# U.S. DOT/PHMSA - Report - Regulatory Impact Analysis - **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:** Not available - **effective on:** Not available - **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:** <<>> 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 Executive Summary The Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing to amend the Federal Pipeline Safety Regulations to require operators of gas distribution pipelines to install excess flow valves (EFV) on all new or replaced residential and commercial service lines where the known load does not exceed 1,000 Standard Cubic Feet per Hour (SCFH) and to install manual shutoff valves on all other new or replaced lines. The purpose of this proposed regulation is to improve safety by mitigating the damages from sudden pipeline ruptures and breaks by quickly shutting off the released gas. The rule addresses Section 22 in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (P.L. 112-90)1 and National Transportation Safety Board (NTSB) recommendation P-01-2. 2 Section 22 of the Act requires PHMSA to issue a final report on the evaluation of the NTSB recommendation on EFVs in applications other than service lines serving one single family residence and, if appropriate, require by regulation the use of excess flow valves, or equivalent technology, where economically, technically, and operationally feasible on new or entirely replaced distribution branch services, multifamily facilities, and small commercial facilities. On December 4, 2009, PHMSA amended the pipeline safety regulations to require the use of EFVs for new or replaced gas lines servicing Single Family Residences (SFRs).3 While this requirement met the mandate of the Pipeline Inspection, Protection, Enforcement and Safety Act (PIPES Act) enacted in 2006, distribution branched services, multi-family facilities, commercial properties, and industrial service lines were still not required to use EFVs. These structures are susceptible to the same risks as SFR service lines. 4 In an effort to study the possible benefits and costs of expanding EFVs beyond SFR applications, PHMSA began development of the Interim Evaluation Report in early 2009. 5 Based on the Report and the comments received on the Report (see NPRM for discussion), PHMSA found that expansion of EFVs is technically, operationally, and economically feasible where loads do not exceed 1,000 SCFH irrespective of the customer classification. PHMSA acknowledges that EFVs may not be practical for large apartment buildings and industrial or commercial users due to inherent design complexity and continuous supply demands. PHMSA believes curb valves will provide the best possible option for improved safety at this time in those situations where loads exceed 1,000 SCFH. The Interim Evaluation Report was finalized by PHMSA based on 1 Under the Act, PHMSA is required to study and issue a final report on EFVs and, if appropriate, to issue regulations requiring the use of EFVs or equivalent technology, where “economically, technically and operationally feasible”, for new or entirely replaced distribution branch services, multi-family lines, and small commercial service lines. 2 National Transportation Safety Board, Natural Gas Explosion and Fire in South Riding, Virginia, July 7, 1998, Pipeline Accident Report NTSB/PAR-01/01 (Washington, D.C.: NTSB, 2001). 3 74 FR 63906 4 Please see the NPRM for Discussion of the 2010 Rule 5 The report is in the docket at http://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS A-2011-0009 2 <<>> 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 EFV and operate with known loads that do not exceed 1,000 SCFH.6 The proposed rule would also require that manual shut-off valves (curb valves) be installed on all new or replaced lines where known loads exceed 1,000 SCFH and the line does not fit into the exceptions in § 192.383. The proposed regulation incorporates PHMSA’s findings and its analysis of comments from the study mandated by the Section 22 of P.L. 112-90. The proposed rule would also require operators to notify customers of their right to request installation of EFVs on existing service lines (other than those being newly installed or replaced). In those cases, the appropriate State regulatory agency will determine all issues related to the costs of installation. The proposed requirements would pertain to all distribution operators, including operators of petroleum gas systems that serve fewer than 100 customers from a single source and operators of master 7 meters. PHMSA collects information on gas distribution infrastructure (number of main miles, number of services, number of EFVs installed) through its gas distribution annual reports (PHMSA Form F 7100.1-1) and detailed information on incidents that met the incident definition in § 191.3 through the incident reports (PHMSA Form F 7100.1). None of the reports ask for information by customer classification or the load sizes. However, this regulatory impact assessment uses existing PHMSA data combined with the information available from published sources to quantify the costs and benefits of the proposed regulation by customer classification as defined in the Section 22 of the Act. PHMSA acknowledges that gas distribution systems are generally safe, averaging 0.11 reportable incidents per 100,000 services in 2010-2013.8 The proposed rule would target to 6 Docket Number: PHMSA-RSPA-2004-19854, “Pipeline Safety: Integrity Management Program for Gas Distribution Pipelines.” 