{"operation":"document","citation":"09000064824b13d6","title":"U.S. DOT/PHMSA - Regulatory Impact Analysis and Regulatory Flexibility Act Analysis 3","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":null,"effective_on":null,"summary":"Regulatory Impact Analysis and Regulatory Flexibility Act Analysis Pipeline Safety: Operator Qualification, Cost Recovery and other Pipeline Safety Changes PHMSA-2013-0163 Office of Pipeline Safety Pipeline and Hazardous Materials Safety Administration (PHMSA) U.S. Department of Transportation February 2017 1 Executive Summary This package of regulatory changes addresses errors and inconsistencies in the current regulations, provides additional clarifications, incorporates industry standards, and updates certain regulatory requirements. The changes also address statutory requirements from the Pipeline Safety, Regulatory...","machine_formats":{"json":"https://regulus.evalyn.ai/document/regulations-gov-attachment-09000064824b13d6.json","markdown":"https://regulus.evalyn.ai/document/regulations-gov-attachment-09000064824b13d6.md"},"app_url":"https://regulus.evalyn.ai/document/regulations-gov-attachment-09000064824b13d6","source_url":"https://downloads.regulations.gov/PHMSA-2013-0163-0050/attachment_4.pdf","body":"<<<PAGE 1>>>\n\nRegulatory Impact Analysis\nand\nRegulatory Flexibility Act Analysis\nPipeline Safety: Operator Qualification, Cost Recovery and other Pipeline Safety Changes\nPHMSA-2013-0163\nOffice of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration (PHMSA)\nU.S. Department of Transportation\nFebruary 2017\n1\n\n<<<PAGE 2>>>\n\nExecutive Summary\nThis package of regulatory changes addresses errors and inconsistencies in the current\nregulations, provides additional clarifications, incorporates industry standards, and updates\ncertain regulatory requirements. The changes also address statutory requirements from the\nPipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (Public Law 112-90) and\nsafety recommendations from the NTSB, as well as petitions for rulemaking. Many of the\nrevisions are small changes that will not lead to substantial changes in regulatory requirements,\noperator practices, or overall costs and benefits.\nBenefit-Cost Analysis\nAnnual compliance costs are estimated at $0.6 million, less savings to be realized from the\nremoval of farm taps from the Distribution Integrity Management Program (DIMP)\nrequirements.\nPHMSA could not quantify annual benefits as readily due to data limitations; however, it\ndesigned several provisions specifically to reduce pipeline incidents and the associated\nconsequences, including the potential to prevent a future high-consequence event, such as those\nthat have occurred on gas transmission and hazardous liquid pipelines in the past. PHMSA\nstreamlined processes and clarified requirements, allowing operators and PHMSA to conserve\nand focus resources on safety-related activities and be better prepared to respond in the event of\nan incident.\nRegulatory Flexibility Act Analysis\nThe Regulatory Flexibility Analysis found that the rule could affect a substantial number of\nsmall entities because of the market structure of the gas and hazardous liquids pipeline industry,\nwhich includes many small entities. However, these impacts are not significant. The post-\naccident drug testing provision will add $132 in documentation costs per reportable incident.\nThe other provisions will not add appreciable costs, and at least one provision (farm taps) will\nyield compliance cost savings.\nUnfunded Mandates Act Analysis\nPHMSA determined that the rule will not impose annual expenditures on State, local, or tribal\ngovernments of the private sector in excess of $155 million, and thus does not require an\nUnfunded Mandates Act analysis.1\n1 The Unfunded Mandates Act threshold was $100 million in 1995 Adjusted for inflation, the current figure as used\nin DOT guidance is $155 million. Thomson, K. and Monje, C., Departmental Guidance: Threshold of Significant\nRegulatory Actions Under the Unfunded Mandates Reform Act of 1995.\n2\n\n<<<PAGE 3>>>\n\n1 Introduction\nThe Pipeline and Hazardous Materials Safety Administration (PHMSA) is promulgating a\npackage of changes to the pipeline safety regulations. On January 3, 2012, President Obama\nsigned into law the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (“the\nAct”).\n2 The changes address Sections 9 and 13 of the Act, correct errors, address\ninconsistencies, and respond to rulemaking petitions.\nRequirements in several subject matter areas are affected, including telephonic or electronic\nnotifications of accidents and incidents, cost recovery for design reviews, the renewal of expiring\nspecial permits, farm taps, reversal of flow or change in product, control room responsibilities\nand team training, and editorial changes. The rule also provides standards for assessment tools\nvia incorporation by reference in Part 195, modifies the criteria used to make decisions about\nconducting post-accident drug and alcohol tests and additional testing in Part 199, requiring\nelectronic reporting of drug and alcohol testing results in Part 199, and requiring post-accident\ndrug and alcohol testing in Part 199.