PHMSA Proposes Metrics For State Damage Prevention Laws

May 2012, Vol. 239 No. 5

The Pipeline Hazardous Materials and Safety Administration (PHMSA) took the next step in its, so far, six-year effort to step in when states fail to punish excavators who damage pipelines.

The 2006 PIPES Act gave PHMSA the authority to take civil enforcement action against excavators in states whose damage prevention laws are weak. But first, PHMSA has to define "weak." The proposed rule PHMSA issued April 2 describes some of the "metrics" it might use in making that determination.

If PHMSA decides a state "fails to enforce” Section 2 of the PIPES Act it can take civil enforcement action against excavators who: 1) fail to use a state's one-call notification system, 2) disregard location information or markings established by a pipeline, or fail to report excavation damage promptly.

The metrics PHMSA wants to use in making a "fail to enforce" decision might include determining whether a state is imposing civil penalties at levels sufficient to ensure compliance, whether an adequate damage reporting system is in place, the quality of the state investigations related to excavation accidents and whether the state law mandates use of a one-call system by excavators and requires immediate reporting of damage.

A big issue, from the standpoint of the pipeline industry, is the exemptions from one-call systems often offered on a state-by-state basis. The Pipeline Security, Job Creation, and Regulatory Certainty Act of 2011, passed unanimously by Congress and signed into law by the president in January, said state damage prevention programs should not exempt agencies of state and local governments, public works departments, for example, from calling damage prevention hotlines before excavating, and required a study of the threat to safety caused by other one-call exemptions. The proposed rule issued by PHMSA does not require states, cities and counties to eliminate other one-call exemptions.

Pipelines, Electric Utilities To Duel Over Reliability And Integration; Rate Structure At Issue
Federal Energy Regulatory Commission (FERC) policies on pipeline rates built around "firm" capacity may be up for grabs as the Commission wades into the issue of increasing dependence by electric utilities on natural gas. Electric utilities most often depend on cheaper "interruptible" service which can leave them vulnerable during times of peak needs. Those peak needs become more of a concern as generators move toward decommissioning coal-fired units in the face of Environmental Protection Agency restrictions and build new natural gas units, incentivized by the floods of low-cost natural gas from shale finds washing over the U.S.

Issues of pipeline rates and supply reliability are arising at FERC because of a docket started based on a workshop held last February. Commissioner Philip Moeller is leading the effort to determine what, if anything, the FERC should do to encourage pipeline/utility integration and assure reliability, the latter issue most recently raised by events during the Southwest cold weather event in early 2011. He was joined by Commissioner Cheryl LaFleur who issued a statement seeking comments on, besides interdependence and reliability issues generally, new pipeline and storage service and pricing structures that might better meet the emerging needs of generators.