7 operators of petroleum gas systems which serve fewer than 100 customers from a single source and operators of master meters are exempt from submitting Annual reports in accordance with 191.11 http://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49-vol3-sec191-11.xml And Master meter system is defined as means a pipeline system for distributing gas within, but not limited to, a definable area, such as a mobile home park, housing project, or apartment complex, where the operator purchases metered gas from an outside source for resale through a gas distribution pipeline system. The gas distribution pipeline system supplies the ultimate consumer who either purchases the gas directly through a meter or by other means, such as by rents; in 191.3 http://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49- vol3-sec191-3.xml 8 Number of gas distribution incidents other than on mains divided by the number of services. Incident definitions and reporting thresholds are found in 49 CFR 191.3 and 49 CFR 191.9. In general, operators must report incidents that result in any deaths, injuries requiring hospitalization, property damage over $50,000, and/or loss of 3 million cubic feet of gas. 3 <<>> June 17, 2015 mitigate the consequences of rare but potentially high-consequence incidents on new and fully replaced services. Since the quantified benefit estimate depends on the existing incident database, the benefit may be underestimated as it is not possible to predict a high-consequence incident that would have be prevented by the safety measure extended through the proposed regulation. PHMSA’s incident database is also limited to incidents that occurred on DOT- jurisdictional pipes and meet certain criteria (§191.3) and does not include EFV-preventable incidents that did not meet the criteria, nor EFV-preventable incidents that occurred downstream of the DOT-jurisdictional piping (such as in customer piping). On the other hand, the cost estimate assumes every single service line has either an EFV or a curb valve as it is impossible to estimate where multiple services are protected by a single EFV or a curb valve. This one-to-one correspondence of a valve and a service line could overestimate the cost of the proposed regulation with respect to smaller non-multifamily residences. However, to be conservative in cost estimation, PHMSA’s analysis provided quantitative costs and benefits per valve, annualized at 7% and 3% discount rates. Setting aside the proposal for SFRs, the benefits of the proposed rule that we were able to quantify are estimated to be $7.7 million when annualized and discounted at 7%, while the estimated costs, also discounted and annualized, are $10.5 million. Therefore, this rule is estimated to be a net-cost rule using a 7% discount rate given the limitation of the quantitative benefit data. Using the alternative 3% discount rate, the estimated quantified annualized benefits are $15.0 million per year, and the estimated total annualized costs are $11.9 million per year, which results in a net benefit of $3.1 million. The incremental benefits and costs of the proposal to extend mandatory EFV installation to newly installed or replaced branched service lines for single-family residences could not be quantitatively estimated. PHMSA has no data with which to distinguish single versus branched services, which differ only in their underground configuration. As an upper bound with respect to the number EFVs required, the cost of the EFV provision for SFR as a whole – branched and non-branched – is estimated to range between $11 to $27 million per year in annualized benefits and $8 million per year in annualized costs.9 The portion specifically attributable to branched SFR could not be estimated, though PHMSA believes that branched services represent a fairly small share of the overall total. (Due to these same data limitations, the Distribution Integrity Management Program (DIMP) rule estimated total impacts for SFR even though that rule did not apply to branched services.) The following table summarizes the quantified cost-benefit estimates at a 7% discount rate. 9This is the estimate from the previous DIMP rule for EFVs on all SFR, single and branched, with an adjustment for