# U.S DOT/PHMSA - Regulatory Impact Analysis - October 2016 - **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:** Not available - **effective on:** Not available - **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:** <<>> 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 <<>> Executive Summary The Pipeline and Hazardous Materials Safety Administration (PHMSA) is amending the Federal Pipeline Safety Regulations to require operators of gas distribution pipelines to install excess flow valves (EFV) on all new or replaced residential and commercial service lines where the known load does not exceed 1,000 Standard Cubic Feet per Hour (SCFH) and to install manual shutoff valves on all other new or replaced lines. The purpose of this regulation is to improve safety by mitigating the damages from sudden pipeline ruptures and breaks by quickly shutting off the released gas. The rule addresses Section 22 in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (hereafter, the Act; P.L. 112-90)1 and National Transportation Safety Board (NTSB) recommendation P-01-2. 2 Section 22 of the Act requires PHMSA to issue a final report on the evaluation of the NTSB recommendation on EFVs in applications other than service lines serving one single family residence and, if appropriate, require by regulation the use of excess flow valves, or equivalent technology, where economically, technically, and operationally feasible on new or entirely replaced distribution branch services, multifamily facilities, and small commercial facilities. On December 4, 2009, PHMSA amended the pipeline safety regulations to require the use of EFVs for new or replaced gas lines servicing Single Family Residences (SFRs).3 While this requirement met the mandate of the Pipeline Inspection, Protection, Enforcement and Safety Act (PIPES Act) enacted in 2006, distribution branched services, multi-family facilities, commercial properties, and industrial service lines were still not required to use EFVs. These structures are susceptible to the same risks as SFR service lines. 4 In an effort to study the possible benefits and costs of expanding EFVs beyond SFR applications, PHMSA began development of the Interim Evaluation Report in early 2009. 5 Based on the Report and the comments received on the Report (see NPRM for discussion), PHMSA found that expansion of EFVs is technically, operationally, and economically feasible where loads do not exceed 1,000 SCFH irrespective of the customer classification. PHMSA acknowledges that EFVs may not be practical for large apartment buildings and industrial or commercial users due to inherent design complexity and continuous supply demands. PHMSA concludes that curb valves will provide the best possible option for improved safety at this time in those situations where loads exceed 1,000 SCFH. 1 Under the Act, PHMSA is required to study and issue a final report on EFVs and, if appropriate, to issue regulations requiring the use of EFVs or equivalent technology, where “economically, technically and operationally feasible”, for new or entirely replaced distribution branch services, multi-family lines, and small commercial service lines. 2 National Transportation Safety Board, Natural Gas Explosion and Fire in South Riding, Virginia, July 7, 1998, Pipeline Accident Report NTSB/PAR-01/01 (Washington, D.C.: NTSB, 2001). 3 74 FR 63906 4 Please see the NPRM for Discussion of the 2010 Rule 5 The report is in the docket at http://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS A-2011-0009 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 on all new or replaced lines where known loads exceed 1,000 SCFH and the line does not fit into the exceptions in § 192.383. The regulation incorporates PHMSA’s findings and its analysis of comments from the study mandated by the Section 22 of P.L. 112-90. The rule also requires operators to notify customers of their right to request installation of EFVs on existing service lines (other than those being newly installed or replaced), though such installations may be at the customer’s expense, as the appropriate State regulatory agency will determine all issues related to the costs of installation. The requirements pertain to all distribution operators, including operators of petroleum gas systems that serve fewer than 100 customers from a single source and operators of master meters. 7 PHMSA collects information on gas distribution infrastructure (number of main miles, number of services, number of EFVs installed) through its gas distribution annual reports (PHMSA Form F 7100.1-1) and detailed information on incidents that met the incident definition in § 191.3 through the incident reports (PHMSA Form F 7100.1). None of the reports ask for information by customer classification or the load sizes. However, this regulatory impact assessment uses existing PHMSA data combined with the information available from published sources to quantify the costs and benefits of the regulation by customer classification as defined in the Section 22 of the Act. PHMSA acknowledges that gas distribution systems are generally safe, averaging 0.11 reportable incidents per 100,000 services in 2010-2013.8 The rule aims to mitigate the consequences of rare but potentially high-consequence incidents on new and fully replaced services. Since the quantified benefit estimate depends on the existing incident database, the benefit may be underestimated as it is not possible to predict a high-consequence incident that would have been prevented by the safety measure extended through the regulation. PHMSA’s 6 Docket Number: PHMSA-RSPA-2004-19854, “Pipeline Safety: Integrity Management Program for Gas Distribution Pipelines.” 