{"operation":"document","citation":"0900006482310371","title":"U.S DOT/PHMSA - Regulatory Impact Analysis - October 2016","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"Regulatory Impact Analysis 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 October 2016 1 The rule expands 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 rule also requires that manual shut-off valves (curb valves) be installed...","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006482310371.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006482310371.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-0900006482310371","source_url":"https://downloads.regulations.gov/PHMSA-2011-0009-0049/attachment_1.pdf","body":"<<<PAGE 1>>>\n\nRegulatory Impact Analysis\nPipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to\nApplications Other Than Single-Family Residences\nPHMSA-2011-0009\nOffice of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration (PHMSA)\nU.S. Department of Transportation\nOctober 2016\n1\n\n<<<PAGE 2>>>\n\nExecutive Summary\nThe Pipeline and Hazardous Materials Safety Administration (PHMSA) is amending the Federal\nPipeline Safety Regulations to require operators of gas distribution pipelines to install excess\nflow valves (EFV) on all new or replaced residential and commercial service lines where the\nknown load does not exceed 1,000 Standard Cubic Feet per Hour (SCFH) and to install manual\nshutoff valves on all other new or replaced lines. The purpose of this regulation is to improve\nsafety by mitigating the damages from sudden pipeline ruptures and breaks by quickly shutting\noff the released gas. The rule addresses Section 22 in the Pipeline Safety, Regulatory Certainty,\nand Job Creation Act of 2011 (hereafter, the Act; P.L. 112-90)1 and National Transportation\nSafety Board (NTSB) recommendation P-01-2.\n2\nSection 22 of the Act requires PHMSA to issue a final report on the evaluation of the NTSB\nrecommendation on EFVs in applications other than service lines serving one single family\nresidence and, if appropriate, require by regulation the use of excess flow valves, or equivalent\ntechnology, where economically, technically, and operationally feasible on new or entirely\nreplaced distribution branch services, multifamily facilities, and small commercial facilities. On\nDecember 4, 2009, PHMSA amended the pipeline safety regulations to require the use of EFVs\nfor new or replaced gas lines servicing Single Family Residences (SFRs).3 While this\nrequirement met the mandate of the Pipeline Inspection, Protection, Enforcement and Safety Act\n(PIPES Act) enacted in 2006, distribution branched services, multi-family facilities, commercial\nproperties, and industrial service lines were still not required to use EFVs. These structures are\nsusceptible to the same risks as SFR service lines.\n4\nIn an effort to study the possible benefits and costs of expanding EFVs beyond SFR applications,\nPHMSA began development of the Interim Evaluation Report in early 2009.\n5 Based on the\nReport and the comments received on the Report (see NPRM for discussion), PHMSA found that\nexpansion of EFVs is technically, operationally, and economically feasible where loads do not\nexceed 1,000 SCFH irrespective of the customer classification. PHMSA acknowledges that\nEFVs may not be practical for large apartment buildings and industrial or commercial users due\nto inherent design complexity and continuous supply demands. PHMSA concludes that curb\nvalves will provide the best possible option for improved safety at this time in those situations\nwhere loads exceed 1,000 SCFH.\n1 Under the Act, PHMSA is required to study and issue a final report on EFVs and, if appropriate, to issue\nregulations requiring the use of EFVs or equivalent technology, where “economically, technically and operationally\nfeasible”, for new or entirely replaced distribution branch services, multi-family lines, and small commercial service\nlines.\n2 National Transportation Safety Board, Natural Gas Explosion and Fire in South Riding, Virginia, July 7, 1998,\nPipeline Accident Report NTSB/PAR-01/01 (Washington, D.C.: NTSB, 2001).\n3 74 FR 63906\n4 Please see the NPRM for Discussion of the 2010 Rule\n5 The report is in the docket at\nhttp://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS\nA-2011-0009\n1\n\n<<<PAGE 3>>>\n\nThe rule expands EFV coverage beyond the SFR requirement included in the Integrity\nManagement (IM) rule that went into effect in 2010 to cover all lines that are suitable for an EFV\nand operate with known loads that do not exceed 1,000 SCFH.6 The rule also requires that\nmanual shut-off valves (curb valves) be installed on all new or replaced lines where known loads\nexceed 1,000 SCFH and the line does not fit into the exceptions in § 192.383. The regulation\nincorporates PHMSA’s findings and its analysis of comments from the study mandated by the\nSection 22 of P.L. 112-90. The rule also requires operators to notify customers of their right to\nrequest installation of EFVs on existing service lines (other than those being newly installed or\nreplaced), though such installations may be at the customer’s expense, as the appropriate State\nregulatory agency will determine all issues related to the costs of installation. The requirements\npertain to all distribution operators, including operators of petroleum gas systems that serve\nfewer than 100 customers from a single source and operators of master meters.