January 3, 2012
Practice Group(s):
Energy, Infrastructure
and Resources
Pennsylvania’s New Gas and Hazardous
Liquids Pipeline Act
By Daniel P. Delaney, George A. Bibikos, Bryan D. Rohm
Oil & Gas
Introduction
Reacting to the influx of new gathering pipeline, midstream and other facilities in Pennsylvania, the
General Assembly passed and the Governor signed House Bill 344, creating the “Gas and Hazardous
Liquids Pipelines Act” (the “Act”). The Act subjects pipeline operators who transport “gas” or
“hazardous liquids” to existing federal safety regulations and imposes additional administrative
measures, such as registration and reporting requirements and the imposition of annual “assessments”
on pipeline operators subject to the new legislation. In addition, the Act expands the jurisdiction of the
Pennsylvania Public Utility Commission (“PUC”) to enforce pipeline safety regulations in
Pennsylvania.
What does the Act do?
The PUC historically exercised its authority to enforce federal pipeline safety standards only on
statutorily-defined “public utilities” that operate pipeline facilities in Pennsylvania. However, the
agency otherwise lacked the authority to enforce those standards on unregulated pipeline entities.
Now, the Act authorizes the PUC to enforce federal pipeline safety regulations on all “pipeline
operators,” broadly defined to include any person that “owns or operates equipment or facilities in this
Commonwealth for the transportation of gas or hazardous liquids by pipeline or pipeline facility
regulated under federal pipeline safety laws.” 1 The term “pipeline” is expansively defined to include
not only the pipeline itself, but also compressor stations, metering stations and appurtenant facilities.
The terms “gas” and “hazardous liquids” include not only natural gas, but also such materials as
liquefied natural gas, landfill gas, petroleum, natural gas liquids, ethane and other materials classified
as “hazardous” under the federal pipeline safety laws. As a result, most operators of pipelines and
related facilities in Pennsylvania will be subject to the PUC’s safety regulation.
What are some of the key provisions of the Act?
The Act is fairly straightforward. The key provisions include:
 Federal standards. The Act incorporates federal pipeline safety standards and authorizes the PUC
to enforce those standards on pipeline operators.
 Investigation authority. The Act gives the PUC authority to investigate and enforce federal
pipeline safety standards. The PUC has announced plans to expand the pipeline safety team within
the agency.
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Section 101 of HB 344, which creates the Act, defines the Federal Pipeline Safety Laws as “[t]he provisions of 49 U.S.C.
Ch. 601 . . . the Hazardous Liquid Pipeline Safety Act of 1979 . . . the Pipeline Safety Improvement Act of 2002 . . . and
the regulations promulgated under the acts.”
Pennsylvania’s New Gas and Hazardous Liquids Pipeline
Act
 Registration requirements. Pipeline operators subject to the Act must register with the PUC. 2
The Act does not indicate when registrations are due or what information is required to be
submitted with each registration. However, the Act does give the PUC authority to develop an
application for registration and charge registration fees.
 Steel products. The initial registration (and each annual renewal) requires that the operator
disclose the country of manufacture for all “tubular steel products” used in the exploration,
gathering or transportation of natural gas or hazardous liquids within the Commonwealth. 3 The
Act does not provide an exemption to disclosure requirements for tubular steel products that were
installed prior to the effective date of the Act. However, the Act does give the PUC authority to
develop a disclosure form for this portion of the registration. In developing the forms, the PUC
could presumably accommodate existing pipelines for which the pipes’ country of manufacture is
unknown.
 Annual reports. On or before March 31 of each year, pipeline operators subject to the Act must
file annual reports disclosing the pipeline operator’s total miles of regulated pipeline in the
Commonwealth during the prior calendar year. 4
 Assessments. The PUC is an independent agency that is generally self-funded. Pursuant to
Section 510 of the Pennsylvania Public Utility Code, the PUC makes annual assessments on all
entities subject to its jurisdiction and recovers from those entities their proportionate share of the
costs of regulation. The Act incorporates the assessment process of Section 510 and authorizes the
PUC to determine by regulation or order annual assessments against pipeline operators to recover
the cost of regulation based on the number of miles of regulated pipeline. 5
 Civil penalties. The Act authorizes the PUC to assess and recover civil penalties of the greater of:
(i) $10,000 per violation for each day the violation persists; or (ii) a penalty provided for under the
federal pipeline safety laws. 6
 No ratemaking authority; no effect on definition of “public utility.” The Act does not give the
PUC any additional jurisdiction for purposes of establishing rates or any matters other than the
safety and additional requirements created by the Act. The Act does not give the PUC additional
authority to determine the status of or regulate a pipeline operator as a public utility as defined in
the Public Utility Code.
What should operators do?
The Act takes effect 60 days from the date of the Governor’s signature and imposes requirements that
require initial planning and preparation. For example:
 Safety standards. Although pipeline facilities that will be subject to the new legislation already
meet or exceed federal safety standards, pipeline operators should assure that proposed facilities
meet or exceed those standards to avoid administrative liability under the Act.
 Work with the PUC on regulations and forms. Gathering system and other pipeline facility
operators, as well as others in the industry, will want to engage actively with the PUC in the
2
Section 301(C)(1) of HB 344.
Section 301(D) of HB 344.
4
Section 503(D) of HB 344.
5
Section 503(B)(1) of HB 344.
6
Section 502(A) of HB 344.
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Pennsylvania’s New Gas and Hazardous Liquids Pipeline
Act
development of regulations and forms to implement the Act. Issues such as how to address steel
product origin requirements, the format and content of reports, and other matters need to be
fleshed-out with active input from industry stakeholders.
 Gather information to comply with administrative measures. Pipeline operators should be sure
they have identified all the information required by the Act for registration and reporting and be
prepared to submit that information in the manner prescribed by the PUC for the purposes
described in the Act, bearing in mind that the Act creates a March 31 deadline for annual reporting.
 Prepare for assessments. As noted, the Act incorporates the assessment procedures contained in
Section 510 of the Public Utility Code. Pipeline operators must object to individual assessments
issued by the PUC within 15 days of receiving the assessment. Within 30 days of receiving the
assessment, the pipeline operator must submit payment. In the recent past, the PUC’s assessments
frequently have been the subject of litigation before the agency and the Pennsylvania appellate
courts. The issue in controversy has frequently involved the over-allocation of the agency’s total
overhead costs on particular utility classes. Similar issues may arise in the agency’s calculation of
the pipeline assessments. Pipeline operators should examine the assessment notice carefully and
be prepared to file objections if necessary, with the assistance of experienced counsel, within 15
days of receiving the notice. Payment of the assessment would still be required within 30 days of
receiving the assessment notice, but the submittal of the objection preserves the opportunity to
receive a refund of any overpayment of assessments.
Authors:
Daniel P. Delany
dan.delaney@klgates.com
+1.717.231.4516
George A. Bibikos
george.bibikos@klgates.com
+1.717.231.4577
Bryan D. Rohm
bryan.rohm@klgates.com
+1.412.355.8682
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