{"operation":"document","citation":"0900006481ca7cda","title":"U.S. DOT/PHMSA - Regulatory Impact Analysis (RIA)","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"Preliminary Regulatory Impact Analysis Regulatory Development Support Services Pipeline Safety: Safety of Hazardous Liquid Pipelines Notice of Proposed Rulemaking (NPRM) Contract No.: DPTH56-09-F-000012 Order No.: DTPH56-09-F-000012TTD002 Project No.: 1027-002 Submitted To: Pipeline and Hazardous Materials Safety Administration U.S. Department of Transportation Attn.: Cheryl... Regulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012 Proposed Requirement Area Entities Affected Pipeline Segments Affected Estimate of Possible Number of Operators6 Estimate of Possible Total Number of Pipeline Miles Affected by the Proposed Rule7 Onshore Offshore 4. Require assessments...","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481ca7cda.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481ca7cda.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006481ca7cda","source_url":"https://downloads.regulations.gov/PHMSA-2010-0229-0037/attachment_1.pdf","body":"<<<PAGE 1>>>\n\nPreliminary Regulatory Impact Analysis\nRegulatory Development Support Services\nPipeline Safety: Safety of Hazardous\nLiquid Pipelines Notice of Proposed Rulemaking (NPRM)\nContract No.:\nDPTH56-09-F-000012\nOrder No.:\nDTPH56-09-F-000012TTD002\nProject No.:\n1027-002\nSubmitted To:\nPipeline and Hazardous Materials Safety Administration\nU.S. Department of Transportation\nAttn.: Cheryl Whetsel, COR\n1200 New Jersey Avenue, SE\nWashington, DC 20590-0001\nSubmitted By:\nEconometrica, Inc.\n7475 Wisconsin Avenue, Suite 1000\nBethesda, MD 20814\nOctober 1, 2015\n\n<<<PAGE 2>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nTable of Contents\nTABLE OF CONTENTS ............................................................................................................... II\nEXECUTIVE SUMMARY ............................................................................................................. 1\n1. INTRODUCTION ..................................................................................................................... 4\n1.1. BACKGROUND ............................................................................................................... 4\n1.2. NOTICE OF PROPOSED RULEMAKING ............................................................................. 4\n1.3. EFFECTIVENESS OF THE RULE ....................................................................................... 5\n1.4. HL PIPELINE SEGMENTS AND OPERATORS POTENTIALLY AFFECTED ............................ 7\n1.5. FACTORS THAT MAY AFFECT THE COSTS AND BENEFITS ............................................. 9\n2. REGULATORY ANALYSIS .................................................................................................... 11\n2.1. INTRODUCTION............................................................................................................ 11\n2.2. NEED FOR THE REGULATORY ACTION ......................................................................... 11\n2.2.1. Economic – Market Failure .............................................................................. 11\n2.2.2. Legislative – Safety Updates to the Nation’s Pipeline Safety Laws ................. 13\n2.2.3. Strategic – PHMSA’s Goals ............................................................................. 14\n2.3. BASELINE .................................................................................................................... 15\n2.3.1. Factors Contributing to Pipeline Failures ......................................................... 17\n2.3.2. HL Pipeline Incidents ....................................................................................... 17\n2.3.3. Current Regulatory Requirements .................................................................... 21\n2.4. TIMEFRAME FOR THE ANALYSIS .................................................................................. 29\n2.5. IDENTIFICATION OF AVAILABLE ALTERNATIVE APPROACHES AND THE CONSEQUENCES\nOF THE ALTERNATIVES ...................................................................................................... 29\n2.6. OVERVIEW OF THE COSTS AND BENEFITS ASSOCIATED WITH THE PROPOSED RULE\nREQUIREMENTS.................................................................................................................. 29\n2.6.1. Costs .................................................................................................................. 29\n2.6.2. Benefits ............................................................................................................. 30\n2.7. CONSIDERATION OF THE LOSS OF ENERGY SUPPLIED .................................................. 33\n3. REGULATORY IMPACT ANALYSIS OF THE PROPOSED REQUIREMENTS ........................... 34\nREQUIREMENT AREA #1 – EXTEND REPORTING REQUIREMENTS TO ALL HL GRAVITY\nLINES ................................................................................................................................. 