the intervening change in USDOT guidance on the value of statistical life. For the previous RIA, see www.regulations.gov/#!documentDetail;D=PHMSA-RSPA-2004-19854-0255 4 <<>> June 17, 2015 ($ Millions) Annualized Benefit (7%) Annualized Cost (7%) [Branched Line Single Family – Upper Bound]10 [11 - 27] [8] Multifamily Residence 1.1 6.2 Small Commercial 1.4 1.1 Industrial/Other curb valve 5.2 3.0 Notification & recordkeeping - 0.2 Total Benefits 7.7 10.5 In addition to the quantified benefits, the proposed rule is also expected to have benefits that we were unable to quantify. They include the following:  Equity: Provides a fair and equal level of safety to members of society who do not live in single-family residences  Additional incident costs avoided for which no PHMSA incident data are available: Mitigates the consequences (death, injury, property damage) of additional incidents that are not reflected in PHMSA records because customer piping or equipment is involved  Additional incident costs which are not recorded in incident reports, including costs of evacuations, emergency response costs, and business downtime  Environmental externalities associated with methane release (discussed in Appendix B)  Peace of mind for operators and customers  Protection against seismic events and intentional tampering PHMSA requests public comments on methods and information to quantify or monetize these unquantified benefits. With respect to point raised above concerning equity, PHMSA specifically requests public comment on whether pipeline operators or customers tend to bear the costs of EFVs. PHMSA also requests public comments on whether the rule would have costs that are not quantified in this RIA. While the analysis could not quantify the benefits and costs of the proposal to require EFVs on new or replaced branched service lines servicing SFRs, and the quantified benefits for multi-family residences are estimated as less than the cost for installing EFVs on that customer classification, PHMSA nonetheless believes the potential unquantified safety benefits, 10 Based on estimates from previous DIMP rule with updated value of statistical life. There are no data on branched versus single available to develop a more precise estimate. Benefits and costs for this category were already included in the DIMP estimates and, to avoid double-counting, are not included in the total estimated quantified costs and benefits of this proposed rule. 5 <<>> June 17, 2015 combined with the quantified monetary benefits, justify the estimated cost. The one-time cost of installing an EFV ($15-$50, best estimate $3011) during new service or replaced service is fairly small. According to the data analyzed, the benefits of incident prevention on a per-EFV basis are also small because incidents involving these classifications are rare. However, these incident prevention benefits will exist for up to 50 years, as PHMSA assumes that EFVs and curb valves have a lifespan of 50 years. The values are calculated based on the assumption that without the regulation, EFVs and curb valves would not be installed in service lines (other than lines serving SFRs under the existing regulations). With voluntary installation, the benefits and costs would be reduced proportionally. The proposed rule is assumed to affect approximately 1,289 natural gas distribution operators and on average 222,114 services per year. In sensitivity testing, the quantified benefits fell in between the low and high cost estimates. The benefits of this proposal are based on high-cost, low-probability incidents. The incident data we analyzed suggests that incidents occurring on many of these service classifications are infrequent. However, PHMSA’s Incident Report database does not capture service classification and less than a decade’s worth of incident data (2004 to 2012) could be analyzed for this proposed rulemaking, it is, thus, unlikely that the cost-benefit analysis captured all of the incidents that could have been prevented or mitigated by an EFV. Further, several of the incidents noted by the NTSB when they made previous recommendations for EFV installation took place decades ago, such that comparable incident causation data are not available in the PHMSA database. PHMSA’s historical data and NTSB investigations show that incidents do occur on these lines, and when they do, they are typically high-consequence events. Key incidents identified by NTSB include the 1994 explosion at a retirement home in Allentown, PA, which resulted in a fatality, 66 injuries, and $5 million in property damage, and the 1998 explosion in St. Cloud, MN, which demolished a pizzeria, apartments, a law office, a bar, and took four lives.12 Because this rule aims to provide an extra level of protection in areas where there are high concentrations of people, a prevented or mitigated incident could prevent several