{"operation":"document","citation":"0900006481b76040","title":"U.S. DOT/PHMSA - Report -  Regulatory Impact Analysis","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"Regulatory Impact Analysis: Proposed Rule Pipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences PHMSA-2011-0009 Office of Pipeline Safety Pipeline and Hazardous Materials Safety Administration (PHMSA) U.S. Department of Transportation 1 June 17, 2015 the comments received and has been placed in the docket. on this final report. The public is requested to comment The proposed rule would expand EFV coverage beyond the SFR requirement included in the Integrity Management (IM) rule that went into effect in 2010 to cover all lines that are suitable for an...","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b76040.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b76040.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b76040","source_url":"https://downloads.regulations.gov/PHMSA-2011-0009-0030/attachment_1.pdf","body":"<<<PAGE 1>>>\n\nRegulatory Impact Analysis: Proposed Rule\nPipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to\nApplications Other Than Single-Family Residences\nPHMSA-2011-0009\nOffice of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration (PHMSA)\nU.S. Department of Transportation\n1\n\n<<<PAGE 2>>>\n\nJune 17, 2015\nExecutive Summary\nThe Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing to amend\nthe Federal Pipeline Safety Regulations to require operators of gas distribution pipelines to\ninstall excess flow valves (EFV) on all new or replaced residential and commercial service lines\nwhere the known load does not exceed 1,000 Standard Cubic Feet per Hour (SCFH) and to\ninstall manual shutoff valves on all other new or replaced lines. The purpose of this proposed\nregulation is to improve safety by mitigating the damages from sudden pipeline ruptures and\nbreaks by quickly shutting off the released gas. The rule addresses Section 22 in the Pipeline\nSafety, Regulatory Certainty, and Job Creation Act of 2011 (P.L. 112-90)1 and National\nTransportation Safety Board (NTSB) recommendation P-01-2.\n2 Section 22 of the Act requires\nPHMSA to issue a final report on the evaluation of the NTSB recommendation on EFVs in\napplications other than service lines serving one single family residence and, if appropriate,\nrequire by regulation the use of excess flow valves, or equivalent technology, where\neconomically, technically, and operationally feasible on new or entirely replaced distribution\nbranch services, multifamily facilities, and small commercial facilities. On December 4, 2009,\nPHMSA amended the pipeline safety regulations to require the use of EFVs for new or replaced\ngas lines servicing Single Family Residences (SFRs).3 While this requirement met the mandate\nof the Pipeline Inspection, Protection, Enforcement and Safety Act (PIPES Act) enacted in 2006,\ndistribution branched services, multi-family facilities, commercial properties, and industrial\nservice lines were still not required to use EFVs. These structures are susceptible to the same\nrisks as SFR service lines.\n4\nIn an effort to study the possible benefits and costs of expanding EFVs beyond SFR applications,\nPHMSA began development of the Interim Evaluation Report in early 2009.\n5 Based on the\nReport and the comments received on the Report (see NPRM for discussion), PHMSA found that\nexpansion of EFVs is technically, operationally, and economically feasible where loads do not\nexceed 1,000 SCFH irrespective of the customer classification. PHMSA acknowledges that\nEFVs may not be practical for large apartment buildings and industrial or commercial users due\nto inherent design complexity and continuous supply demands. PHMSA believes curb valves\nwill provide the best possible option for improved safety at this time in those situations where\nloads exceed 1,000 SCFH. The Interim Evaluation Report was finalized by PHMSA based on\n1 Under the Act, PHMSA is required to study and issue a final report on EFVs and, if appropriate, to issue\nregulations requiring the use of EFVs or equivalent technology, where “economically, technically and operationally\nfeasible”, for new or entirely replaced distribution branch services, multi-family lines, and small commercial service\nlines.\n2 National Transportation Safety Board, Natural Gas Explosion and Fire in South Riding, Virginia, July 7, 1998,\nPipeline Accident Report NTSB/PAR-01/01 (Washington, D.C.: NTSB, 2001).\n3 74 FR 63906\n4 Please see the NPRM for Discussion of the 2010 Rule\n5 The report is in the docket at\nhttp://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS\nA-2011-0009\n2\n\n<<<PAGE 3>>>\n\nJune 17, 2015\nthe comments received and has been placed in the docket. on this final report.