34\nAlternatives Considered .............................................................................................. 34\nAnalysis of Costs and Benefits of the Proposed Action ............................................. 35\nii\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 3>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nREQUIREMENT AREA #2 – EXTEND CERTAIN REPORTING REQUIREMENTS TO ALL HL\nGATHERING LINES ............................................................................................................. 39\nAlternatives Considered .............................................................................................. 39\nAnalysis of Costs and Benefits of the Proposed Action ............................................. 40\nREQUIREMENT AREA #3 – REQUIRE INSPECTIONS OF PIPELINES IN AREAS AFFECTED BY\nEXTREME WEATHER, NATURAL DISASTERS, AND OTHER SIMILAR EVENTS ...................... 44\nBaseline Inspection Requirements for HL Pipelines .................................................. 44\nAlternatives Considered .............................................................................................. 45\nAnalysis of Costs and Benefits of the Proposed Action ............................................. 46\nInteraction With Other Proposed Requirements ......................................................... 51\nRequest for Comments ................................................................................................ 51\nREQUIREMENT AREA #4 – REQUIRE HL PIPELINE IN NON-HCAS BE ASSESSED AT LEAST\nONCE EVERY 10 YEARS USING ILI TOOLS ........................................................................ 52\nAlternatives Considered .............................................................................................. 52\nAnalysis of Costs and Potential Benefits of the Proposed Action .............................. 53\nInteraction With Other Proposed Requirements ......................................................... 64\nRequest for Comments ................................................................................................ 65\nREQUIREMENT AREA #5 – REQUIRE LDSS FOR ALL HL PIPELINES ................................... 66\nThe Target Problem and Need for the Proposed Action ............................................. 66\nAlternatives Considered .............................................................................................. 66\nREQUIREMENT AREA #6 – MODIFY THE REPAIR REQUIREMENTS FOR HCA AND NON-HCA\nPIPELINE ............................................................................................................................ 69\nAlternatives Considered .............................................................................................. 70\nAnalysis of Costs and Benefits of the Proposed Action ............................................. 70\nInteraction With Other Proposed Requirements ......................................................... 71\nRequest for Comments ................................................................................................ 71\nREQUIREMENT AREA #7 – INCREASE THE USE OF ILI TOOLS IN HCAS ............................. 72\nAlternatives Considered .............................................................................................. 75\nAnalysis of Costs and Benefits of the Proposed Requirement ................................... 76\nInteraction With Other Proposed Requirements ......................................................... 80\nREQUIREMENT AREA #8 – CLARIFY IM REQUIREMENTS ................................................... 81\nAlternatives Considered .............................................................................................. 82\nAnalysis of Costs and Benefits of the Proposed Action ............................................. 83\nAPPENDIX A. POTENTIALLY ASSESSMENT-PREVENTABLE INCIDENTS, 2010 TO 2014 ...... A-1\niii\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 4>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nExecutive Summary\nThe Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing to make\ncertain changes to the hazardous liquid (HL) pipeline safety regulations.1 The proposed changes\ninclude the following: (1) extend reporting requirements to gravity lines; (2) extend certain\nreporting requirements to HL gathering lines located outside of high consequence areas (HCAs);2\n(3) require inspections of pipelines in areas affected by extreme weather, natural disasters, and\nother similar events within 72 hours and appropriate remedial action to ensure the safe operation\nof a pipeline; (4) require assessments of pipelines located in non-HCAs every 10 years using in-\nline inspection (ILI) tools; (5) expand the use of leak detection systems (LDSs) to HL pipelines\nlocated in non-HCAs to mitigate the effects of failures that occur outside of HCAs; (6) modify\nthe Integrity Management (IM) repair criteria and apply those same criteria to pipelines that are\nnot subject to the IM requirements; (7) increase the use of ILI tools by requiring that any pipeline\nthat could affect an HCA be capable of accommodating these devices within 20 years, unless its\nbasic construction will not permit that accommodation; and (8) resolve inconsistent deadlines,\nclarify requirements for information integration, clarify definition of covered pipeline facilities,\nand specify timeframe for rechecking HCA status for the IM Plan.