injuries or fatalities (and sometimes extensive property damage), thereby producing significant quantifiable benefits. Further, while the unquantifiable benefits include avoided evacuations, avoided emergency response costs, and seismic event and tamper protections, there is substantial value in the perception of the safety and integrity of the natural gas distribution system. Currently, certain SFR residents are the only people who have the added protection of EFVs by federal regulation: 11 The average cost of an EFV, ranging from $15-$50 is $32.50. PHMSA used $30 in this analysis as a ball-park as the analysis does not have any basis for assuming what would be a weighted average cost (how many EFVs at $15 and how many at $50 or in between. The analysis also does not account for future technology/manufacturing progress which typically reduces the unit cost. 12 National Transportation Safety Board, UGI Utilities, Inc., Natural Gas Distribution Pipeline Explosion and Fire, Allentown, Pennsylvania, June 9, 1994, Pipeline Accident Report NTSB/PAR-96/01 (Washington, D.C.: NTSB, 1996) and National Transportation Safety Board, Natural Gas Pipeline Rupture and Subsequent Explosion, St. Cloud, Minnesota, December 11, 1998, Pipeline Accident Report NTSB/PAR-00/01 (Washington, D.C.: NTSB, 2000) 6 <<>> June 17, 2015 anyone who is residing in a multi-family residence (MFR), no matter if it is by choice or circumstance, is not being provided an equal opportunity to avoid incidents like the ones that occurred at Allentown, PA, and St. Cloud, MN. The Initial Regulatory Flexibility Analysis, included as a separate document in the docket, noted that the natural gas distribution industry contains a substantial number of small entities. However, while there may be a small (and disproportionate) impact on small entities due to the ability of larger companies to save by buying valves in bulk, the impact is not significant due to the very low cost per valve. PHMSA determined that the rule would not impose annual expenditures on State, local, or tribal governments of the private sector in excess of $147.6 million and thus does not require an Unfunded Mandates Act analysis.13 13 The Unfunded Mandates Act threshold was $100 million in 1995. Using the non-seasonally adjusted CPI-U (Index series CUUR0000SA0), that number is $147.6 million in 2011 dollars. 7 <<>> June 17, 2015 1 Introduction The Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing to amend the requirements of §192.383 (b) by requiring the installation of excess flow valves (EFV) beyond single-family residence (SFR) service lines to cover new or replaced branched service lines, multi-family residences, and small commercial service lines serving a single customer with a known load that does not exceed 1,000 SCFH. Additionally, PHMSA is proposing to add §192.385 to require the installation of manual shutoff valves (curb valves) on all new or replaced lines where the installed meter capacity exceeds 1,000 SCFH. The National Transportation Safety Board (NTSB) has identified, between 1970 and 2011, 11 significant incidents that could have been mitigated by the presence of an EFV and has issued more than 20 recommendations concerning the installation of EFVs for both residential and commercial applications. The NTSB’s recommendations culminated in the most recent Safety Recommendation P-01-2, which states that PHMSA “require that excess flow valves be installed in all new and renewed gas service lines, regardless of a customer’s classification, when the operating conditions are compatible with readily available valves.” PHMSA published an ANPRM (76 FR 72666, November 25, 2011) that included an Interim Evaluation report on expanding the EFV requirement beyond single-family residences. The Interim Evaluation, which had been posted online and received extensive feedback from stakeholders, recommended that an economic analysis be performed that would take into account alternatives, particularly curb valves; differentiate among the various classifications of customers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a survey would have to be performed in order to identify incidents and to find operators with experience and data on operating EFVs beyond SFRs. While the ANPRM was open for comments, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 into law. Section 22 of that law required PHMSA to issue a final report on the evaluation of the NTSB’s recommendation on EFVs in applications other than service lines serving one single family residence, and “if appropriate, require by regulation the use of excess flow valves, or equivalent technology, where economically, technically, and operationally feasible on new or entirely replaced distribution branch services, multifamily facilities, and small commercial facilities.” This proposed rule addresses Section 22 of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 