\nThis report analyzes the benefits and costs of the regulatory changes as required by Section 1 of\nExecutive Order 12866 (as amended by E.O.s 13258 (2002), 13422 (2007), and 13497 (2009))\nand Section 1 of Executive Order 13563.3 Executive Orders 12866 and 13563 require agencies\nregulate in the most cost-effective manner make a reasoned determination that the benefits of the\nintended regulation justify its costs, and develop regulations that impose the least burden on\nsociety.\nAnalysis of the potential impacts on small entities is also required by the Regulatory Flexibility\nAct. The Final Regulatory Flexibility Act analysis is also included in this document (see Section\n8).\n2 Background\nPHMSA, pipeline operators, and others have identified certain errors, inconsistencies, updates to\nstandards incorporated by reference, and other deficiencies in the Pipeline Safety Regulations.\nAs such, PHMSA is making a set of miscellaneous changes to the Pipeline Safety regulations\nconcerning the following subjects, which are described in more detail in sections 3.1 to 3.12\nbelow:\n• Accident and Incident Notification\n• Cost Recovery for Design Reviews\n• NTSB Recommendation on Control Room Center Staff\n2 Public Law 112-90\n3 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\n3\n\n<<<PAGE 4>>>\n\n• Special Permit Renewal\n• Farm Taps\n• Reversal of Flow or Change in Product\n• Control Room Team Training\n• Assessment tools by Incorporation by Reference\n• modifying the criteria used to make decisions about conducting post-accident drug and\nalcohol tests\n• Electronic Reporting of Drug and Alcohol Testing Results\n• Post-Accident Drug and Alcohol Testing\n3 Identification of the Problem and the Need for the Rule\nUnder the Federal Pipeline Safety Laws, 49 U.S.C. 60101 et seq., the Secretary of Transportation\nmust prescribe minimum safety standards for pipeline transportation and for pipeline facilities.\nThe Secretary has delegated this authority to the PHMSA Administrator (49 CFR 1.97(a)). The\nrule creates changes in the regulations consistent with the protection of persons and property\nwhile changing unduly burdensome or nonsensical requirements.\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 ... .\" The mission of\nPHMSA is to ensure the safety of the natural gas and hazardous liquids pipeline system.\nPipeline operators do not always bear the full costs of an incident. Even in cases where they\nprovide compensation for losses that can be monetized, those monetary penalties or settlements\ndo not necessarily capture the full impact on affected parties, especially when a death or injury\noccurs. As a result, there is a negative externality present in which the company may not take the\nfull societal cost of a possible incident into account in its decision-making. The negative\nexternality alters the company’s decision about safety precautions, leading to a need for\ngovernment to set minimum levels of safety precautions. Pipeline safety regulations are\ndesigned to address this potential market failure. The rulemaking package analyzed here is more\nspecifically intended to improve compliance with these regulations by updating references and\ntechnical standards, providing clarification, and removing conflicting language. Some of the\nprovisions also promote improved pipeline integrity and safety by addressing small gaps in the\ncurrent regulations, as discussed in more detail below.\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\n4\n\n<<<PAGE 5>>>\n\nrule could adversely affect the economy in terms of productivity and employment, the\nenvironment, public health, safety, or State, local, or tribal governments. The goal of the analysis\nis to provide decision makers with a clear indication of the most efficient alternative – that is, the\nalternative that generates the largest net benefits to society.\nThis rule is not a significant regulatory action under Section 3(f) of Executive Order 12866 (58\nFR 51735), and therefore is not reviewed by OMB. This rule is not significant under the\nRegulatory Policies and Procedures of the Department of Transportation (44 FR 11034). It falls\nbelow the $100 million per year in annual impact threshold.\nThis regulatory analysis:\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.\nSubsections 3.1 to 3.13 describe the regulatory changes in detail and the specific needs to which\neach regulatory change responds.\n3.1 Accident and Incident Notification\nCurrently, PHMSA requires pipeline owners and operators to notify the National Response\nCenter by telephone or electronically at the earliest practicable moment following discovery\n(§§ 191.5 and 195.52). In an advisory notice (67 FR 57060) dated September 6, 2002, PHMSA\nadvised owners and operators of gas and hazardous liquids pipeline systems and liquefied natural\ngas (LNG) facilities that at the earliest practicable opportunity usually means 1 to 2 hours after\ndiscovery of the incident.