proposing the following changes:
• Include the higher-risk rural onshore gathering lines in a new definition of
“regulated rural onshore gathering lines;”
• Require operators of “regulated rural onshore gathering lines” to follow safety
rules for design, construction, testing, and maximum operating pressure;
• Require operators of “regulated rural onshore gathering lines” to protect those
pipelines from corrosion and excavation damage;
• Require operators of “regulated rural onshore gathering lines” to install and
maintain line markers;
• Require operators of “regulated rural onshore gathering lines” to undertake public
education programs;
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• Require operators of “regulated rural onshore gathering lines” to demonstrate OQ
compliance; and
• Require operators of “regulated rural onshore gathering lines” to report accidents
and safety-related conditions and to make annual reports.
With respect to rural onshore low stress lines, PHMSA is proposing the following
changes:
• Include the higher-risk rural onshore low stress lines in a new definition of
“regulated rural onshore low stress lines;”
• Require operators of “regulated rural onshore low stress lines” to follow safety
rules for design, construction, testing, and maximum operating pressure;
• Require operators of “regulated rural onshore low stress lines” to protect those
pipelines from corrosion and excavation damage;
• Require operators of “regulated rural onshore low stress lines” to install and
maintain line markers;
• Require operators of “regulated rural onshore low stress lines” to undertake public
education programs;
• Require operators of “regulated rural onshore low stress lines” to demonstrate OQ
compliance;
• Require operators of “regulated rural onshore low stress lines” to report accidents
and safety-related conditions and to make annual reports;
• Require operators of “regulated rural onshore low stress lines” to establish an
integrity assessment program; and
• Require operators of “regulated rural onshore low stress lines” to establish a leak
detection program based on API 1130.
The benefits and costs of the proposed regulatory changes are addressed in this section of
this report. The analysis of benefits and costs takes the following approach: (1) the
mileage impacted by the proposed regulatory changes is identified and estimated; (2) the
potential benefits of the proposed rule are examined; (3) the potential costs of the rule are
examined; and (4) a discussion of the expected benefits versus the expected costs are
presented. It should be noted that, unless otherwise specified, all dollar amounts in
section 6 of this report are given in constant 2005 dollars.7
It should also be noted that the gathering and low stress lines impacted by the proposed
regulatory changes are not currently regulated by PHMSA. As a consequence, PHMSA
has only limited information about the pipelines, their location, operating characteristics,
and safety performance. Because of this, a number of assumptions have been made in
this economic analysis. Therefore the public is invited to comment on those assumptions.
7 Where necessary, dollars are converted from nominal values to real 2005 values using the Implicit Price
Deflators for Gross Domestic Product. The source of these deflators is the annual data version of Table
1.1.9 Implicit Price Deflators for Gross Domestic Product, which is located on the Bureau of Economic
Analysis website at http://www.bea.gov/bea/dn/nipaweb/SelectTable.asp?Selected=N.
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6.1 Impacted Mileage
Both rural onshore gathering lines and rural onshore low stress lines will be impacted by
the proposed regulatory changes. The impacted mileages for each of these two types of
pipeline are estimated below.
6.1.1 Gathering Lines
The rural onshore gathering line mileage that will be impacted by the proposed regulatory
change is unknown and must be estimated. The impacted mileage would be operated as
regulated rural onshore gathering lines, as defined in the proposed regulatory change.
Such regulated rural onshore gathering lines
• Have a nominal diameter of 6 5/8 inches or more;
• Operate at a stress level of more than 20 %of SMYS (specified minimum yield
strength) during normal operation or, if the stress level is unknown or the pipeline
is not constructed using a steel pipe, at a pressure of more than 125 psig; and
• Are within 440 yards (i.e., 1/4 mile) of an unusually sensitive area (USA) as
defined in 49 CFR § 195.6.
Information about the mileage of gathering lines in the U.S. is somewhat sketchy. AOPL
estimates that there are between 30,000 and 40,000 miles of crude oil gathering lines in
this country. 8 This estimated mileage includes both onshore and offshore gathering lines
as well as both rural and non-rural gathering lines. A mileage breakdown between
onshore and offshore lines and rural and non-rural gathering lines are not available.
PHMSA does have information indicating that pipeline operators have 2,573 miles of
crude oil gathering lines that are currently regulated under Part 195. Some of this
mileage may be non-rural. Other mileage, however, may be rural mileage located in the
inlets of the Gulf of Mexico and subject to 49 CFR § 195.413.
It is also known that interstate common-carrier pipelines that are required to file Form 6
with the U.S. Federal Energy Regulatory Commission (FERC) operate approximately
15,000 miles of crude gathering lines.9 Common carrier pipelines are those that charge a
fee for their service. There is a filing threshold for Form 6 that is based on pipeline
operating revenues, and some common carrier pipelines may have revenues below that
threshold and consequently may not be reporting their gathering system mileage to
FERC.10
8 The Association of Oil Pipelines estimates that there are between 30,000 and 40,000 miles of gathering
lines in the U.S. This includes the mileage of onshore and offshore crude gathering lines (see “How Many
Pipelines are There?” at http://www.pipeline101.com/Overview/energy-pl.html).
