{"operation":"document","citation":"0900006481b75f4a","title":"U.S. DOT/PHMSA - Report - Initial Regulatory Flexibility Analysis","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"Initial Regulatory Flexibility Analysis Pipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences PHMSA-2011-0009 Prepared by Economic Analysis Division Volpe National Transportation Systems Center Research and Innovative Technology Administration U.S. Department of Transportation For: Office of... March 20, 2013 1 Reasons for Agency Action Executive Order 12866 states that \"Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling need, such as material failures of private markets to protect or improve the health and...","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b75f4a.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b75f4a.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b75f4a","source_url":"https://downloads.regulations.gov/PHMSA-2011-0009-0029/attachment_1.pdf","body":"<<<PAGE 1>>>\n\nInitial Regulatory Flexibility Analysis\nPipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to\nApplications Other Than Single-Family Residences\nPHMSA-2011-0009\nPrepared by\nEconomic Analysis Division\nVolpe National Transportation Systems Center\nResearch and Innovative Technology Administration\nU.S. Department of Transportation\nFor:\nOffice of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration (PHMSA)\nU.S. Department of Transportation\nSept. 25, 2013\n1\n\n<<<PAGE 2>>>\n\nMarch 20, 2013\n1 Reasons for Agency Action\nExecutive Order 12866 states that \"Federal agencies should promulgate only such regulations as are\nrequired by law, are necessary to interpret the law, or are made necessary by compelling need, such as\nmaterial failures of private markets to protect or improve the health and safety of the public, the\nenvironment, or the well-being of the American people ... .\" Part of the mission of the Pipeline and\nHazardous Materials Safety Administration (PHMSA) is to ensure the safety of the natural gas system.\nGovernment regulation of pipeline safety standards addresses the market failure of negative\nexternalities, namely the costs that pipeline incidents impose on other parties for which there is no\nmarket compensation. Recognizing the safety benefits of excess flow valve installation in natural gas\ndistribution systems, Section 22 of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of\n2011 directed PHMSA to require the installation of excess flow valves (EFVs) on multi-family residential\nand small commercial entities. In addition, PHMSA is required to respond to the National Transportation\nSafety Board’s (NTSB) recommendation P-01-2, which recommends that PHMSA “require that excess\nflow valves be installed in all new and renewed gas service lines, regardless of a customer’s\nclassification, when the operating conditions are compatible with readily available valves.” The\nproposed rule requires operators of gas distribution pipelines to install EFVs on all new or entirely\nreplaced residential and commercial service lines where the known load does not exceed 1,000\nStandard Cubic Feet per Hour (SCFH) and to install manual shutoff valves on all other new or entirely\nreplaced lines.\n2 Objectives of, and legal basis for, the proposed rule\nThis proposed rule implements statutory mandates of Section 22 of the Pipeline Safety, Regulatory\nCertainty, and Job Creation Act of 2011 by requiring the installation of EFVs on new and entirely\nreplaced service lines serving branched single-family residences, multi-family residences, and small\ncommercial entities with known loads not exceeding 1,000 SCFH. The proposed rule also addresses\nNTSB recommendation P-01-2, which calls for EFVs to be installed in all new and replaced lines\nregardless of customer classification where operating conditions are compatible with readily available\nvalves. Recognizing that broader expansion of EFVs, particularly where known loads exceed 1,000 SCFH,\npresents challenges, PHMSA is proposing the use of curb valves (manual service line shut-off valves) for\nfacilities with known loads that exceed 1,000 SCFH. PHMSA believes the proposed rule will satisfy\nRecommendation P-01-2 by ensuring all service lines have adequate protection from either EFVs or curb\nvalves according to operational conditions.\n2\n\n<<<PAGE 3>>>\n\nMarch 20, 2013\n3 Description and estimate of the number of small entities to which the\nproposed rule will apply\nThis rule applies to all operators of gas distribution systems. This includes gas distribution operators\nwho file annual reports with PHMSA, plus master meter and small LPG operators who do not file annual\nreports. No data on revenues or headcount are available for master meter and small LPG operators, but\nmost of the 6,184 operators in these categories1 can be presumed to be small entities due to the nature\nof their operations.