\nSection 9 of the Act requires PHMSA to require a specific time limit for telephonic or electronic\nreporting of pipeline accidents and incidents.\nIn this rulemaking, PHMSA revises the pipeline safety regulations to establish time limits for\ntelephonic or electronic notification of an accident or incident to require such notification at the\nearliest practicable moment following the confirmed discovery of an accident or incident, not\nlater than 1 hour following the time of such confirmed discovery. Owners and operators must\nalso revise their initial telephonic or electronic notice to the Secretary and the National Response\nCenter with an estimate of the amount of the product released, an estimate of the number of\nfatalities and injuries, if any, and any other information determined appropriate by the Secretary.\n5\n\n<<<PAGE 6>>>\n\nThis information must be reported within 48 hours of the accident or incident, to the extent\npracticable.\nOwners and operators of gas and hazardous liquid pipelines and LNG facilities are already\nrequired to report an incident to the NRC in Washington, DC, at the earliest practicable\nopportunity (usually one to two hours after discovering the incident). However, under Section\n9(b)(1) of the Act, PHMSA is required to issue regulations requiring owners and operators to\nnotify the NRC no later than one hour of discovery of a pipeline accident or incident. Therefore,\nthe rule requires that pipeline operators report accidents and incidents within one hour of\nconfirmed discovery.\n3.2 Cost Recovery for Design Reviews\nThis rulemaking action amends the Federal pipeline safety regulations to prescribe a fee structure\nand assessment methodology for recovering Agency costs associated with design reviews of new\ngas and hazardous liquid pipelines with overall design and construction costs totaling at least\n$2,500,000,000 or that contain new and novel technologies.\nPHMSA has no method for recovering design review costs from the operator of the pipeline\nincurred by the agency while conducting these reviews.\nSection 13 of the Act requires PHMSA to recover costs associated with design reviews. Section\n13 of the Act allows PHMSA to prescribe a fee structure and assessment methodology for\nrecovering costs associated with design reviews. Specifically, cost recovery can apply to any\nproject that : 1) costs at least $2,500,000,000 as adjusted by the Secretary to take into account\nchanges in CPI, 2) uses new or novel technologies or design, as determined by the Secretary.\nThe Act also requires the Secretary of Transportation to issue guidance to clarify the meaning of\nthe term \"new or novel technologies\" one year after the date of enactment.\nAs directed, in January 2013, PHMSA issued guidance on its website to clarify the meaning of\nthe term ‘‘new or novel technologies or design’’ as meaning, “any products, designs, materials,\ntesting, construction, inspection, or operational procedures that are not addressed in Title 49 CFR\nPart 192, 193, or 195 due to technology or design advances and innovation.”\nPHMSA conducts facility design safety reviews in connection with proposals to construct,\nexpand, or operate gas or hazardous liquid pipelines or liquefied natural gas pipeline facilities.\nReviews include design, construction, and operational inspections and oversight. These reviews\ndivert a significant amount of PHMSA’s limited resources from the agency’s pipeline safety\nenforcement responsibilities. Currently, PHMSA has no method for recovering design review\ncosts from the operator of the pipeline that are incurred by the agency while conducting these\nreviews. The rule prescribes a fee structure and assessment methodology for recovering the\ncosts associated with design reviews. Section 13 of the Act permits the agency to require the\nentity or individual proposing the project to pay the costs incurred by PHMSA relating to such\nreviews. PHMSA is exercising the cost recovery authority described in Section 13(a) of the Act\n6\n\n<<<PAGE 7>>>\n\nby prescribing a fee structure and assessment methodology that is based on the costs of providing\nthese reviews. PHMSA has developed a sample master cost recovery agreement for use by\nPHMSA and the applicant for a project proposal meeting the criteria of 49 CFR Part 190,\nSubpart D requirements. The sample master cost recovery agreement will be posted on\nPHMSA’s website and in Docket No. PHMSA-2013-0163.\n3.3 NTSB Recommendation on Control Room Center Staff\nThis portion of the rule addresses the National Transportation Safety Board’s (NTSB)\nrecommendation to clarify operator qualification (OQ) requirements for control rooms (Safety\nRecommendation P-12-8). Specifically, PHMSA will require each operator to define the roles\nand responsibilities and qualifications of personnel who have the authority to direct or supersede\nthe specific technical actions of controllers (a change to 49 CFR 192.631(b) and 49 CFR\n195.446(b)).