On January 11, the Pipeline and Hazardous Materials Safety Administration (PHMSA) finalized its June 2020 proposed rulemaking intended to reduce regulatory burdens and offer greater flexibility to gas pipeline operators, previously discussed in our post here. Pipeline operators may voluntarily comply with the rule starting on the effective date of March 12, 2021, but mandatory compliance is not required until October 1, 2021. Although the rule implements moderate changes to the pipeline safety regulations, given the timing of the final rule’s release, it is at least possible that the new administration could withdraw the rule.

Below is a summary of the most noteworthy changes that will result from the final rule, including a significant increase to the incident reporting property damage threshold, allowances for remote monitoring of rectifier changes, and various changes applicable to distribution pipeline operators.

Incident Reporting Threshold

PHMSA raised the property damage threshold associated with a reportable “incident” in 49 C.F.R. § 191.3 from the existing $50,000 threshold first set in the 1980s to $122,000. This amount is subject to further adjustments for inflation to be calculated according to a newly established formula. Starting in 2022, PHMSA will publish annual updates to this property damage threshold on its website. As a result of this rule change, pipeline operators would no longer have to report smaller incidents that cause property damage below $122,000.

Remote Monitoring of Rectifier Stations

With minor changes, PHMSA finalized its proposal allowing regulated gas pipelines to inspect rectifier stations remotely. Operators who chose to remotely monitor their rectifiers under 49 C.F.R. § 192.465(b), as opposed to more traditional, direct on-site monitoring, would have to physically inspect the rectifiers at least annually, but with intervals not exceeding 15 months. This frequency requirement applies after January 1, 2022 and is a change from the proposed rule, which PHMSA adopted in response to public comments. The proposal originally required physical inspection when a cathodic protection survey is performed under § 192.456(a).

Relief for Distribution Pipelines

PHMSA finalized the proposed rule to allow farm tap operators to conduct pressure regulator inspections under either their distribution integrity management plan (DIMP) or the existing 49 C.F.R. § 192.740 rule. That provision requires inspections and testing at least once every three calendar years. PHMSA explained that this new requirement would provide greater flexibility to farm tap operators, while still protecting the public and the environment.

Significantly, the preamble to the final rule includes extensive discussion regarding when a farm tap starts and ends and the related boundaries of PHMSA jurisdiction, a topic that has historically been the subject of varying interpretations. The issue was raised by public comments on the proposal. In response, PHMSA noted that the rule was not intended to define the jurisdictional boundaries of farm taps and that it would address the issue in its guidance and/or other rulemaking. In the final rule, PHMSA nevertheless (1) made certain changes to avoid ambiguity identified in the proposed language on this issue and (2) withdrew its March 29, 2019 rule “Exercise of Enforcement Discretion Regarding Farm Taps” effective on March 12, 2021.

PHMSA also finalized changes that would relieve distribution operators from the requirement to submit mechanical fittings failure (MFF) reports through DOT Form PHMSA F-7100.1-2. PHMSA will instead require operators to provide this information by submitting other forms. These other forms include (1) the Gas Distribution Annual Report, to which PHMSA added a count of MFFs and (2) the Gas Distribution Incident Report, which PHMSA revised to include information from the MFF report for incidents involving a failure of a mechanical joint.

Lastly, PHMSA finalized an extended interval for gas distribution service lines to perform atmospheric corrosion reassessment. Under the new rule, operators must conduct inspections once every five calendar years instead of once every three years. The five-year inspection interval is available to operators with records of the two most recent three-year atmospheric corrosion inspections. The final rule provides, however, that if an operator identifies atmospheric corrosion during an inspection, the requirement reverts back to once every three years, until no corrosion is identified.

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Photo of Catherine D. Little Catherine D. Little

Catherine Little has been advising oil and gas pipelines, terminals and LNG facilities on energy and environmental administrative law for over 25 years at all levels of federal, state and local government, with particular emphasis on regulatory compliance, litigation and enforcement defense and…

Catherine Little has been advising oil and gas pipelines, terminals and LNG facilities on energy and environmental administrative law for over 25 years at all levels of federal, state and local government, with particular emphasis on regulatory compliance, litigation and enforcement defense and administrative adjudication under the Pipeline Safety Act, Natural Gas Act, Clean Water Act (including wetlands), Oil Pollution Act and National Environmental Policy Act. Her team has sought appellate review for enforcement matters with favorable results and works closely with industry and regulators alike to obtain favorable results for their clients. Catherine also regularly counsels clients with respect to pipeline construction and design issues, permitting, confidential investigations, spill and release reporting and response.

Photo of Annie M. Cook Annie M. Cook

Annie Cook’s practice focuses on administrative, environmental, and oil and gas transportation laws. Annie counsels clients on regulatory issues, compliance and litigation strategy, construction and siting, and permitting and enforcement defense relating to the Pipeline Safety Act, the Natural Gas Act, the Clean…

Annie Cook’s practice focuses on administrative, environmental, and oil and gas transportation laws. Annie counsels clients on regulatory issues, compliance and litigation strategy, construction and siting, and permitting and enforcement defense relating to the Pipeline Safety Act, the Natural Gas Act, the Clean Water Act, the Oil Pollution Act, National Environment Policy Act, TCSA, and related state and local laws.  Her team also represents clients regarding related transportation security issues and in responding to inquiries and investigations from the Department of Transportation’s Office of Inspector General. Annie’s clients include owners and operators of oil and natural gas pipeline and related storage, terminal, and LNG facilities as well as other energy industry stakeholders.

Photo of Viktoriia De Las Casas Viktoriia De Las Casas

Viktoriia assists clients in complying with environmental laws and regulations, including permitting and strategizing on implementation of environmental requirements. She also represents them in litigation matters and advises on various aspects of environmental due diligence. Her practice encompasses all of the major environmental…

Viktoriia assists clients in complying with environmental laws and regulations, including permitting and strategizing on implementation of environmental requirements. She also represents them in litigation matters and advises on various aspects of environmental due diligence. Her practice encompasses all of the major environmental statutes, including the Clean Water Act, Endangered Species Act, Federal Insecticide, Fungicide, and Rodenticide Act, Clean Air Act, Comprehensive Environmental Response, Compensation, and Liability Act, and corresponding regulations.