\nDifferent requirements in this Notice of Proposed Rulemaking (NPRM) affect different sets of\noperators, and different mileage segments are also affected by different parts of the proposal.\nSome of the requirements are directed only to pipelines in HCAs, and others are directed only to\npipelines outside of HCAs. Some requirements incorporate only onshore pipelines, and others\nrefer to offshore also. Throughout the analysis, the cost estimates are based on assumptions\nregarding how operators will choose to comply with many of the proposed requirements. The\nresulting cost estimates are based on information available at the time of the analysis. Similarly,\nthe benefits of the requirements will be affected by how effective the rule will be in reducing or\nmitigating the costs associated with incidents. Some of the requirements provide a period of time\nbefore operators must comply and the timing of when mandatory compliance will affect both the\ncost and benefit estimates.\nIn this regulatory analysis, we discuss PHMSA’s alternatives to the proposed requirements and,\nwhere possible, provide estimates of the costs and benefits for specific regulatory requirements\nin the eight areas. The regulatory analysis provides PHMSA’s best estimate of the impact of the\nseparate proposed requirements and throughout invites comment on the assumptions and\nmethodologies employed. For some of the provisions, the costs and benefits are not readily\n1 PHMSA, U.S. Department of Transportation (DOT), 49CFR Part 195. Docket No. PHMSA-2010-0229 RIN 2137-\nAE66. The proposed action is in response to the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011\n(P.L. 112-90), National Transportation Safety Board (NTSB) recommendations to update HL pipeline regulations,\nlessons learned, and public input.\n2 For HL pipelines, HCAs include populated areas, drinking water sources, and unusually sensitive ecological areas.\nFR §195.452 requires HL pipeline operators to conduct an initial risk assessment to determine if an accidental\nrelease from any segment of their pipeline could reach an HCA. Operators are required to meet more stringent\nregulatory requirements known as IM for segments of their pipeline from which a release could reach an HCA. Any\npipeline from which a release “could affect” an HCA is subject to the IM Rule. In this document, we use HCA and\n“could affect HCA” interchangeably. For more information, please see PHMSA’s “Fact Sheet: High Consequence\nAreas” at http://primis.phmsa.dot.gov/comm/FactSheets/FSHCA.htm. Accessed December 15, 2014.\nPage 1 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 5>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines\n1027-002/DTPH56-09-F-000012\nquantified or possible to monetize. Estimates of the annual costs and potential benefits that are\nquantified are discounted at both 3 percent and 7 percent and presented in the analysis of the\nrequirements to arrive at the present values for purposes of comparison. The present values of\ncosts and potential benefits are calculated over different time periods, depending on the nature of\nthe requirements. Table ES-1 presents a summary of the present value of the annualized costs\nand benefits for the eight requirement areas in the proposed rule discounted at 7 percent.\nTable ES-1. Annualized Costs and Benefits by Requirement Area Discounted at 7\nPercent\nRequirement Area\nCosts\nBenefits\nNet Benefits\n1. Extend certain reporting\nrequirements to all HL\n$900\nquantified but\nBenefits not\nExpected to be\ngravity lines.\nexpected to justify\npositive.\ncosts.\nExtend certain reporting\nrequirements to all HL\n$23,300\nBenefits not\nExpected to be\ngathering lines.\nquantified but\nexpected to justify\npositive.\nthe costs.\n3.\nRequire inspections of\n$1.5 million\n$3.5 to 10.4 million\npipelines in areas affected\n$2.0 to 8.9 million\nby extreme weather, natural\ndisasters, and other similar\nif a condition that could\nappropriate remedial action\nadversely affect the safe\noperation of a pipeline is\ndiscovered\n4. Require periodic\n$16.7 million\n$17.7 million\n$1 million\nthat are not already covered\nassessments of pipelines\nunder the IM program\nRange:\n$9.4 to $26.0 million\n-$7.3 to $9.3 million\nRange:\ntool (or demonstrate to the\nrequirements using an ILI\nsatisfaction of PHSA that\nExpected to be\npositive even at the\nsina this tool)\nthe pipeline is not capable of\nbenefit range if\nunquantified benefits\n5. Require use of LDSs on HL\nNot quantified.\nNot quantified but\nNot quantified, but\nHAs to mitigate the effects\npipelines located in non-\nof failures that occur outside\nthat the cost of\nexpected to be\nexpanding LDSs to\nminimal and justify\nbenefits.\npositive qualitative\nthe costs.\nof HCAs.\nadditional repairs to\nperforming any\nEconometrica, Inc.