Rulemaking Process and Cost
Benefit Analysis
John A. Gale
Director
Office of Standards & Rulemaking
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Goals
• Regulatory Process
– Improve your knowledge of the regulatory
process
– Improve your knowledge of how you can be
involved in the process
• Cost Benefit Analysis
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– Better understanding of how “Cost Benefit
Analysis” affects rulemaking development – in
particular rulemakings affecting pipeline safety
Steps 1-5
• Step 1 – Initiating event – THE PROBLEM”
• Steps 2 & 3 – Development of the Notice of
Proposed Rulemaking
– Development of cost benefit analysis (Regulatory
Impact Analysis”
– Small Business Impact
– Information Collection
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• Step 4 – OMB Review – Significant rule
• Step 5 – Publication of NPRM in the
Federal Register
– Public comment period
www.regulations.gov
• Please comment!!!
– Positive or negative comments.
– Additional data
– https://www.federalregister.gov/agencies
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Steps 6-9 (Plus one more)
• Extra Step – Pipeline Advisory
Committees
– GPAC/LPAC
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• Steps 6-7 – summarize comments,
develop final rule, revise proposed
regulatory changes based on comments
and data
• Step 8 OMB Review
• Step 9 Publish in the Federal Register
Rule Process
• Non-Significant rules
• PHMSA - Federal Register
• Significant rules
• PHMSA - OST – OMB – Federal Register
• OMB Determines what rules are Significant
– Most PHMSA Pipeline Safety Rulemakings are
deemed Significant
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Rule Process
• Significant vs Non-Significant Rulemakings
(EO 12866)
• Have an annual effect on the economy of $100 million
or more…
• Create a serious inconsistency or with another agency;
• Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or
• Raise novel legal or policy issues arising out of legal
mandates, the President’s priorities, or the principles
set forth in this Executive order.
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Relational Reference
Significant
Rulemakings
Statute(s)
OMB
Secretary of DOT
Administrator of PHMSA
Office of Pipeline Safety
Rule Process
• Where can I find information on the
Status of rulemakings?
– PHMSA – www.phmsa.dot.gov
– DOT
• DOT Significant Rulemakings (Monthly reports)
– www.dot.gov/regulations/report-on-significantrulemakings
– OMB
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• www.reginfo.gov
DOT Significant Rulemaking report
Milestone
Originally
Scheduled
Date
11/18/2011
To OST
Returned to Mode
Resubmitted to OST
Returned to Mode/2
Resubmitted to OST
Returned to C-1
Returned to S-1
To OMB
12/16/2011
OMB Clearance
03/19/2012
Publication Date
03/30/2012
End of Comment Period 05/30/2012
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New
Projected
Date
05/22/2012
07/16/2012
04/15/2014
09/22/2015
10/02/2015
12/02/2015
Actual
Date
06/13/2012
06/28/2012
09/17/2012
10/04/2013
12/05/2013
02/21/2014
03/07/2014
05/01/2014
09/17/2015
10/13/2015
01/08/2016
Cost Benefit Analysis
• EO 12866, EO 13563 and OMB guidance A4
– Provides Federal agencies guidance and direction
on the development of regulatory analysis
– …agencies should propose or adopt a regulation
only upon a reasoned determination that is its
benefits justify its costs…
– Select those regulatory approaches that maximize
net benefits
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Cost Benefit Analysis
• Cost benefit analysis
– 49 USC 60102(b)(5) – Federal Pipeline Safety
Statute
• “… the Secretary shall propose or issue a standard
under this chapter only upon a reasoned
determination that the benefits of the intended
standard justify its costs.”
• Pipeline Advisory Committees
• Mandate vs Discretion
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• if appropriate; reasonable; practicable; minimize
costs
Cost Benefit Analysis
 Averages over last 20 years for Gas
Transmission incidents:
 Fatalities – 2
 Injuries – 9
 Property damages - $88.6 million
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 Excluding excavation damage/Outside or
natural force damage incidents:
 Fatalities - 1
 Injuries - 6
 Property damages - $52.3 million
Cost and Benefits
• Number of Gas Transmission miles that
would be affected to Hydro-test a mile of
pipeline:
• 45,000 miles
• Estimated cost to implement NPMS
amendments:
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• PHMSA – $85 million over three years
– INGAA - $820m covering 180,000 miles of GT
– API - $10.8m-$21m per operator
THOUGHTS
• Rulemaking development is a process
• Improve our “benefit formula”
• Bring additional economic expertise into
the organization
• Public
involvement/engagement/education
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QUESTIONS
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Current Rulemakings in Process
Hazardous Liquid NPRM
Gas Transmission NPRM
Excess Flow Valve NPRM
Plastic Pipe NPRM
Operator Qualification and Cost Recovery NPRM
Rupture Detection and Automatic shutoff Valve
NPRM
• Standards Update
• Excavation Damage Final Rule
• Miscellaneous Final Rule
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