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Pipeline Safety Update Issue No. 28 – March 14, 2012


Congressional Research Service issues report on pipeline safety and security. PHMSA issues Advisory Bulletins on drug and alcohol testing and plastic pipe. CPUC ALJ proposes decision regarding PG&E show cause order. CPUC proposes to expand scope of rulemaking on pipeline safety and rates. WUTC requests comments on whether to issue penalty policy statement.

Congressional Research Service Issues Report on Pipeline Safety and Security
On February 13, the Congressional Research Service (CRS) issued a report entitled “Keeping America’s Pipelines Safe and Secure: Key Issues for Congress.” The report follows a similar CRS report in March 2011, and provides updates on safety and security issues in light of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011.
The CRS report finds that, among the many issues addressed in the 2011 Act, the following are most significant: the number of federal pipeline safety inspectors, automatic shutoff valves, MAOP verification, civil penalties, and review of pipeline safety regulations in relation to the transportation of oil sands crude.
The report also suggests that Congress is faced with an oversight challenge in managing the separate federal programs for pipeline safety and pipeline security, and notes that the pending Transportation Security Administration Authorization Act of 2011 (HR 3011) would require a study of the pipeline security roles of PHMSA and the Transportation Security Administration. The CRS report is here.1
PHMSA Issues Advisory Bulletins on Drug and Alcohol Testing and Plastic Pipe
On February 23, PHMSA issued an advisory bulletin reminding operators of the importance of conducting post-accident drug and alcohol testing of all potentially involved personnel despite any uncertainty about the circumstances of an accident. PHMSA issued the advisory, in part, in response to a recommendation of the National Transportation Safety Board in its final report on the 2010 San Bruno, California pipeline rupture.