\nPage 2 of 86 Pages\nOctober 1, 2015\n\n<<<PAGE 6>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nRequirement Area Costs Benefits Net Benefits\n6. Modify the IM repair criteria,\nboth by expanding the list of\nconditions that require\nimmediate remediation,\nconsolidating the timeframes\nfor remediating all other\nconditions, and making\nexplicit deadlines for repairs\non non-IM pipeline.\nNot quantified but\nexpected to be\nminimal.\nNot quantified but\nexpected to justify\nthe minimal costs.\nNot quantified but\nexpected to be\nminimal.\n7. Increase the use of ILI tools\nby requiring that any pipeline\nthat could affect an HCA be\ncapable of accommodating\nthese devices within 20\nyears, unless its basic\nconstruction will not permit\nthat accommodation.\n$1.0 million $12.2 million $11.2 million\n8. Clarify and resolve\ninconsistencies regarding\ndeadlines and information\nanalyses for IM plans.\n$3.2 million $10.0 million $6.8 million\nThe proposed rule is a significant regulatory action under DOT’s regulatory policies and\nprocedures (44 FR 11034; February 26, 1979) but is not economically significant under EO\n12866 and EO 13563 because the estimated annual impact is less than $100 million.\nLooking at the individual provisions of the proposed rule, the quantified benefits justify the costs\nexcept for in the case of Requirement 4. Factors such as an increase in public confidence that all\npipelines are being regulated and better risk management procedures on the part of operators are\nexpected to yield qualitative and quantitative benefits that are in further excess of the costs.\nSection 202 of the Unfunded Mandates Reform Act of 1995 requires that agencies assess\nanticipated costs and benefits before issuing any rule whose mandates would require spending\n$151 million in any one year. This proposed rule does not impose enforceable duties on State,\nlocal, or tribal governments or on the private sector of $155 million in any one year.\nPage 3 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 7>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\n1. Introduction\n1.1. Background\nPHMSA (or “the Agency”) is the agency within DOT (or “the Department”) that administers the\nPipeline Safety Laws. On October 18, 2010 (75 FR 63774), PHMSA published an ANPRM\nasking the public to comment on several proposed changes to Part 195.3 The ANPRM sought\ncomments on the following:\n1. Scope of Part 195 and Existing Regulatory Exceptions.\n2. Criteria for Designation of HCAs.\n3. Leak Detection and Emergency Flow Restricting Devices.\n4. Valve Spacing.\n5. Repair Criteria Outside of HCAs.\n6. Stress Corrosion Cracking.\nTwenty-one organizations and individuals submitted comments in response to the ANPRM. The\nanalysis of comments appears in “Notice of Proposed Rulemaking Safety of Onshore HL\nPipelines Docket Number PHMSA 2010-0229.”\n1.2. Notice of Proposed Rulemaking\nIn response to mandates, recommendations, lessons learned, and public input, PHMSA is\nproposing to make certain changes to the Hazardous Liquid Pipeline Safety Regulations.\n The first proposal is to extend reporting requirements to gravity lines. Other pipelines that\noperate at relatively low pressures (such as gathering lines), and for short distances, are\nsubject to reporting requirements. Gravity lines can operate at pressures that exceed low\npressure pipelines or gathering lines due to significant elevation differences needed to\nprovide the motive force for liquid flow and thus can represent as much or more risk than\nlow pressure lines or gathering lines. The collection of information about these lines is\nauthorized under the Pipeline Safety Laws, and the resulting data would assist in\ndetermining whether the existing Federal and State regulations for these lines are\nadequate.\n The second proposal is to extend reporting requirements to all HL gathering lines. The\ncollection of information about these lines is also authorized under the Pipeline Safety\nLaws, and the resulting data would assist in determining whether the existing Federal and\nState regulations for these lines are adequate.\n The third proposal is to require inspections within 72 hours of pipelines in areas affected\nby extreme weather, natural disasters, and other similar events. Such inspections would\nensure that pipelines are still capable of being safely operated after these events. PHMSA\nis also proposing to require operators to take remedial action if a condition that could\nadversely affect the safe operation of a pipeline is discovered.\n3 The ANPRM may be viewed at http://www.regulations.gov/#!docketDetail;D=PHMSA-2010-0229 (accessed\nAugust 15, 2012).\nPage 4 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 8>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\n The fourth proposal is to require assessments of HL pipelines that are located outside of\nHCAs using ILI tools at least once every 10 years. Pipelines that could affect HCAs are\nalready required under the IM program requirements to be assessed using ILI, hydrostatic\ntesting, or direct assessment. This proposed requirement would provide critical\ninformation about the condition of pipelines located in non-HCAs, including the\nexistence of internal and external corrosion and deformation anomalies.