\nThe public is requested to comment\nThe proposed rule would expand EFV coverage beyond the SFR requirement included in the\nIntegrity Management (IM) rule that went into effect in 2010 to cover all lines that are suitable\nfor an EFV and operate with known loads that do not exceed 1,000 SCFH.6 The proposed rule\nwould also require that manual shut-off valves (curb valves) be installed on all new or replaced\nlines where known loads exceed 1,000 SCFH and the line does not fit into the exceptions in §\n192.383. The proposed regulation incorporates PHMSA’s findings and its analysis of comments\nfrom the study mandated by the Section 22 of P.L. 112-90. The proposed rule would also require\noperators to notify customers of their right to request installation of EFVs on existing service\nlines (other than those being newly installed or replaced). In those cases, the appropriate State\nregulatory agency will determine all issues related to the costs of installation. The proposed\nrequirements would pertain to all distribution operators, including operators of petroleum gas\nsystems that serve fewer than 100 customers from a single source and operators of master\n7\nmeters.\nPHMSA collects information on gas distribution infrastructure (number of main miles, number\nof services, number of EFVs installed) through its gas distribution annual reports (PHMSA Form\nF 7100.1-1) and detailed information on incidents that met the incident definition in § 191.3\nthrough the incident reports (PHMSA Form F 7100.1). None of the reports ask for information\nby customer classification or the load sizes. However, this regulatory impact assessment uses\nexisting PHMSA data combined with the information available from published sources to\nquantify the costs and benefits of the proposed regulation by customer classification as defined in\nthe Section 22 of the Act.\nPHMSA acknowledges that gas distribution systems are generally safe, averaging 0.11\nreportable incidents per 100,000 services in 2010-2013.8 The proposed rule would target to\n6 Docket Number: PHMSA-RSPA-2004-19854, “Pipeline Safety: Integrity Management Program for Gas\nDistribution Pipelines.”\n7 operators of petroleum gas systems which serve fewer than 100 customers from a single source and operators of\nmaster meters are exempt from submitting Annual reports in accordance with 191.11\nhttp://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49-vol3-sec191-11.xml\nAnd Master meter system is defined as means a pipeline system for distributing gas within, but not limited to, a\ndefinable area, such as a mobile home park, housing project, or apartment complex, where the operator purchases\nmetered gas from an outside source for resale through a gas distribution pipeline system. The gas distribution\npipeline system supplies the ultimate consumer who either purchases the gas directly through a meter or by other\nmeans, such as by rents; in 191.3 http://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49-\nvol3-sec191-3.xml\n8 Number of gas distribution incidents other than on mains divided by the number of services. Incident definitions\nand reporting thresholds are found in 49 CFR 191.3 and 49 CFR 191.9. In general, operators must report incidents\nthat result in any deaths, injuries requiring hospitalization, property damage over $50,000, and/or loss of 3 million\ncubic feet of gas.\n3\n\n<<<PAGE 4>>>\n\nJune 17, 2015\nmitigate the consequences of rare but potentially high-consequence incidents on new and fully\nreplaced services. Since the quantified benefit estimate depends on the existing incident\ndatabase, the benefit may be underestimated as it is not possible to predict a high-consequence\nincident that would have be prevented by the safety measure extended through the proposed\nregulation. PHMSA’s incident database is also limited to incidents that occurred on DOT-\njurisdictional pipes and meet certain criteria (§191.3) and does not include EFV-preventable\nincidents that did not meet the criteria, nor EFV-preventable incidents that occurred downstream\nof the DOT-jurisdictional piping (such as in customer piping). On the other hand, the cost\nestimate assumes every single service line has either an EFV or a curb valve as it is impossible to\nestimate where multiple services are protected by a single EFV or a curb valve. This one-to-one\ncorrespondence of a valve and a service line could overestimate the cost of the proposed\nregulation with respect to smaller non-multifamily residences. However, to be conservative in\ncost estimation, PHMSA’s analysis provided quantitative costs and benefits per valve,\nannualized at 7% and 3% discount rates.\nSetting aside the proposal for SFRs, the benefits of the proposed rule that we were able to\nquantify are estimated to be $7.7 million when annualized and discounted at 7%, while the\nestimated costs, also discounted and annualized, are $10.5 million. Therefore, this rule is\nestimated to be a net-cost rule using a 7% discount rate given the limitation of the quantitative\nbenefit data. Using the alternative 3% discount rate, the estimated quantified annualized benefits\nare $15.0 million per year, and the estimated total annualized costs are $11.9 million per year,\nwhich results in a net benefit of $3.1 million.