November 2011, Vol. 238 No. 11

Government

Integrity Management Expansion Stirs Controversy In Congress

Two House committees are attempting to combine slightly different pipeline safety bills while Sen. Rand Paul (R-KY) is preventing a Senate vote on a bill passed by the Commerce Committee in May. All three bills are moderate, and make changes around the edges of current law, both with regard to natural gas and oil pipelines.

“Congress is not over-reaching or posturing,” says Robert Hogfoss, a partner at Hunton & Williams LLP, a firm with a large natural gas legal practice.

The most controversial issue is a provision in one of the House bills and the Senate bill which would allow the Pipeline and Hazardous Materials Safety Administration (PHMSA) to expand integrity management requirements outside high consequence areas (HCAs) without congressional approval. Paul is holding up consideration of the bill on the Senate side because of this perceived potential expansion of federal regulatory authority.

Rep. Bill Shuster (R-PA), chairman of the House Railroads, Pipelines and Hazardous Materials Subcommittee in the Transportation & Infrastructure Committee, feels the same way. The bill passed by that committee is called the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (H.R. 2845). It requires congressional approval of PHMSA expansion of integrity management requirements to new areas.

The House Energy & Commerce Committee passed the Pipeline Infrastructure and Community Protection Act (H.R. 2937). It allows PHMSA to act without congressional approval after considering factors enumerated in that bill, such as: “the continuing priority to enhance protections for public safety” and “the continuing importance of reducing risk in high consequence areas…”

Martin Edwards, vice president at INGAA, says the group supports expansion of IM programs beyond HCAs and that in fact, the industry, on its own is already doing so.

Because pipeline safety is mostly a Department of Transportation issue, the T&I Committee will have its bill voted on in the House. That may occur before the end of 2011. The House Rules Committee may add some of the E&C language to the bill before the House votes. The big issue will be the differences in language in the two bills on expansion of integrity management. “We have 80 conservative Republicans in the House who want smaller government and want to reduce regulation,” says a House staffer.

Senate Majority Leader Harry Reid (D-NV), wants to bring S. 275 up under what is called the suspension calendar, which requires a bill to be passed by unanimous consent without debate. Paul wants the Senate pipeline safety bill to be the subject of floor debate.

In addition to the expansion of integrity management requirements, the two House bills differ on the issue of maximum allowable operating pressure (MAOP). The E&C bill contains provisions on MAOP which was an issue in the San Bruno, CA accident. The bill requires PHMSA within six months to require pipelines to verify MAOP for pipelines running through HCAs. Any exceedence above the build-up allowed for operation of pressure-limiting or control devices would have to be reported to PHMSA within five working days of the exceedence. There would be other MAOP requirements as well. The T&I bill includes no provisions on MAOP.

Edwards states INGAA is supportive, too, of the MAOP provision “with some tiny modifications.” S. 275 includes MAOP provisions similar to those in the E&C bill.

All three bills contain a provision which for the first time gives PHMSA new authority to conduct “facility design safety reviews” of new gas and hazardous liquid pipelines and charge a fee for doing so. PHMSA typically already reviews natural gas pipelines during the FERC construction approval process. It does not charge the pipeline companies a fee. Unlike natural gas pipelines, oil pipelines can be built without any prior federal approval.

As a matter of course, oil pipeline companies may have preliminary informal discussions with PHMSA before starting to build. The three bills establish thresholds – for new projects either over $1 billion or $3.4 billion, depending on the bill – over which PHMSA can assert authority and charge the pipeline a fee for “looking over the company’s shoulder,” in Hogfross’ words.

Exemption From OSHA Injury Recordkeeping Possible For Pipelines
When does the pipeline industry find out a federal regulatory agency wants to exempt it from injury and illness recordkeeping requirements it has had to comply with for 30 years? Well, that is what the Occupational Safety and Health Administration (OSHA) is saying, believe it or not. Companies which transport both crude oil and natural gas would be among those in sectors which would no longer have to fill out OSHA Forms 300 and 300A. The first is used to note when an employee is injured on the job and why. The second is a compilation of all injuries during the year. Form 300A is posted in the workplace. Oil and natural gas pipeline companies have had to complete those forms since 1982.

But that requirement was based on illness and injury rates in each industry as of 1999. OSHA has now computed more recent statistics, based on the years 2007-09, and changed the way it evaluates each sector. Formerly, OSHA used Standard Industrial Classification (SIC) codes to compare companies to others in similar industries. It is switching to use of North American Industry Classification System (NAICS) codes.

Each four digit NAICS code is compared to a national average of Days Away, Restricted, or Transferred (DART) rates. The national average in 2007-09 was 2.0. Any four-digit NAICS code whose DART is 75% below that, in other words, lower than 1.5, now qualifies as a “low hazard” industry and an exemption from OSHA Forms 300 and 300A. Included in that category are NAICS 4861 (pipeline transportation of natural gas), 4862 (pipeline transportation of natural gas) and 4869 (other pipeline transportation). However, OSHA is considering using other measures instead of the “75% of the recent national DART” as a yardstick for determining low hazard industries. Paul Schulte, director, Division of Education and Information at NIOSH, says OSHA might want to make its DART-only yardstick more sensitive. Schulte says OSHA should consider giving additional weight to injuries or illnesses where an employee is kept away from work for three days or more. Another way to sharpen the OSHA yardstick would be to use a measure in which industries account for a disproportionate share of work loss days instead of work loss cases.

So the pipeline industry is not ensured an exemption, at least not yet.