\n The fifth proposal is to require the use of LDSs on HL pipelines located in non-HCAs.\nLDSs are already required for segments of pipeline that could reach an HCA. The use of\nsuch systems would help mitigate the effects of HL pipeline failures that occur outside of\nHCAs.\n The sixth proposal is to modify the provisions for making pipeline repairs. Additional\nconservatism would be incorporated into the existing repair criteria and an adjusted\nschedule will be established to provide greater uniformity. These criteria would also be\nmade applicable to all HL pipelines, with an extended timeframe for making repairs\noutside of HCAs.\n The seventh proposal is to require that all pipelines subject to the IM requirements be\ncapable of accommodating ILI tools within 20 years, unless the basic construction of a\npipeline cannot be modified to permit that accommodation. ILI tools are an effective\nmeans of assessing the integrity of a pipeline. Broadening their use would improve the\ndetection of anomalies and prevent or mitigate future accidents in high-risk areas.\n Finally, PHMSA is proposing clarification changes to other regulations to improve\ncertainty and compliance.\n1.3. Effectiveness of the Rule\nPHMSA expects that the proposed changes will protect the public, property, and the environment\nby increasing the detection and remediation of unsafe conditions and mitigating the adverse\neffects of pipeline failures.\nIn the past 10 years, PHMSA has issued the following final rules that affect HL pipelines.\nA. Protecting Unusually Sensitive Areas From Rural Onshore Hazardous Liquid\nGathering Lines and Low-Stress Lines, June 3, 2008 (Docket No. PHMSA-2003-15864)\nOperators of rural gathering lines meeting certain criteria must comply with pipeline safety\nrequirements that address corrosion and third-party damage. In particular, operators of these lines\nmust establish maximum operating pressure, install and maintain line markers, establish\ncontinuing public education and damage prevention programs, comply with corrosion control\nrequirements, implement programs for continuously identifying operating conditions that could\ncontribute to internal corrosion (including measures to prevent and mitigate internal corrosion),\nand comply with operator qualification programs. In addition, operators of regulated rural\ngathering lines must comply with Subpart B’s reporting requirements.\nThe regulations require that larger-diameter rural low-stress pipelines comply with all Part 195\nsafety requirements and shutdown ability, to determine if a pipeline could affect an unusually\nPage 5 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 9>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nsensitive area (USA). New steel gathering lines constructed, replaced, relocated, or otherwise\nchanged after July 3, 2009, must comply with Part 195’s installation, construction, initial\ninspection, and initial testing requirements. For pipelines that become regulated because of the\nidentification of a new USA, an operator must implement the regulatory requirements (except for\nSubpart H corrosion control requirements) within 6 months of identifying the USA for gathering\nlines and within 12 months of identifying low-stress pipelines.\nB. Pipeline Safety: Control Room Management/Human Factors, February 3, 2010\nPHMSA amended the Federal pipeline safety regulations to address human factors and other\naspects of control room management for pipelines where controllers use supervisory control and\ndata acquisition (SCADA) systems. Under the final rule, affected pipeline operators must define\nthe roles and responsibilities of controllers and provide controllers with the necessary\ninformation, training, and processes to fulfill these responsibilities. Operators must also\nimplement methods to prevent controller fatigue. The final rule further requires operators to\nmanage SCADA alarms, ensure that control room considerations are taken into account when\nchanging pipeline equipment or configurations, and review reportable incidents or accidents to\ndetermine whether control room actions contributed to the event.\nHL and gas pipelines are often monitored in a control room by controllers using computer-based\nequipment, such as a SCADA system, that records and displays operational information about\nthe pipeline system, such as pressures, flow rates, and valve positions. Some SCADA systems\nare used by controllers to operate pipeline equipment, while in other cases, controllers may\ndispatch other personnel to operate equipment in the field. These monitoring and control actions,\nwhether via SCADA system commands or direction to field personnel, are a principal means of\nmanaging pipeline operation.\nThis rule improves opportunities to reduce risk through more effective control of pipelines. It\nfurther requires the statutorily mandated human factors management. These regulations will\nenhance pipeline safety by coupling strengthened control room management with improved\ncontroller training and fatigue management.