# U.S. DOT/PHMSA - Regulatory Impact Analysis and Initial Regulatory Flexibility Act Analysis: Proposed Rule - **operation:** document - **citation:** 0900006481b78740 - **title:** U.S. DOT/PHMSA - Regulatory Impact Analysis and Initial Regulatory Flexibility Act Analysis: Proposed Rule - **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 and Initial Regulatory Flexibility Act Analysis: Proposed Rule Pipeline Safety: Operator Qualification, Cost Recovery and other Pipeline Safety Proposed Changes PHMSA-2013-0163 Office of Pipeline Safety Pipeline and Hazardous Materials Safety Administration (PHMSA) U.S. Department of Transportation June 1, 2015 1 April 30, 2014 Executive Summary This package of proposed regulatory changes would address errors and inconsistencies in the current regulations, provide additional clarifications, incorporate industry standards, and update certain regulatory requirements. The proposed changes also address statutory requirements from... - **machine formats:** - **json:** https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b78740.json - **markdown:** https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b78740.md - **app url:** https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481b78740 - **source url:** https://downloads.regulations.gov/PHMSA-2013-0163-0004/attachment_1.pdf **body:** <<>> Regulatory Impact Analysis and Initial Regulatory Flexibility Act Analysis: Proposed Rule Pipeline Safety: Operator Qualification, Cost Recovery and other Pipeline Safety Proposed Changes PHMSA-2013-0163 Office of Pipeline Safety Pipeline and Hazardous Materials Safety Administration (PHMSA) U.S. Department of Transportation June 1, 2015 1 <<>> April 30, 2014 Executive Summary This package of proposed regulatory changes would address errors and inconsistencies in the current regulations, provide additional clarifications, incorporate industry standards, and update certain regulatory requirements. The proposed changes also address statutory requirements from the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (Public Law 112-90) and safety recommendations from the NTSB, as well as petitions for rulemaking. Many of the proposed revisions are small changes that would not lead to substantial changes in regulatory requirements, operator practices, or overall costs and benefits. Benefit-Cost Analysis Annual compliance costs are estimated at $3.1 million, less savings to be realized from the removal of farm taps from the DIMP requirements. Annual safety benefits cannot be quantified as readily due to data limitations, but are in the range of $1.6 million per year in avoided incident costs, plus numerous intangible benefits from the improved clarity and consistency of regulations and improved abilities to conduct post-incident investigations. Although the quantified benefits do not exceed the estimated costs, PHMSA believes that these non-quantified benefits are significant enough to outweigh the costs of compliance. In particular, improvements to Operator Qualification and post-incident investigation may prevent a future high-consequence event. At an annual compliance cost of $3.1 million, the proposed new Operator Qualification and post- accident testing requirements would be cost-effective if they prevented a single fatal incident over a 3-year period. Regulatory Flexibility Act Analysis The Initial Regulatory Flexibility Analysis found that the proposed rule could affect a substantial number of small entities because of the market structure of the gas and hazardous liquids pipeline industry, which includes many small entities. However, these impacts would not be significant. The Operator Qualification provision would entail new costs for small entities in the range of $160 per employee per year, or about 0.3% of salary for a typical pipeline employee. The post-accident drug testing provision would add $74 in documentation costs per reportable incident. The other provisions would not add appreciable costs, and at least one provision (Farm Taps) would yield compliance cost savings. Unfunded Mandates Act Analysis PHMSA determined that the rule would not impose annual expenditures on State, local, or tribal governments of the private sector in excess of $153 million, and thus does not require an Unfunded Mandates Act analysis.1 1 The Unfunded Mandates Act threshold was $100 million in 1995. Using the non-seasonally adjusted CPI-U (Index series CUUR000SA0), that number is $153 million in 2013 dollars. 2 <<>> April 30, 2014 1 Introduction The Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing a package of changes to the pipeline safety regulations. On January 3, 2012, President Obama signed into law the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (“the Act”). 