\n7\nPHMSA collects information on gas distribution infrastructure (number of main miles, number\nof services, number of EFVs installed) through its gas distribution annual reports (PHMSA Form\nF 7100.1-1) and detailed information on incidents that met the incident definition in § 191.3\nthrough the incident reports (PHMSA Form F 7100.1). None of the reports ask for information\nby customer classification or the load sizes. However, this regulatory impact assessment uses\nexisting PHMSA data combined with the information available from published sources to\nquantify the costs and benefits of the regulation by customer classification as defined in the\nSection 22 of the Act.\nPHMSA acknowledges that gas distribution systems are generally safe, averaging 0.11\nreportable incidents per 100,000 services in 2010-2013.8 The rule aims to mitigate the\nconsequences of rare but potentially high-consequence incidents on new and fully replaced\nservices. Since the quantified benefit estimate depends on the existing incident database, the\nbenefit may be underestimated as it is not possible to predict a high-consequence incident that\nwould have been prevented by the safety measure extended through the regulation. PHMSA’s\n6 Docket Number: PHMSA-RSPA-2004-19854, “Pipeline Safety: Integrity Management Program for Gas\nDistribution Pipelines.”\n7 operators of petroleum gas systems which serve fewer than 100 customers from a single source and operators of\nmaster meters are exempt from submitting Annual reports in accordance with 191.11\nhttp://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49-vol3-sec191-11.xml\nAnd Master meter system is defined as means a pipeline system for distributing gas within, but not limited to, a\ndefinable area, such as a mobile home park, housing project, or apartment complex, where the operator purchases\nmetered gas from an outside source for resale through a gas distribution pipeline system. The gas distribution\npipeline system supplies the ultimate consumer who either purchases the gas directly through a meter or by other\nmeans, such as by rents; in 191.3 http://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49-\nvol3-sec191-3.xml\n8 Number of gas distribution incidents other than on mains divided by the number of services. Incident definitions\nand reporting thresholds are found in 49 CFR 191.3 and 49 CFR 191.9. In general, operators must report incidents\nthat result in any deaths, injuries requiring hospitalization, property damage over $50,000, and/or loss of 3 million\ncubic feet of gas.\n2\n\n<<<PAGE 4>>>\n\nincident database is also limited to incidents that occurred on DOT-jurisdictional pipes and meet\ncertain criteria (§191.3) and does not include EFV-preventable incidents that did not meet the\ncriteria, nor EFV-preventable incidents that occurred downstream of the DOT-jurisdictional\npiping (such as in customer piping). In comparison, the cost estimate assumes every single\nservice line has either an EFV or a curb valve as it is impossible to estimate where multiple\nservices are protected by a single EFV or a curb valve. This one-to-one correspondence of a\nvalve and a service line could overestimate the number of valves with respect to smaller\nmultifamily residences.\nPHMSA estimated quantitative costs and benefits per valve on new and replaced service lines\nover the next 50 years, annualized at 7% and 3% discount rates. Costs were estimated using\ndocket submissions and other information on valve installation costs, combined with a forecast\nof future installation volumes by customer category that is based on PHMSA annual report data\nand other sources. Benefits were estimated using a 50-year forecast of EFV-preventable incident\nconsequences, which was developed using historical incident data from the period 2004-2015.\nSection 7 of this document has more detailed information on the data sources, assumptions, and\nmethods used in estimating benefits and costs. Some costs and benefits could not be estimated\ndue to data limitations.\nThe quantified benefits of the rule, including avoided injuries, fatalities, and property damage,\nare estimated to be $5.5 million when annualized and discounted at 7%. There will be additional\nnon-quantifiable benefits as discussed below. Estimated costs, also discounted and annualized,\nare $10.6 million. Using the alternative 3% discount rate, the estimated quantified annualized\nbenefits are $10.5 million per year, and the estimated total annualized costs are $12.0 million per\nyear.