\nC. Application of Safety Regulation to Rural Onshore Hazardous Liquid Low-Stress\nPipelines (Phase II), May 5, 2011\nPHMSA amended its pipeline safety regulations to apply safety regulation to rural low-stress HL\npipelines that were not covered previously by safety regulations. This change complies with a\nmandate in the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 (PIPES\nAct).\nSome rules may overlap and thus would not result in mutually exclusive benefits. PHMSA\nestimates that the group of previously published rules has resulted in some reduction in incidents,\nmost of which is accounted for in the data presented in the area requirement analyses. PHMSA\nsees the following regulatory effects, which affect the benefits and the effectiveness of the rule:\nPage 6 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 10>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nArea Effect\n1. Extend reporting requirements to all HL gravity\nlines.\nProvides information to improve the effectiveness\nof regulatory policies.\n2. Extend reporting requirements to all HL\ngathering lines.\nProvides information to improve the effectiveness\nof regulatory policies.\n3. Require inspections of pipelines in areas\naffected by extreme weather, natural disasters,\nand other similar events.\nPHMSA believes that most operators already\nperform these inspections. To the extent\noperators do not currently perform them within 72\nhours following an event, this proposal lowers the\nlikelihood of an accident.\n4. Require assessments for corrosion and\ndeformation anomalies of HL pipelines that are\nlocated outside of HCAs at least once every 10\nyears.\nLowers the likelihood of an accident.\n5. Require the use of LDSs on HL pipelines\nlocated in non-HCA.\nMinimal because most all operators already use\nLDSs on their non-HCA pipe. For the very few that\ndo not, this proposal would mitigate the effects of\nan accident by lowering the quantity of product\nspilled.\n6. Modify the provisions for making pipeline\nrepairs.\nMitigates the effects of an accident by lowering\nthe quantity of product spilled.\n7. Require that all pipelines subject to the IM\nrequirements be capable of accommodating ILI\ntools within 20 years, unless the basic\nconstruction of a pipeline cannot be modified to\npermit that accommodation.\nMitigates the effects of an accident by lowering\nthe quantity of product spilled.\n8. Clarify regulations. Improves compliance.\nPHMSA believes that the effectiveness of the rule would range from 10 percent to 50 percent,\ndepending on the proposed requirement. The effectiveness will be addressed separately in the\nindividual analysis. The risks addressed by each of the different proposed requirements may not\nall be mutually exclusive, but that does not necessarily lead to assigning benefits more than once.\nFor example, although three of the requirements—inspections following natural events,\nclarifications, and repair criteria modification—might apply to all pipelines, they would not\napply to gravity lines or operators who are not required to report without those separate\nrequirements. In addition, when operators are not required to report because of exemptions,\nexceptions, or exclusions, the total extent of incidents and associated societal costs and potential\nbenefits cannot be known.\n1.4. HL Pipeline Segments and Operators Potentially Affected\nIn general, it is difficult to estimate pipeline mileage for each requirement in this NPRM. The\npipeline segments impacted depend on many factors such as the location of the pipeline (inside\nHCAs or outside HCAs); the product transported (in this case a petroleum or a petroleum\nproduct); the length, diameter, and type of pipeline; and the reconfiguration of pipelines that\noccurs following changes made to the pipeline by either installing new pipelines or abandoning\nold pipelines.\nPage 7 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 11>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nBased on PHMSA and publicly available data, we estimated that currently, there are 421 HL\npipeline operators.4 Two hundred and twenty of the operators have pipelines less than 50 miles\nlong, 96 operators have pipelines between 50 and 250 miles long, and 105 operators have\npipelines greater than 250 miles in length.\n5 Table 1 describes the entities and the pipelines\naffected by this NPRM.\nTable 1. Estimated Entities and Pipeline Segments Affected by the NPRM by\nProposed Requirement Area\nProposed Requirement Area Entities\nAffected Pipeline Segments Affected\nEstimate of\nPossible\nNumber of\nOperators6\nEstimate of\nPossible Total\nNumber of\nPipeline Miles\nAffected by the\nProposed Rule7\nOnshore Offshore\n1. Extend reporting requirements to HCA\nand non-HCA HL gravity lines.\n3 to 58 179 to 2810 \n2. Extend reporting requirements to HL\ngathering lines located in non-HCAs.\n2311 26,000 to\n36,00012 \n3. Require inspections of pipelines in areas\naffected by extreme weather, natural\ndisasters, and other similar events, and\nremedial action.