March 6, PHMSA issued an advisory bulletin to alert operators using Driscopipe® 8000 High Density Polyethylene Pipe (Drisco8000 pipe) of the potential for pipe material degradation. PHMSA indicates that degradation has been identified on pipe between one-half inch to two inches in diameter that was installed between 1978 and 1999 in desert-like environments in the southwestern United States. PHMSA urges all operators, including those outside of desert-like environments, using Drisco8000 pipe to consider the use of accelerated and more frequent leak surveys in those areas where degraded pipe is known or suspected to exist. The advisory bulletin is here.3
Pipeline Safety Resources Available
Van Ness Feldman’s redline of the Pipeline Safety Laws showing how the newly enacted Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 amends existing statutes is available by contacting Susan Olenchuk at 202-298-1896 or sam@vnf.com or Jim Curry at 202-298-1831 or jbc@vnf.com.
In addition, a chart describing the 2011 Act’s implementation deadlines is here.4 The 2011 Act (H.R. 2845, Public Law 112-90, 125 Stat. 1904) is here.5
PHMSA Activities and Updates
DOT Significant Rulemaking Report. DOT’s March report on significant rulemakings reflects the following actual or estimated dates for future PHMSA rulemaking actions. DOT’s report is here.6
Next Action
DOT’s Actual or Estimated Date of Next Action
Excavation Damage Prevention
Publication of Notice of Proposed Rulemaking
March 14, 2012
Safety of On-Shore Liquid Hazardous Pipelines
Publication of Notice of Proposed Rulemaking
July 10, 2012
Excess Flow Valves
ANPRM Extended Comment Period Ends
March 19, 2012
Safety of Gas Transmission Pipelines
Publication of Notice of Proposed Rulemaking
To be announced
Enforcement Cases. PHMSA has posted new enforcement case documents issued in January and February. Case documents are here.7
Select Activities from the States
California Public Utilities Commission (CPUC) ALJ Issues Proposed Decision Regarding PG&E Show Cause Order. On February 22, a CPUC Administrative Law Judge issued a proposed decision that would resolve a 2011 Show Cause Order issued to Pacific Gas and Electric Company (PG&E) related to records and MAOP verification. At a hearing on the show cause order last year, PG&E and the CPUC’s Consumer Protection and Safety Division (CPSD) presented the Commission with a stipulation that provided for a detailed compliance plan for PG&E, as well a fine of $3 million, plus an additional $3 million payment for any failure to conform with the plan. PG&E and CPSD filed a joint status report on February
3 stating that PG&E complied with the MAOP validation on the schedule set forth in the compliance plan. Moreover, PG&E and CPSD agreed to the $3 million penalty provided in the stipulation. The proposed decision will be considered at the CPUC’s March 22 meeting and is here.8
CPUC Proposes to Expand the Scope of Its Rulemaking on Pipeline Safety and Rates. The CPUC released a draft order, which, if approved, would expand the scope of its ongoing rulemaking proceeding on pipeline safety and rates to include measures specified in the recently-enacted California Senate Bill 705. The law requires gas corporations to develop plans for the safe and reliable operation of their pipeline facilities, and for the CPUC to accept, modify, or reject those plans by the end of 2012. In accordance with the new law, the CPUC added as respondents to the rulemaking proceeding all gas corporations in California, requiring them to file their safety plans with the Commission by June 29, 2012. Additionally, the proposed amendment would require management and financial audits of PG&E, San Diego Gas & Electric Company, and Southern California Gas Company, the major gas corporations in California. The management audits would seek to ensure that operators have established a “culture of safety,” while the financial audits would compare the authorized gas safety expenditures and capital investments with actual recorded amounts, noting the rationales for any differences. The CPUC plans to conduct similar audits of the remaining gas corporations in the future. The draft decision will be considered at the CPUC’s March 22 meeting and can be found here.9
AB1456 and AB578 (Hill-D). AB578 passed out of the Committee on Appropriations on January 19 and was passed by the Assembly on January 30 by a vote of 57-19. AB578 would require the CPUC and pipeline operators to implement "in a timely manner" any gas safety recommendations made by the NTSB. AB1456, introduced on January 9, would require the CPUC to consider a gas utility’s safety performance when determining the utility’s rates. No action since last Update.
H. 3051, H. 3052 and H. 3053 (Ehrlich-D). H. 3051 would establish natural gas leak classification standards and repair requirements. H. 3052 would require heightened patrolling of cast iron pipelines during certain cold weather conditions associated with increased leaks. H. 3053 would require the Department of Public Utilities to post to its website certain data and information related to pipeline safety oversight and enforcement. The bills were referred to the Joint Committee on Telecommunications, Utilities and Energy where a hearing was held on June 8. No action since last Update.
The Washington Utilities and Transportation Commission (WUTC) issued a notice requesting comments on whether to issue a policy statement on when and how it would use penalties as part of its compliance oversight activities. The policy statement would apply to all regulatory programs administered by the WUTC, including pipeline safety. The Commission is soliciting comments regarding the appropriateness of a penalty policy and how such a policy should address the role of penalties, different penalty case processes, penalty amounts, and mitigation or suspension of penalties. Comments are due on March 27. The WUTC notice is here.10
West Virginia

SB412 (Kirkendoll-D). SB 412 would increase the civil penalties that the Public Service Commission can impose for pipeline safety violations. Maximum penalties would be increased from $1,000 to $100,000 per violation per day, and from $200,000 to $1 million for a related series of violations. The bill was introduced on January 25 and was amended and reported by the Committee on Energy, Industry, and Mining on February 14. The new version of the bill would increase the maximum penalty to $200,000 per violation per day and $2 million for a related series of violations. The amended bill also creates a fund in the State Treasury known as the “Pipeline Rehabilitation Fund” to be used in the repair and/or replacement of pipeline, but the Senate Judiciary Committee deleted that provision before reporting the legislation to the Senate on February 24. The Senate passed the bill on February 28 by a vote of 34-0. SB 412 has been referred to the House Committee on Government Organization and the Committee on Judiciary. The regular legislative session concluded on Saturday, March 10, but the Governor can convene a special session to complete unfinished tasks for the year.

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