{"operation":"document","citation":"0900006480e8a885","title":"U.S. DOT/PHMSA - Regulatory Assessment: IMP Modifications","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"_______________________________________ DRAFT Regulatory Assessment Notice of Proposed Rulemaking Pipeline Integrity Management: Program Modifications and Clarifications [Docket No. RSPA-04-18938] October 2005 Prepared by Economic and Industry Analysis Division Volpe National Transportation Systems Center and Office of Pipeline Safety Department of Transportation 1 governments. In accordance with the regulatory philosophy and principles provided in Sections 1(a) and (b) and Section 6(a)(3)(C) of Executive Order 12866, an economic analysis of the proposed regulatory changes must be conducted. Furthermore, the Regulatory Flexibility Act of 1980, as amended, requires Federal...","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e8a885.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e8a885.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006480e8a885","source_url":"https://downloads.regulations.gov/PHMSA-RSPA-2000-7666-0364/attachment_1.pdf","body":"<<<PAGE 1>>>\n\n_______________________________________\nDRAFT Regulatory Assessment\nNotice of Proposed Rulemaking\nPipeline Integrity Management:\nProgram Modifications and Clarifications\n[Docket No. RSPA-04-18938]\nOctober 2005\nPrepared by\nEconomic and Industry Analysis Division\nVolpe National Transportation Systems Center\nand\nOffice of Pipeline Safety\nDepartment of Transportation\n1\n\n<<<PAGE 2>>>\n\nRegulatory Analysis\nIntroduction\nThe Office of Pipeline Safety (OPS) in the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) proposes modifications to the current Pipeline Safety Regulations for\nPipeline Integrity Management (IMP) in High Consequence Areas. The modifications would\naffect Title 49 of the Code of Federal Regulations (CFR) part 192 (Gas Transmission Pipelines)\nand part 195 (Hazardous Liquid Operators). The proposed rule would (1) allow more flexibility\nin the reassessment interval for hazardous liquid pipelines by adding an eight-month window to\nthe five-year time frame for operators to complete the reassessment; and (2) (a) require both\nhazardous liquid and natural gas operators to notify OPS whenever they reduce pipeline pressure\nto make a repair; (b) require hazardous liquid and natural gas operators to provide OPS with the\nreason for the pressure reduction; and (c) correct the existing provision for calculating a pressure\nreduction on hazardous liquid pipelines to allow operators the use of another acceptable method\nfor calculating reduced operating pressure (when the specified formula is not applicable, or\nresults in a calculated pressure higher than the operating pressure).\nBackground\nThe Nation’s existing pipeline infrastructure, much of which is over 50 years old, requires\nregular safety and environmental reviews to ensure its reliability. To address several statutory\nmandates and National Transportation Safety Board (NTSB) recommendations, OPS issued rules\nfor the regulation of the Integrity Management Program (IMP). Regulations for hazardous liquid\npipeline operators are found in 49 CRF 195.452. Rules found in 49 CFR Subpart O address\nregulations of the IMP for gas transmission pipelines. Both the hazardous liquid and natural gas\nIMP regulations require operators to continually assess, evaluate, repair, and validate through\ncomprehensive analysis the integrity of pipeline segments in locales where a leak or rupture\nwould do the most damage, such as populated and environmentally sensitive areas, otherwise\nknown as High Consequence Areas (HCAs).\n2\n\n<<<PAGE 3>>>\n\nThe liquid pipeline IMP rules require operators to establish intervals not to exceed five years for\nreassessing the integrity of pipeline infrastructure. Each operator is to have a schedule for the\nevaluation and remediation of any anomalous conditions that are discovered. For certain\nconditions, the regulations prescribe the timeframes in which an operator must complete the\nremediation of the defect. These conditions are categorized as either immediate, 60-day, or 180-\nday repair conditions.\nThis proposed rule would allow more flexibility (i) in the reassessments for hazardous liquid\npipelines by adding an eight-month window to the five-year timeframe for operators to complete\nthe reassessment; and (ii) by allowing the use of another acceptable method for calculating\nreduced operating pressure (when the specified formula is not applicable, or results in a\ncalculated pressure higher than the operating pressure).\nIn addition, another proposed revision would require both hazardous liquid and natural gas\noperators to notify OPS whenever they reduce pipeline pressure to mitigate a defect and to\nprovide OPS with the reason for the pressure reduction. With the data collected from such\nnotifications, OPS seeks to evaluate the scope and scale of repair issues to develop an accurate\nbaseline for future program development. OPS would also assess the reasons for delay in\nscheduling assessments and evaluate the effect of permitting restrictions on delaying\nassessments.