\nThe incremental benefits and costs of the proposal to extend mandatory EFV installation to\nnewly installed or replaced branched service lines for single-family residences could not be\nquantitatively estimated. PHMSA has no data with which to distinguish single versus branched\nservices, which differ only in their underground configuration. As an upper bound with respect\nto the number EFVs required, the cost of the EFV provision for SFR as a whole – branched and\nnon-branched – is estimated to range between $11 to $27 million per year in annualized benefits\nand $8 million per year in annualized costs.9 The portion specifically attributable to branched\nSFR could not be estimated, though PHMSA believes that branched services represent a fairly\nsmall share of the overall total. (Due to these same data limitations, the Distribution Integrity\nManagement Program (DIMP) rule estimated total impacts for SFR even though that rule did not\napply to branched services.)\nThe following table summarizes the quantified cost-benefit estimates at a 7% discount rate.\n9This is the estimate from the previous DIMP rule for EFVs on all SFR, single and branched, with an adjustment for\nthe intervening change in USDOT guidance on the value of statistical life.\nFor the previous RIA, see www.regulations.gov/#!documentDetail;D=PHMSA-RSPA-2004-19854-0255\n4\n\n<<<PAGE 5>>>\n\nJune 17, 2015\n($ Millions) Annualized\nBenefit (7%)\nAnnualized Cost (7%)\n[Branched Line Single\nFamily – Upper Bound]10\n[11 - 27] [8]\nMultifamily Residence 1.1 6.2\nSmall Commercial 1.4 1.1\nIndustrial/Other curb valve 5.2 3.0\nNotification & recordkeeping - 0.2\nTotal Benefits 7.7 10.5\nIn addition to the quantified benefits, the proposed rule is also expected to have benefits that we\nwere unable to quantify. They include the following:\n Equity: Provides a fair and equal level of safety to members of society who do not live in\nsingle-family residences\n Additional incident costs avoided for which no PHMSA incident data are available:\nMitigates the consequences (death, injury, property damage) of additional incidents that\nare not reflected in PHMSA records because customer piping or equipment is involved\n Additional incident costs which are not recorded in incident reports, including costs of\nevacuations, emergency response costs, and business downtime\n Environmental externalities associated with methane release (discussed in Appendix B)\n Peace of mind for operators and customers\n Protection against seismic events and intentional tampering\nPHMSA requests public comments on methods and information to quantify or monetize these\nunquantified benefits. With respect to point raised above concerning equity, PHMSA specifically\nrequests public comment on whether pipeline operators or customers tend to bear the costs of\nEFVs. PHMSA also requests public comments on whether the rule would have costs that are not\nquantified in this RIA. While the analysis could not quantify the benefits and costs of the proposal\nto require EFVs on new or replaced branched service lines servicing SFRs, and the quantified\nbenefits for multi-family residences are estimated as less than the cost for installing EFVs on that\ncustomer classification, PHMSA nonetheless believes the potential unquantified safety benefits,\n10 Based on estimates from previous DIMP rule with updated value of statistical life. There are no data on branched\nversus single available to develop a more precise estimate. Benefits and costs for this category were already\nincluded in the DIMP estimates and, to avoid double-counting, are not included in the total estimated quantified\ncosts and benefits of this proposed rule.\n5\n\n<<<PAGE 6>>>\n\nJune 17, 2015\ncombined with the quantified monetary benefits, justify the estimated cost. The one-time cost of\ninstalling an EFV ($15-$50, best estimate $3011) during new service or replaced service is fairly\nsmall. According to the data analyzed, the benefits of incident prevention on a per-EFV basis are\nalso small because incidents involving these classifications are rare. However, these incident\nprevention benefits will exist for up to 50 years, as PHMSA assumes that EFVs and curb valves\nhave a lifespan of 50 years. The values are calculated based on the assumption that without the\nregulation, EFVs and curb valves would not be installed in service lines (other than lines serving\nSFRs under the existing regulations). With voluntary installation, the benefits and costs would be\nreduced proportionally. The proposed rule is assumed to affect approximately 1,289 natural gas\ndistribution operators and on average 222,114 services per year.\nIn sensitivity testing, the quantified benefits fell in between the low and high cost estimates. The\nbenefits of this proposal are based on high-cost, low-probability incidents. The incident data we\nanalyzed suggests that incidents occurring on many of these service classifications are infrequent.\nHowever, PHMSA’s Incident Report database does not capture service classification and less\nthan a decade’s worth of incident data (2004 to 2012) could be analyzed for this proposed\nrulemaking, it is, thus, unlikely that the cost-benefit analysis captured all of the incidents that\ncould have been prevented or mitigated by an EFV. Further, several of the incidents noted by the\nNTSB when they made previous recommendations for EFV installation took place decades ago,\nsuch that comparable incident causation data are not available in the PHMSA database.