and NTSB Recommendation P-01-2. Section 22 of the Act requires PHMSA to conduct a study on the expanded use of EFVs in applications other than SFR service 1 <<>> June 17, 2015 lines. Based on the study 14 and the comments received on the study (see NPRM for discussion), PHMSA has determined that expanding EFV installation will provide protection for the vast majority of gas customers, irrespective of customer classification where known load size is less than or equals 1,000 SCFH, and is technically, operationally, and economically feasible. PHMSA acknowledges that EFVs may not be practical for large apartment buildings and industrial or commercial users due to inherent design complexity and continuous supply demands. PHMSA believes curb valves will provide the best possible option for improved safety at this time in situations where loads exceed 1,000 SCFH. PHMSA believes this proposed rule will satisfy the NTSB recommendation and promote better public safety by ensuring all service lines, regardless of the customer classification, have adequate protection through the installation of either an EFV or a curb valve. The interim report was finalized by PHMSA based on the comments received and has been placed in the docket. The public is requested to comment on this final report. The proposed requirements for distribution pipeline operators are described below. 1.1 Excess Flow Valves The proposed rule would revise 49 CFR part 192 §383 by adding four new categories of service for which EFV installation will be required on all new or replaced lines. The four new categories that will be added to the existing requirement for SFRs served by a single service line are: - Branched service lines to a SFR installed concurrently with the primary SFR service line (a single EFV may be installed to protect both lines) - Branched service lines to an SFR installed off a previously installed SFR service line that does not contain an EFV - Multi-family residences with known customer loads at time of service installation, based on installed meter capacity, not exceeding 1,000 SCFH per service - A single, small commercial customer, served by a single service line, with known customer load at time of service installation, based on installed meter capacity, not exceeding 1,000 SCFH per service. PHMSA believes the first two categories of branched service lines to SFRs cover the majority of branched services. The benefits and costs of installing EFVs on service lines to SFRs were analyzed as part of the DIMP rulemaking in 2009. As there is no data available for which 14 The report is in the docket at http://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS A-2011-0009 2 <<>> June 17, 2015 installed lines are single-service or branched service15 , and because incident data doesn’t distinguish the two types of lines, there was no practical way to exclude branched lines from the overall SFR calculations for DIMP. Indeed, the only difference between whether a service line is single-service or branched is in the underground configuration, which is determined by the installing operator on a case-by-case basis. The 2009 DIMP analysis found that installing EFVs on lines serving SFRs would yield annual benefits in the range of $7 million to $17 million against costs of $8 million. The safety benefits were calculated using the then-current $5.8 million value per statistical life and would thus be substantially higher using today’s $9.1 million value. While PHMSA is not aware of a practical way to break down the benefits and costs of EFV installation on branched lines serving SFRs specifically, installing EFVs on branched lines is expected to have positive net benefits in light of the overall SFR results. Branched SFR is excluded from the remainder of this analysis as the cost and benefits are unquantifiable due to data limitation and to avoid duplication of the costs and benefits incorporated in the DIMP analysis. PHMSA seeks public comments on the benefits and costs of its proposal to require installation of EFVs on new or replaced branched service lines servicing SFRs and any information that would help overcome the data limitations regarding the number of branched and non-branched services lines. The present analysis categorizes the estimated new and replaced services by multifamily, commercial, and industrial classifications and ensures every service line has the protection of either an EFV or a curb valve, thereby accounting for the cost of either an EFV or a curb valve for every service (the cost may be slightly overestimated as one can potentially have an EFV or a curb valve servicing multiple customers/services). The proposed rule would continue to include exceptions for excess flow valves for cases where installation would not be feasible. These exceptions, now in part (c) of section 383, are: - When the service line