\nPHMSA has no data with which to distinguish single versus branched services, which differ only\nin their underground configuration. As a result, PHMSA estimated the total impacts for all SFR\nservices in the economic analysis of the Distribution Integrity Management Program (DIMP)\nrule, even though that rule did not apply to branched services. Therefore, to avoid double\ncounting, PHMSA did not include the costs and benefits for branched SFRs in this EFV analysis.\nThe following table summarizes the quantified cost-benefit estimates at a 7% discount rate.\n3\n\n<<<PAGE 5>>>\n\nTable ES-1. Summary of Estimated Benefits and Costs ($ Millions)1\nCustomer Category Annualized Benefit Annualized Cost\nBranched Line Single Family See note See note\nMultifamily Residence 1.0 6.2\nSmall Commercial 1.6 1.1\nIndustrial/Other curb valve 3.0 3.0\nAll classifications:\nNotification & recordkeeping\nNot estimated 0.3\nTotal 5.5 10.6\nNote: Benefits and costs for branched SFR services accounted for in economic analysis of previous\nrulemaking (Distribution Integrity Management Program).\n1. 50-year present value converted to annual equivalent using 7% discount rate.\nIn addition to the quantified benefits, the rule is also expected to have benefits that we were\nunable to quantify. They include the following:\n• Equity: Provides a fair and equal level of safety to members of society who do not live in\nsingle-family residences\n• Additional incident costs avoided for which no PHMSA incident data are available:\nMitigates the consequences (death, injury, property damage) of additional incidents that\nare not reflected in PHMSA records because customer piping or equipment is involved\n• Additional incident costs which are not recorded in incident reports, including costs of\nevacuations, some emergency response costs, and business downtime\n• Environmental externalities associated with methane release (discussed in Appendix B)\n• Peace of mind for operators and customers\n• Protection against seismic events and intentional tampering\nThe one-time cost of installing an EFV ($15-$50, best estimate $309) during new service or\nreplaced service is fairly small. According to the data analyzed, the benefits of incident prevention\non a per-EFV basis are also small because incidents involving these classifications are rare.\nHowever, these incident prevention benefits will exist for up to 50 years, as PHMSA assumes that\nEFVs and curb valves have a lifespan of 50 years.\nThe values are calculated based on the assumption that without the regulation, EFVs and curb\nvalves would not be installed in service lines (other than lines serving SFRs under the existing\nregulations). With voluntary installation, the benefits and costs would be reduced proportionally.\n9 The average cost of an EFV, ranging from $15-$50 is $32.50. PHMSA used $30 in this analysis as it does not have\nany basis for constructing a weighted average cost (i.e., how many EFVs at $15 and how many at $50 or in\nbetween). The analysis also does not account for future technology/manufacturing progress which typically reduces\nthe unit cost.\n4\n\n<<<PAGE 6>>>\n\nThe rule is assumed to affect approximately 1,289 natural gas distribution operators and on\naverage 222,114 services per year.\nIndustry sources provided PHMSA with a range of cost estimates for EFVs and curb valves. The\nanalysis in this document is based primarily on our best estimates, which fall roughly in the\nmiddle of that range. In Appendix A, we present the results of sensitivity testing using the lower\nand higher cost figures received; quantified benefits fall in between the low and high cost\nestimates.\nThe benefits of this rule are based on high-cost, low-probability incidents. The incident data\nanalyzed suggest that incidents occurring on many of these service classifications are infrequent.\nHowever, PHMSA’s Incident Report database does not capture service classification and just over\na decade’s worth of incident data (2004 to 2015) could be analyzed for this rulemaking. It is thus\nunlikely that the cost-benefit analysis captured all of the incidents that could have been prevented\nor mitigated by an EFV. Further, several of the incidents noted by the NTSB when they made\nprevious recommendations for EFV installation took place decades ago, such that comparable\nincident causation data are not available in the PHMSA database. PHMSA’s historical data and\nNTSB investigations show that incidents do occur on these lines, and when they do, they are\ntypically high-consequence events. Key incidents identified by NTSB include the 1994 explosion\nat a retirement home in Allentown, Pennsylvania, which resulted in a fatality, 66 injuries, and $5\nmillion in property damage, and the 1998 explosion in St. Cloud, Minnesota, which demolished a\npizzeria, apartments, a law office, a bar, and took four lives.10\nBecause PHMSA aims to provide an extra level of protection in areas where there are high\nconcentrations of people, a prevented or mitigated incident could prevent several injuries or\nfatalities (and sometimes extensive property damage), thereby producing significant quantifiable\nbenefits, along with benefits that could not be quantified, such as avoided evacuations. There is\nalso substantial value in the perception of the safety and integrity of the natural gas distribution\nsystem. Currently, certain SFR residents are the only people who have the added protection of\nEFVs by federal regulation: anyone who is residing in a multi-family residence (MFR), no matter\nif it is by choice or circumstance, is not being provided an equal opportunity to avoid incidents\nlike the ones that occurred at Allentown, Pennsylvania, and St. Cloud, Minnesota.