7 operators of petroleum gas systems which serve fewer than 100 customers from a single source and operators of master meters are exempt from submitting Annual reports in accordance with 191.11 http://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49-vol3-sec191-11.xml And Master meter system is defined as means a pipeline system for distributing gas within, but not limited to, a definable area, such as a mobile home park, housing project, or apartment complex, where the operator purchases metered gas from an outside source for resale through a gas distribution pipeline system. The gas distribution pipeline system supplies the ultimate consumer who either purchases the gas directly through a meter or by other means, such as by rents; in 191.3 http://www.gpo.gov/fdsys/pkg/CFR-2004-title49-vol3/xml/CFR-2004-title49- vol3-sec191-3.xml 8 Number of gas distribution incidents other than on mains divided by the number of services. Incident definitions and reporting thresholds are found in 49 CFR 191.3 and 49 CFR 191.9. In general, operators must report incidents that result in any deaths, injuries requiring hospitalization, property damage over $50,000, and/or loss of 3 million cubic feet of gas. 2 <<>> incident database is also limited to incidents that occurred on DOT-jurisdictional pipes and meet certain criteria (§191.3) and does not include EFV-preventable incidents that did not meet the criteria, nor EFV-preventable incidents that occurred downstream of the DOT-jurisdictional piping (such as in customer piping). In comparison, the cost estimate assumes every single service line has either an EFV or a curb valve as it is impossible to estimate where multiple services are protected by a single EFV or a curb valve. This one-to-one correspondence of a valve and a service line could overestimate the number of valves with respect to smaller multifamily residences. PHMSA estimated quantitative costs and benefits per valve on new and replaced service lines over the next 50 years, annualized at 7% and 3% discount rates. Costs were estimated using docket submissions and other information on valve installation costs, combined with a forecast of future installation volumes by customer category that is based on PHMSA annual report data and other sources. Benefits were estimated using a 50-year forecast of EFV-preventable incident consequences, which was developed using historical incident data from the period 2004-2015. Section 7 of this document has more detailed information on the data sources, assumptions, and methods used in estimating benefits and costs. Some costs and benefits could not be estimated due to data limitations. The quantified benefits of the rule, including avoided injuries, fatalities, and property damage, are estimated to be $5.5 million when annualized and discounted at 7%. There will be additional non-quantifiable benefits as discussed below. Estimated costs, also discounted and annualized, are $10.6 million. Using the alternative 3% discount rate, the estimated quantified annualized benefits are $10.5 million per year, and the estimated total annualized costs are $12.0 million per year. PHMSA has no data with which to distinguish single versus branched services, which differ only in their underground configuration. As a result, PHMSA estimated the total impacts for all SFR services in the economic analysis of the Distribution Integrity Management Program (DIMP) rule, even though that rule did not apply to branched services. Therefore, to avoid double counting, PHMSA did not include the costs and benefits for branched SFRs in this EFV analysis. The following table summarizes the quantified cost-benefit estimates at a 7% discount rate. 3 <<>> Table ES-1. Summary of Estimated Benefits and Costs ($ Millions)1 Customer Category Annualized Benefit Annualized Cost Branched Line Single Family See note See note Multifamily Residence 1.0 6.2 Small Commercial 1.6 1.1 Industrial/Other curb valve 3.0 3.0 All classifications: Notification & recordkeeping Not estimated 0.3 Total 5.5 10.6 Note: Benefits and costs for branched SFR services accounted for in economic analysis of previous rulemaking (Distribution Integrity Management Program). 1. 