\nPHMSA’s historical data and NTSB investigations show that incidents do occur on these lines,\nand when they do, they are typically high-consequence events. Key incidents identified by NTSB\ninclude the 1994 explosion at a retirement home in Allentown, PA, which resulted in a fatality, 66\ninjuries, and $5 million in property damage, and the 1998 explosion in St. Cloud, MN, which\ndemolished a pizzeria, apartments, a law office, a bar, and took four lives.12\nBecause this rule aims to provide an extra level of protection in areas where there are high\nconcentrations of people, a prevented or mitigated incident could prevent several injuries or\nfatalities (and sometimes extensive property damage), thereby producing significant quantifiable\nbenefits. Further, while the unquantifiable benefits include avoided evacuations, avoided\nemergency response costs, and seismic event and tamper protections, there is substantial value in\nthe perception of the safety and integrity of the natural gas distribution system. Currently, certain\nSFR residents are the only people who have the added protection of EFVs by federal regulation:\n11 The average cost of an EFV, ranging from $15-$50 is $32.50. PHMSA used $30 in this analysis as a ball-park as\nthe analysis does not have any basis for assuming what would be a weighted average cost (how many EFVs at $15\nand how many at $50 or in between. The analysis also does not account for future technology/manufacturing\nprogress which typically reduces the unit cost.\n12 National Transportation Safety Board, UGI Utilities, Inc., Natural Gas Distribution Pipeline Explosion and Fire,\nAllentown, Pennsylvania, June 9, 1994, Pipeline Accident Report NTSB/PAR-96/01 (Washington, D.C.: NTSB,\n1996) and National Transportation Safety Board, Natural Gas Pipeline Rupture and Subsequent Explosion, St.\nCloud, Minnesota, December 11, 1998, Pipeline Accident Report NTSB/PAR-00/01 (Washington, D.C.: NTSB,\n2000)\n6\n\n<<<PAGE 7>>>\n\nJune 17, 2015\nanyone who is residing in a multi-family residence (MFR), no matter if it is by choice or\ncircumstance, is not being provided an equal opportunity to avoid incidents like the ones that\noccurred at Allentown, PA, and St. Cloud, MN.\nThe Initial Regulatory Flexibility Analysis, included as a separate document in the docket, noted\nthat the natural gas distribution industry contains a substantial number of small entities. However,\nwhile there may be a small (and disproportionate) impact on small entities due to the ability of\nlarger companies to save by buying valves in bulk, the impact is not significant due to the very\nlow cost per valve.\nPHMSA determined that the rule would not impose annual expenditures on State, local, or tribal\ngovernments of the private sector in excess of $147.6 million and thus does not require an\nUnfunded Mandates Act analysis.13\n13 The Unfunded Mandates Act threshold was $100 million in 1995. Using the non-seasonally adjusted CPI-U\n(Index series CUUR0000SA0), that number is $147.6 million in 2011 dollars.\n7\n\n<<<PAGE 8>>>\n\nJune 17, 2015\n1 Introduction\nThe Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing to amend\nthe requirements of §192.383 (b) by requiring the installation of excess flow valves (EFV)\nbeyond single-family residence (SFR) service lines to cover new or replaced branched service\nlines, multi-family residences, and small commercial service lines serving a single customer with\na known load that does not exceed 1,000 SCFH. Additionally, PHMSA is proposing to add\n§192.385 to require the installation of manual shutoff valves (curb valves) on all new or replaced\nlines where the installed meter capacity exceeds 1,000 SCFH.\nThe National Transportation Safety Board (NTSB) has identified, between 1970 and 2011, 11\nsignificant incidents that could have been mitigated by the presence of an EFV and has issued\nmore than 20 recommendations concerning the installation of EFVs for both residential and\ncommercial applications. The NTSB’s recommendations culminated in the most recent Safety\nRecommendation P-01-2, which states that PHMSA “require that excess flow valves be installed\nin all new and renewed gas service lines, regardless of a customer’s classification, when the\noperating conditions are compatible with readily available valves.”\nPHMSA published an ANPRM (76 FR 72666, November 25, 2011) that included an Interim\nEvaluation report on expanding the EFV requirement beyond single-family residences. The\nInterim Evaluation, which had been posted online and received extensive feedback from\nstakeholders, recommended that an economic analysis be performed that would take into account\nalternatives, particularly curb valves; differentiate among the various classifications of\ncustomers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a\nsurvey would have to be performed in order to identify incidents and to find operators with\nexperience and data on operating EFVs beyond SFRs.