9 In Warren R. True and Jeannie Stell, “Special Report: Pipeline Economics,” Oil & Gas Journal Data
Book, 2005 Edition, PennWell Corp., Tulsa, OK, 2005, p. 80, it is reported that these pipelines operated
14,187 miles of gathering lines in 2003, while the pipelines operated 16,214 miles of gathering lines in
2002.
10 True and Stell, p. 66.
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For the purposes of this analysis, the gathering line mileage that would be impacted by
the proposed regulatory changes was estimated as follows.
As mentioned before, AOPL, an industry group representing pipeline operators, estimates
that there are between 30,000 and 40,000 miles of gathering lines in the U.S. 11 The
midpoint of AOPL’s range, 35,000 miles, is used as the point estimate for the total
number of miles of gathering lines in the U.S.
Also as mentioned before, DOT currently regulates the safety of approximately 2,600
miles of gathering lines.12 Those lines, which include all non-rural gathering lines,
offshore gathering lines, and some rural onshore gathering lines, will continue to be
regulated, and furthermore, it is assumed that the proposed regulatory changes will not
impact them. Consequently, an estimated 32,400 (= 35,000 – 2,600) miles of rural
gathering lines are currently unregulated.
The 32,400 mile estimate includes both onshore and offshore mileage. PHMSA assumes
that 50 %of all rural gathering line mileage is onshore. Thus, an estimated 16,200 (= 0.5
x 32,400) miles of rural onshore gathering lines are currently unregulated.
Furthermore, based on comments by AOPL,13 PHMSA assumes that no more than 20%
of all onshore gathering line mileage that is currently unregulated meets the following
conditions: (1) has a nominal diameter of 6 5/8 inches or greater and (2) operates at
greater than 20% of SMYS (or alternatively at a pressure of 125 psig or greater). Thus,
PHMSA expects that no more than 3,240 (= 0.2 x 16,200) miles of rural onshore
gathering lines (1) have a nominal diameter of 6 5/8 inches or greater and (2) operate at
greater than 20% of SMYS (or at a pressure of 125 psig or greater).
Some the mileage will not be impacted because it already operates in compliance with
Part 195, even though that is not currently required. No information is readily available
for gathering lines, but information is available from the 1990 ANPRM questionnaire
mentioned earlier on the percentage of low stress lines operating in compliance with Part
195. Responses indicated that approximately 16% of the low-stress mileage of the
respondents was operated in compliance with Part 195, while approximately 84% were
not.14
Given the situation in 1990 with low stress pipelines, PHMSA assumes that 16% of the
rural onshore gathering lines currently operates in compliance with Part 195, while 84%
do not. That means an estimated 2,722 (= 0.84 x 3,240) miles of rural onshore gathering
lines do not operate in compliance with Part 195.
11 AOPL’s estimate is for oil producing states. It might not include mileage in waters of the OCS outside of
state control. Consequently, the actual rural gathering line mileage might be higher than estimated here.
12 This includes all crude oil gathering lines subject to Part 195, including those on the OCS.
13 According to AOPL, “gathering lines generally operate…at low pressure….” Lines operating at greater
than 20% of SMYS, as the NPRM notes, are not operating at low pressure.
14 For more detail on this, see p. 8 of “Economic Evaluation of Regulating Certain Hazardous Liquid
Pipelines Operating at 20% or Less of Specified Minimum Yield Strength,” July 21, 1992, which can be
found in Docket PS-117.
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To complete the estimation of the gathering line mileage impacted by the proposed rule,
information is needed on the proximity of gathering lines to USAs.
According to information contained in the National Pipeline Mapping System,
approximately 22% of all regulated hazardous liquid pipeline mileage is within 440 yards
of a USA.15 PHMSA assumes for the purposes of this analysis that 22% of the 2,722
miles of onshore gathering lines are within 440 yards of a USA. That is, PHMSA
assumes that 599 (= 2,722 x 0.22) miles of onshore gathering lines are within 440 yards
of a USA. Since these lines operate at greater than 20% of SMYS, PHMSA assumes that
major pipeline firms operate all of these lines.
PHMSA acknowledges that this mileage figure is an estimate. Determining the actual
number of miles of gathering lines that would become regulated as a consequence of the
proposed regulatory changes requires the application of the criteria in the proposed rule
to each unregulated rural onshore gathering line and its local environment. Since
PHMSA does not have information about the location and environment of unregulated
rural onshore gathering lines that would allow explicit determination of whether any
portion of any particular gathering line would be regulated pipeline operators must make
these determinations. PHMSA invites public comment on the reasonableness of its
estimate.
6.1.2 Low Stress Lines
The rural onshore low stress line mileage that will be impacted by the proposed
regulatory change is unknown and must be estimated. The impacted mileage will be that
operated as “regulated rural onshore low stress lines,” as defined in the proposed
regulatory change. Such low stress lines
• Have a nominal diameter of 8 5/8 inches or more;
• Operate at a stress level of less than 20% of SMYS during normal operation or, if
the stress level is unknown or the pipeline is not constructed using steel pipe, at a
pressure of less than 125 psig; and
• Are within 440 yards of an unusually sensitive area as defined in 49 CFR § 195.6
and could affect that area.
PHMSA assumes that approximately 200,000 miles
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