2 The proposed changes would address Sections 9 and 13 of the Act, correct errors, address inconsistencies, and respond to rulemaking petitions. Requirements in several subject matter areas would be affected, including telephonic or electronic notifications of accidents and incidents, cost recovery for design reviews, Operator Qualification requirements, the renewal of expiring special permits, farm taps, reversal of flow or change in product, control room team training, editorial changes, provide standards for assessment tools via incorporation by reference in Part 195, modify the criteria used to make decisions about conducting post-accident drug and alcohol tests and additional testing in Part 199, requiring electronic reporting of drug and alcohol testing results in Part 199, and requiring post-accident drug and alcohol testing in Part 199. This report analyzes the benefits and costs of the proposed regulatory changes as required by Section 1 of Executive Order 12866 (as amended by E.O.’s 13258 (2002), 13422 (2007), and 13497 (2009)) and Section 1 of Executive Order 13563. 3 Executive Orders 12866 and 13563 require agencies regulate in the “most cost-effective manner” make a “reasoned determination that the benefits of the intended regulation justify its costs,” and develop regulations that “impose the least burden on society.” Analysis of the potential impacts on small entities is also required by the Regulatory Flexibility Act. The initial Regulatory Flexibility Act analysis is also included in this document (see Section 8). 2 Background PHMSA, pipeline operators, and others have identified certain errors, inconsistencies, updates to standards incorporated by reference, and other deficiencies in the Pipeline Safety Regulations. As such, PHMSA is proposing to make a set of miscellaneous changes to the Pipeline Safety regulations concerning the following subjects, which are described in more detail in sections 3.1 to 3.12 below:  Accident and Incident Notification  Cost Recovery for Design Reviews  Operator Qualification Requirements for Parts 192 and 195 2 Public Law 112-90 3 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 3 <<>> April 30, 2014  Special Permit Renewal  Farm Taps  Reversal of Flow or Change in Product  Control Room Team Training  Editorial Amendments  Assessment tools by Incorporation by Reference  modifying the criteria used to make decisions about conducting post-accident drug and alcohol tests  Electronic Reporting of Drug and Alcohol Testing Results  Post-Accident Drug and Alcohol Testing 3 Identification of the Problem and the Need for the Rule Under the Federal Pipeline Safety Laws, 49 U.S.C. 60101 et seq., the Secretary of Transportation must prescribe minimum safety standards for pipeline transportation and for pipeline facilities. The Secretary has delegated this authority to the PHMSA Administrator (49 CFR 1.97(a)). The proposed rule would create changes in the regulations consistent with the protection of persons and property while changing unduly burdensome or nonsensical requirements. 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 safety of the public, the environment, or the well-being of the American people ... ." The mission of the PHMSA is to ensure the safety of the natural gas and hazardous liquids pipeline system. Pipeline operators do not always bear the full costs of an incident. Even in cases where they provide compensation for losses that can be monetized, those monetary penalties or settlements do not necessarily capture the full impact on affected parties, especially when a death or injury occurs. As a result, there is a negative externality present in which the company may not take the full societal cost of a possible incident into account in its decision-making. The negative externality alters the company’s decision about safety precautions, leading to a need for government to set minimum levels of safety precautions. Pipeline safety regulations are designed to address this potential market failure. The rulemaking package analyzed here is more specifically intended to improve compliance with these regulations by updating references and technical standards, providing clarification, and removing conflicting language. Some of the provisions also promote improved pipeline integrity and safety by addressing small gaps in the current regulations, as discussed in more detail below. Executive Orders 12866 and 13563 direct all Federal agencies to consider the costs and benefits of “significant regulatory actions.” Federal agencies are directed to develop a formal Regulatory 4 <<>> April 30, 2014 Impact Analysis consistent with Office of Management and Budget (OMB) Circular A-4 for all “economically significant” rules, or those rules estimated to have an impact of $100 million in 1995 dollars or more in any one year. The Order also requires a determination as to whether a rule could adversely affect the economy in terms of productivity and employment, the environment, public health, safety, or State, local, or tribal governments. This requirement applies to rulemakings that rescind or modify existing rules as well as to those that establish new requirements. The goal of the analysis is to provide decision makers with a clear indication of the most efficient alternative – that is, the alternative that generates the largest net benefits to society ignoring distributional effects. This proposed rule has been considered a non-significant regulatory action under Section 3(f) of Executive Order 12866 (58 FR 51735), and therefore is not reviewed by OMB. This proposed rule is non-significant under the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034). It falls below the $100 million per year in annual impact threshold. This regulatory analysis:  Identifies the target problem, including a statement of the need for the action.  