50-year present value converted to annual equivalent using 7% discount rate. In addition to the quantified benefits, the rule is also expected to have benefits that we were unable to quantify. They include the following: • Equity: Provides a fair and equal level of safety to members of society who do not live in single-family residences • Additional incident costs avoided for which no PHMSA incident data are available: Mitigates the consequences (death, injury, property damage) of additional incidents that are not reflected in PHMSA records because customer piping or equipment is involved • Additional incident costs which are not recorded in incident reports, including costs of evacuations, some emergency response costs, and business downtime • Environmental externalities associated with methane release (discussed in Appendix B) • Peace of mind for operators and customers • Protection against seismic events and intentional tampering The one-time cost of installing an EFV ($15-$50, best estimate $309) during new service or replaced service is fairly small. According to the data analyzed, the benefits of incident prevention on a per-EFV basis are also small because incidents involving these classifications are rare. However, these incident prevention benefits will exist for up to 50 years, as PHMSA assumes that EFVs and curb valves have a lifespan of 50 years. The values are calculated based on the assumption that without the regulation, EFVs and curb valves would not be installed in service lines (other than lines serving SFRs under the existing regulations). With voluntary installation, the benefits and costs would be reduced proportionally. 9 The average cost of an EFV, ranging from $15-$50 is $32.50. PHMSA used $30 in this analysis as it does not have any basis for constructing a weighted average cost (i.e., how many EFVs at $15 and how many at $50 or in between). The analysis also does not account for future technology/manufacturing progress which typically reduces the unit cost. 4 <<>> The rule is assumed to affect approximately 1,289 natural gas distribution operators and on average 222,114 services per year. Industry sources provided PHMSA with a range of cost estimates for EFVs and curb valves. The analysis in this document is based primarily on our best estimates, which fall roughly in the middle of that range. In Appendix A, we present the results of sensitivity testing using the lower and higher cost figures received; quantified benefits fall in between the low and high cost estimates. The benefits of this rule are based on high-cost, low-probability incidents. The incident data analyzed suggest that incidents occurring on many of these service classifications are infrequent. However, PHMSA’s Incident Report database does not capture service classification and just over a decade’s worth of incident data (2004 to 2015) could be analyzed for this rulemaking. It is thus unlikely that the cost-benefit analysis captured all of the incidents that could have been prevented or mitigated by an EFV. Further, several of the incidents noted by the NTSB when they made previous recommendations for EFV installation took place decades ago, such that comparable incident causation data are not available in the PHMSA database. PHMSA’s historical data and NTSB investigations show that incidents do occur on these lines, and when they do, they are typically high-consequence events. Key incidents identified by NTSB include the 1994 explosion at a retirement home in Allentown, Pennsylvania, which resulted in a fatality, 66 injuries, and $5 million in property damage, and the 1998 explosion in St. Cloud, Minnesota, which demolished a pizzeria, apartments, a law office, a bar, and took four lives.10 Because PHMSA aims to provide an extra level of protection in areas where there are high concentrations of people, a prevented or mitigated incident could prevent several injuries or fatalities (and sometimes extensive property damage), thereby producing significant quantifiable benefits, along with benefits that could not be quantified, such as avoided evacuations. There is also substantial value in the perception of the safety and integrity of the natural gas distribution system. Currently, certain SFR residents are the only people who have the added protection of EFVs by federal regulation: anyone who is residing in a multi-family residence (MFR), no matter if it is by choice or circumstance, is not being provided an equal opportunity to avoid incidents like the ones that occurred at Allentown, Pennsylvania, and St. Cloud, Minnesota. 1 Introduction 10 National Transportation Safety Board, UGI Utilities, Inc., Natural Gas Distribution Pipeline Explosion and Fire, Allentown, Pennsylvania, June 9, 1994, Pipeline Accident Report NTSB/PAR-96/01 (Washington, D.C.: NTSB, 1996) and National Transportation Safety Board, Natural Gas Pipeline Rupture and Subsequent Explosion, St. Cloud, Minnesota, December 11, 1998, Pipeline Accident Report NTSB/PAR-00/01 (Washington, D.C.: NTSB, 2000) 5 <<>> The Pipeline and Hazardous Materials Safety Administration (PHMSA) is amending the requirements of §192.383 (b) by requiring the installation of excess flow valves (EFV) beyond single-family residence (SFR) service lines to cover new or replaced branched service lines, multi-family residences, and small commercial service lines serving a single customer with a known load that does not exceed 1,000 SCFH. Additionally, PHMSA is adding §192.385 to require the installation of manual shutoff valves (curb valves) on all new or replaced lines where the installed meter capacity exceeds 1,000 SCFH. The National Transportation Safety Board (NTSB) has identified, between 1970 and 2011, 11 significant incidents that could have been mitigated by the presence of an EFV and has issued more