\n421 191,478  \n4 See https://www.federalregister.gov/articles/2010/01/26/2010-1497/pipeline-safety-leak-detection-on-hazardous-\nliquid-pipelines#h-6 (accessed August 9, 2014).\n5 Derived from PHMSA Annual Report data, available at\nhttp://www.phmsa.dot.gov/portal/site/PHMSA/menuitem.6f23687cf7b00b0f22e4c6962d9c8789/?vgnextoid=a872df\na122a1d110VgnVCM1000009ed07898RCRD&vgnextchannel=3430fb649a2dc110VgnVCM1000009ed07898RCR\nD&vgnextfmt=print (accessed January 2, 2015).\n6 Most estimates are based on available PHMSA data. Source of estimates not from PHMSA data are included in the\nfootnotes to the table. PHMSA data used for this table is available at\nhttp://www.phmsa.dot.gov/portal/site/PHMSA/menuitem.6f23687cf7b00b0f22e4c6962d9c8789/?vgnextoid=a872df\na122a1d110VgnVCM1000009ed07898RCRD&vgnextchannel=3430fb649a2dc110VgnVCM1000009ed07898RCR\nD&vgnextfmt=print (accessed January 2, 2015).\n7 Most estimates are based on available PHMSA data. Source of estimates not from PHMSA data are included in the\nfootnotes to the table.\n8 Estimate based on data provided by the PHMSA Data Manager. One known gravity line is the TESORO pipeline,\nwhich runs to a refinery near Kenai, AK.\n9 American Petroleum Institute and Association of Oil Pipelines Comment in response to ANPRM, Docket\nPHMSA-2010-0229. The estimate is based on the 2009 Pipeline Performance Tracking System, a survey of HL\npipeline operators. Respondents reported on approximately 150,000 of total pipeline miles.\n10 Estimate based on data provided by the PHMSA Data Manager.\n11 American Petroleum Institute and Association of Oil Pipelines Comment in response to ANPRM, Docket\nPHMSA-2010-0229. The estimate is based on the 2009 Pipeline Performance Tracking System, a survey of HL\npipeline operators. Respondents reported on approximately 150,000 of total pipeline miles.\n12 See NPRM, page 18, response to comments on “Rural Gathering Lines.” The Association of Oil Pipelines\n(AOPL) in its comments (see footnote 3 for source) notes that it estimates that there are 6,705 miles impacted;\nhowever, PHMSA in the NPRM notes that “PHMSA only regulates 3,644 miles of the approximately 30,000 to\n40,000 miles of onshore hazardous liquid gathering lines in the United States.” By PHMSA estimates, this leaves\napproximately 26,000 to 36,000 miles of HL gathering lines unregulated.\nPage 8 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 12>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nProposed Requirement Area Entities\nAffected Pipeline Segments Affected\nEstimate of\nPossible\nNumber of\nOperators6\nEstimate of\nPossible Total\nNumber of\nPipeline Miles\nAffected by the\nProposed Rule7\nOnshore Offshore\n4. Require assessments of non-HCA\npipeline using ILI tools every 10 years.\n421 17,794  \n5. Require LDSs on HL pipelines located\noutside of HCAs to mitigate the effects of\nfailures that occur.\n421 2,565  \n6. Modify the IM repair criteria, both by\nexpanding the list of conditions that\nrequire immediate remediation and\nconsolidating the timeframes for\nremediating all other conditions, and\napply those same criteria to pipelines\nthat are not subject to the IM\nrequirements.\n421 191,478  \n7. Increase the use of ILI tools by requiring\nthat pipelines in areas that could affect\nan HCA be capable of accommodating\nthese devices within 20 years, unless its\nbasic construction will not permit that\naccommodation.\nAll operators\nwith pipelines\nthat could\naffect HCAs\n83,014  \n8. Clarify other regulations to improve\ncompliance and enforcement.\n421 191,478  \n1.5. Factors That May Affect the Costs and Benefits\nEstimates of impacts, costs, and benefits are calculated based on the action taken for each\nrequirement area. Regarding compliance cost, there is no specific general rule that can cover all\nsituations. The costs will depend on factors such as where the pipeline is located, how much of\nthe pipeline is affected, the type of pipeline, the size of the pipeline, and the method used to\naddress the requirements. For example:\n ILI tools are not 100 percent effective and may not detect all defects (proposed\nrequirement area number 4).13 Also, the results of inspections may not be accurately\nassessed. For example, even after Enbridge inspected a 34-inch pipeline near Cohasset,\nMN, with the Elastic Wave ILI, the pipeline ruptured. NTSB determined that the\nprobable cause of the July 4, 2002, incident “was inadequate loading of the pipe for\ntransportation that allowed a fatigue crack to initiate along the seam of the longitudinal\nweld during transit. After the pipe was installed, the fatigue crack grew with pressure\n13 For more information about smart pig technology, see presentations from the June 24, 2011, ILI symposium\nhosted by the California Public Utilities Commission. http://www.cpuc.ca.gov/NR/rdonlyres/0DEA7BA4-5421-\n4287-BD32-A22863A2BFE9/0/INLINEINSPECTIONSYMPOSIUMCONCATENATEDFINAL.pdf (accessed\nJanuary 7, 2015.)