Richard Lonn, Southern Company Gas

2016 AGA State Affairs Fall Committee Meeting October 9-12, 2016

Pipeline Safety Update: Gas Transmission Rule

Safety of Gas Transmission & Gathering Lines Rule

A Significant Rule A Long Time in the Making… with a Limited Time to Review and Comment

Responds to:• NTSB Recommendations• 2011 Pipeline Safety Act

Comprehensive Regulatory Reform: • Assessments for Non-HCA’s• Repair Criteria for HCA and Non-HCA• Requirements for Assessment Methods• Validating & Integrating Pipeline Data• Risk Assessment Requirements• Integration of Integrity Management Results • Corrosion Control Requirements

August 2011

•Advance Notice of Proposed Rulemaking

June 2013

• Integrity Verification Workshop

April 2016

•Notice of Proposed Rulemaking

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• Management of Change• Extreme External Events• Gathering Lines• Grandfather Clause /

Inadequate records - Integrity Verification Process (IVP)

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The Most Impactful Change to the Code Since its Inception…

Transition from performance based regulations to prescriptive.

Diversion of valuable resources from critical pipeline safety initiatives.

Questionable authority for the numerous retroactive requirements.

Requirements that are beyond the intent of the Congressional Mandates and NTSB Recommendations.

Codification of “good” practices that may not be appropriate for all companies, on all pipelines.

Impacts beyond transmission and gathering pipelines.

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Failure to Accurately Estimate Impact

PHMSA has a statutory obligation to estimate the expected costs and benefits of a proposed rule, and provide a reasoned determination that the benefits of the

intended standard justify its costs.

Concerns• Gross underestimate of costs for nearly all proposed requirements.• Failure to estimate costs associated with many aspects of the proposed rule• Estimated benefits are overestimated based on unsupported assumptions

Preliminary Regulatory Impact Assessment

Topic Area Benefits(millions)

Costs(millions)

MAOP Verification

PHMSA $196.9 - $230.5 $17.8

Industry $9.25 - $26.7 $51.5

Total

PHMSA $215.6 - $249.2 $39.8

Industry$20.4 - $37.9 $2,227.7

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Definition of Transmission Line and Distribution Center

PHMSA proposes to modify the definition of Transmission Line by requiring operators to use the MAOP of the pipeline for the % SMYS calculation versus the “operating pressure.”

Concerns• Changes classification of pipelines away from how they actually operate• Changes classification of pipelines to how they “might” some day in the future operate• Significant mileage of existing “distribution” pipelines would be defined as “transmission.”

PHMSA introduces a definition for distribution center without explanation or justification.

Concerns• Proposed definition could create situations where additional low stress pipelines would

be designated as transmission pipelines.

Transmission line means a pipeline, other than a gathering line, that: (1) Transports gas from a gathering line or storage facility to a distribution center, storage

facility, or large volume customer that is not down-stream from a distribution center; (2) operates at a hoop stress has an MAOP of 20 percent or more of SMYS; or (3) transports gas within a storage field.

Distribution center means a location where gas volumes are either metered to have

pressure or volume reductions prior to delivery to customers through a distribution line.

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Moderate Consequence Areas

PHMSA introduced definitions for Moderate consequence area and Occupied site:

“Piggable” MCAs are referenced twice in the proposed rule:1. §192.624 MAOP Verification2. §192.710 Pipeline Integrity Assessments Outside of HCAs

Concerns• Leads to massive expansion of areas requiring assessment• Data source for identifying roads and associated rights-of-way. • Significant administrative challenges with identifying sites.• Thresholds are so low that a conservative approach will capture all buildings/structures.

Moderate consequence area means an onshore area that is within a PIR containing • (1) 5 or more buildings intended for human occupancy, • (2) an occupied site,• (3) or a right-of-way for a designated interstate, freeway, expressway, and other

principal 4-lane arterial roadway.

Occupied site means each of the following areas: (1) An outside area or open structure that is occupied by 5 or more persons on at least

50 days in any 12-month period. (2) A building that is occupied by 5 or more persons on at least 5 days a week for 10

weeks in any 12-month period.

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Expansion of Pipeline Assessments Outside HCAs

PHMSA proposed to require “integrity assessments” on non-HCA pipelines that are in:Class 3, Class 4, and piggable MCA locations.

For indications found during assessments, PHMSA proposed to require repair criteria similar to what is required on HCAs.

Timeline for Compliance:Effective Date + 1 Year: Assessment Plan

Effective Date + 15 Years: 50% of Applicable PipelinesEffective Date + 20 Years: 100% of Applicable Pipelines

1. ILI2. Subpart J Pressure Test3. Spike Hydrotest4. Excavation and in-situ

Direct Examination

5. Guided Wave Ultrasonic Testing

6. Direct Assessment7. Other Technologyas approved by the administrator

Assessment Methods:

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Repair Criteria

1. Introduces prescriptive repair criteria outside of HCAs.

2. Introduces new “Immediate” and “Schedule” Conditions in HCAs.

3. Requires RTVC records for Remaining Strength Calculations.

Concerns- Disagree with PHMSA’s assessment that prescriptive repair criteria allows operators to

allocate resources to higher priority areas. - Allow for clear differentiation between defects found on HCA pipelines and those found

on non-HCA.- Immediate v. High Priority

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Record Requirements

PHMSA introduced new “general requirements”:

Concerns:- PHMSA does not have the authority to retroactively prescribe regulations.- PHMSA has applied “reliable, traceable, verifiable and complete” (RTVC) to ALL records

and to ALL pipelines (gas transmission, distribution, & gathering).