than 20 recommendations concerning the installation of EFVs for both residential and commercial applications. The NTSB’s recommendations culminated in the most recent Safety Recommendation P-01-2, which states that PHMSA “require that excess flow valves be installed in all new and renewed gas service lines, regardless of a customer’s classification, when the operating conditions are compatible with readily available valves.” PHMSA published an ANPRM (76 FR 72666, November 25, 2011) that included an Interim Evaluation report on expanding the EFV requirement beyond single-family residences. The Interim Evaluation, which had been posted online and received extensive feedback from stakeholders, recommended that an economic analysis be performed that would take into account alternatives, particularly curb valves; differentiate among the various classifications of customers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a survey would have to be performed in order to identify incidents and to find operators with experience and data on operating EFVs beyond SFRs. While the ANPRM was open for comments, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 into law. Section 22 of that law required PHMSA to issue a final report on the evaluation of the NTSB’s recommendation on EFVs in applications other than service lines serving one single family residence, and “if appropriate, require by regulation the use of excess flow valves, or equivalent technology, where economically, technically, and operationally feasible on new or entirely replaced distribution branch services, multifamily facilities, and small commercial facilities.” This rule addresses Section 22 of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 and NTSB Recommendation P-01-2. Section 22 of the Act requires PHMSA to conduct a study on the expanded use of EFVs in applications other than SFR service lines. Based on the study11 and the comments received on the study (see NPRM for discussion), PHMSA has 11 The report is in the docket at http://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR;rpp=10;po=0;D=PHMS A-2011-0009 6 <<>> determined that expanding EFV installation will provide protection for the vast majority of gas customers, irrespective of customer classification where known load size is less than or equals 1,000 SCFH, and is technically, operationally, and economically feasible. PHMSA acknowledges that EFVs may not be practical for large apartment buildings and industrial or commercial users due to inherent design complexity and continuous supply demands. PHMSA concludes that curb valves will provide the best possible option for improved safety at this time in situations where loads exceed 1,000 SCFH. PHMSA notes that this rule will satisfy the NTSB recommendation and promote better public safety by ensuring all service lines, regardless of the customer classification, have adequate protection through the installation of either an EFV or a curb valve. The requirements for distribution pipeline operators are described below. 1.1 Excess Flow Valves The rule revises 49 CFR part 192 §383 by adding four new categories of service for which EFV installation will be required on all new or replaced lines. The four new categories that will be added to the existing requirement for SFRs served by a single service line are: - Branched service lines to a SFR installed concurrently with the primary SFR service line (a single EFV may be installed to protect both lines) - Branched service lines to an SFR installed off a previously installed SFR service line that does not contain an EFV - Multi-family residences with known customer loads at time of service installation, based on installed meter capacity, not exceeding 1,000 SCFH per service - A single, small commercial customer, served by a single service line, with known customer load at time of service installation, based on installed meter capacity, not exceeding 1,000 SCFH per service. PHMSA notes that the first two categories of branched service lines to SFRs cover the majority of branched services. The benefits and costs of installing EFVs on service lines to SFRs were analyzed as part of the DIMP rulemaking in 2009. As there is no data available for which installed lines are single-service or branched service12 , and because incident data doesn’t distinguish the two types of lines, there was no practical way to exclude branched lines from the overall SFR calculations for DIMP. Indeed, the only difference between whether a service line is single-service or branched is in the underground configuration, which is determined by the installing operator on a case-by-case basis. The 2009 DIMP analysis found that installing EFVs 12 PHMSA’s Natural Gas Distribution Annual reports (PHMSA F7100.1-1) collect information on the number of services per operator in each state as an aggregate number without service type classification. 