\n3.4 Special Permit Renewal\nThis rulemaking action amends 49 CFR 190.341 of the Federal pipeline safety regulations to add\nprocedures for renewing a special permit.\nAs defined in Section 190.341(a), a special permit is an order by which PHMSA waives\ncompliance with one or more of the pipeline safety regulations. In order to grant a request for a\nspecial permit, PHMSA must determine that granting the permit would “not be inconsistent with\npipeline safety.” Special permits are authorized by statute in 49 USC § 60118(c), and the\napplication process is set forth in 49 CFR 190.341. PHMSA performs extensive technical\nanalysis on special permit applications and typically conditions a grant of a special permit on the\nperformance of alternative measures that will provide an equal or greater level of safety.\nPHMSA is committed to public involvement and transparency in special permit proceedings and\npublishes notice of every special permit application received in the Federal Register for\ncomment.\nIn the past, PHMSA has included an expiration date for certain special permits depending on the\nnature of the permit. Starting in 2009, PHMSA began adding an expiration date to all new\npermits. By doing so, PHMSA is able to ensure that each special permit will be re-reviewed no\nlater than the expiration date. This process ensures that a special permit will not continue to be\nused if it is no longer in the best interest of public safety.\nSince the special permits that were issued with expiration dates in 2009 will start expiring in\n2014, PHMSA is adding renewal procedures to the pipeline safety regulations.\nPHMSA acknowledges that not all active special permits have expiration dates. Therefore,\nPHMSA may seek to modify any existing special permit without an expiration date through the\n“order to show cause” process described in 190.341(h)(2).\n7\n\n<<<PAGE 8>>>\n\n3.5 Farm Taps\nThis rulemaking action amends the Federal pipeline safety regulations in 49 CFR Part 192. The\namendment includes adding a new section (§ 192.740) to cover regulators and over-pressure\nprotection equipment for an individual service line that originates from a transmission, gathering,\nor production pipeline, and revises § 192.1003 to exclude farm taps from the requirements of\npipeline Distribution Integrity Management Program (DIMP).\nA “farm tap” is industry jargon for a pipeline that branches from a transmission, gathering, or\nproduction pipeline to deliver gas to a farmer or other landowner. PHMSA has recognized farm\ntaps as distribution lines for many years. Historically, PHMSA and its predecessor agencies\nhave held that farm taps are service lines—a subset of distribution pipelines. Rulemaking\nproceedings and responses to requests for interpretation have recognized this fact on numerous\noccasions, dating as far back as 1971.\nOn December 4, 2009, PHMSA published the DIMP final rule for gas distribution pipelines (74\nFR 63906). That rule applies integrity management requirements to all distribution pipelines.\nUnlike the integrity management requirements for hazardous liquid or gas transmission\npipelines, the DIMP requirements do not focus on a subset of pipelines in “high consequence\nareas,” but instead apply to all distribution pipelines. Therefore, little consideration was given to\nthe potential impact or appropriateness of subjecting farm taps to DIMP requirements.\nFarm taps are mostly located in less-populated areas (Class 1 and 2 locations) and risk to the\npublic is generally low, though it can vary by location and service type. DIMP identifies\nneeded risk control practices for threats associated with distribution systems, whereas threats to\ntypical farm taps are limited, and most are already addressed within Part 192. Therefore,\nPHMSA is amending Part 192 to exempt farm taps from the requirements of Part 192, Subpart P\n- Gas Distribution Pipeline Integrity Management. However, to better protect customers served\nby these lines, PHMSA is amending Part 192, Subpart M - Maintenance by adding a new section\nthat prescribes inspection activities for pressure regulators and over-pressurization protection\nequipment on service lines that originate from transmission, gathering, or production pipelines.\n3.6 Control Room Team Training\nIn response to NTSB recommendation P-12-7, PHMSA is making a small addition to the\nregulations related to Control Room Management (49 CFR 192.631 and 195.446). Specifically,\nPHMSA is reinforcing the need for team training and exercises that include not only controllers,\nbut other individuals, such as supervisors, that controllers would reasonably be expected to\ninterface with during normal, abnormal, and emergency conditions.\n3.7 Reversal of Flow or Change in Product\nOn November 26, 2010, PHMSA published a final rule (75 FR 72878) that established and\nrequired participation in the National Registry of Pipeline and LNG Operators. This final rule\n8\n\n<<<PAGE 9>>>\n\namends the Federal pipeline safety regulations to require operators to notify PHMSA\nelectronically of the occurrence of certain events no later than 60 days before the events occur.