Regulation of Pipelines

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Regulation of Pipelines

• Pipeline Safety Trust Conference
• Denise Hamsher
• November 2006

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Forget the Term Unregulated

• Environmental Protection Agency
• Federal Energy Regulatory Commission
• Mineral Management Service
• Occupational Safety and Health Administration
• Department of Transportation, Pipeline and
  Hazardous Materials Administration
• State Utility Commissions
• State Pipeline Safety Offices
• State Department of Natural Resources
• State Environmental Agencies
• U.S. Fish and Wildlife
• U.S. Forest Service
• U.S. Army Corps of Engineers
• the list goes on..

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FERC Regulation of Onshore Pipelines

• Natural Gas
• Legislation Natural Gas Act of 1938, Natural Gas
  Policy Act of 1978 and Energy Policy Act of 2005
• FERC oversight clarified in case history
• Import and export
• Rates and terms of service for pipelines in
  interstate commerce
• Construction and abandonment of service
• System of accounts and records
• Code of conduct for affiliates

• Liquid Petroleum
• Legislation Hepburn Act made oil pipelines
  subject to Interstate Commerce Act
• Energy Policy Act of 1992
• oil pipeline rates now indexed, unless rate case,
  negotiated or market-based rates filed
• Rates and terms of service for common carrier oil
  pipelines in interstate commerce

Note offshore pipelines may differ Oil
pipelines include crude oil, refined products,
etc.
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Pipeline and Hazardous Materials Safety
AdministrationOnshore

• Pipeline Safety Act as amended through periodic
  reauthorization of Act
• Regulations issued in 49 CFR Part 190-199
• Scope regulation depends on function
• Incident reporting
• Operator qualification
• Design and abandonment
• Operation, maintenance and testing
• Integrity management programs
• Drug and alcohol prevention program
• Some differences between natural gas and liquid
  petroleum pipeline regulations

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Gathering PipelinesHow FERC and PHMSA regulate

• FERCs primary function test
• Natural Gas Act exempts gathering but does not
  define it
• Defined in extensive case history
• Numerous factors considered
• Length, diameter and operating pressure
• Extension beyond central point in the field
• Geographic configuration
• Location of wells, compressors and processing
• Gas quality
• The entity involved
• Crude oil not exempted under Interstate Commerce
  Act
• Short distance typically exempted, otherwise case
  specific
• Also subject to state regulation and oversight

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Gathering PipelinesHow FERC and PHMSA regulate

• PHSMA
• Gas Gathering (49 CFR Part 192)
• Defined in new regulations, adopts API 80
• Clarifies producer exemption
• Refocuses on populated areas (HCA) versus
  government municipal boundaries
• Liquid Gathering (49 CFR Part 195)
• Existing definitions 8? inches
• Proposed rulemaking re-focuses on HCA rather than
  municipal boundaries
• New rules focus on highest risks (damage and
  corrosion)
• Also subject to state regulation and oversight

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Who Regulates What?
Local distribution company lines
Natural gas transmission or main line
Underground storage
Underground steel storage
Gas plant
Industrial users
LPG distribution
Oil and gas gathering lines
Oil products line
Gathering stations
Products terminals
Crude oil trunk or main line
Refining center
Courtesy of Meisner and Leffer
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CommerceFERC and State Utility Commissions
FERC regulates oil or gas pipelines in interstate
commerce
States regulate intrastate transmission
pipelines, LDC service, rates and some oversight
of gathering (varies)
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SafetyFederal Pipeline Safety
States can and do expand regulation of intrastate
pipeline and local distribution
Gathering Was municipal boundaries (now HCAs)
Production facilities exempt from federal
pipeline safety legislation where production
ends is the issue
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Environmental Regulation

• Building new pipelines
• Host of federal and state environmental
  requirements/permits to protect waterways,
  wetlands, agriculture, threatened and endangered
  species, cultural resources
• Examples U.S. Army Corps of Engineers, State
  Public Utility Commission, State DNR, U.S. Forest
  Service, Tribal Councils
• FERC is lead role in EIS or EA for interstate gas
  pipelines
• Lead role for liquid pipelines or intrastate gas
  vary
• U.S. State Department if crossing international
  border
• Operations
• Various facility emission permits
• Spills reporting and remediation
• Disposal of hazardous waste such as solvents used
  to clean

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Incident ReportingFederal and State Requirements

• Federal
• Notification to National Response Center of major
  incidents
• Notification and alert system not reporting
  system
• Reporting to PHMSA
• State
• In addition to federal requirements
• Varies depending on state
• Requires reporting of incidents and environmental
  spills
• Local
• All first responders
• Alert to local and regional supply interruptions

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Worker Safety and Training

• Occupational Health and Safety Administration
• Worker and contractor safety
• Construction and work practices
• E.g. trenching, exposure to hazardous vapors,
  working in confined spaces, etc.
• Worker and emergency responder training for
  hazardous material and petroleum spills
• PHMSA
• Operator qualification rules

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Security

• Department of Homeland Security oversight
• Regulations for pipelines and storage pending
• Meanwhile, various local, state and federal
  agencies have worked with companies to develop
  and test plans
• DHS consultation with PHMSA

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Whether commercial, pipeline, worker safety or
environmental regulation, there is extensive
federal and state oversight
Thank you