7 <<>> on lines serving SFRs would yield annual benefits in the range of $7 million to $17 million against costs of $8 million. The safety benefits were calculated using the then-current $5.8 million value per statistical life and would thus be substantially higher using today’s $9.4 million value. While PHMSA is not aware of a practical way to break down the benefits and costs of EFV installation on branched lines serving SFRs specifically, installing EFVs on branched lines is expected to have positive net benefits in light of the overall SFR results. Branched SFR is excluded from the remainder of this analysis due to data limitations and to avoid duplication of the costs and benefits incorporated in the DIMP analysis. The present analysis categorizes the estimated new and replaced services by multifamily, commercial, and industrial classifications and accounts for the cost of either an EFV or a curb valve for every service. (Costs may be slightly overestimated as one can potentially have an EFV or a curb valve servicing multiple customers/services). The rule continues to include exceptions for excess flow valves for cases where installation would not be feasible. These exceptions, now in part (c) of section 383, are: - When the service line does not operate at a pressure of 10 psig or greater throughout the year - When the operator has prior experience with contaminants in the gas stream that could interfere with the EFV’s operation or cause loss of service to the customer - When an EFV could interfere with necessary operations or maintenance activities, such as blowing liquids from the line - When an EFV meeting performance standards in 192.381 is not commercially available to the operator. The exceptions reduce the potential cost of the regulation by acknowledging that there are reasonable conditions that render EFV installation not operationally and technically feasible. As there are no data available to estimate the proportion of lines that are exempt, the analysis will assume that all lines with known loads under 1,000 SCFH have operating conditions suitable for an EFV, thereby overestimating the cost. The revision also adds a part (d) to section 383 that allows optional installation of EFVs if requested by a customer. The analysis does not estimate the number of customer requests that may occur in any given year or the resulting transfers. Based on the findings and the comments on the Interim Report, PHMSA has determined that expanding the installation of EFVs will provide protection for the vast majority of gas distribution customers, irrespective of the customer classification, where loads does not exceed 1,000 SCFH. PHMSA has also deemed that EFVs may not be practical for large apartment buildings and industrial or commercial users due to inherent design complexity and continuous supply demands. For those situations (loads exceeding 1,000 SFCH), PHMSA concludes that curb valves will provide the best possible option for improved safety at this time. 8 <<>> 1.2 Curb Valves The rule adds §385 to Part 192. The addition requires operators to install a manual service line shut-off valve (curb valve) on any new or replaced service line on which an EFV is not installed in accordance with section 192.383(b). The required use of curb valves for large commercial (greater than 1,000 SFCH) goes beyond the Section 22 language of the Pipeline Safety, Job Creation, and Regulatory Certainty Act of 2011; however, it is based on ANPRM comments received from industry, trade associations and other stakeholders. PHMSA and industry in general determined that EFVs are not suitable for larger commercial facilities over 1,000 SFCH. As mentioned above, curb valves are the best alternative to an EFV and provide an effective added level of safety for these facilities. PHMSA’s authority for regulating natural gas pipelines was first established by the Natural Gas Pipeline Safety Act of 1968, Pub. L. No. 90-481, and has since been enlarged by additional legislation. The Pipeline Safety Laws specifically delegate authority to DOT to develop, prescribe, and enforce minimum Federal safety standards for the transportation of natural gas. PHMSA has used this statutory authority to promulgate comprehensive minimum safety standards. While the 2011 Act specifically directed PHMSA to require the installation of EFVs on new and replaced branched lines serving SFRs, multi-family and small commercial facilities, DOT’s underlying prior statutory authority under 49 USC § 60104 provides PHMSA with the authority to require the installation of curb valves for large commercial facilities. The remainder of this report analyzes the benefits and costs of the regulatory changes as required by Section 1 of Executive Order 12866 (as amended by E.O.s 13258 (2002), 13422 (2007), and 13497 (2009)) and Section 1 of Executive Order 13563 (2011). 