Regulation of Pipelines
Pipeline Safety Trust Conference
Denise Hamsher
November 2006
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
UNREGULATED
 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
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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.
Pipeline and Hazardous Materials
Safety Administration—Onshore
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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
Gathering Pipelines:
How FERC and PHMSA regulate
FERC’s “primary function test”
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Natural Gas Act exempts gathering but does not define it
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Numerous factors considered:
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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
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Defined in extensive case history
Short distance typically exempted, otherwise case specific
Also subject to state regulation and oversight
Gathering Pipelines:
How 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 ≤ 8⅝ 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?
Natural gas
transmission
or main line
Local
distribution
company
lines
Underground storage
Underground
& steel storage
Gas
plant
Industrial users
LPG
distribution
Oil and gas
gathering
lines
Gathering
stations
Crude oil
trunk or
main line
Oil products
line
Products
terminals
Refining center
Courtesy of Meisner and Leffer
Commerce:
FERC 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)
Safety:
Federal Pipeline Safety
Gathering:
Was municipal boundaries
(now HCAs)
Production
facilities exempt
from federal
pipeline safety
legislation; where
production ends is
the issue
States can and do
expand
regulation of
intrastate
pipeline and local
distribution
Environmental Regulation
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Building new pipelines
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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
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U.S. State Department if crossing international border
Operations
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Various facility emission permits
Spills: reporting and remediation
Disposal of hazardous waste such as solvents used to clean
Incident Reporting:
Federal and State Requirements
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Federal
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State
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Notification to National Response Center of major incidents
 “Notification” and alert system: not reporting system
Reporting to PHMSA
In addition to federal requirements
Varies depending on state
Requires reporting of incidents and environmental spills
Local
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All first responders
Alert to local and regional supply interruptions
Worker Safety and Training
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Occupational Health and Safety
Administration
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Worker and contractor safety
Construction and work practices
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E.g. trenching, exposure to hazardous vapors, working in
confined spaces, etc.
Worker and emergency responder training for
hazardous material and petroleum spills
PHMSA
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Operator qualification rules
Security
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Department of Homeland Security oversight
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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
Whether commercial, pipeline,
worker safety or environmental
regulation, there is extensive
federal and state oversight
Thank you