\nWhile the ANPRM was open for comments, President Obama signed the Pipeline Safety,\nRegulatory Certainty, and Job Creation Act of 2011 into law. Section 22 of that law required\nPHMSA to issue a final report on the evaluation of the NTSB’s recommendation on EFVs in\napplications other than service lines serving one single family residence, and “if appropriate,\nrequire by regulation the use of excess flow valves, or equivalent technology, where\neconomically, technically, and operationally feasible on new or entirely replaced distribution\nbranch services, multifamily facilities, and small commercial facilities.”\nThis proposed rule addresses Section 22 of the Pipeline Safety, Regulatory Certainty, and Job\nCreation Act of 2011 and NTSB Recommendation P-01-2. Section 22 of the Act requires\nPHMSA to conduct a study on the expanded use of EFVs in applications other than SFR service\n1\n\n<<<PAGE 9>>>\n\nJune 17, 2015\nlines. Based on the study\n14 and the comments received on the study (see NPRM for discussion),\nPHMSA has determined that expanding EFV installation will provide protection for the vast\nmajority of gas customers, irrespective of customer classification where known load size is less\nthan or equals 1,000 SCFH, and is technically, operationally, and economically feasible.\nPHMSA acknowledges that EFVs may not be practical for large apartment buildings and\nindustrial or commercial users due to inherent design complexity and continuous supply\ndemands. PHMSA believes curb valves will provide the best possible option for improved safety\nat this time in situations where loads exceed 1,000 SCFH. PHMSA believes this proposed rule\nwill satisfy the NTSB recommendation and promote better public safety by ensuring all service\nlines, regardless of the customer classification, have adequate protection through the installation\nof either an EFV or a curb valve. The interim report was finalized by PHMSA based on the\ncomments received and has been placed in the docket. The public is requested to comment on\nthis final report.\nThe proposed requirements for distribution pipeline operators are described below.\n1.1 Excess Flow Valves\nThe proposed rule would revise 49 CFR part 192 §383 by adding four new categories of service\nfor which EFV installation will be required on all new or replaced lines. The four new categories\nthat will be added to the existing requirement for SFRs served by a single service line are:\n- Branched service lines to a SFR installed concurrently with the primary SFR service line\n(a single EFV may be installed to protect both lines)\n- Branched service lines to an SFR installed off a previously installed SFR service line that\ndoes not contain an EFV\n- Multi-family residences with known customer loads at time of service installation, based\non installed meter capacity, not exceeding 1,000 SCFH per service\n- A single, small commercial customer, served by a single service line, with known\ncustomer load at time of service installation, based on installed meter capacity, not\nexceeding 1,000 SCFH per service.\nPHMSA believes the first two categories of branched service lines to SFRs cover the majority of\nbranched services. The benefits and costs of installing EFVs on service lines to SFRs were\nanalyzed as part of the DIMP rulemaking in 2009. As there is no data available for which\n14 The report is in the docket at\nhttp://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS\nA-2011-0009\n2\n\n<<<PAGE 10>>>\n\nJune 17, 2015\ninstalled lines are single-service or branched service15\n, and because incident data doesn’t\ndistinguish the two types of lines, there was no practical way to exclude branched lines from the\noverall SFR calculations for DIMP. Indeed, the only difference between whether a service line is\nsingle-service or branched is in the underground configuration, which is determined by the\ninstalling operator on a case-by-case basis. The 2009 DIMP analysis found that installing EFVs\non lines serving SFRs would yield annual benefits in the range of $7 million to $17 million\nagainst costs of $8 million. The safety benefits were calculated using the then-current $5.8\nmillion value per statistical life and would thus be substantially higher using today’s $9.1 million\nvalue. While PHMSA is not aware of a practical way to break down the benefits and costs of\nEFV installation on branched lines serving SFRs specifically, installing EFVs on branched lines\nis expected to have positive net benefits in light of the overall SFR results. Branched SFR is\nexcluded from the remainder of this analysis as the cost and benefits are unquantifiable due to\ndata limitation and to avoid duplication of the costs and benefits incorporated in the DIMP\nanalysis. PHMSA seeks public comments on the benefits and costs of its proposal to require\ninstallation of EFVs on new or replaced branched service lines servicing SFRs and any\ninformation that would help overcome the data limitations regarding the number of branched and\nnon-branched services lines.