Identifies available alternative approaches  Defines the baseline.  Defines the scope and parameters of the analysis.  Defines and evaluates the costs and benefits of the action and the main alternatives identified by the analysis.  Compares the costs and benefits.  Interprets the cost and benefit results. Subsections 3.1 to 3.13 describe the proposed regulatory changes in detail and the specific needs to which each regulatory change responds. 3.1 Accident and Incident Notification Currently, PHMSA requires pipeline owners and operators to notify the National Response Center by telephone or electronically at the earliest practicable moment following discovery (§§ 191.5 and 195.52). In an advisory notice (67 FR 57060) dated September 6, 2002, PHMSA advised owners and operators of gas and hazardous liquids pipeline systems and liquefied natural gas (LNG) facilities that at the earliest practicable opportunity usually means 1 to 2 hours after discovery of the incident. Section 9 of the Act requires PHMSA to require a specific time limit for telephonic or electronic reporting of pipeline accidents and incidents. 5 <<>> April 30, 2014 In this rulemaking, PHMSA proposes to revise the pipeline safety regulations to establish time limits for telephonic or electronic notification of an accident or incident to require such notification at the earliest practicable moment following the confirmed discovery of an accident or incident, not later than 1 hour following the time of such confirmed discovery. Owners and operators would also be required to revise their initial telephonic or electronic notice to the Secretary and the National Response Center with an estimate of the amount of the product released, an estimate of the number of fatalities and injuries, if any, and any other information determined appropriate by the Secretary. This information must be reported within 48 hours of the accident or incident, to the extent practicable. Owners and operators of gas and hazardous liquid pipelines and LNG facilities are already required to report an incident to the NRC in Washington, DC, at the earliest practicable opportunity (usually one to two hours after discovering the incident). However, under Section 9(b)(1) of the Act, PHMSA is required to issue regulations requiring owners and operators to notify the NRC no later than one hour of discovery of a pipeline accident or incident. Therefore, PHMSA is proposing that pipeline operators report accidents and incidents within one hour of confirmed discovery. 3.2 Cost Recovery for Design Reviews This proposed rulemaking action would amend the Federal pipeline safety regulations to prescribe a fee structure and assessment methodology for recovering Agency costs associated with design reviews of new gas and hazardous liquid pipelines with overall design and construction costs totaling at least $2,500,000,000 or that contain new and novel technologies. PHMSA has no method for recovering design review costs from the operator of the pipeline incurred by the agency while conducting these reviews. Section 13 of the Act requires PHMSA to recover costs associated with design reviews. Section 13 of the Act allows PHMSA to prescribe a fee structure and assessment methodology for recovering costs associated with design reviews. Specifically, cost recovery can apply to any project that : 1) has costs totaling at least $2,500,000,000 as adjusted by the Secretary to take into account changes in CPI, 2) uses new or novel technologies or design, as determined by the Secretary. The Act also requires the Secretary of Transportation to issue guidance to clarify the meaning of the term "new or novel technologies" one year after the date of enactment. As directed, in January 2013, PHMSA issued guidance on its website to clarify the meaning of the term ‘‘new or novel technologies or design’’ as meaning, “any products, designs, materials, testing, construction, inspection, or operational procedures that are not addressed in Title 49 CFR Part 192, 193, or 195 due to technology or design advances and innovation.” PHMSA conducts facility design safety reviews in connection with proposals to construct, expand, or operate gas or hazardous liquid pipelines or liquefied natural gas pipeline facilities. Reviews include design, construction, and operational inspections and oversight. These reviews 6 <<>> April 30, 2014 divert a significant amount of PHMSA’s limited resources from the agency’s pipeline safety enforcement responsibilities. Currently, PHMSA has no method for recovering design