\nPage 9 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 13>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\ncycle stresses until the crack reached a critical size and the pipe ruptured. The Elastic\nWave ILI conducted before the accident recorded an indication at the point where the\npipe eventually failed; however, pre-accident and post-accident interpretations of the\nrecorded data found that the indication did not meet the feature selection criteria to\nidentify it as a crack.”14\n Regarding the requirement associated with the LDS (proposed requirement area number\n5), there is no one system that would effectively detect all HL pipeline leaks, and few\nsystems can be programmed to detect small leaks without generating false positives or\nfalse negatives. In general, the type of LDS selected depends on a variety of factors,\nincluding pipeline characteristics, product characteristics, instrumentation,\ncommunications capabilities, and economic factors.\n14 See http://www.ntsb.gov/doclib/reports/2004/PAR0401.pdf (accessed August 12, 2014), page 33.\nPage 10 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 14>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\n2. Regulatory Analysis\n2.1. Introduction\nExecutive Order 12866, “Regulatory Planning and Review,” directs all Federal agencies to\ndevelop both preliminary and final regulatory analyses if their regulations are likely to be\n“significant regulatory actions” that may have an annual impact on the economy of $100 million\nor more.\nThe more recent Executive Order 13563, “Improving Regulation and Regulatory Review,”\nJanuary 18, 2011, emphasizes careful consideration of costs and benefits and directs agencies to\nuse the best available techniques to quantify anticipated present and future benefits and costs as\naccurately as possible and to proceed only if the benefits justify the costs.\nIn accordance with the guidance provided by the Office of Management and Budget’s (OMB’s)\nCircular A-4 on the development of regulatory analysis as required under Section 6(a)(3)(c) of\nExecutive Order 12866, the Regulatory Right-to-Know Act, and a variety of related authorities,\nthis regulatory analysis addresses the following:\n Describes the need for the regulatory action.\n Defines the baseline.\n Sets the timeframe of analysis.\n Identifies a range of regulatory alternatives.\n Identifies the consequences of regulatory alternatives.\n Quantifies and monetizes the benefits and costs or evaluates non-quantified costs and\nbenefits.\n Discounts future benefits and costs.\nThe proposed rule contains eight separate regulatory initiatives. Therefore, we chose to discuss\nthe overall implications in this chapter (following the OMB guidelines) and present the\nindividual (requirement area by requirement area) regulatory impact analysis (RIA) in\nsubsequent chapters. The remainder of this chapter presents an overview of the factors\nconsidered for the analysis in accordance with OMB guidelines.\n2.2. Need for the Regulatory Action\nThe need for PHMSA’s actions is based on three external and internal components—Economic,\nLegislative, and Strategic Objectives.\n2.2.1. Economic – Market Failure\nHL pipelines, in most instances, meet the definition of a natural monopoly. A natural monopoly\nis a distinct type of monopoly that may arise when there are extremely high fixed costs of\nproduction and very long-term average costs in an industry. Such a situation exists when large-\nscale infrastructure is required to ensure supply of the good. Common examples of natural\nPage 11 of 86 Pages\nEconometrica, Inc. October 1, 2015\n\n<<<PAGE 15>>>\n\nRegulatory Impact Analysis: Hazardous Liquid Pipelines 1027-002/DTPH56-09-F-000012\nmonopolies include railroad, electricity grids, oil pipelines, and water supply.15 As such, HL\npipelines are regulated by the Federal Energy Regulatory Commission (FERC). FERC’s\noversight includes regulation of rates and practices of oil pipeline companies engaged in\ninterstate transportation, establishment of equal service conditions to provide shippers with equal\naccess to pipeline transportation, and establishment of reasonable rates for transporting\npetroleum and petroleum products by pipeline. PHMSA oversees the development and\nimplementation of regulations concerning pipeline construction, maintenance, and operation, in\ncooperation with State regulatory partners.\nIn addition, health, safety, and environmental-related regulations associated with HL pipelines\nexist under the IM program and other requirements. This proposal is expected to enhance the IM\nprogram and increases the coverage to other operators or pipelines for which there has been an\nexception or they were otherwise exempt from IM program coverage. Aside from the reporting\nrequirement extensions to gathering lines and gravity lines, all of the other requirements are\naimed at HL spills—either preventing them, detecting them earlier, or mitigating the damages\nwhen spills do occur.\nThe market failure that suggests a need for Federal regulations is that there are externalities\nassociated with spills for which there may be no economic incentive for operators to be\nconcerned. An externality is an uncompensated direct impact of an economic activity on parties\nnot involved","truncated":true,"body_characters":287344}