does not operate at a pressure of 10 psig or greater throughout the year - When the operator has prior experience with contaminants in the gas stream that could interfere with the EFV’s operation or cause loss of service to the customer - When an EFV could interfere with necessary operations or maintenance activities, such as blowing liquids from the line - When an EFV meeting performance standards in 192.381 is not commercially available to the operator. The exceptions reduce the potential cost of the regulation by acknowledging that there are reasonable conditions that render EFV installation not operationally and technically feasible. As there is no data available to estimate the proportion of lines that are exempt, the analysis will 15 PHMSA’s Natural Gas Distribution Annual reports (PHMSA F7100.1-1) collect information on the number of services per operator in each state as an aggregate number without service type classification. 3 <<>> June 17, 2015 assume that all lines with known loads under 1,000 SCFH have operating conditions suitable for an EFV, thereby overestimating the cost. The revision also adds a part (d) to section 383 that allows optional installation of EFVs if requested by a customer. The analysis does not estimate the number of customer requests that may occur in any given year or the resulting transfers. Based on the findings and the comments on the Interim Report, PHMSA has determined that expanding the installation of EFVs will provide protection for the vast majority of gas distribution customers, irrespective of the customer classification, where loads does not exceed 1,000 SCFH. PHMSA has also deemed that EFVs may not be practical for large apartment buildings and industrial or commercial users due to inherent design complexity and continuous supply demands. For those situations (loads exceeding 1,000 SFCH), PHMSA believes curb valves will provide the best possible option for improved safety at this time. 1.2 Curb Valves The proposed rule adds §385 to Part 192. The addition would require operators to install a manual service line shut-off valve (curb valve) on any new or replaced service line on which an EFV is not installed in accordance with section 192.383(b). The proposed required use of curb valves for large commercial (greater than 1,000 SFCH) goes beyond the Section 22 language of the Pipeline Safety, Job Creation, and Regulatory Certainty Act of 2011, however it is based on ANPRM comments received from industry, trade associations and other stakeholders. PHMSA and industry in general believe that EFVs are not suitable for larger commercial facilities over 1,000 SFCH. As mentioned above, curb valves are the best alternative to an EFV and provide an effective added level of safety for these facilities. These valves also are a feasible alternative based on the cost/benefit analyses. PHMSA’s authority for regulating natural gas pipelines was first established by the Natural Gas Pipeline Safety Act of 1968, Pub. L. No. 90-481, and has since been enlarged by additional legislation. The Pipeline Safety Laws specifically delegate authority to DOT to develop, prescribe, and enforce minimum Federal safety standards for the transportation of natural gas. PHMSA has used this statutory authority to promulgate comprehensive minimum safety standards. While the 2011 Act specifically directed PHMSA to require the installation of EFVs on new and replaced branched lines serving SFRs, multi-family and small commercial facilities, DOT’s underlying prior statutory authority under 49 USC § 60104 provides PHMSA with the authority to require the installation of curb valves for large commercial facilities. The remainder of this report analyzes the benefits and costs of the regulatory changes as required by Section 1 of Executive Order 12866 (as amended by E.O.s 13258 (2002), 13422 (2007), and 4 <<>> June 17, 2015 13497 (2009)) and Section 1 of Executive Order 13563 (2011). The initial Regulatory Flexibility Analysis is filed separately in the docket.16 2 Background EFVs are designed to automatically stop the flow of a gas when the flow increases suddenly and significantly, such as during a pipeline separation. They are used in the United States and around the world to mitigate damage resulting from a sudden pipeline rupture caused by a natural disaster, excavation damage, or other third-party damage. However, because they shut automatically based on changes in flow, they can also shut when customers suddenly increase their gas load, causing an inconvenience for the customer and the company. Manual shutoff valves, known as curb valves, are an alternative that avoids a false closure but requires a trained responder to be on site to shut the valve, increasing the amount of gas that is released after an incident. PHMSA has moved towards greater installation rates of EFVs over the years while continuing to recognize