\nPHMSA is expanding the scope of reportable events in §§ 191.22 and 195.64 to include the\nreversal of flow of product or change in product in a mainline pipeline. This notification is not\nrequired for pipeline systems already designed for bi-directional flow, or when the reversal is not\nexpected to last for a duration of 30 days or less. The rule requires operators to notify PHMSA\nelectronically no later than 60 days before there is a reversal of the flow of product through a\npipeline, and also in the instance that there is a change in the product flowing through a pipeline.\nExamples include, but may not be limited to, changing a transported product from liquid to gas,\nfrom crude oil to highly volatile liquids (HVL), and vice versa. In addition, a modification in §§\n192.14 and 195.5 reflect the 60 days notification.\n3.8 Pipeline Assessment Tools\nThe National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113; March 7,\n1996) directs Federal agencies to use voluntary consensus standards and design specifications\ndeveloped by voluntary consensus standard bodies instead of government-developed voluntary\ntechnical standards, when applicable. OMB Circular A-119: “Federal Participation in the\nDevelopment and Use of Voluntary Consensus Standards and in Conformity Assessment\nActivities” sets the policy for Federal use and development of voluntary consensus standards.\nAs defined in OMB Circular A-119, voluntary consensus standards are technical standards\ndeveloped or adopted by organizations, both domestic and international. These organizations use\nagreed upon procedures to update and revise their published standards every 3 to 5 years to\nreflect modern technology and best technical practices.\nThe legal effect of incorporation by reference is that the material is treated as if it were published\nin the Federal Register and the Code of Federal Regulations (CFR). This material, like any other\nproperly issued rule, has the force and effect of law. Congress authorized incorporation by\nreference to reduce the volume of material published in the Federal Register and CFR (See 5\nU.S.C. 552(a) and 1 CFR Part 51). Congress granted authority to the Director of the Federal\nRegister to determine whether incorporation by reference serves the public interest.\nSection 24 of the Act amended 49 U.S.C. 60102 by adding a new requirement on documents\nincorporated by reference after January 3, 2013. The law states, “Beginning one year after the\ndate of enactment of this subsection, the Secretary may not issue guidance or a regulation\npursuant to this chapter that incorporates by reference any documents or portions thereof unless\nthe documents or portions thereof are made available to the public, free of charge, on an Internet\nWeb site.’’ To meet this requirement, PHMSA negotiated agreements with the majority of the\nstandards-setting organizations with documents incorporated by reference in the pipeline safety\nregulations. The American Petroleum Institute (API) and the National Association of Corrosion\nEngineers (NACE) International have signed such agreements with PHMSA. Also, the\n9\n\n<<<PAGE 10>>>\n\nAmerican Society for Nondestructive Testing (ASNT) has provided access for free copies during\nthe comment period.\nThis rule incorporates by reference consensus standards for assessing the physical condition of\nin-service hazardous liquids pipelines using in-line inspection (ILI) and stress corrosion cracking\ndirect assessment (SCCDA). Periodic assessment of hazardous liquids pipelines is required by §\n195.452. These sections allow use of the inspection techniques addressed in these standards.\nIncorporation of the consensus standards assure better consistency, accuracy and quality in\npipeline assessments conducted using these techniques. In addition, the incorporation of these\nstandards address part of the NTSB Recommendation P-12-3 by identifying crack defects and\nseam corrosion using crack tools and circumferential tools. PHMSA is incorporating by\nreference the following consensus standards into 49 CFR Part 195: API STD 1163, “In-Line\nInspection Systems Qualification Standard” (August 2005); NACE Standard Practice RP0102-\n2010 “Inline Inspection of Pipelines;” NACE SP0204-2008 “Stress Corrosion Cracking Direct\nAssessment;” and ANSI/ASNT ILI-PQ-2005, “In-line Inspection Personnel Qualification and\nCertification” (2005). Also, PHMSA is allowing pipeline operators to conduct assessments\nusing tethered or remote control tools not explicitly discussed in NACE SP0102-2010, provided\nthe operators comply with applicable sections of NACE SP0102-2010.\nNote that this rulemaking action addresses only Part 195, but PHMSA will consider making a\nsimilar proposal for 49 CFR Part 192 under a separate rulemaking action.