\n1 Introduction\n10 National Transportation Safety Board, UGI Utilities, Inc., Natural Gas Distribution Pipeline Explosion and Fire,\nAllentown, Pennsylvania, June 9, 1994, Pipeline Accident Report NTSB/PAR-96/01 (Washington, D.C.: NTSB,\n1996) and National Transportation Safety Board, Natural Gas Pipeline Rupture and Subsequent Explosion, St.\nCloud, Minnesota, December 11, 1998, Pipeline Accident Report NTSB/PAR-00/01 (Washington, D.C.: NTSB,\n2000)\n5\n\n<<<PAGE 7>>>\n\nThe Pipeline and Hazardous Materials Safety Administration (PHMSA) is amending the\nrequirements of §192.383 (b) by requiring the installation of excess flow valves (EFV) beyond\nsingle-family residence (SFR) service lines to cover new or replaced branched service lines,\nmulti-family residences, and small commercial service lines serving a single customer with a\nknown load that does not exceed 1,000 SCFH. Additionally, PHMSA is adding §192.385 to\nrequire the installation of manual shutoff valves (curb valves) on all new or replaced lines where\nthe installed meter capacity exceeds 1,000 SCFH.\nThe National Transportation Safety Board (NTSB) has identified, between 1970 and 2011, 11\nsignificant incidents that could have been mitigated by the presence of an EFV and has issued\nmore than 20 recommendations concerning the installation of EFVs for both residential and\ncommercial applications. The NTSB’s recommendations culminated in the most recent Safety\nRecommendation P-01-2, which states that PHMSA “require that excess flow valves be installed\nin all new and renewed gas service lines, regardless of a customer’s classification, when the\noperating conditions are compatible with readily available valves.”\nPHMSA published an ANPRM (76 FR 72666, November 25, 2011) that included an Interim\nEvaluation report on expanding the EFV requirement beyond single-family residences. The\nInterim Evaluation, which had been posted online and received extensive feedback from\nstakeholders, recommended that an economic analysis be performed that would take into account\nalternatives, particularly curb valves; differentiate among the various classifications of\ncustomers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a\nsurvey would have to be performed in order to identify incidents and to find operators with\nexperience and data on operating EFVs beyond SFRs.\nWhile the ANPRM was open for comments, President Obama signed the Pipeline Safety,\nRegulatory Certainty, and Job Creation Act of 2011 into law. Section 22 of that law required\nPHMSA to issue a final report on the evaluation of the NTSB’s recommendation on EFVs in\napplications other than service lines serving one single family residence, and “if appropriate,\nrequire by regulation the use of excess flow valves, or equivalent technology, where\neconomically, technically, and operationally feasible on new or entirely replaced distribution\nbranch services, multifamily facilities, and small commercial facilities.”\nThis rule addresses Section 22 of the Pipeline Safety, Regulatory Certainty, and Job Creation Act\nof 2011 and NTSB Recommendation P-01-2. Section 22 of the Act requires PHMSA to conduct\na study on the expanded use of EFVs in applications other than SFR service lines. Based on the\nstudy11 and the comments received on the study (see NPRM for discussion), PHMSA has\n11 The report is in the docket at\nhttp://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS\nA-2011-0009\n6\n\n<<<PAGE 8>>>\n\ndetermined that expanding EFV installation will provide protection for the vast majority of gas\ncustomers, irrespective of customer classification where known load size is less than or equals\n1,000 SCFH, and is technically, operationally, and economically feasible. PHMSA\nacknowledges that EFVs may not be practical for large apartment buildings and industrial or\ncommercial users due to inherent design complexity and continuous supply demands. PHMSA\nconcludes that curb valves will provide the best possible option for improved safety at this time\nin situations where loads exceed 1,000 SCFH. PHMSA notes that this rule will satisfy the NTSB\nrecommendation and promote better public safety by ensuring all service lines, regardless of the\ncustomer classification, have adequate protection through the installation of either an EFV or a\ncurb valve.\nThe requirements for distribution pipeline operators are described below.