\nThe present analysis categorizes the estimated new and replaced services by multifamily,\ncommercial, and industrial classifications and ensures every service line has the protection of\neither an EFV or a curb valve, thereby accounting for the cost of either an EFV or a curb valve\nfor every service (the cost may be slightly overestimated as one can potentially have an EFV or a\ncurb valve servicing multiple customers/services).\nThe proposed rule would continue to include exceptions for excess flow valves for cases where\ninstallation would not be feasible. These exceptions, now in part (c) of section 383, are:\n- When the service line does not operate at a pressure of 10 psig or greater throughout the\nyear\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\nas blowing liquids from the line\n- When an EFV meeting performance standards in 192.381 is not commercially available\nto the operator.\nThe exceptions reduce the potential cost of the regulation by acknowledging that there are\nreasonable conditions that render EFV installation not operationally and technically feasible. As\nthere is no data available to estimate the proportion of lines that are exempt, the analysis will\n15 PHMSA’s Natural Gas Distribution Annual reports (PHMSA F7100.1-1) collect information on the number of\nservices per operator in each state as an aggregate number without service type classification.\n3\n\n<<<PAGE 11>>>\n\nJune 17, 2015\nassume that all lines with known loads under 1,000 SCFH have operating conditions suitable for\nan EFV, thereby overestimating the cost.\nThe revision also adds a part (d) to section 383 that allows optional installation of EFVs if\nrequested by a customer. The analysis does not estimate the number of customer requests that\nmay occur in any given year or the resulting transfers.\nBased on the findings and the comments on the Interim Report, PHMSA has determined that\nexpanding the installation of EFVs will provide protection for the vast majority of gas\ndistribution customers, irrespective of the customer classification, where loads does not exceed\n1,000 SCFH. PHMSA has also deemed that EFVs may not be practical for large apartment\nbuildings and industrial or commercial users due to inherent design complexity and continuous\nsupply demands. For those situations (loads exceeding 1,000 SFCH), PHMSA believes curb\nvalves will provide the best possible option for improved safety at this time.\n1.2 Curb Valves\nThe proposed rule adds §385 to Part 192. The addition would require operators to install a\nmanual service line shut-off valve (curb valve) on any new or replaced service line on which an\nEFV is not installed in accordance with section 192.383(b).\nThe proposed required use of curb valves for large commercial (greater than 1,000 SFCH) goes\nbeyond the Section 22 language of the Pipeline Safety, Job Creation, and Regulatory Certainty\nAct of 2011, however it is based on ANPRM comments received from industry, trade\nassociations and other stakeholders. PHMSA and industry in general believe that EFVs are not\nsuitable for larger commercial facilities over 1,000 SFCH. As mentioned above, curb valves are\nthe best alternative to an EFV and provide an effective added level of safety for these facilities.\nThese valves also are a feasible alternative based on the cost/benefit analyses.\nPHMSA’s authority for regulating natural gas pipelines was first established by the Natural Gas\nPipeline Safety Act of 1968, Pub. L. No. 90-481, and has since been enlarged by additional\nlegislation. The Pipeline Safety Laws specifically delegate authority to DOT to develop,\nprescribe, and enforce minimum Federal safety standards for the transportation of natural\ngas. PHMSA has used this statutory authority to promulgate comprehensive minimum safety\nstandards. While the 2011 Act specifically directed PHMSA to require the installation of EFVs\non new and replaced branched lines serving SFRs, multi-family and small commercial facilities,\nDOT’s underlying prior statutory authority under 49 USC § 60104 provides PHMSA with the\nauthority to require the installation of curb valves for large commercial facilities.\nThe remainder of this report analyzes the benefits and costs of the regulatory changes as required\nby Section 1 of Executive Order 12866 (as amended by E.O.s 13258 (2002), 13422 (2007), and\n4\n\n<<<PAGE 12>>>\n\nJune 17, 2015\n13497 (2009)) and Section 1 of Executive Order 13563 (2011). The initial Regulatory Flexibility\nAnalysis is filed separately in the docket.16\n2 Background\nEFVs are designed to automatically stop the flow of a gas when the flow increases suddenly and\nsignificantly, such as during a pipeline separation. They are used in the United States and around\nthe world to mitigate damage resulting from a sudden pipeline rupture caused by a natural\ndisaster, excavation damage, or other third-party damage. However, because they shut\nautomatically based on changes in flow, they can also shut when customers suddenly increase\ntheir gas load, causing an inconvenience for the customer and the company. Manual shutoff\nvalves, known as curb valves, are an alternative that avoids a false closure but requires a trained\nresponder to be on site to shut the valve, increasing the amount of gas that is released after an\nincident.