review costs from the operator of the pipeline that are incurred by the agency while conducting these reviews. The proposed rule would prescribe a fee structure and assessment methodology for recovering the costs associated with design reviews. Section 13 of the Act permits the agency to require the entity or individual proposing the project to pay the costs incurred by PHMSA relating to such reviews. PHMSA is proposing to exercise the cost recovery authority described in Section 13(a) of the Act by prescribing a fee structure and assessment methodology that is based on the costs of providing these reviews. PHMSA has developed a sample master cost recovery agreement for use by PHMSA and the applicant for a project proposal meeting the criteria of proposed 49 CFR Part 190, Subpart D requirements. The sample master cost recovery agreement will be posted on PHMSA’s website and in Docket No. PHMSA-2013-0163. 3.3 Operator Qualification Requirements for Parts 192 and 195 This proposed rulemaking action would amend the Federal pipeline safety regulations in 49 CFR Parts 192 and 195. The amendments would include: expanding the scope of the regulations to cover new construction and certain operation and maintenance tasks and including requirements for program effectiveness review and recordkeeping in the Operator Qualification (OQ) program. The recommended changes would enhance the OQ requirements by clarifying existing requirements and making necessary changes to address findings and shortcomings in the interest of public safety. This proposed rule would address the National Transportation Safety Board’s (NTSB) recommendation that would clarify OQ requirements to control rooms (Safety Recommendation P-12-8). In addition, PHMSA is extending the program requirements to operators of regulated Type B onshore gas gathering lines. On July 25, 2012 the National Transportation Safety Board (NTSB) recommended to PHMSA to extend Operator Qualification requirements in Title 49 CFR Part 195 Subpart G to all hazardous liquid and gas transmission control center staff involved in pipeline operational decisions. PHMSA determined that requiring only a description of the processes used to qualify personnel instead of qualification methods for each individual that is allowed to perform tasks on Type A gas gathering in Class 2 locations and regulated hazardous liquids gathering in rural locations fails to provide necessary ability to ensure that individuals possess requisite abilities. The proposed action would amend the Federal Pipeline Safety Regulations in 49 CFR parts 192 and 195. The Amendments would include:  Standardization of the format used in OQ  Changing the scope of OQ rule in §§ 192.801 and 195.501 so that the method of determining a "covered task" is changed to a technically justified method instead of the negotiated "4-part test" originally in the rule. In particular, a “covered task” would now include new construction rather than just operations and maintenance. 7 <<>> April 30, 2014  Established dates in General Sections of §§ 192.809 and 195.509 no longer affect implementation requirements for operators and are renumbered as §§ 192.803 and 195.503  In §§ 192.809 and 195.509 enhancements are being included to clarify requirements, one training requirement date is deleted while clarifying the needs for training, a new Paragraph J has been added to establish requirements for evaluators including necessary training  New program effectiveness requirements are added in §§ 192.806 and 195.506  In §§ 192.807 and 195.507, record requirements that would address evaluators and program effectiveness have been added that are normally reviewed during inspection of OQ programs  After additional definitions have been added to guide the operators in the regulation, §§ 192.803 and 195.503 have been added into general definition in §§ 192.3 and 195.2 respectively  Sections 192.9 and 195.11 have been modified to have and administer an Operator Qualification program covering personnel that perform work on regulated Type B onshore gas gathering lines and regulated hazardous liquids gathering in rural locations respectively. In consideration of the NTSB recommendations in this area, PHMSA also proposes requiring each operator to define the roles and responsibilities and qualifications of others who have the authority to direct or supersede the specific technical actions of controllers (a change to 49 CFR 192.631(b) and 49 CFR 195.446(b)). 3.4 Special Permit Renewal This proposed rulemaking action would amend 49 CFR 190.341 of the Federal pipeline safety regulations to add procedures for renewing a special permit. As defined in Section 190.341(a), a special permit is an order by which PHMSA waives compliance with one or more of the pipeline safety regulations. In order to grant a request for a special permit, PHMSA must determine that granting the permit would “not be inconsistent with pipeline safety.” Special permits are authorized by statute in 49 USC § 60118(c), and the application process is set forth in 49 CFR 190.341. PHMSA performs extensive technical analysis on special permit applications and typically conditions a grant of a special permit on the performance of alternative measures that will provide an equal or greater level of safety. PHMSA is committed to public involvement and transparency in special permit proceedings and publishes notice of every special permit application received in the Federal Register for comment. 