\n1.1 Excess Flow Valves\nThe rule revises 49 CFR part 192 §383 by adding four new categories of service for which EFV\ninstallation will be required on all new or replaced lines. The four new categories that will be\nadded to the existing requirement for SFRs served by a single service line are:\n- Branched service lines to a SFR installed concurrently with the primary SFR service line\n(a single EFV may be installed to protect both lines)\n- Branched service lines to an SFR installed off a previously installed SFR service line that\ndoes not contain an EFV\n- Multi-family residences with known customer loads at time of service installation, based\non installed meter capacity, not exceeding 1,000 SCFH per service\n- A single, small commercial customer, served by a single service line, with known\ncustomer load at time of service installation, based on installed meter capacity, not\nexceeding 1,000 SCFH per service.\nPHMSA notes that the first two categories of branched service lines to SFRs cover the majority\nof branched services. The benefits and costs of installing EFVs on service lines to SFRs were\nanalyzed as part of the DIMP rulemaking in 2009. As there is no data available for which\ninstalled lines are single-service or branched service12\n, and because incident data doesn’t\ndistinguish the two types of lines, there was no practical way to exclude branched lines from the\noverall SFR calculations for DIMP. Indeed, the only difference between whether a service line is\nsingle-service or branched is in the underground configuration, which is determined by the\ninstalling operator on a case-by-case basis. The 2009 DIMP analysis found that installing EFVs\n12 PHMSA’s Natural Gas Distribution Annual reports (PHMSA F7100.1-1) collect information on the number of\nservices per operator in each state as an aggregate number without service type classification.\n7\n\n<<<PAGE 9>>>\n\non lines serving SFRs would yield annual benefits in the range of $7 million to $17 million\nagainst costs of $8 million. The safety benefits were calculated using the then-current $5.8\nmillion value per statistical life and would thus be substantially higher using today’s $9.4 million\nvalue. While PHMSA is not aware of a practical way to break down the benefits and costs of\nEFV installation on branched lines serving SFRs specifically, installing EFVs on branched lines\nis expected to have positive net benefits in light of the overall SFR results. Branched SFR is\nexcluded from the remainder of this analysis due to data limitations and to avoid duplication of\nthe costs and benefits incorporated in the DIMP analysis.\nThe present analysis categorizes the estimated new and replaced services by multifamily,\ncommercial, and industrial classifications and accounts for the cost of either an EFV or a curb\nvalve for every service. (Costs may be slightly overestimated as one can potentially have an EFV\nor a curb valve servicing multiple customers/services).\nThe rule continues to include exceptions for excess flow valves for cases where installation\nwould not be feasible. These exceptions, now in part (c) of section 383, are:\n- When the service line does not operate at a pressure of 10 psig or greater throughout the\nyear\n- When the operator has prior experience with contaminants in the gas stream that could\ninterfere with the EFV’s operation or cause loss of service to the customer\n- When an EFV could interfere with necessary operations or maintenance activities, such\nas blowing liquids from the line\n- When an EFV meeting performance standards in 192.381 is not commercially available\nto the operator.\nThe exceptions reduce the potential cost of the regulation by acknowledging that there are\nreasonable conditions that render EFV installation not operationally and technically feasible. As\nthere are no data available to estimate the proportion of lines that are exempt, the analysis will\nassume that all lines with known loads under 1,000 SCFH have operating conditions suitable for\nan EFV, thereby overestimating the cost.\nThe revision also adds a part (d) to section 383 that allows optional installation of EFVs if\nrequested by a customer. The analysis does not estimate the number of customer requests that\nmay occur in any given year or the resulting transfers.\nBased on the findings and the comments on the Interim Report, PHMSA has determined that\nexpanding the installation of EFVs will provide protection for the vast majority of gas\ndistribution customers, irrespective of the customer classification, where loads does not exceed\n1,000 SCFH. PHMSA has also deemed that EFVs may not be practical for large apartment\nbuildings and industrial or commercial users due to inherent design complexity and continuous\nsupply demands. For those situations (loads exceeding 1,000 SFCH), PHMSA concludes that\ncurb valves will provide the best possible option for improved safety at this time.\n8\n\n<<<PAGE 10>>>\n\n1.2 Curb Valves\nThe rule adds §385 to Part 192. The addition requires operators to install a manual service line\nshut-off valve (curb valve) on any new or replaced service line on which an EFV is not installed\nin accordance with section 192.383(b).