\nPHMSA has moved towards greater installation rates of EFVs over the years while continuing to\nrecognize that EFV closures pose hazards of their own.\n17 In 1996, PHMSA added 49 CFR\n192.381 to the Pipeline Safety Regulations, which contains performance standards for EFVs. In\n1998, responding to statutory mandates in Section 104 of the Pipeline Safety Act of 1992 (Pub.\nL. 102-508), PHMSA added a requirement18 that required operators to notify customers in\nwriting about EFV availability; the safety benefits derived from installation; and any installation,\nmaintenance, and replacement costs19\n.\nIn 2006, the Pipeline Integrity, Protection, Enforcement, and Safety (PIPES) Act of 2006\nrequired that EFVs be installed on all new or replaced service lines serving one SFR where:\n The service line continuously operates at a pressure at or above 10 psig\n The service line is not connected to a gas stream with a prior history of contaminants\n The installation is not likely to cause a loss of service to the residence or to interfere with\nnecessary operations and maintenance\n EFVs are commercially available.\n16 The text of E.O. 12866 can be found here: http://www.archives.gov/federal-register/executive-\norders/pdf/12866.pdf and E.O. 13563 here:\nhttp://www.whitehouse.gov/sites/default/files/omb/inforeg/eo12866/eo13563_01182011.pdf\n17See FR Doc No: 94-18771, “Excess Flow Valve Installation on Service Lines” August 2, 1994 for discussion of\nEFV closure costs and PHMSA’s 1996 cost-benefit analysis summarized in 61 FR 31449.\n18 http://www.gpo.gov/fdsys/pkg/CFR-2002-title49-vol3/pdf/CFR-2002-title49-vol3-sec192-383.pdf\n19 Distribution Integrity Management Rule (http://primis.phmsa.dot.gov/dimp/docs/DIMPFINALRULE.PDF)\nremoved this requirement in 2009.\n5\n\n<<<PAGE 13>>>\n\nJune 17, 2015\nPHMSA issued Advisory Bulletin 08-04 encouraging operators to begin installing EFVs in\naccordance with the Act. The final rule on natural gas distribution IM programs was officially\npublished December 4, 2009, and applied to lines installed or replaced after February 2, 2010 (74\nFR 63906). However, the NTSB issued a response to PHMSA’s status update urging PHMSA to\nmake the rule applicable to all customers “regardless of their classification.”20\nPHMSA then published an ANPRM that included an Interim Evaluation report on expanding the\nEFV requirement beyond single-family residences (76 FR 72666, November 25, 2011)21\n. The\nInterim Evaluation recommended that an economic analysis be performed that would take into\naccount alternatives, particularly curb valves; differentiate among the various classifications of\ncustomers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a\nsurvey would have to be performed in order to identify incidents and to find operators with\nexperience and data on operating EFVs beyond SFR applications.\nNineteen entities submitted comments to the ANPRM docket (PHMSA-2011-0009). Eleven\ncomments were from utility companies or associations, two were from manufacturers, one was\nfrom a State regulator, one was from the NTSB, one was from a city government, and the\nremainders were from the public.\nIn general, utilities supported an expansion of EFV installation, with limits on feasibility. The\nAmerican Gas Association, American Public Gas Association, Northeast Gas Association,\nSouthwest Gas Corporation, Nicor Gas Company, National Grid, Avista, and Laclede Gas all\nsupported a limited expansion. Mid-American Gas and the City of Ellensburg, WA, supported an\nexpansion as long as curb valves and EFVs were viewed as perfect substitutes for one another\nand companies could select which valve best suited operational conditions. The Texas Pipeline\nAssociation focused specifically on service lines extending from transmission and gathering\nlines. Three companies (Southwest, Mid-American, and Nicor) cited maintenance issues with\nensuring access to curb valves, as well as delays in shutting off the gas in the event of a break.\nReasons cited for delays included the valve’s accessibility during an incident and the potential,\nbecause curb valve boxes are above-ground, that curb valves could be buried or damaged by\nthird-parties, thereby making the valve inaccessible or inoperable. PHMSA requests further\ncomment on reasons why using a curb valve to shut off gas in the event of an incident might be\ndelayed. The State regulator noted that upstream above-ground valves are already present on\nmany large commercial and industrial properties. The comments also noted that the categories\nprovided in the Interim Evaluation were not specific enough. The American Gas Association\n(AGA) and others suggested that the threshold between small and large should be a load size of\n1,000 SCFH (PHMSA 2011-0009-0024).