\nRational for Regulatory Assessment\nAll proposed and final Federal regulations must undergo economic analysis. Executive Order\n12866 directs all Federal agencies to develop both preliminary and final regulatory analyses if\ntheir proposed regulations are likely to be “significant regulatory actions” that may have an\nannual impact on the economy of $100 million. The Order also requires a determination as to\nwhether a proposed rule could adversely affect the economy or a section of the economy in terms\nof productivity and employment, the environment, public health, safety, or State, local or tribal\n3\n\n<<<PAGE 4>>>\n\ngovernments. In accordance with the regulatory philosophy and principles provided in Sections\n1(a) and (b) and Section 6(a)(3)(C) of Executive Order 12866, an economic analysis of the\nproposed regulatory changes must be conducted. Furthermore, the Regulatory Flexibility Act of\n1980, as amended, requires Federal agencies to conduct a separate analysis of the economic\nimpact of proposed rules on small entities, and the Unfunded Mandates Act also requires\neconomic impact analysis.\nIn accordance with the above directives, OPS has performed a preliminary evaluation of the\npotential compliance costs of the proposed rule and feasible regulatory options, and identified\nthose benefits that can be expressed in monetary terms. To the extent possible, this is based on\navailable data and information from a range of pertinent sources. OPS estimates that the impact\nof implementing the rule would be less than $100 million annually, and expects that the rule\nwould not adversely affect the economy or a section of the economy in terms of productivity and\nemployment, the environment, public health, safety, or State, local or tribal governments.\nPHMSA has also determined, as required by the Regulatory Flexibility Act, that the proposed\nrule would not have a significant economic impact on a substantial number of small entities in\nthe United States. Additionally, it was determined that the rule would not impose annual\nexpenditures of $120.7 million or more on State, local, or tribal governments or the private\nsector, and thus would not require an Unfunded Mandates Act analysis.\nAlternatives Considered\nThe goal of this rulemaking is to facilitate the continuous assessment and remediation of the\nNation’s pipeline infrastructure through added flexibility without adversely affecting the safety\nof the pipeline system. In developing the NPRM, the following two alternatives were\nconsidered:\n1. Do nothing.\n4\n\n<<<PAGE 5>>>\n\n2. Adopt the recommendations in the API petition with some modifications and expand\nthe requirement for notification of pressure reduction to enhance data collection and\nevaluation of the IMP.\nFor the purpose of the regulatory impact analysis, the cost-benefit analysis of option 2 is\nevaluated here. Also note that OPS is also seeking the submittal of engineering analyses and\ntechnical data to evaluate the scope and scale of the repair issues. Consequently, the cost-benefit\nanalysis does not make any assumption on the frequency and scope of the repair issues but is\nbased on the available data from the Integrity Management Program already in place.\nEconomic Analysis\nIn the proposed rule for Modifications and Clarifications to the Pipeline Integrity Management\nProgram, PHMSA is proposing to amend Parts 192 and 195 in 49 CFR as follows:\n• Section 195.452(j)(3):\nChange length of intervals for continually assessing the integrity of hazardous liquid\npipelines from five-years (60 months) to five-year intervals that are not to exceed 68\nmonths.\n• Section 195.452(h)(4):\nAdd flexibility in scheduling repairs to hazardous liquid pipelines. For immediate repairs,\nOPS proposes to allow hazardous liquid pipeline operators to use another acceptable\nmethod for calculating a reduced operating pressure when the formula in 451.7 of\nASME/ANSI B31.4 (ibr, see §195.3) is not applicable.\n• Sections 192.933 and 195.452(h):\nChange notification of pressure requirements for gas transmission operators (192.933)\nand hazardous liquid pipeline operators (195.452). Currently, an operator must notify\nOPS when it cannot meet scheduled repairs or when it cannot provide safety though a\n5\n\n<<<PAGE 6>>>\n\ntemporary pressure reduction. Operators would now need to notify each time pressure is\nreduced and report the reason for the reduction.\nPHMSA has previously established the IMP, requiring hazardous liquid and gas transmission\npipelines to regularly schedule the evaluation of pipeline integrity and to repair discovered\ndefects. The proposed changes would add flexibility to scheduling assessments for hazardous\nliquid pipelines, but would not impact the number of entities subject to the existing regulatory\nrequirements nor impact the number of assessments to be conducted. The frequency of\nnotification of reduced pressure would increase under the proposed rule changes.