\n3.9 Electronic Reporting of Drug and Alcohol Testing Results\nPHMSA’s pipeline safety regulations at 49 CFR 191.7 and 49 CFR 195.58 require electronic\nreporting of most pipeline safety reports through the PHMSA Portal. PHMSA is also requiring\nelectronic reporting for anti-drug testing results required under § 199.119 and alcohol testing\nresults required under § 199.229. Pipeline operators with less than 50 covered employees are\nrequired to submit these reports only when PHMSA provides written notice. PHMSA is\nmodifying these regulations to specify that PHMSA will provide notice to operators in the\nPHMSA Portal.\n3.10 Post-Accident Drug and Alcohol Testing\nPHMSA's regulations require documentation of decisions not to administer a post-accident\nalcohol test. The requirement to document a decision not to administer a post-accident drug test\nis implied in the regulations, but not explicitly required. PHMSA is adding a section to the post-\naccident drug testing regulation to require documentation of such a decision.\nThe NTSB issued the following safety recommendation (NTSB Recommendation P-11-12):\n\"Amend 49 CFR 199.105 and 49 CFR 199.225 to eliminate operator discretion with regard to\ntesting covered employees. The revised language requires drug and alcohol testing of each\nemployee whose performance either contributed to the accident or cannot be completely\ndiscounted as a contributing factor to the accident.\"\n10\n\n<<<PAGE 11>>>\n\nAccordingly, PHMSA is also modifying 49 CFR 199.105 and 49 CFR 199.225 by restating and\nfurther defining the existing requirement to conduct post-accident drug and alcohol testing of all\nemployees except those for whom sufficient information establishes that they had no role in the\naccident.\n4 Identification of Available Alternative Approaches\n4.1 No Action\nPHMSA identified only the no action alternative to the regulation. Under this alternative, no new\nrequirements would be levied. No costs would be incurred to implement new requirements. No\nnew benefits would result.\nPHMSA has an obligation to ensure the safe and effective transportation of hazardous liquids\nand gases by pipeline. The rule serves that purpose by clarifying the pipeline safety regulations,\neliminating conflicting provisions, responding to new statutory mandates, and eliminating unduly\nburdensome requirements. A failure to undertake these actions would allow for the continued\nimposition of unnecessary compliance costs without increasing public safety. Accordingly,\nPHMSA rejected the “no action” alternative.\n4.2 Regulatory Revisions\nThis alternative was determined by PHMSA as the preferred regulatory option and is compared\nin the document with the baseline “no action” alternative.\nPHMSA is making certain amendments, corrections, and editorial changes to the pipeline safety\nregulations. These revisions would eliminate inconsistencies and respond to several petitions for\nrulemaking and recommendations from stakeholders, thereby facilitating the safe and effective\ntransportation of hazardous liquids and gases by pipeline. The changes serve that purpose by\nclarifying the pipeline safety regulations and eliminating unduly burdensome requirements.\n5 Industry Information\nThe affected industry comprises owners and operators of regulated natural gas and hazardous\nliquid pipelines. These include a mix of large and small businesses, as well as publically owned\nutilities, municipalities, and other organizations. Using a combination of PHMSA 2014 Annual\nReport data and the Dun and Bradstreet company database, there are approximately 3,000\nregulated entities when all corporate subsidiaries are separately counted, with a total of roughly\n150,000 onsite employees. There are wide variations across entities with respect to the share of\nemployees actually engaged in pipeline operations, especially for public agencies.\nAmong these entities, common industry (NAICS) codes are 211111, Crude Petroleum and\nNatural Gas Extraction; 221210, Natural Gas Distribution; 324110, Petroleum Refineries;\n486910, Pipeline Transportation of Refined Petroleum Products; 486210, Pipeline Transportation\nof Natural Gas; and 424720, Petroleum and Petroleum Products Merchant Wholesalers.\n11\n\n<<<PAGE 12>>>\n\nMany of the specific provisions in this rulemaking apply only to specific subsets of this\npopulation, such as operators of gas gathering lines, as described in more detail in Section 6\nbelow.\n6 Definition and Evaluation of the Benefits and Costs\n6.1 Data Sources and Limitations\nCost information is taken from PHMSA databases and external datasets as detailed more\nspecifically below. In many cases the changes are so small as to entail little to no quantifiable\ncosts.\n6.2 Costs\nIn the sub-sections below, each provision of the rulemaking is analyzed individually for potential\ncost implications.\n6.2.1 Accident and Incident Notification\nThere is an existing requirement to notify the NRC by telephone of incidents at the “earliest\npracticable moment” after discovery. This provision clarifies the existing rule and\naccompanying guidance by providing additional specificity on the expected timeframe. As a\nclarification to an existing requirement, this section does not entail any significant changes in\ncompliance costs.