8 <<>> April 30, 2014 In the past, PHMSA has included an expiration date for certain special permits depending on the nature of the permit. Starting in 2009, PHMSA began adding an expiration date to all new permits. By doing so, PHMSA is able to ensure that each special permit will be re-reviewed no later than the expiration date. This process ensures that a special permit will not continue to be used if it is no longer in the best interest of public safety. Since the special permits that were issued with expiration dates in 2009 will start expiring in 2014, PHMSA is proposing to add renewal procedures to the pipeline safety regulations. PHMSA acknowledges that not all active special permits have expiration dates. Therefore, PHMSA may seek to modify any existing special permit without an expiration date through the “order to show cause” process described in 190.341(h)(2). 3.5 Farm Taps This proposed rulemaking action would amend the Federal pipeline safety regulations in 49 CFR Part 192. The amendment would include adding a new section (§ 192.740) to cover regulators and over-pressure protection equipment for an individual service line that originates from a transmission, gathering, or production pipeline, and would revise § 192.1003 to exclude farm taps from the requirements of pipeline Distribution Integrity Management Program (DIMP). A “farm tap” is industry jargon for a pipeline that branches from a transmission, gathering, or production pipeline to deliver gas to a farmer or other landowner. PHMSA has recognized farm taps as distribution lines for many years. Historically, PHMSA and its predecessor agencies have held that farm taps are service lines—a subset of distribution pipelines. Rulemaking proceedings and responses to requests for interpretation have recognized this fact on numerous occasions, dating as far back as 1971. On Friday, December 4, 2009, PHMSA published the DIMP final rule for gas distribution pipelines (74 FR 63906). That rule applies integrity management requirements to all distribution pipelines. Unlike the integrity management requirements for hazardous liquid or gas transmission pipelines, the DIMP requirements do not focus on a subset of pipelines in “high consequence areas,” but instead apply to all distribution pipelines. Therefore, little consideration was given to the potential impact or appropriateness of subjecting farm taps to DIMP requirements. Farm taps are mostly located in less-populated areas (Class 1 and 2 locations). The risk to the public from farm taps is generally low, but the risk is dependent upon the service in which the farm tap is employed, the environment in which it operates, and the consequence of an over- pressurization event. DIMP is written to identify needed risk control practices for threats associated with distribution systems, whereas threats to typical farm taps are limited, and most are already addressed within Part 192. Therefore, PHMSA is proposing to amend Part 192 to 9 <<>> April 30, 2014 exempt farm taps from the requirements of Part 192, Subpart P - Gas Distribution Pipeline Integrity Management. However, to better protect customers served by these lines, PHMSA is proposing to amend Part 192, Subpart M - Maintenance by adding a new section that prescribes inspection activities for pressure regulators and over-pressurization protection equipment on service lines that originate from transmission, gathering, or production pipelines. 3.6 Control Room Team Training In response to NTSB recommendation P-12-7, PHMSA is proposing a small addition to the regulations related to Control Room Management (49 CFR 192.631 and 195.446). Specifically, PHMSA’s proposed language would reinforce the need for team training and exercises that include not only controllers, but other individuals, such as supervisors, that controllers would reasonably be expected to interface with during normal, abnormal, and emergency conditions.. 3.7 Reversal of Flow or Change in Product On November 26, 2010, PHMSA published a final rule (75 FR 72878) that established and required participation in the National Registry of Pipeline and LNG Operators. This final rule amends the Federal pipeline safety regulations to require operators to notify PHMSA electronically of the occurrence of certain events no later than 60 days before the events occur. In this NPRM, PHMSA proposes to expand the scope of reportable events in §§191.22 and 195.64 to include the reversal of flow of product or change in product in a mainline pipeline. This notification is not required for pipeline systems already designed for bi-directional flow, or when the reversal is not expected to last for a duration of 30 days or less. The proposed rule would require operators to notify PHMSA electronically no later than 60 days before there is a reversal of the flow of product through a pipeline, and also in the instance that there is a change in the product flowing through a pipeline. Examples include, but may not be limited to, changing a transported product from liquid to gas, from crude oil to highly volatile liquids (HVL), and vice versa. In addition, a modification is proposed to §§ 192.14 and 195.5 to reflect the 60 days notification. 