\nQuantity and Characteristics of Entities Affected by the Proposed Rule\nThe proposed changes to Section 195.452 would affect all hazardous liquid pipeline operators.\nProposed changes to Section 192.933 would affect all gas transmission operators.\nTable 1. Numbers of Pipelines by Type1\nEstimated\nPipeline Type\nNumber of Operators\nHazardous liquid transmission pipelines 263\nNatural gas transmission pipelines (includes\ngathering lines)\n903\nTOTAL 1,166\nNote that the proposed rule would also impact intrastate operators that are currently affected by\nthe IMP.\n1 Source: PHMSA Hazardous Liquid Annual Reports and Gas Transmission Annual Reports as of 10/2005.\n6\n\n<<<PAGE 7>>>\n\nNatural gas transmission pipelines are those lines that connect gas production sources with gas\nconsumers. Hazardous liquid pipelines are those that deliver hazardous liquids, as defined by\nfederal pipeline safety regulations, from production or processing facilities to terminals and final\nconsumers. A total of 1,166 entities would be affected by the proposed rule2\n.\nBoth gas transmission and hazardous liquid pipeline operators are generally large firms.\nTherefore, no small entities are affected by the proposed regulatory changes.\nRegulatory Impact\nAll proposed changes to the IMP are cost-effective. The proposed changes to 49 CFR 195.452\nwould create benefits through added flexibility for liquid pipeline operators without raising the\ncosts of compliance with reassessment and remediation regulation. The operators would conduct\nthe same number of inspections and repairs as under existing regulations.\nThe proposed change to notification requirements would increase the frequency of notification\nand thus raise the costs of compliance for both liquid and gas transmission operators. However,\nOPS believes that the benefits of the collected data would offset these costs. The data would be\nused to better address industry concerns over delays to assessments and repairs caused by\npermitting restrictions, to identify other reasons for delays and ways to expedite repairs and to\nunderstand whether prolonged pressure reductions have potential impact on the Nation’s energy\nsupply.\nEstimated Costs of Changes to Reassessment Interval\nThe primary impact of changes to the reassessment interval is to provide hazardous liquid\noperators with extra flexibility in meeting regulatory requirements for continuous evaluation and\nrepairs of pipelines. These changes are expected to have no effect on costs. The estimated 200\n2 Additionally, the proposed rule would affect some intrastate operators that operate HCA miles under IMP program.7\n\n<<<PAGE 8>>>\n\nhazardous liquid pipeline operators would still be required to make the same total number of\ninspections and repairs.\nCosts may decline slightly for those operators that extend the evaluation interval beyond the\npreviously required five years, as the costs of excavation would be borne up to the proposed\neight months further into the future. Allowing the reassessment to be completed at an interval no\nlonger than 68 months should not compromise pipeline safety.\nEstimated Costs of Changes to Notification Requirements of Pressure Reduction\nThe costs of compliance with proposed changes to notification requirements would increase for\nboth hazardous liquid pipeline and natural gas transmission operators. Without the proposed\nchange, operators notify OPS only when they cannot meet the schedule for evaluation or\nremediation and cannot provide safety through a temporary reduction in pressure. They must also\nsubmit reasons for pressure reductions lasting longer than 365 days. With the proposed rule,\noperators would notify OPS every time that pressure is reduced and report the reasons for the\nreduction. They would still notify OPS of reductions lasting longer than 365 days. The frequency\nof notification would thus increase.\nBased on the database on hazardous liquid IMP that includes about 263 operators,3\nsince May 2002 OPS has received 74 notifications as of May 2005. Among the 74, 36 requests\nwere due to an operator’s inability to meet repair schedules or reduce pressure; 22 were to use\n“other technology”; 13 were to request longer time schedule; and 3 were for other reasons. The\nfollowing figure depicts the notification by type of request.\n3 The figure is based on inspection conducted over past 3 years. Number of operators include intrastate operators as\nwell.\n8\n\n<<<PAGE 9>>>\n\nFigure 1: Notifications by Type\n(Based on the Hazardous Liquid IMP database as of May 2005)\n40\n35\n30\n25\n20\n15\n10\n5\n0\nSchedule Technology Interval Other\nOPS assumes that an engineering manager, with a fully loaded cost of $64.75 per hour,4 would\ntake 30 minutes to complete each notification.5 The estimated cost per notification is $32.38.\nHowever, based on the currently available information from the hazardous liquid pipeline IMP\ndatabase, the 74 notification requests were submitted by 26 operators over a period of 3 years.