§192.13(e)

(e) Each operator must make and retain records that demonstrate compliance with this part.

(1) Operators of transmission pipelines must keep records for the retention period specified

in Appendix A.

(2) Records must be reliable, traceable, verifiable, and complete.

(3) For pipeline material manufactured before [insert effective date of the rule] and for which

records are not available, each operator must re-establish pipeline material

documentation in accordance with the requirements of §192.607.

§ 192.619(f) Operators must maintain all records necessary to establish and document the MAOP

of each pipeline as long as the pipe or pipeline remains in service, Records that establish the

pipeline MAOP include, but are not limited to, design, construction, operation, maintenance,

inspection, testing, material strength, pipe wall thickness, seam type, and other related data.

Records must be reliable, traceable, verifiable and complete.

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Definition of “Traceable, Verifiable, & Complete”

PHMSA utilizes the terms “reliable, traceable, verifiable, and complete” 11 times in the NPRM when referring to records.

Concerns:- Retroactive Applicability- The term “reliable” does not add substance.- The PHMSA Advisory Bulletin previously released.

AGA’s Proposed Definition (Attempt at regulatory certainty)

Traceable, verifiable, and complete means that a single quality record, or a combination of records, related to the maximum allowable operating pressure of a gas transmission pipeline:

(1) can be clearly linked to information about a pipeline segment or facility and is finalized as evidenced by a signature, date, or other appropriate marking, or

(2) has other similar characteristics that support its validity.A single quality record can be traceable, verifiable, and complete. However, in some situations, complementary, but separate, documentation may be necessary. In determining whether a record is traceable, verifiable, and complete, due consideration shall be given to the standards and practices in effect at the time the record was created.

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Material VerificationApplicability: Transmission Pipelines installed prior to the effective date of the rule, that:

1. Do not have reliable, traceable, verifiable and complete (RTVC) material records for all pipe & components, and

2. Are in HCAs or Class 3 or 4 location

Requirements:1. Develop a “Material Documentation Plan”: That implements all actions required

in this section by 180 days after the effective date of the rule.

2. Address missing material records: Develop and implement procedures for conducting PHMSA prescribed non-destructive or destructive tests, examinations, and assessments for line pipe at:a. Above ground locationsb. Excavations associated with replacements or relocations of pipe segments

that are removed from service.c. At all excavations associated with anomaly examinations, evaluations, repairs,

remediations, maintenance or any other time the pipe segment is exposed… Concerns

- PHMSA is retroactively requiring material records for pipelines installed prior to Federal pipeline safety regulations.

- The regulations should be written in such a way that allow for the advancement of tools & technologies.

- The act of obtaining material property information through destructive and non-destructive tests is ultimately a misuse of resources, and will not result in any meaningful impact to pipeline safety.

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MAOP Verification

Concerns- The applicability of PHMSA’s MAOP verification is above and beyond Congressional Mandates.- The final rule needs to clearly reflect that applying a method under §192.624 resolves any

compliance gaps with §192.619- PHMSA should prescribe straightforward and technically justifiable actions under each of the MAOP

verification methods- PHMSA needs to provide clarification on record retention requirements.- PHMSA should provide reasonable deadlines for completing MAOP verification.

Applicability:Pipelines in HCAs , Class 3 or 4 Locations & MCAs1. Pipeline segment has

experienced a reportable incident since its last subpart J pressure test that was due to an original M&C related defect, etc.

2. Pressure tests to meet Subpart J are not RTVC

- Not applicable to MCAs

3. MAOP is established using §192.619(c), the grandfather clause.

Completion Dates:For pipelines installed prior to the effective date of the rule, all actions must meet the following timeline:1. Create a plan in 1 year2. 50% of mileage in 8 years3. 100% of mileage in 15

years.4. If there are constraints that

limit the operator from meeting the deadline, the operator must file a petition for extension of 1 year.

MAOP Determination Methods:1. Pressure Test2. Pressure Reduction3. Engineering Critical

Assessment4. Pipe Replacement5. Pressure Reduction for

Segments with small PIR and diameter

6. Alternative Technology

Path to Final RuleSafety of Gas Transmission & Gathering Lines Rule

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Effective Date of Final RuleFinal Rule Publication + 6 Months = May 2018

Final Rule PublicationNovember 2017

Office of Management and Budget Reviews & Approves Final RuleJuly - October 2017

Office of the Secretary of Transportation Reviews & Approves Final RuleMay - June 2017

PHMSA Makes Necessary ModificationsApril 2017

PHMSA Presents Path Forward to GPAC (3 Meetings)December 2016, January 2017, February/March 2017

PHMSA Reviews NPRM CommentsJuly – December 2016Note this is

AGA’s estimate for the quickest

scenario.

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Next Step… PHMSA Gas Pipeline Advisory Committee

PHMSA intends to hold three Gas Pipeline Advisory Committee meetings.

December 2016January 2017

February 2017

Gas Pipeline Advisory Committee• 15 members

• 5 government (federal or state)• 5 industry• 5 general public

• Evaluates the technical feasibility, reasonableness, cost-effectiveness, and practicability of proposed standards.

December 2016 Meeting• Discussion will be directed at “Low hanging fruit”

• Advocating that committee members receive information prior to the meeting.