13 2 Background EFVs are designed to automatically stop the flow of a gas when the flow increases suddenly and significantly, such as during a pipeline separation. They are used in the United States and around the world to mitigate damage resulting from a sudden pipeline rupture caused by a natural disaster, excavation damage, or other third-party damage. However, because they shut automatically based on changes in flow, they can also shut when customers suddenly increase 13 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 9 <<>> their gas load, causing an inconvenience for the customer and the company. Manual shutoff valves, known as curb valves, are an alternative that avoids a false closure but requires a trained responder to be on site to shut the valve, increasing the amount of gas that is released after an incident. PHMSA has moved towards greater installation rates of EFVs over the years while continuing to recognize that EFV closures pose hazards of their own. 14 In 1996, PHMSA added 49 CFR 192.381 to the Pipeline Safety Regulations, which contains performance standards for EFVs. In 1998, responding to statutory mandates in Section 104 of the Pipeline Safety Act of 1992 (Pub. L. 102-508), PHMSA added a requirement15 that required operators to notify customers in writing about EFV availability; the safety benefits derived from installation; and any installation, maintenance, and replacement costs16 . In 2006, the Pipeline Integrity, Protection, Enforcement, and Safety (PIPES) Act of 2006 required that EFVs be installed on all new or replaced service lines serving one SFR where: • The service line continuously operates at a pressure at or above 10 psig • The service line is not connected to a gas stream with a prior history of contaminants • The installation is not likely to cause a loss of service to the residence or to interfere with necessary operations and maintenance • EFVs are commercially available. PHMSA issued Advisory Bulletin 08-04 encouraging operators to begin installing EFVs in accordance with the Act. The final rule on natural gas distribution IM programs was officially published December 4, 2009, and applied to lines installed or replaced after February 2, 2010 (74 FR 63906). However, the NTSB issued a response to PHMSA’s status update urging PHMSA to make the rule applicable to all customers “regardless of their classification.”17 PHMSA then published an ANPRM that included an Interim Evaluation report on expanding the EFV requirement beyond single-family residences (76 FR 72666, November 25, 2011). The Interim Evaluation recommended that an economic analysis be performed that would take into account alternatives, particularly curb valves; differentiate among the various classifications of customers; and reflect the increase in EFVs already installed. The Interim Evaluation noted that a 14See FR Doc No: 94-18771, “Excess Flow Valve Installation on Service Lines” August 2, 1994 for discussion of EFV closure costs and PHMSA’s 1996 cost-benefit analysis summarized in 61 FR 31449. 15 http://www.gpo.gov/fdsys/pkg/CFR-2002-title49-vol3/pdf/CFR-2002-title49-vol3-sec192-383.pdf 16 Distribution Integrity Management Rule (http://primis.phmsa.dot.gov/dimp/docs/DIMPFINALRULE.PDF) removed this requirement in 2009. 17 NTSB response dated 9/22/2009. Correspondence available on the NTSB website here: http://www.ntsb.gov/safetyrecs/private/history.aspx?rec=P-01-002&addressee=PHMSA 10 <<>> survey would have to be performed in order to identify incidents and to find operators with experience and data on operating EFVs beyond SFR applications. Nineteen entities submitted comments to the ANPRM docket (PHMSA-2011-0009). Eleven comments were from utility companies or associations, two were from manufacturers, one was from a State regulator, one was from the NTSB, one was from a city government, and the remainders were from the public. In general, utilities supported an expansion of EFV installation, with limits on feasibility. The American Gas Association, American Public Gas Association, Northeast Gas Association, Southwest Gas Corporation, Nicor Gas Company, National Grid, Avista, and Laclede Gas all supported a limited expansion. Mid-American Gas and the City of Ellensburg, WA, supported an expansion as long as curb valves and EFVs were viewed as perfect substitutes for one another and companies could select which valve best suited operational conditions. The Texas Pipeline Association focused specifically on service lines extending from transmission and gathering lines. Three companies (Southwest, Mid-American, and Nicor) cited maintenance issues with ensuring access to curb valves, as well as delays in shutting off the gas in the event of a break. Reasons cited for delays included the valve’s accessibility during an incident and the potential, because curb valve boxes are above-ground, that curb valves could be buried or damaged by third-parties, thereby making the valve inaccessible or inoperable. The State regulator noted that upstream above-ground valves are already present on many large commercial and industrial properties. The comments also noted that the categories provided in the Interim Evaluation were not specific enough. The American Gas Association (AGA) and others suggested that the threshold between small and large should be a load size of 1,000 SCFH (PHMSA 2011-0009- 0024). Following the ANPRM, PHMSA developed a draft survey document aimed at identifying incidents and operators with experience operating EFVs beyond SFRs. As a key component of the survey, the research team developed customer categories based on the Interim Evaluation, ANPRM comments, and discussions with operators. Key variables identified to separate customers included load size, customer type, and load variability.18 The analysis eventually resulted in seven categories: single family residential, small multi-family residential, large multi- family residential, small space and water heat non-residential customers, large space and water heat non-residential customers, small other non-residential customers, and large other non- residential customers. The distinction between small and large was the 1,000 SCFH load size mentioned in comments to the ANPRM. Using the customer categories, the research team developed the survey recommended by the Interim Evaluation report, aimed at gathering data on EFV and curb valve costs and benefits. The 18 Demand for heat and water is less variable that demand for other uses such as cooking or clothes drying, so space and water heat customers were separated from other customers with more complex needs. 