\n6.2.2 Cost Recovery for Design Reviews\nUnder this provision, PHMSA will conduct design reviews for certain large-scale pipeline\nprojects on a cost-recovery basis rather than at the agency’s own expense. The cost recovery\nprovision represents a transfer between parties, with no net societal costs or benefits.\nParticularly for projects meeting the project cost criterion, the relatively small cost of the design\nreview is unlikely to hinder innovation in design techniques.\n6.2.3 NTSB Recommendation on Control Room Center Staff\nOQ programs are designed to ensure that each worker conducting pipeline activities, such as\noperations and maintenance, has the appropriate knowledge and skills to perform that function.\nPHMSA is making a minor revision in scope that responds to NTSB Recommendation P-12-8. It\nspecifies that pipeline operators’ OQ plans must define the roles, responsibilities, and\nqualifications of any employees who have the authority to direct or supersede pipeline\ncontrollers’ actions. As NTSB noted, it is inconsistent with safe operating principles to have\ncontrollers’ actions guided or overridden by employees who do not necessarily have the same\nlevel of operator qualification. This change makes explicit that an employee who guides or\noverrules a pipeline controller is also effectively acting as a controller, even if he/she has another\njob title. PHMSA is making this change in response to NTSB’s recommendation and to make\nthe regulations as clear as possible. However, PHMSA already addresses this issue through its\nFrequently Asked Questions for the OQ program and its definition of “controller” (49 CFR 192.3\n12\n\n<<<PAGE 13>>>\n\nand 195.2), which includes anyone who monitors and controls the safety-related operations of a\npipeline from a control room. Supervisors already fall under this functional definition to the\nextent that they direct first-line controllers, though this may not be clear to all operators. This\nclarification explicitly reinforces that point. As a clarification of an existing requirement, there\nare no incremental compliance costs.\n6.2.4 Special Permit Renewal\nThis section establishes a new set of administrative procedures to handle Special Permit\nrenewals. Since Special Permits previously did not carry expiration dates, this change is\nnecessary to have a defined process for renewals. This provision deals solely with agency\nprocedures and has little or no direct costs.\n6.2.5 Farm Taps\nIn this provision, farm taps are removed from the DIMP program in favor of a less stringent set\nof inspection activities and over-pressurization protection equipment. This change will yield\ncost savings for operators. The overall cost savings could not be quantified because PHMSA’s\ndatabase does not record the number of farm taps. However, PHMSA previously estimated that\nimplementing a DIMP program and conducting required mitigation would cost the affected\nindustry approximately $78 million per year after start-up. Removing farm taps from DIMP will\nrelieve a small portion of these costs.\n6.2.6 Control Room Team Training\nMany pipeline operators already conduct team training and exercises that include both\ncontrollers and others staff (e.g. supervisors) that controllers may interface with during normal,\nabnormal, and emergency situations. For these operators, the revision will have little to no\nimpact on their training approach or compliance costs. For operators who currently do not\nconduct this type of team training, an additional training module will be required. PHMSA\npreviously estimated that there are approximately 524 control room supervisors for hazardous\nliquids pipelines and 631 for gas pipeline (1,155 total). Average hourly wages (including\nbenefits) for these personnel are estimated at $82.\n4 Similar types of control room training require\n4 hours per person per year plus $105 per person for the training itself.5 Putting these figures\ntogether, and assuming very conservatively that no operators are already conducting this type of\n4 These personnel are expected to be equivalent to the BLS job category “Industrial Engineers, Including Health and\nSafety” (17-2110). Using a multiplier for benefits based on Employer Costs of Employee Compensation, the fully\nloaded wage rate is approximately $81.73 ($52.06 × 1.57). Wage rate source: BLS, May 2014, NAICS 486000 –\nPipeline Transportation, http://www.bls.gov/oes/current/naics3_486000.htm. Benefits source: BLS, Employer Costs\nof Employee Compensation, September 2015, Table 3 – State and Local Government Workers.\n5 PHMSA, Pipeline Safety: Control Room Management/Human Factors, Revision of Implementation Period,\nRegulatory Evaluation, June 2011. The original estimate was for $100 in 2011 dollars. Adjusting for inflation using\nthe BLS CPI Inflation Calculator (http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100&year1=2011&year2=2015) leads\nto an estimate of $105 in 2015 dollars.