\nThere are 263 Hazardous Liquid operators that filed the 2004 Annual Report,6 and the total\nnumber of anomalies within an HCA Segment meeting the definition of immediate repair\nconditions were 1,230 while 644 anomalies were met the 60-day condition and 3,690 anomalies\nwere met the 180-day condition7. Since this NPRM proposes a notification is required whenever\nan operator has to reduce pressure to make a repair. This would include immediate repairs\n(required reduction) or any other repairs where an operator chooses to reduce pressure.\n4 Based on the 2004 U.S. Department of Labor’s Bureau of Labor Statistics National Industry-Specific Occupational\nEmployment and Wage Estimates. The median hourly wage of an engineering manager (for NAICS 486000 –\npipeline transportation) is estimated to be $47.96. With an estimated fringe benefit of 35%, the fully loaded coast of\nan engineering manager in the pipeline industry is $64.75 per hour.\n5 The estimated time includes time to fill up the form as well as some time to collect data, reviews, and approval.\n6 As of 10/2005, 263 operators submitted annual reports to OPS. This is the first hazardous liquid annual report\nsubmitted to OPS, therefore the data are preliminary and may change in future.\n7 per Part J Item 2 of the Annual Report.\n9\n\n<<<PAGE 10>>>\n\nTherefore, this regulatory impact assessment assumes that 263 hazardous liquid operators would\nsubmit about 1,500 notifications per year or about 6 notifications per operator per year and the\nsame will be true for gas transmission operators.8 Assuming each notification costs $32.38 to\nprepare and submit, the estimated total notification cost to the operator is $194.25 annually and\nthe total cost to the industry (263 hazardous liquid and 903 gas transmission operators times\n$194.25) is $226,495 per year.\nThrough this NPRM, OPS is seeking information on the frequency of the repairs. Based on the\ninformation developed, OPS would develop the total cost of compliance for the industry.\nEstimated Benefits of Changes to Reassessment Interval and Repair Schedules\nBased on the information on frequency and scope of the repairs, OPS would quantify or\nmonetize the benefits of the proposed changes to the reassessment interval for hazardous liquid\npipeline operators in future. However, the benefits to the industry would be positive. The added\nflexibility would better allow the operators to meet established regulatory requirements in more\ncost-effective ways. Operators would be better able to plan around adverse weather and other\nunforeseen circumstances that may delay assessment and in turn, repairs. The added flexibility\nwould thus help the industry to avoid unscheduled delays.\nEstimated Benefits of Changes to Notification Requirements for Pressure Reduction\nCurrently, OPS does not have the information needed to quantify or monetize the benefits of the\nproposed changes to the notification requirements for pressure reductions. The benefits would\nresult from data collected from the notifications. The data would be used to study the causes of\ndelays in pipeline assessment and repairs, especially the effect of permitting restrictions on the\ndelays. Such analyses can lead to further improvements in the pipeline IMP and the addressing of\n8 This is a rough estimate – 1,500/263 ≈ 6 based on only 1 year worth of data.\n10\n\n<<<PAGE 11>>>\n\nthe causes of delays. The data would also be used to study the effect of prolonged pressure\nreductions on the Nation’s energy supply.\nBenefits and Costs Assessment\nThe proposed changes to add flexibility to the scheduling of continuous assessment would create\nongoing benefits and have no cost effects. These modifications would thus create positive net\nbenefits. The changes to notification requirement for pressure reduction would create additional\nongoing costs as well as benefits. The benefits are expected to offset the costs. Together, these\nproposed modifications to the IMP for hazardous liquid and gas transmission pipelines are\nexpected to create positive net benefits.\nRegulatory Flexibility Analysis\nThe Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an agency to review regulations to\nassess their impact on small entities unless the agency determines that a rule is not expected to\nhave a significant impact on a substantial number of small entities. Most hazardous liquid\npipeline operators and the natural gas transmission operators do not meet the Small Business\nAdministration’s definition of small business, which is either $6.0 in revenue (for natural gas\npipelines – NAICS 486210) or 1,500 employee size (for crude oil and refines petroleum product\npipelines – NAICS 486110 and 486910)9. The notification cost per operator is about $194.25\nannually, i.e., less than 0.003% of the gross revenue of $6 million per operator. Therefore, the\nrequirements in this NPRM do not have a significant impact on pipeline operators, including\nsmall entities.\n9 http://ecfr.gpoaccess.gov/cgi/t/text/text-\nidx?c=ecfr&sid=eeb26803b82759a11a87d80990f9b044&rgn=div5&view=text&node=13:1.0.1.1.14&idno=13#13:1\n.0.1.1.14.1.231.2\n11\n\n<<<PAGE 12>>>\n\n12","truncated":false,"body_characters":19005}