\nAmong distribution operators, there were 1,289 operators with unique OPIDs who submitted an annual\nreport to PHMSA in 2011. These include private natural gas distributors, private companies of other\ntypes that operate service lines, and municipalities. Using a dataset provided by Dun and Bradstreet\nwith information on these operators, , this analysis breaks down the percentage of each type of\noperator within the industry and identifies the percentage that are small businesses. There were 363\ncompanies that identified Natural Gas Distribution as a business operation (the dataset listed up to 6\ncodes per company). Of those that did not indicate Natural Gas Distribution, 601 included a public NAICS\ncode (a code beginning with 92). Fifteen operators were unclassified and the remaining 310 were other\ncompanies, largely electric utilities and other petroleum related industries. Figure 1 below summarizes\nthe breakdown.\nFigure 1. Industry Breakdown of Gas Distribution Line Operators\n1 According to PHMSA’s Operator Management System, there are 5,295 master meter and 889 small LPG\noperators, for a total of 6,184 operators, as of 9/20/2013.\n3\n\n<<<PAGE 4>>>\n\nMarch 20, 2013\n15\n310\n363\n601\nNatural Gas Distributor Public Sector Entity Other Company Unknown\nAccording to the Small Business Administration’s Table of Size Standards Footnote 19, size standards are\nnot developed for public sector operations. Instead, “concerns performing operational services for the\nadministration of a government program are classified under the NAICS private sector industry based on\nthe activities performed.” The NAICS code for Natural Gas Distribution is 221210 and the small business\nsize threshold is 500 employees. Of the 1,289 companies, 1,221 (95%) had fewer than 500 employees.\nBy industry sector, 55 of the 363 natural gas distributors are considered large, or 15%. In the public\nsector, eight entities listed more than 500 employees, or 1% of the public sector distribution companies.\nAmong the other companies, 15, or 5%, listed more than 500 employees. Unclassified operators do not\nhave employment data.\nThe table below breaks down operators by type and the number of service lines they operate. It tracks\nalong with employees fairly closely, with distributors tilting to larger networks and public sector entities\non the smaller end.\nUnder\n1,000\nservice\nlines\n1,001-\n50,000\nlines\nOver\n50,000\nlines\nLines\nunknown\nPercent\nof Total\nService\nLines\nNatural Gas\n23% 53% 24% 1% 73%\nDistributor\nPublic Sector\nEntity\n55% 44% 0% 1% 3%\nOther Company 49% 39% 10% 2% 18%\nUnknown Type 32% 40% 28% 0% 6%\n4\n\n<<<PAGE 5>>>\n\nMarch 20, 2013\nTotal 44% 45% 10% 1%\nOverall, because of the high percentage of gas distribution operators classified as small entities, as well\nas the master meter and small LPG operators that are presumed to be small entities, the proposed rule\nwould impact a substantial number of small entities.\n4 Description of the projected reporting, recordkeeping and other\ncompliance requirements of the proposed rule and their impact on\nsmall entities\n4.1 Excess Flow Valves\n4.1.1 Requirements\nPHMSA proposes to add four new categories of service for which an EFV must be installed on all new or\nreplaced lines. The four new categories that will be added to the existing requirement (49 CFR §\n192.383) for single-family residences (SFRs) served by a single service line are:\n- Branched service lines to a SFR installed concurrently with the primary SFR service line (a single\nEFV may be installed to protect both lines)\n- Branched service lines to an SFR installed off a previously installed SFR service line that does not\ncontain an EFV\n- Multi-family installations, including duplexes, triplexes, and fourplexes with known customer\nloads at time of service installation, based on installed meter capacity, that do not exceed 1,000\nstandard cubic feet per hour (SCFH) per service\n- A single, small commercial customer, served by a single service line, with known customer load\nat time of service installation, based on installed meter capacity, that do not exceed 1,000 SCFH\nper service.\nThe section will continue to include exceptions for cases where installation would not be feasible. These\nexceptions, currently listed in 192.383(b)(1)-(4) of the section, are:\n- When the service line does not operate at a pressure of 10 psig or greater throughout the year\n- When the operator has prior experience with contaminants in the gas stream that could\ninterfere with the EFV’s operation or cause loss of service to the customer\n- When an EFV could interfere with necessary operations or maintenance activities, such as\nblowing liquids from the line\n5\n\n<<<PAGE 6>>>\n\nMarch 20, 2013\n- When an EFV meeting performance standards in 192.381 is not commercially available to the\noperator.