3.8 Editorial Amendments In this NPRM, PHMSA is also proposing to make the following editorial amendments to the pipeline safety regulations: On July 13, 1998, the Research and Special Programs Administration (RSPA) issued a final rule (63 FR 37500) to provide metric equivalents to the English units. RSPA provided the metric equivalents for informational purposes only. Operators were required to continue using the English units for purposes of compliance and enforcement. RSPA provided a metric equivalent for § 192.175(b) as follows: RSPA removed C=(3DxPxF/1,000) and replaced it with C=(DxPxF/48.33) (C=(3DxPxF/1,000)). However, the replacement formula was in error. The correct formula is: C = (3D*P*F)/1000) (C = (3D*P*F*)/6,895). Where, C = (3D*P*F)/1000) is in inches (English unit), and 10 <<>> April 30, 2014 (C = (3D*P*F*)/6,895) is in millimeters (metric conversion). On November 26, 2010, PHMSA published a final rule (75 FR 72878), which established the National Registry of Pipeline and LNG Operators. In this rule, PHMSA inadvertently omitted the inclusion of carbon dioxide in the operating commodity types. In an effort to maintain consistency with the rest of Part 195, this proposed rule would amend the language in § 195.64(a) and § 195.64(c)(1)(ii) to correct the term “hazardous liquid” to read “hazardous liquid or carbon dioxide.” In § 195.248, the correct conversion to 100 feet is mistakenly stated as 30 millimeters. Therefore, the phrase “100 feet (30 millimeters)” is replaced to read “100 feet (30.5 meters).” In § 195.452, a new paragraph (a)(4) is added to clarify the applicability of § 195.452 to low stress pipelines as described in § 195.12. 3.9 Pipeline Assessment Tools The National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113; March 7, 1996) directs Federal agencies to use voluntary consensus standards and design specifications developed by voluntary consensus standard bodies instead of government-developed voluntary technical standards, when applicable. OMB Circular A-119: “Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities” sets the policy for Federal use and development of voluntary consensus standards. As defined in OMB Circular A-119, voluntary consensus standards are technical standards developed or adopted by organizations, both domestic and international. These organizations use agreed upon procedures to update and revise their published standards every 3 to 5 years to reflect modern technology and best technical practices. The legal effect of incorporation by reference is that the material is treated as if it were published in the Federal Register and Code of Federal Regulations (CFR). This material, like any other properly issued rule, has the force and effect of law. Congress authorized incorporation by reference to reduce the volume of material published in the Federal Register and CFR (See 5 U.S.C. 552(a) and 1 CFR Part 51). Congress granted authority to the Director of the Federal Register to determine whether a proposed incorporation by reference serves the public interest. Section 24 of the Act amended 49 U.S.C. 60102 by adding a new requirement on documents incorporated by reference after January 3, 2013. The law states, “Beginning 1 year after the date of enactment of this subsection, the Secretary may not issue guidance or a regulation pursuant to this chapter that incorporates by reference any documents or portions thereof unless the documents or portions thereof are made available to the public, free of charge, on an Internet Web site.’’ To meet this requirement, PHMSA negotiated agreements with the majority of the standards-setting organizations with documents incorporated by reference in the pipeline safety regulations. The American Petroleum Institute (API), the American Society for Nondestructive 11 <<>> April 30, 2014 Testing (ASNT), and the National Association of Corrosion Engineers (NACE) International have signed such agreements with PHMSA. This proposed rule would incorporate by reference consensus standards for assessing the physical condition of in-service hazardous liquids pipelines using in-line inspection (ILI) and stress corrosion cracking direct assessment (SCCDA). Periodic assessment of hazardous liquids pipelines is required by § 195.452. These sections allow use of the inspection techniques addressed in these standards. Incorporation of the consensus standards would assure better consistency, accuracy and quality in pipeline assessments conducted using these