\nThe required use of curb valves for large commercial (greater than 1,000 SFCH) goes beyond the\nSection 22 language of the Pipeline Safety, Job Creation, and Regulatory Certainty Act of 2011;\nhowever, it is based on ANPRM comments received from industry, trade associations and other\nstakeholders. PHMSA and industry in general determined that EFVs are not suitable for larger\ncommercial facilities over 1,000 SFCH. As mentioned above, curb valves are the best\nalternative to an EFV and provide an effective added level of safety for these facilities.\nPHMSA’s authority for regulating natural gas pipelines was first established by the Natural Gas\nPipeline Safety Act of 1968, Pub. L. No. 90-481, and has since been enlarged by additional\nlegislation. The Pipeline Safety Laws specifically delegate authority to DOT to develop,\nprescribe, and enforce minimum Federal safety standards for the transportation of natural\ngas. PHMSA has used this statutory authority to promulgate comprehensive minimum safety\nstandards. While the 2011 Act specifically directed PHMSA to require the installation of EFVs\non new and replaced branched lines serving SFRs, multi-family and small commercial facilities,\nDOT’s underlying prior statutory authority under 49 USC § 60104 provides PHMSA with the\nauthority to require the installation of curb valves for large commercial facilities.\nThe remainder of this report analyzes the benefits and costs of the regulatory changes as required\nby Section 1 of Executive Order 12866 (as amended by E.O.s 13258 (2002), 13422 (2007),\nand 13497 (2009)) and Section 1 of Executive Order 13563 (2011).\n13\n2 Background\nEFVs are designed to automatically stop the flow of a gas when the flow increases suddenly and\nsignificantly, such as during a pipeline separation. They are used in the United States and around\nthe world to mitigate damage resulting from a sudden pipeline rupture caused by a natural\ndisaster, excavation damage, or other third-party damage. However, because they shut\nautomatically based on changes in flow, they can also shut when customers suddenly increase\n13 The text of E.O. 12866 can be found here: http://www.archives.gov/federal-register/executive-\norders/pdf/12866.pdf and E.O. 13563 here:\nhttp://www.whitehouse.gov/sites/default/files/omb/inforeg/eo12866/eo13563_01182011.pdf\n9\n\n<<<PAGE 11>>>\n\ntheir gas load, causing an inconvenience for the customer and the company. Manual shutoff\nvalves, known as curb valves, are an alternative that avoids a false closure but requires a trained\nresponder to be on site to shut the valve, increasing the amount of gas that is released after an\nincident.\nPHMSA has moved towards greater installation rates of EFVs over the years while continuing to\nrecognize that EFV closures pose hazards of their own.\n14 In 1996, PHMSA added 49 CFR\n192.381 to the Pipeline Safety Regulations, which contains performance standards for EFVs. In\n1998, responding to statutory mandates in Section 104 of the Pipeline Safety Act of 1992 (Pub.\nL. 102-508), PHMSA added a requirement15 that required operators to notify customers in\nwriting about EFV availability; the safety benefits derived from installation; and any installation,\nmaintenance, and replacement costs16\n.\nIn 2006, the Pipeline Integrity, Protection, Enforcement, and Safety (PIPES) Act of 2006\nrequired that EFVs be installed on all new or replaced service lines serving one SFR where:\n• The service line continuously operates at a pressure at or above 10 psig\n• The service line is not connected to a gas stream with a prior history of contaminants\n• The installation is not likely to cause a loss of service to the residence or to interfere with\nnecessary operations and maintenance\n• EFVs are commercially available.\nPHMSA issued Advisory Bulletin 08-04 encouraging operators to begin installing EFVs in\naccordance with the Act. The final rule on natural gas distribution IM programs was officially\npublished December 4, 2009, and applied to lines installed or replaced after February 2, 2010 (74\nFR 63906). However, the NTSB issued a response to PHMSA’s status update urging PHMSA to\nmake the rule applicable to all customers “regardless of their classification.”17\nPHMSA then published an ANPRM that included an Interim Evaluation report on expanding the\nEFV requirement beyond single-family residences (76 FR 72666, November 25, 2011). The\nInterim Evaluation recommended that an economic analysis be performed that would take into\naccount alternatives, particularly curb valves; differentiate among the various classifications of\ncustomers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a\n14See FR Doc No: 94-18771, “Excess Flow Valve Installation on Service Lines” August 2, 1994 for discussion of\nEFV closure costs and PHMSA’s 1996 cost-benefit analysis summarized in 61 FR 31449.\n15 http://www.gpo.gov/fdsys/pkg/CFR-2002-title49-vol3/pdf/CFR-2002-title49-vol3-sec192-383.pdf\n16 Distribution Integrity Management Rule (http://primis.phmsa.dot.gov/dimp/docs/DIMPFINALRULE.PDF)\nremoved this requirement in 2009.\n17 NTSB response dated 9/22/2009. Correspondence available on the NTSB website here:\nhttp://www.ntsb.gov/safetyrecs/private/history.aspx?rec=P-01-002&addressee=PHMSA\n10\n\n<<<PAGE 12>>>\n\nsurvey would have to be performed in order to identify incidents and to find operators with\nexperience and data on operating EFVs beyond SFR applications.