\nThe exceptions will reduce the potential cost of the regulation. As there is no data available to estimate\nthe proportion of lines that are excepted, the analysis will assume conservatively that all lines have\noperating conditions suitable for an EFV.\nThe revision also adds a regulation allowing optional installation of EFVs if requested by a customer.\nBecause this component deals with voluntary action only, it will not be considered in the regulatory\nflexibility analysis. However, the analysis does include the associated notification and recordkeeping\ncosts for informing customers of this option.\n4.1.2 Cost to small entities\nEach additional valve imposes a small cost on the operator, as the cost of installation is estimated at $30\nper EFV. Industry comments have referred to the cost as “relatively minimal.”2 These costs may be\nslightly larger for smaller operators due to economies of scale in purchasing valves; however, the cost is\nminimal. Additionally, public operators and natural gas distributors are able to pass on increased costs\nthrough rate adjustments, further minimizing impacts to those entities. The one-time costs incurred by\nthe operators during the installation of new or replaced service lines provide safety benefits for\napproximately 50 years following installation.\n4.2 Curb Valve\n4.2.1 Requirements\nThe proposed rule adds section 385 to part 192. This section would require operators to install a manual\nservice line shut-off valve (curb valve) on any new or replaced service line for which an EFV is not\ninstalled in accordance with section 192.383.\n4.2.2 Cost to small entities\nSimilar to costs related to excess flow valves, each additional valve imposes a small cost on the operator\nof approximately $55 per installation. These costs may be slightly larger for smaller operators due to\neconomies of scale in purchasing valves; however, the cost is minimal. Additionally, public operators and\nnatural gas distributors are able to pass on increased costs through rate adjustments, further minimizing\nimpacts to those entities. Similar to EFVs, the one-time costs incurred by the operators during the\ninstallation of new or replaced service lines provide safety benefits for approximately 50 years following\ninstallation.\n4.3 Recordkeeping Requirements and Cost to Small Entities\nThe proposed rule in part expands the scope of an existing rule that requires recordkeeping. Specifically,\noperators are required to report annually the number of EFVs installed that calendar year and the total\nnumber of EFVs in their system. This portion of the rule will increase the number of lines subject to the\nrequirement but does not itself add additional recordkeeping burden. The curb valve requirement, while\n2 PHMSA-2012-0086-0003, Comment by the American Gas Association, submitted 7/17/2012, pg. 2\n6\n\n<<<PAGE 7>>>\n\nMarch 20, 2013\nnew, also imposes no additional recordkeeping requirement. The notification and recordkeeping costs\nassociated with the new notification requirement for optional EFV installation are estimated at $42 per\nfirm annually, which is a minimal cost even for the smallest operators.\n4.4 Professional Skill Required\nNo additional professional skills are required. The proposed rule in part expands the scope of an existing\nrule to new service lines, so skills required by the previous rule already exist within the entity. The curb\nvalve requirement, while new, imposes no additional skill requirement as curb valve installation is a\ncommon practice within the industry.\n5 Federal rules which may duplicate, overlap or conflict with the\nproposed rule\nTo the best of the knowledge of PHMSA, no other Federal rules duplicate, overlap, or conflict with the\nproposed rule.\n6 Alternatives Considered\nPHMSA considered the following alternatives to the proposed rule: no-action, the full implementation of\nNTSB’s Recommendation P-01-2 (requiring EFVs on service lines regardless of known load size), and the\nhybrid approach selected. The no-action alternative did not address the objectives of Section 22 of the\nPipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, and the full implementation of\nRecommendation P-01-2 would have increased the potential economic impact of the proposed rule.\nBecause the proposed rule is focused on ensuring safety and does not have a significant economic\nimpact on small entities, PHMSA did not consider establishing different compliance or reporting\nrequirements or timetables for small entities.\n7 Effect on the Cost of Credit\nThe proposed rule is not projected to increase the cost of credit for small entities in any way.\n8 Summary and Conclusion\nThe natural gas distribution industry does have a substantial number of small entities as defined by the\nSBA small business threshold of having fewer than 500 employees. However, the rule does not have a\nsignificant impact on small entities because the additional costs are minimal.\n7","truncated":false,"body_characters":13662}