February 2015, Vol. 70, No. 2
Washington Watch
Industry Unhappy With Proposed Pipeline Mapping Data Requirements
The interstate pipeline industry is pushing back hard against a proposal to require companies to submit much broader, more detailed pipeline location information.
Terry Boss, senior vice president at the Interstate Natural Gas Association of America (INGAA), calls the expanded data collection proposal from the PHMSA a violation of the federal paperwork act and of other requirements related to burdensome regulations.
Eric Amundsen, vice president of technical services at Energy Transfer, is a little less veiled. He says, “Many of the justifications or need rationales stated in the Information Collection Request are unsupported and non-obvious and are vague to the point of operators not being able to respond specifically.” He adds, “PHMSA should provide significantly more detail and explanation regarding these justification points before asking operators to spend tens of millions of dollars each to fulfill a wish list.” He estimates the cost to gas pipelines for complying with the Information Collection Request (ICR) as proposed would be $800 million plus whatever survey and additional attributable location costs will be incurred by the hazardous liquid pipeline operators. If that cost is approximately proportional to the estimated costs for natural gas transmission operators, that’s at least an additional $300 million, bringing the minimum total for most of the affected operators to perhaps over $1 billion.
The ICR published by the Pipeline and Hazardous Materials Safety Administration (PHMSA) last July would require pipelines to submit 31 new data elements as part of their annual submissions to the agency. The extra information ostensibly, according to the agency, would improve emergency response, better allow the agency to target its inspections and design future regulatory programs, among other benefits. An ICR is generally a non-controversial request a federal regulatory agency makes to the White House Office of Management and Budget (OMB) asking permission to collect data from the regulated community. Rarely does an industry react as vociferously as has been the case with this PHMSA request. An ICR allows a onetime collection of data, as opposed to a change to federal regulations, where the collection would be allowed permanently. However, a federal rule requires a formal comment period, which is not occurring in this case, another cause of irritation for the industry.
The original standards for the National Pipeline Mapping System (NPMS) program data collection were drafted in 1998 by a joint government/industry committee comprised of members from PHMSA’s predecessor agency the Research and Special Programs Administration, the American Petroleum Institute, the American Gas Association and INGAA. With the passage of the Pipeline Safety Improvement Act of 2002, gas transmission and hazardous liquid pipeline operators were required to submit their geospatial data, attributes, metadata, public contact information and a transmittal letter to the NPMS program. In the ICR, the PHMSA stated “while the standards reflected the state of geospatial data and positional accuracy at that time, they do not reflect the current state of geospatial data and positional accuracy.”
Not everyone agrees that geospatial information system accuracy is better today. Amundsen states, “PHMSA’s claim that ‘the current state of geospatial data and positional accuracy is improved’ is unfounded, misleading and inaccurate.”
What looks to be the most objectionable aspect of the ICR applies to pipeline segments located within Class 3, Class 4, High Consequence Areas (HCA), or “could-affect” HCAs. In those cases, operators would have to submit data to NPMS with a positional accuracy of five feet. The PHMSA further proposes that for all pipeline segments located within Class 1 or Class 2 locations, operators submit data to the NPMS with a positional accuracy of 50 feet. There is a 500-foot accuracy requirement today. Pipelines say they can work to a +/- 50-foot goal over time, but a +/- five-foot accuracy goal is both unnecessary and unobtainable.
Although the PHMSA seems to lean most heavily on the “emergency response need” as its prime rational, INGAA and individual companies argue fire departments come directly to the transmission and intrastate companies for exact pipeline location data. They do not consult the NPMS. An INGAA survey done by Paradigm Alliance Inc. queried 985 emergency response departments around the country. Only 7.4 percent listed the NPMS as their preferred method of obtaining pipeline facility information. Only 1.9 percent said they used the NPMS frequently. Sixty-nine percent said they receive paper maps from their local pipeline.
Those concerns and others aside, the INGAA has made a counter proposal which includes submission of some of the new information the PHMSA would like to have, such as the pipe material, the nominal pipe diameter, pipe coating, whether a low-stress pipeline is using the 30 percent SMYS threshold and some other items. In addition, transmission companies would commit to estimating location of segments in one of three categories, i.e. 50-foot or less, 50-100 feet, over 100 feet and actually measure 70 percent of the INGAA mileage to the 50-foot accuracy standard by 2023.
Even Carl Weimer, executive director, Pipeline Safety Trust, admits that the five-foot accuracy standard “may be difficult to accomplish due to all the curves and bends in a pipeline.” However he supports a level of accuracy that is near that figure and notes some states are already well below the PHMSA 500-foot accuracy requirement.
FERC Flips Position; Will Allow Surcharges To Fund Modernization
In a departure from past policy, the Federal Energy Regulatory Commission (FERC) is considering allowing interstate pipelines to recoup the costs of complying with federal environmental and safety regulations. The FERC would allow pipelines to insert simplified mechanisms, such as trackers or surcharges, into contracts with shippers. FERC allowed trackers in an isolated case involving Columbia Gas Transmission. FERC issued the final order in January2013. Prior to that, the Commission stated that recovering those costs in a tracking mechanism was contrary to the requirement to design rates based on estimated units of service.
Joan Dreskin, the general counsel for the INGAA, called the proposal a “very positive” development. She says that once it becomes final, it won’t open a floodgate of requests for a number of reasons, for example, because some pipelines face more competitive marketplaces than others. Also, the timing of new environmental and safety requirements may not parallel one another, raising a question about the best timing to negotiate a “tracker” into a contract with a shipper. Those contracts, as was the case with Columbia, will require pipelines to make extensive shipper rate concessions and provide consumer protections.
It appears the FERC’s tentative decision to change policy and allow trackers stems in good part from passage of the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011. That law requires transmission companies to undertake new maintenance initiatives. Even prior to passage of that law, the PHMSA had issued a first-step regulatory proposal, never finalized, which could lead to broadened integrity management requirements, including expanded high consequence areas. Moreover, the EPA is considering a regulatory proceeding meant to decrease methane emissions from compressors.
Giving certain and potential new federal requirements, the Commission says it is proposing the Policy Statement “in an effort to ensure that existing Commission ratemaking policies do not unnecessarily inhibit interstate natural gas pipelines’ ability to expedite needed or required upgrades and improvements.”
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