techniques. In addition, the incorporation of these standards would address part of the NTSB Recommendation P-12-3 by identifying crack defects and seam corrosion using crack tools and circumferential tools. PHMSA proposes to incorporate by reference the following consensus standards into 49 CFR Part 195: API STD 1163, “In-Line Inspection Systems Qualification Standard” (August 2005); NACE Standard Practice RP0102-2010 “Inline Inspection of Pipelines;” NACE SP0204- 2008 “Stress Corrosion Cracking Direct Assessment;” and ANSI/ASNT ILI-PQ-2005, “In-line Inspection Personnel Qualification and Certification” (2005). Also, PHMSA proposes to allow pipeline operators to conduct assessments using tethered or remote control tools not explicitly discussed in NACE SP0102-2010, provided the operators comply with applicable sections of NACE SP0102-2010. Note that this proposed rulemaking action addresses only Part 195, but PHMSA will consider making a similar proposed rule for 49 CFR Part 192 under a separate rulemaking action. 3.10 Electronic Reporting of Drug and Alcohol Testing Results PHMSA’s pipeline safety regulations at 49 CFR 191.7 and 49 CFR 195.58 require electronic reporting of most pipeline safety reports through the PHMSA Portal. PHMSA proposes to also require electronic reporting for anti-drug testing results required under § 199.119 and alcohol testing results required under § 199.229. Pipeline operators with less than 50 covered employees are required to submit these reports only when PHMSA provides written notice. PHMSA proposes to modify these regulations to specify that PHMSA will provide notice to operators in the PHMSA Portal. 3.11 Post-Accident Drug and Alcohol Testing PHMSA's regulations require documentation of decisions not to administer a post-accident alcohol test. The requirement to document a decision not to administer a post-accident drug test is implied in the regulations, but not explicitly required. PHMSA proposes to add a section to the post-accident drug testing regulation to require documentation of such a decision. The NTSB issued the following safety recommendation (NTSB Recommendation P-11-12): "Amend 49 CFR 199.105 and 49 CFR 199.225 to eliminate operator discretion with regard to testing covered employees. The revised language should require drug and alcohol testing of each 12 <<>> April 30, 2014 employee whose performance either contributed to the accident or cannot be completely discounted as a contributing factor to the accident." Accordingly, PHMSA also proposes to modify 49 CFR 199.105 and 49 CFR 199.225 by restating and further defining the existing requirement to conduct post-accident drug and alcohol testing of all employees except those for whom sufficient information establishes that they had no role in the accident. 4 Identification of Available Alternative Approaches 4.1 No Action This was used as the baseline against which PHMSA compared all other alternatives. Regulatory analyses typically consider an alternative in which the agency would not take any action, because it would maintain the status quo. No new requirements would be levied. No costs would be incurred to implement new requirements. No new benefits would result. PHMSA has an obligation to ensure the safe and effective transportation of hazardous liquids and gases by pipeline. The changes proposed in this NPRM serve that purpose by clarifying the pipeline safety regulations, eliminating conflicting provisions, responding to new statutory mandates, and eliminating unduly burdensome requirements. A failure to undertake these actions would allow for the continued imposition of unnecessary compliance costs without increasing public safety. Accordingly, PHMSA rejected the “no action” alternative. 4.2 Proposed Revisions This alternative was determined by PHMSA as the preferred regulatory option and is compared in the document with the baseline “no action” alternative. PHMSA is proposing to make certain amendments, corrections, and editorial changes to the pipeline safety regulations. These revisions would eliminate inconsistencies and respond to several petitions for rulemaking and recommendations from our stakeholders, thereby facilitating the safe and effective transportation of hazardous liquids and gases by pipeline. The changes proposed in this NPRM serve that purpose by clarifying the pipeline safety regulations and eliminating unduly burdensome requirements. 5 Industry Information The affected industry comprises owners and operators of regulated natural gas and hazardous liquid pipelines. These include a mix of large and small businesses, as well as publically owned 13 <<>> April 30, 2014 utilities, municipalities, and other organizations. Using a combination of PHMSA 2011 Annual Report data and the Dun and Bradstreet company database, there are approximately 3,000 regulated entities when all corporate subsidiaries are separately counted, with a total of roughly 150,000 onsite employees. There are wide variations across entities with respect to the share of employees actually engaged in pipeline operations, especially for public agencies. Among these entities, common industry (NAICS) codes are 211111, Crude Petroleum and Natural Gas Extraction; 221210, Natural Gas Distribution; 324110, Petroleum Refineries; 486910, Pipeline Transportation of Refined Petroleum Products; 486210, Pipeline Transportation of Natural Gas; and 424720, Petroleum and Petroleum Products Merchant Wholesalers. Many of the specific provisions in this rulemaking would apply only to specific subsets of this population, such as operators of gas gathering lines, as described in more detail in Section 6 below. 