\n13\n\n<<<PAGE 14>>>\n\nteam training, the annual compliance cost is approximately $500,155 (that is, 1,155 × 4 × $82 =\n$378,840 for the opportunity cost of the supervisors’ time, plus 1,155 × $100 = $121,275 for the\ncost of the training itself)\n6.2.7 Reversal of Flow or Change in Product\nThere will be relatively few notifications under this section since it excludes temporary changes\nand pipelines designed for bidirectional flow. Moreover, PHMSA’s intention is that changes in\nbatched petroleum products (e.g. gasoline, diesel, jet fuel) would not constitute a reportable\n“change in product” as these are commonplace. Overall, based on historical information,\nPHMSA estimates that it will receive approximately 8 notifications per year. Only a simple\nnotification will be required, which could be handled electronically, so total compliance costs are\nminimal.\n6.2.8 Pipeline Assessment Tools\nThis section clarifies existing requirements for the inspection of hazardous liquids pipelines by\nciting specific technical standards for those inspections and incorporating the standards by\nreference. This rule addresses in part NTSB recommendation P-12-3 by incorporating by\nreference consensus standards for assessing the physical condition of in-service hazardous\nliquids pipelines using ILI and SCCDA. Incorporation of the consensus standards assures better\nconsistency, accuracy and quality in pipeline assessments conducted using these techniques.\nPHMSA asked the Standards Developing Organizations to develop these standards, and now that\nthey are developed, PHMSA is adopting them to bring consistency throughout the industry.\nThese standards provide tables to guide tool section choices and help select the right tool for the\nright anomaly.\nOverall, these consensus standards and guidance on tool selection should not entail additional\ncosts for pipeline operators. The standards reflect widespread industry practices, so PMHSA\ndoes not expect any incremental compliance costs. The standards documents are freely available\nonline.\n6.2.9 Electronic Reporting of Drug and Alcohol Testing Results\nThis section requires electronic reporting of testing results through the same PHMSA portal that\nis used for other reporting. This change should yield small cost savings for operators and for\nPHMSA compared to hard-copy documentation.\n6.2.10 Post-Accident Drug and Alcohol Testing\nUnder the provisions of this section, operators will be required to document any decisions not to\nadminister post-accident drug testing to a particular employee, as is required for post-accident\nalcohol testing. Although this requirement is somewhat implied by the current regulations, it is\nnot explicitly stated and may not be a universal practice. There will, therefore, be small\nrecordkeeping and documentation costs associated with the provision.\n14\n\n<<<PAGE 15>>>\n\nThe regulation does not specify a precise form that the documentation must take. Given the\nrequirements, a reasonable estimate would be 2 hours per incident to prepare documentation on\nany decision not to administer drug testing. According to the Bureau of Labor Statistics, the\naverage wage rate of a Human Resources Specialist (Occupation Code 13-1071) in the Pipeline\nTransportation industry (NAICS 486000) is $42. (The figures are similar for other job series and\nindustries that may be relevant). When applying the benefits multiplier of 1.57 described above,\nthe estimated hourly wage rate, including benefits, becomes approximately $66.\nOver the past 5 years, there has been an average of 609 reported pipeline incidents per year.\nAlthough many firms may already document their decisions since this is required for post-\naccident alcohol testing and may be useful for company records, we assume conservatively that\neach incident will require some new documentation. The total compliance cost is approximately\n$80,621 per year (609 incidents × 2 hours × $66/hour).\n6.2.11 Cost Summary\nOverall, these changes are largely minor provisions with little or no substantive change to\nindustry practices or compliance costs. For the three provisions with quantifiable costs, these are\nestimated at $500,000 per year for the Control Room Management training provisions and\n$51,000 per year for the Post-Accident Testing provisions. The overall total is approximately\n$0.6 million per year. These estimates are generally upper bounds, in that they assume that\npipeline operators are not already in compliance with the regulations.\nSome of these cost increases will be offset by the reduction in DIMP-related costs associated\nwith the Farm Tap provisions, though these could not be estimated due to data limitations.\n6.3 Benefits\nPipeline incidents can result in death, injury, property damage, and environmental damage. The\nbenefits of the regulatory changes stem primarily from improvements to regulatory clarity and\nfrom upgraded safety requirements that are intended to reduce th","truncated":true,"body_characters":58111}