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U.S. DOT/RSPA - Fact Sheet re: Draft Regulatory Evaluation for Pipeline Integrity Management in High Consequence Areas (Gas Transmission Operators)
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Page 1- PA F- 11- 71367 Draft Final Regulatory Evaluation Pipeline Integrity Management in High Consequence Areas (Gas Transmission Operators) Advisory Committee Action: Vote Our emphasis on the integrity management system encourages a balanced program, addressing the range of prevention and mitigation needs and avoiding reliance on any single tool or overemphasis on any single cause of failure. This orientation will lead to addressing the most significant risks, o and is the best opportunity to improve industry performance and assure that the high wnsequencz areas get the protection they need. It also addresses the interrelationships between failure causes -3 .-: 1 -3 'I -? and benefits. It promotes the coordination of risk control actions, beyond what a compliance- 2 based approach would achieve. - - = -- 3 -. ; .-; I 3 The cost for operators to identify pipeline segments that can affect high consequence areas is T I -- estimated to be $9.63 million. These costs will be incurred in the first year d e r the effective d a t e < of the rule. P I The integrated cost to all operators for developing integrity management plans is estimated to be $6 1.2 million (plus $370,000 for providing real-time access to performance measures). Annual costs of $6.68 million are projected to review the plans, make changes as needed, and to prepare routine reports. First year costs for performing the necessary data integration are estimated to be $17.04 million, reflecting the need for operators to adjust their management systems to assure that the relevant data can be collected and analyzed. Those process changes will not be required in following years, when the costs for data integration are estimated to be $8.52 million annually. Testing is a k ~ e l e m e n t t h e T h i i i & i € i o n a s s u m e s t n a t ~ i p i ~ ~ o ~ ~ - the addition of perkanent laudchers and receivers for in-line inspection equipment. This increases the costs of in-line inspection for baseline inspections, which would occur under the proposed rule for the first ten years. A portion of transmission piping in high consequence areas will be inspected each year, using one of three specified methods. (The proposed rule would allow operators to use alternative methods, with adequate justification, but no additional methods are projected in this analysis). The total cost across the industry for testing, including the necessary modification of some pipelines, is estimated to be $16.28 million annually for each of the first seven years after the proposed rule becomes effective, $18.44 million annually for the next three years, and $15.07 million annually thereafter. As described in the evaluation, it is difficult to quanti@ the benefit of this proposed rule, because it is not now possible to estimate with certainty the effectiveness the proposed requirements would have in avoiding natural gas transmission pipeline accidents. Sixteen years of data indicate that the benefit of the rule in avoiding deaths, serious injuries, and property damage would be equal to $53.25 million annually ifthese measures are completely successful in avoiding accidents like those reflected in the current data. Even though this represents the monetized value of all deaths, serious injuries, and property damages reported in the last 16 years, it is not necessarily a#
Page 2bounding estimate. Future accidents are likely to have greater consequences, as described in the analysis. In addition, avoiding major accidents, with multiple fatalities, can result in greater benefit. The 16 years of data considered include two years (eleven years apart) in which accidents occurred that had many fatalities. The most recent of these accidents was the explosion and fire caused by a pipeline rupture near Carlsbad, NM on August 19,2000, which caused 12 fatalities. The fiequency of such major accidents could be greater in future years absent some regulatory change. This evaluation demonstrates that the costs for implementing the proposed rule will be larger than the monetized benefits it will provide. As described, the maximum quantitative benefit that the rule could provide, assuming fbture accident rates and consequences consistent with the recent historical record and that the proposed rule is completely effective in eliminating such accidents, is $53.25 million. The proposed rule is directed at that portion of natural gas transmission pipelines where an accident is most likely to result in the highest consequences, the pipeline mileage in the areas with highest population density. It could, therefore, be quite effective in reducing accident consequences. As a result, the benefits are of the same order of magnitude as the annual costs of approximately $30 million. The up-front costs that will be incurred as a result of the proposed rule are substantial, however, and are not justified by the resulting quantifiable benefits. Incurring them is necessary in order to establish the improved framework for operator management and regulator oversight of safety. As described in the analysis, there are a number of qualitative benefits that will be realized from the proposed change. Foremost among these is providing a basis for improved public confldence in pipeline safety. Economic benefits are expected to accrue from this increased level of confidence, including reduced costs for siting and constructing new pipelines, thereby allowing access to the environmental benefits of increased use of natural gas in lieu of other fuels. ~ Q ~ B ~ g v g s - ~ h s Q c e s s e f d e v ~ l s p i n g - a R - i e ~ ~ ~ ~~-~ ~ -~ ~- integrating data related to pipeline integrity is an important process for the operator, the government and the general public. The creation, and development of the plan will alert operators of the potential risks and consequences unique to high consequence areas. The planning process, including the testing schedule, also provides a level of confidence to Federal and state pipeline inspectors that pipeline operators are considering, examining, testing, and repairing if necessary, natural and other gas transmission pipelines that may potentially pose severe consequences to public safety. Finally, standardizing the requirements nationally for transmission pipelines will save operators having to face potentially different testing and inspection requirements from the various state pipeline agencies. The OPS concludes that the qualitative benefits justie the costs associated with initial implementation of the proposed requirements.#
This material provides agency context. It does not replace binding regulatory text, and its legal effect depends on the underlying authority and facts.