\n20 NTSB response dated 9/22/2009. Correspondence available on the NTSB website here:\nhttp://www.ntsb.gov/safetyrecs/private/history.aspx?rec=P-01-002&addressee=PHMSA\n21 Ibid 2\n6\n\n<<<PAGE 14>>>\n\nJune 17, 2015\nFollowing the ANPRM, PHMSA developed a draft survey document aimed at identifying\nincidents and operators with experience operating EFVs beyond SFRs. As a key component of\nthe survey, the research team developed customer categories based on the Interim Evaluation,\nANPRM comments, and discussions with operators. Key variables identified to separate\ncustomers included load size, customer type, and load variability.\n22 The analysis eventually\nresulted in seven categories: single family residential, small multi-family residential, large multi-\nfamily residential, small space and water heat non-residential customers, large space and water\nheat non-residential customers, small other non-residential customers, and large other non-\nresidential customers. The distinction between small and large was the 1,000 SCFH load size\nmentioned in comments to the ANPRM.\nUsing the customer categories, the research team developed the survey recommended by the\nInterim Evaluation report, aimed at gathering data on EFV and curb valve costs and benefits. The\nsurvey was to be sent to all operators because industry comments suggested that experience with\nEFV installation beyond SFRs was rare, so a sample may have excluded operators with relevant\ndata. The goal was to have a better understanding of the costs of EFVs on installations beyond\nSFRs from operators who already deployed the technology and on the costs and effectiveness of\ncurb valves.\nNine companies were asked to pilot the census, and a copy was published in the Federal Register\nas part of a notice of information collection on May 15, 2012 (77 FR 28669). The purpose of the\npilot was to ensure that operators were able to provide the requested data, that the questions were\nclearly worded, and that the response categories cover the full range of possible responses.\nAdditionally, because the survey was developed using an online survey tool, Survey Gizmo, the\npilot also served as a test of the online functionality. The nine companies selected varied by size\n(defined by number of service lines) and region of the country (East, Midwest, South, and West)\nin order to ensure that there was variation along key factors that might impact responses. All\nrespondents had installed EFVs in the previous calendar year according to PHMSA’s annual\nreport data.\nThe pilot was conducted from May 24 to July 17, 2012. PHMSA sent an introductory letter to all\nnine participants explaining the purpose and importance of the data collection. The Volpe Center\nfollowed up with an email that described the study purpose and included the survey link. To\nboost response, Volpe contacted participants by email and phone to encourage participation and\nto answer any questions operators might have about the survey. The Volpe Center also\nconducted telephone debriefs with each of the nine pilot respondents to obtain more detailed\nfeedback on their experience completing the survey.\n22 Demand for heat and water is less variable that demand for other uses such as cooking or clothes drying, so space\nand water heat customers were separated from other customers with more complex needs.\n7\n\n<<<PAGE 15>>>\n\nJune 17, 2015\nOf the nine pilot respondents, only four attempted to complete the survey, but in most cases they\nentered “0” as their response because the data was not available. Only one operator, whose\ncompany comprised a small system of approximately 3,000 service lines that installed EFVs only\non single-family residences, provided responses by the different customer classifications. It took\nthe respondent 3 hours to sort their service lines into the requested categories. In the debrief\ncalls, the other respondents (five) indicated they could not provide the data being requested.\nBoth the census pilot and the docket comments on the notice of information collection (PHMSA\n2012-0086) quickly revealed that company databases are not currently set up to provide the\nnecessary data. Load and customer type data are stored separately from data on EFVs and from\ndata on incidents, and grouping customers into the census categories would, according to these\npilot respondents, be a time-intensive and costly undertaking. Because only one respondent was\nable to complete the survey, no data from the survey is included in this RIA.\nAs a result of the survey experience and feedback from pilot participants and industry comments\non the docket, including AGA’s docket comment (PHMSA 2012-0086-0003) stating a\npreference for putting forth a consensus regulation rather than continuing the data collection\nefforts, PHMSA moved to continue the rulemaking process authorized by Section 22 of the\nPipeline Safety, Job Creation, and Regulatory Certainty Act of 2011 without further information\ncollection in order to avoid undue industry burden.\n3 Regulatory Analysis\nExecutive Orders 12866 and 13563 direct all Federal agencies to consider the costs and benefits\nof “significant regulatory actions.” Federal agencies are directe","truncated":true,"body_characters":103832}