U.S. DOT/RSPA - Draft Regulatory Evaluation and Regulatory Flexibility Certification

Page 1e-*>? ’ I L t - , n-.- 8 i % ~ , I . :! - 2 U.S. DEPARTMENT OF TRANSPORTATION RESEARCH AND SPECIAL PROGRAMS ADMINISTRAlXffN ’ 3 I ,. , , I P : - C J 49 CFR PART 195 -7 DOCKET NO. RSPA-01-9832 RIN 2137-AD59 Pipeline Safety: New Reporting Requirement for Hazardous Liquid Pipeline Operators: Hazardous Liquid Annual Report Form DRAFT REGULATORY EVALUATION AND REGULATORY FLEXIBILITY CERTIFICATION Backmound The Research and Special Programs Administration’s (RSPA) Office of Pipeline Safety (OPS) has responsibility for assuring adequate safety and environmental protection for risks posed by the nation’s approximately 2 million miles of natural gas and hazardous liquid pipelines. The OPS shares responsibility for inspecting and overseeing the nation’s pipelines with state pipeline safety offices. RSPA maintains a hazardous liquid pipeline accident database which it uses to identify safety issues and to target inspections of hazardous liquid pipeline facilities based on risk. RSPA does not, however, collect inventory information on hazardous liquid pipelines that would allow for normalization or trending of accident data. The inventory information that the new form proposes to collect includes: miles of pipeline by size and decade installed; type and volume of hazardous liquid transported; number and size of breakout tanks; etc. Need for the Regulation RSPA currently does not collect inventory data from hazardous liquid pipeline operators. The data is needed to: 1) identify safety trends in hazardous liquid pipeline accident data; 2) provide aggregate information about the extent and type of hazardous liquid pipelines in operation in the United States; and 3) compare natural gas pipeline inventory data with hazardous liquid pipeline inventory data. The proposed rule will provide RSPA with the inventory information necessary to perform normalization and trending of accident data and to accurately characterize the hazardous liquid pipeline infrastructure on a national scale. In its special investigation report PB96-917002 (January 23, 1996), the National Transportation Safety Board (NTSB) issued recommendation P-96-1, which directed the Office of Pipeline Safety (OPS) to develop: a comprehensive plan for the collection and use of gas and hazardous liquid pipeline accident data that details the type and extent of data to be collected, to provide RSPA with the capability to perform methodologically sound accident trend analysis and evaluations of pipeline operator performance using normalized accident data. The process of making elements of data comparable for comparison purposes (as, for example, in#

Page 2finding a common denominator) is known as “normalizing “ the data. Alternatives Alternative 1 : Use the American Petroleum Institute Pipeline Performance Tracking Initiative (PPTI) which has been in existence since 1999. This alternative was rejected because the PPTI program is voluntary and anonymous. RSPA requires full participation and accountability by hazardous liquid pipeline operators. Alternative 2: Use the National Pipeline Mapping System (NPMS) as a means of collecting the necessary information. NPMS is also a voluntary initiative. Alternative 2 was rejected for that reason and also because system limitations made submission of the information impractical. Alternative 3: Create a mandatory hazardous liquid pipeline annual report. Alternative 3 is the chosen alternative. Although RSPA has never collected the needed inventory data from the hazardous liquid industry, it has collected such information from natural gas pipeline operators since the 1970’s. RSPA intends to use the inventory information from hazardous liquid pipeline operator annual reports to normalize and trend accident data. For example, RSPA will be able to compute a leak rate per mile of pipeline. RSPA may also determine if pipe installed in certain years are more likely to have problems compared to those installed in other years. RSPA will be able to compare operators’ safety records to determine which operators may require more frequent Federal or state inspections. Additionally, RSPA will use the normalized data to advise operators whether they should consider repairing or replacing parts of their pipelines. RSPA will use the normalized data for cost-benefit analysis, regulatory development and compliance, and RSPA resource utilization. State pipeline safety programs will use this data for the same purposes. costs RSPA estimates the new annual report form will take hazardous liquid pipeline operators about 12 hours to complete in its first year of use. Every subsequent year operators will spend about 6 hours completing the form as they gain familiarity with it. The 6 hours for completing this form corresponds to the time previously estimated for completion of the Annual Report form for Gas Transmission and Gathering Systems. The new hazardous liquid system form will be very similar to the gas system forms currently in use. RSPA estimates that 300 hazardous liquid operators will be required to completed this form yearly. The average cost to complete this form will be $40 per hour. This is the same hourly cost used in RSPA’s recently published regulation#

Page 3on hazardous liquid accident reporting. The $40 figure was based on the U.S. Department of Labor's National Occupational Employment and Wage Earnings for 1999. According to that document, the hourly wage for a Transportation, Storage, and Distribution Manager (the closest category to a pipeline manager) was $26.03 per hour. The $26.03 figure was multiplied by 1.35 to account for fringe benefits ($26.03 x 1.35= $35.14). RSPA added an inflation factor of 14% to account for inflation from 1999 to 2002 ($35.14 x 1.14= $40.05). Three hundred forms X 12 hours X $40 per hour = $144,000 for the first year total cost to industry. The cost in subsequent years will be $60,000 (300 forms X 6 hours * $40 = $72,000). The average cost per firm will be $480 the first year (12 X $40 = $480) and $240 each year thereafter (6 X $40 = $240). Conclusions RSPA believes the initial annual cost of $144,000 and subsequent yearly cost of $72,000 are relatively modest burdens on the hazardous liquid pipeline industry. The benefits accruing to RSPA, state pipeline safety offices, and industry through the increased utility of the hazardous liquid accident data should easily outweigh the cost. The additional information will allow RSPA, the states, and the hazardous liquid pipeline industry to identify safety issues and trends, and allow operators to make changes to procedures and practices that will ultimately reduce pipeline accidents and improve pipeline safety. Regulatory Flexibility Act The annual cost per operator of complying with this proposed rule is $480 for the first year and $240 per year thereafter. Based on this small increase in costs per operator, I certify pursuant to section 605 of the Regulatory Flexibility Act (5 U.S.C. 605), that this proposed rulemaking would not have a significant impact on a substantial number of small entities. RSPA continues to seek information from anyone who has information on the potential impact of this proposal on small entities. In RSPA's Hazardous Liquid Accident Reporting Notice of Proposed Rulemaking (66 FR 15681; March 20,2001) RSPA sought input from the public on the impact of the proposed rule on small entities. No one responded to this request. The Small Business Administration Chief Counsel for Advocacy, however, made comments on behalf of small businesses. SBA asked a question regarding how many operators RSPA would consider small. For several years RSPA has sought public comment from small hazardous liquid operators. RSPA solicited public comment from small operators in its recent rulemakings on pipeline integrity management. No comments from small hazardous liquid operators were forthcoming. The hazardous liquid pipeline industry is a highly competitive, capital intensive industry which in recent years has seen many mergers and buyouts. SBA's criteria for defining a small entity in the hazardous liquid pipeline industry is 1,500 employees, as specified in the North American#

Page 4Industry Classification System codes (4861 lO--Pipeline Transportation of Crude Oil and 48691 0- -Pipeline Transportation of Refined Petroleum Products). RSPA does not collect information on number of employees or revenues for pipeline operators. Such a collection would require OMB approval. However, RSPA has had recent conversations with SBA regarding characterization of hazardous liquid pipelines for rulemaking purposes. RSPA intends to continue its dialog with SBA and its efforts to ascertain the number of small business operators in the hazardous liquid pipeline industry.#