\nNineteen entities submitted comments to the ANPRM docket (PHMSA-2011-0009). Eleven\ncomments were from utility companies or associations, two were from manufacturers, one was\nfrom a State regulator, one was from the NTSB, one was from a city government, and the\nremainders were from the public.\nIn general, utilities supported an expansion of EFV installation, with limits on feasibility. The\nAmerican Gas Association, American Public Gas Association, Northeast Gas Association,\nSouthwest Gas Corporation, Nicor Gas Company, National Grid, Avista, and Laclede Gas all\nsupported a limited expansion. Mid-American Gas and the City of Ellensburg, WA, supported an\nexpansion as long as curb valves and EFVs were viewed as perfect substitutes for one another\nand companies could select which valve best suited operational conditions. The Texas Pipeline\nAssociation focused specifically on service lines extending from transmission and gathering\nlines. Three companies (Southwest, Mid-American, and Nicor) cited maintenance issues with\nensuring access to curb valves, as well as delays in shutting off the gas in the event of a break.\nReasons cited for delays included the valve’s accessibility during an incident and the potential,\nbecause curb valve boxes are above-ground, that curb valves could be buried or damaged by\nthird-parties, thereby making the valve inaccessible or inoperable. The State regulator noted that\nupstream above-ground valves are already present on many large commercial and industrial\nproperties. The comments also noted that the categories provided in the Interim Evaluation were\nnot specific enough. The American Gas Association (AGA) and others suggested that the\nthreshold between small and large should be a load size of 1,000 SCFH (PHMSA 2011-0009-\n0024).\nFollowing the ANPRM, PHMSA developed a draft survey document aimed at identifying\nincidents and operators with experience operating EFVs beyond SFRs. As a key component of\nthe survey, the research team developed customer categories based on the Interim Evaluation,\nANPRM comments, and discussions with operators. Key variables identified to separate\ncustomers included load size, customer type, and load variability.18 The analysis eventually\nresulted in seven categories: single family residential, small multi-family residential, large multi-\nfamily residential, small space and water heat non-residential customers, large space and water\nheat non-residential customers, small other non-residential customers, and large other non-\nresidential customers. The distinction between small and large was the 1,000 SCFH load size\nmentioned in comments to the ANPRM.\nUsing the customer categories, the research team developed the survey recommended by the\nInterim Evaluation report, aimed at gathering data on EFV and curb valve costs and benefits. The\n18 Demand for heat and water is less variable that demand for other uses such as cooking or clothes drying, so space\nand water heat customers were separated from other customers with more complex needs.\n11\n\n<<<PAGE 13>>>\n\nsurvey was to be sent to all operators because industry comments suggested that experience with\nEFV installation beyond SFRs was rare, so a sample may have excluded operators with relevant\ndata. The goal was to have a better understanding of the costs of EFVs on installations beyond\nSFRs from operators who already deployed the technology and on the costs and effectiveness of\ncurb valves.\nNine companies were asked to pilot the census, and a copy was published in the Federal Register\nas part of a notice of information collection on May 15, 2012 (77 FR 28669). The purpose of the\npilot was to ensure that operators were able to provide the requested data, that the questions were\nclearly worded, and that the response categories cover the full range of possible responses.\nAdditionally, because the survey was developed using an online survey tool, Survey Gizmo, the\npilot also served as a test of the online functionality. The nine companies selected varied by size\n(defined by number of service lines) and region of the country (East, Midwest, South, and West)\nin order to ensure that there was variation along key factors that might impact responses. All\nrespondents had installed EFVs in the previous calendar year according to PHMSA’s annual\nreport data.\nThe pilot was conducted from May 24 to July 17, 2012. PHMSA sent an introductory letter to all\nnine participants explaining the purpose and importance of the data collection. The Volpe Center\nfollowed up with an email that described the study purpose and included the survey link. To\nboost response, Volpe contacted participants by email and phone to encourage participation and\nto answer any questions operators might have about the survey. The Volpe Center also\nconducted telephone debriefs with each of the nine pilot respondents to obtain more detailed\nfeedback on their experience completing the survey.