11 <<>> survey was to be sent to all operators because industry comments suggested that experience with EFV installation beyond SFRs was rare, so a sample may have excluded operators with relevant data. The goal was to have a better understanding of the costs of EFVs on installations beyond SFRs from operators who already deployed the technology and on the costs and effectiveness of curb valves. Nine companies were asked to pilot the census, and a copy was published in the Federal Register as part of a notice of information collection on May 15, 2012 (77 FR 28669). The purpose of the pilot was to ensure that operators were able to provide the requested data, that the questions were clearly worded, and that the response categories cover the full range of possible responses. Additionally, because the survey was developed using an online survey tool, Survey Gizmo, the pilot also served as a test of the online functionality. The nine companies selected varied by size (defined by number of service lines) and region of the country (East, Midwest, South, and West) in order to ensure that there was variation along key factors that might impact responses. All respondents had installed EFVs in the previous calendar year according to PHMSA’s annual report data. The pilot was conducted from May 24 to July 17, 2012. PHMSA sent an introductory letter to all nine participants explaining the purpose and importance of the data collection. The Volpe Center followed up with an email that described the study purpose and included the survey link. To boost response, Volpe contacted participants by email and phone to encourage participation and to answer any questions operators might have about the survey. The Volpe Center also conducted telephone debriefs with each of the nine pilot respondents to obtain more detailed feedback on their experience completing the survey. Of the nine pilot respondents, only four attempted to complete the survey, but in most cases they entered “0” as their response because the data was not available. Only one operator, whose company comprised a small system of approximately 3,000 service lines that installed EFVs only on single-family residences, provided responses by the different customer classifications. It took the respondent 3 hours to sort their service lines into the requested categories. In the debrief calls, the other respondents (five) indicated they could not provide the data being requested. Both the census pilot and the docket comments on the notice of information collection (PHMSA 2012-0086) quickly revealed that company databases are not currently set up to provide the necessary data. Load and customer type data are stored separately from data on EFVs and from data on incidents, and grouping customers into the census categories would, according to these pilot respondents, be a time-intensive and costly undertaking. Because only one respondent was able to complete the survey, no data from the survey is included in this RIA. As a result of the survey experience and feedback from pilot participants and industry comments on the docket, including AGA’s docket comment (PHMSA 2012-0086-0003) stating a preference for putting forth a consensus regulation rather than continuing the data collection 12 <<>> efforts, PHMSA moved to continue the rulemaking process authorized by Section 22 of the Pipeline Safety, Job Creation, and Regulatory Certainty Act of 2011 without further information collection in order to avoid undue industry burden. 3 Regulatory Analysis Executive Orders 12866 and 13563 direct all Federal agencies to consider the costs and benefits of “significant regulatory actions.” Federal agencies are directed to develop a formal Regulatory 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 rule falls below the $100 million a 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. 4 Identification of the Problem and the Need for the Rule 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 ..." Executive Order 13563 states that, to the extent permitted by law, agencies must (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on 13 <<>> society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. PHMSA’s mission is to ensure the safety of the natural gas system. Recognizing the safety benefits of EFV installation in natural gas distribution systems, Section 22 of the Pipeline Safety, Job Creation, and Regulatory Certainty Act of 2011 directed PHMSA to, if appropriate, require the installation of EFVs or equivalent technology, where economically, - **truncated:** true - **body characters:** 98745