V&E Environmental Law Update E-communication, January 13, 2012
On January 3, 2012, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (the “Act”).1 The Act is primarily designed to address pipeline safety-related issues that have been brought to the forefront by a series of high-profile incidents involving pipeline integrity. For example, maximum per day and total penalty amounts have been doubled, the number of government inspectors increased, and other operational obligations have been added that undoubtedly will lead to additional costs for pipeline owners and operators. As for the “regulatory certainty” aspects of the new law, while the Act provides a four-year reauthorization of the Federal pipeline safety programs currently administered by the Pipeline and Hazardous Materials Safety Administration of the U.S. Department of Transportation (DOT), it also directs DOT to evaluate certain aspects of the existing programs, and where deemed appropriate, propose new rules and requirements (thus undermining the very regulatory certainty promised by the Act’s title). Interestingly, reflecting the political split between the Legislative and Executive branches, in several areas, the Act requires “studies and reports” back to the Legislature, shifting the responsibility for new requirements from the agency to Congress. As far as job creation, the studies, reports, and regulations that must be conducted, written, and/or proposed assure that DOT will be exceptionally busy for at least the next few years.
A few provisions of the Act take effect immediately. Those provisions include:
Civil penalty increase: the newly passed bill increases the daily per-violation cap from $100,000 to $200,000, with a maximum of $2 million for any related series of violations, up from $1 million.
Pipeline damage prevention: municipalities and state agencies are no longer exempt from one-call programs.
Biofuel pipelines: the Act expands the universe of regulated hazardous liquid pipelines to include non-petroleum fuels, including biofuels, that are flammable, toxic, or corrosive.
Pipeline owners and operators should expect DOT rulemakings to implement a number of requirements added by the Act. Those rulemakings will cover:
Maximum allowable operating pressure: the Act directs DOT to require “each owner or operator” of a pipeline facility located in populated or certain high consequence areas to access historical records and verify the maximum allowable operating pressure (MAOP) of the pipelines. The statute also requires reporting within five days to DOT of any exceedance of the MAOP on a gas transmission pipeline beyond the build-up allowed for pressure-limiting or control devices. Operators who fail to confirm the MAOP for the identified locations within six months of enactment must conduct new testing to identify the MAOP “as expeditiously as economically feasible.” Not later than 18 months after enactment, DOT must promulgate regulations for conducting tests to confirm the material strength of pipe operating above 30 percent of specified minimum yield strength in high consequence areas.
Automatic and remote-controlled shut-off valves: DOT may, if deemed appropriate, promulgate regulations requiring the use of automatic or remote-controlled shut-off valves where economically, technically, and operationally feasible on transmission pipelines constructed or entirely replaced after the promulgation of such regulations. In determining whether to proceed with a rulemaking, DOT shall consider various factors, including the costs and benefits expected to result from such a standard. Existing, unchanged pipelines are not affected by this requirement.
Leak detection: within a year of enactment, DOT must submit a report to Congress analyzing the technical limitations of current leak detection systems, including their ability to detect “ruptures and small leaks that are on-going or intermittent,” and the feasibility of establishing standards for these systems, which must consider the “safety benefits and adverse consequences” of requiring their use. If appropriate, DOT may, but is not required to, promulgate regulations that 1) require operators to utilize such leak detection systems; and 2) establish standards for such systems.
Accident and incident notification: not later than 18 months after enactment, DOT must promulgate regulations establishing time limits for accident and incident notification to require notification “not later than 1 hour” after discovery of the accident or incident. The regulations will also require a review of the notification procedures utilized by the pipeline owners and operators, and will require revision of post-incident reports to include estimates of release volumes, fatalities, and injuries.
Carbon dioxide pipelines: the bill requires DOT to prescribe minimum safety standards for transporting gaseous-state carbon dioxide by pipeline.
Other provisions of the Act call for studies by DOT that may ultimately expand the statutory requirements or otherwise make existing regulations more stringent. These provisions generally preclude any promulgation of regulations by DOT until Congress has considered the results of the studies, except where circumstances so warrant (e.g., risk to human health, the environment, or imminent danger). The provisions that may ultimately result in additional rulemaking include:
Mechanized excavation: the bill requires DOT to conduct a third-party damage study that will consider, among other things, whether to eliminate “mechanized excavation”2 exemptions going forward.
Integrity management/high consequence areas: not later than 18 months after enactment, DOT must evaluate whether integrity management program (IMP) requirements should be extended beyond high consequence areas3 (HCAs), and whether extending IMP requirements beyond HCAs would obviate the need for class location requirements for gas transmission pipelines. As part of the evaluation, DOT must consider whether to extend repair requirements beyond HCAs as well. DOT must submit a report to Congress discussing the findings of this evaluation not later than two years after enactment.
Cast iron gas pipelines: beginning in 2012, and biennially thereafter, DOT must conduct surveys to measure the progress pipeline owners and operators have made in implementing plans for the safe management and replacement of cast iron gas pipelines. By December 2013, DOT must report to Congress on “total mileage of cast iron pipelines” and progress made in safe management of these pipelines.
Gas and hazardous liquid gathering lines: within two years of enactment, DOT must review existing State and Federal regulations for both onshore and offshore gas and hazardous liquid gathering lines, and report to Congress on whether these laws and regulations sufficiently ensure the safety of gas and hazardous liquid lines, and quantify the economical and technical practicability and challenges of applying existing Federal regulations to currently-exempt gathering lines against public safety benefits.
Because several of the provisions require further action on the part of DOT and Congress, some require study, and specific requirements will be developed as part of future regulations. We anticipate that the regulations resulting from this Act will continue the trend of increasing regulatory restrictions on pipeline owners and operators.
For further information, please contact Vinson & Elkins lawyers Casey Hopkins, Larry Nettles, or George Wilkinson. Visit our website to learn more about V&E’s Environmental practice, or e-mail one of the practice contacts.
1 Pub L No 112-90.
2 “Mechanized excavation” generally refers to excavation done with mechanical equipment, as opposed to by hand. Each State may differ on what specific activities are covered by this definition.
3 High consequence areas are defined in 49 C.F.R. Part 192.903. Practically speaking, these areas are determined by the extent of a pipeline's potential impact circle as it relates to certain buildings or structures intended for human occupancy or use.