6 Definition and Evaluation of the Benefits and Costs 6.1 Data Sources and Limitations Cost information is taken from PHMSA databases and external datasets as detailed more specifically below. In many cases the proposed changes are so small as to entail little to no quantifiable costs. 6.2 Costs In the sub-sections below, each provision of the rulemaking is analyzed individually for potential cost implications. 6.2.1 Accident and Incident Notification There is an existing requirement to notify the NRC by telephone of incidents at the “earliest practicable moment” after discovery. This provision would clarify the existing rule and accompanying guidance by providing additional specificity on the expected timeframe. As a clarification to an existing requirement, this section does not entail any significant changes in compliance costs. 6.2.2 Cost Recovery for Design Reviews Under this provision, PHMSA would conduct design reviews for certain large-scale pipeline projects on a cost-recovery basis rather than at the agency’s own expense. The cost recovery provision would represent a transfer between parties, with no net societal costs or benefits. Particularly for projects meeting the project cost criterion, the relatively small cost of the design review is unlikely to hinder innovation in design techniques. 14 <<>> April 30, 2014 6.2.3 Operator Qualification Requirements for Parts 192 and 195 Operator Qualification (OQ) programs are designed to ensure that each worker conducting pipeline activities, such as operations and maintenance, has the appropriate knowledge and skills to perform that function. OQ programs are already required and in place for most pipeline operators, with some exceptions. The proposed revisions to the OQ requirements include rearranging/renumbering with clarification to existing requirements and a number of small editorial changes and clarifications. These smaller changes do not involve any significant compliance costs because they largely re- state existing requirements and resolve perceived ambiguities in the regulatory text, rather than impose substantively new requirements. Notable among these is a revision in scope that responds to NTSB Recommendation P-12-8; it specifies that pipeline operators’ OQ plans must define the roles, responsibilities, and qualifications of any employees who have the authority to direct or supersede pipeline controllers’ actions. As NTSB noted, it is inconsistent with safe operating principles to have controllers’ actions guided or overridden by employees who do not necessarily have the same level of operator qualification. This change makes explicit that an employee who guides or overrules a pipeline controller is also effectively acting as a controller, even if he/she has another job title. PHMSA is making this change in response to NTSB’s recommendation and to make the regulations as clear as possible. However, PHMSA already addresses this issue through its Frequently Asked Questions for the OQ program and its definition of “controller” (49 CFR 192.3 and 195.2), which includes anyone who monitors and controls the safety-related operations of a pipeline from a control room. Supervisors already fall under this functional definition to the extent that they direct first-line controllers, though this may not be clear to all operators. This clarification explicitly reinforces that point. As a clarification of an existing requirement, there are no incremental compliance costs. PHMSA is also proposing a small revision to OQ programs to explicitly require a “management of change” component, i.e. that operators inform their employees if there are changes to their OQ-covered tasks. This proposed change again provides additional clarity to the regulations. However, PHMSA believes that there are little to no costs associated with the change, because communicating changes in employees’ responsibilities is a normal business practice. PHMSA’s proposed OQ-related provisions also include two more substantive changes that may entail changes to operator practices and incremental compliance costs:  OQ would be extended to three additional pipeline categories that currently avail of a modified recordkeeping approach that does not require individualized documentation: o Type A gas gathering lines in Class 2 locations o Type B onshore gas gathering lines o Regulated hazardous liquid gathering lines in rural areas 15 <<>> April - **truncated:** true - **body characters:** 76395