\nOf the nine pilot respondents, only four attempted to complete the survey, but in most cases they\nentered “0” as their response because the data was not available. Only one operator, whose\ncompany comprised a small system of approximately 3,000 service lines that installed EFVs only\non single-family residences, provided responses by the different customer classifications. It took\nthe respondent 3 hours to sort their service lines into the requested categories. In the debrief\ncalls, the other respondents (five) indicated they could not provide the data being requested.\nBoth the census pilot and the docket comments on the notice of information collection (PHMSA\n2012-0086) quickly revealed that company databases are not currently set up to provide the\nnecessary data. Load and customer type data are stored separately from data on EFVs and from\ndata on incidents, and grouping customers into the census categories would, according to these\npilot respondents, be a time-intensive and costly undertaking. Because only one respondent was\nable to complete the survey, no data from the survey is included in this RIA.\nAs a result of the survey experience and feedback from pilot participants and industry comments\non the docket, including AGA’s docket comment (PHMSA 2012-0086-0003) stating a\npreference for putting forth a consensus regulation rather than continuing the data collection\n12\n\n<<<PAGE 14>>>\n\nefforts, PHMSA moved to continue the rulemaking process authorized by Section 22 of the\nPipeline Safety, Job Creation, and Regulatory Certainty Act of 2011 without further information\ncollection in order to avoid undue industry burden.\n3 Regulatory Analysis\nExecutive Orders 12866 and 13563 direct all Federal agencies to consider the costs and benefits\nof “significant regulatory actions.” Federal agencies are directed to develop a formal Regulatory\nImpact Analysis consistent with Office of Management and Budget (OMB) Circular A-4 for all\n“economically significant” rules, or those rules estimated to have an impact of $100 million in\n1995 dollars or more in any one year. The Order also requires a determination as to whether a\nrule could adversely affect the economy in terms of productivity and employment, the\nenvironment, public health, safety, or State, local, or tribal governments. This requirement\napplies to rulemakings that rescind or modify existing rules as well as to those that establish new\nrequirements. The goal of the analysis is to provide decision makers with a clear indication of the\nmost efficient alternative—that is, the alternative that generates the largest net benefits to society\nignoring distributional effects.\nThis rule falls below the $100 million a year in annual impact threshold. This regulatory\nanalysis:\n- Identifies the target problem, including a statement of the need for the action\n- Identifies available alternative approaches\n- Defines the baseline\n- Defines the scope and parameters of the analysis\n- Defines and evaluates the costs and benefits of the action and the main alternatives\nidentified by the analysis\n- Compares the costs and benefits\n- Interprets the cost and benefit results.\n4 Identification of the Problem and the Need for the Rule\nExecutive Order 12866 states that \"Federal agencies should promulgate only such regulations as\nare required by law, are necessary to interpret the law, or are made necessary by compelling\nneed, such as material failures of private markets to protect or improve the health and safety of\nthe public, the environment, or the well-being of the American people ...\" Executive Order\n13563 states that, to the extent permitted by law, agencies must (1) propose or adopt a regulation\nonly upon a reasoned determination that its benefits justify its costs (recognizing that some\nbenefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on\n13\n\n<<<PAGE 15>>>\n\nsociety, consistent with obtaining regulatory objectives, taking into account, among other things,\nand to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among\nalternative regulatory approaches, those approaches that maximize net benefits (including\npotential economic, environmental, public health and safety, and other advantages; distributive\nimpacts; and equity); (4) to the extent feasible, specify performance objectives, rather than\nspecifying the behavior or manner of compliance that regulated entities must adopt; and (5)\nidentify and assess available alternatives to direct regulation, including providing economic\nincentives to encourage the desired behavior, such as user fees or marketable permits, or\nproviding information upon which choices can be made by the public.\nPHMSA’s mission is to ensure the safety of the natural gas system. Recognizing the safety\nbenefits of EFV installation in natural gas distribution systems, Section 22 of the Pipeline Safety,\nJob Creation, and Regulatory Certainty Act of 2011 directed PHMSA to, if appropriate, require\nthe installation of EFVs or equivalent technology, where economically, ","truncated":true,"body_characters":98745}