that EFV closures pose hazards of their own. 17 In 1996, PHMSA added 49 CFR 192.381 to the Pipeline Safety Regulations, which contains performance standards for EFVs. In 1998, responding to statutory mandates in Section 104 of the Pipeline Safety Act of 1992 (Pub. L. 102-508), PHMSA added a requirement18 that required operators to notify customers in writing about EFV availability; the safety benefits derived from installation; and any installation, maintenance, and replacement costs19 . In 2006, the Pipeline Integrity, Protection, Enforcement, and Safety (PIPES) Act of 2006 required that EFVs be installed on all new or replaced service lines serving one SFR where:  The service line continuously operates at a pressure at or above 10 psig  The service line is not connected to a gas stream with a prior history of contaminants  The installation is not likely to cause a loss of service to the residence or to interfere with necessary operations and maintenance  EFVs are commercially available. 16 The text of E.O. 12866 can be found here: http://www.archives.gov/federal-register/executive- orders/pdf/12866.pdf and E.O. 13563 here: http://www.whitehouse.gov/sites/default/files/omb/inforeg/eo12866/eo13563_01182011.pdf 17See FR Doc No: 94-18771, “Excess Flow Valve Installation on Service Lines” August 2, 1994 for discussion of EFV closure costs and PHMSA’s 1996 cost-benefit analysis summarized in 61 FR 31449. 18 http://www.gpo.gov/fdsys/pkg/CFR-2002-title49-vol3/pdf/CFR-2002-title49-vol3-sec192-383.pdf 19 Distribution Integrity Management Rule (http://primis.phmsa.dot.gov/dimp/docs/DIMPFINALRULE.PDF) removed this requirement in 2009. 5 <<>> June 17, 2015 PHMSA issued Advisory Bulletin 08-04 encouraging operators to begin installing EFVs in accordance with the Act. The final rule on natural gas distribution IM programs was officially published December 4, 2009, and applied to lines installed or replaced after February 2, 2010 (74 FR 63906). However, the NTSB issued a response to PHMSA’s status update urging PHMSA to make the rule applicable to all customers “regardless of their classification.”20 PHMSA then published an ANPRM that included an Interim Evaluation report on expanding the EFV requirement beyond single-family residences (76 FR 72666, November 25, 2011)21 . The Interim Evaluation recommended that an economic analysis be performed that would take into account alternatives, particularly curb valves; differentiate among the various classifications of customers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a survey would have to be performed in order to identify incidents and to find operators with experience and data on operating EFVs beyond SFR applications. Nineteen entities submitted comments to the ANPRM docket (PHMSA-2011-0009). Eleven comments were from utility companies or associations, two were from manufacturers, one was from a State regulator, one was from the NTSB, one was from a city government, and the remainders were from the public. In general, utilities supported an expansion of EFV installation, with limits on feasibility. The American Gas Association, American Public Gas Association, Northeast Gas Association, Southwest Gas Corporation, Nicor Gas Company, National Grid, Avista, and Laclede Gas all supported a limited expansion. Mid-American Gas and the City of Ellensburg, WA, supported an expansion as long as curb valves and EFVs were viewed as perfect substitutes for one another and companies could select which valve best suited operational conditions. The Texas Pipeline Association focused specifically on service lines extending from transmission and gathering lines. Three companies (Southwest, Mid-American, and Nicor) cited maintenance issues with ensuring access to curb valves, as well as delays in shutting off the gas in the event of a break. Reasons cited for delays included the valve’s accessibility during an incident and the potential, because curb valve boxes are above-ground, that curb valves could be buried or damaged by third-parties, thereby making the valve inaccessible or inoperable. PHMSA requests further comment on reasons why using a curb valve to shut off gas in the event of an incident might be delayed. The State regulator noted that upstream above-ground valves are already present on many large commercial and industrial properties. The comments also noted that the categories provided in the Interim Evaluation were not specific enough. The American Gas Association (AGA) and others suggested that the threshold between small and large should be a load size of 1,000 SCFH (PHMSA 2011-0009-0024). 20 NTSB response dated 9/22/2009. Correspondence available on the NTSB website here: http://www.ntsb.gov/safetyrecs/private/history.aspx?rec=P-01-002&addressee=PHMSA 21 Ibid 2 6 <<>> June 17, 2015 Following the ANPRM, PHMSA developed a draft survey document aimed at identifying incidents and operators with experience operating EFVs beyond SFRs. As a key component of the survey, the research team developed customer categories based on the Interim Evaluation, ANPRM comments, and discussions with operators. Key variables identified to separate customers included load size, customer type, and load variability. 22 The analysis eventually resulted in seven categories: single family residential, small multi-family residential, large multi- family residential, small space and water heat non-residential customers, large space and water heat non-residential customers, small other non-residential customers, and large other non- residential customers. The distinction between small and large was the 1,000 SCFH load size mentioned in comments to the ANPRM. Using the customer categories, the research team developed the survey recommended by the Interim Evaluation report, aimed at gathering data on EFV and curb valve costs and benefits. The survey was to be sent to all operators because industry comments suggested that experience with EFV installation beyond SFRs was rare, so a sample may have excluded operators with relevant data. The goal was to have a better understanding of the costs of EFVs on installations beyond SFRs from operators who already deployed the technology and on the costs and effectiveness of curb valves. Nine companies were asked to pilot the census, and a copy was published in the Federal Register as part of a notice of information collection on May 15, 2012 (77 FR 28669). The purpose of the pilot was to ensure that operators were able to provide the requested data, that the questions were clearly worded, and that the response categories cover the full range of possible responses. Additionally, because the survey was developed using an online survey tool, Survey Gizmo, the pilot also served as a test of the online functionality. The nine companies selected varied by size (defined by number of service lines) and region of the country (East, Midwest, South, and West) in order to ensure that there was variation along key factors that might impact responses. All respondents had installed EFVs in the previous calendar year according to PHMSA’s annual report data. The pilot was conducted from May 24 to July 17, 2012. PHMSA sent an introductory letter to all nine participants explaining the purpose and importance of the data collection. The Volpe Center followed up with an email that described the study purpose and included the survey link. To boost response, Volpe contacted participants by email and phone to encourage participation and to answer any questions operators might have about the survey. The Volpe Center also conducted telephone debriefs with each of the nine pilot respondents to obtain more detailed feedback on their experience completing the survey. 22 Demand for heat and water is less variable that demand for other uses such as cooking or clothes drying, so space and water heat customers were separated from other customers with more complex needs. 7 <<>> June 17, 2015 Of the nine pilot respondents, only four attempted to complete the survey, but in most cases they entered “0” as their response because the data was not available. Only one operator, whose company comprised a small system of approximately 3,000 service lines that installed EFVs only on single-family residences, provided responses by the different customer classifications. It took the respondent 3 hours to sort their service lines into the requested categories. In the debrief calls, the other respondents (five) indicated they could not provide the data being requested. Both the census pilot and the docket comments on the notice of information collection (PHMSA 2012-0086) quickly revealed that company databases are not currently set up to provide the necessary data. Load and customer type data are stored separately from data on EFVs and from data on incidents, and grouping customers into the census categories would, according to these pilot respondents, be a time-intensive and costly undertaking. Because only one respondent was able to complete the survey, no data from the survey is included in this RIA. As a result of the survey experience and feedback from pilot participants and industry comments on the docket, including AGA’s docket comment (PHMSA 2012-0086-0003) stating a preference for putting forth a consensus regulation rather than continuing the data collection efforts, PHMSA moved to continue the rulemaking process authorized by Section 22 of the Pipeline Safety, Job Creation, and Regulatory Certainty Act of 2011 without further information collection in order to avoid undue industry burden. 3 Regulatory Analysis Executive Orders 12866 and 13563 direct all Federal agencies to consider the costs and benefits of “significant regulatory actions.” Federal agencies are directe - **truncated:** true - **body characters:** 103832