In June 2016, President Obama signed into law new pipeline safety legislation that adds responsibility to the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA). The legislation, titled Protecting our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016, extends PHMSA’s authorization through FY 2019, expands the agency’s oversight responsibilities, and requires new safety rules for underground natural gas storage facilities.
Several factors drove the enactment of this legislation. Scrutiny of pipeline safety has continued since the 2010 San Bruno pipeline explosion and the occurrence of other incidents. A major leak at Southern California Gas’s Alison Canyon storage facility in October 2015 increased industry focus on underground natural gas storage. Also, a number of mandates from the 2011 pipeline safety act have yet to be implemented.
The PIPES Act is a major rulemaking for the natural gas industry. It increases the scope of PHMSA’s oversight, enables the agency to respond more rapidly to pressing safety issues, and sets the stage for additional rulemakings in the future.
However, some industry stakeholders are concerned that the Act is too far-reaching, complex, and costly to implement. Pipeline operators and industry associations say that the Act will result in many new requirements that affect large portions of their systems. Each requirement will have to be evaluated, debated, and implemented—a time-consuming and laborious undertaking. Also, retroactive provisions, such as establishing updated maximum allowable operating pressures for older pipeline sections, could have major implications for distribution and transmission systems. Federal regulators and state commissions counter these arguments by stating that the Act is designed to address known safety threats emerging from incidents such as the San Bruno pipeline explosion.
The Act will likely have significant operational impacts, as inspection, monitoring, and repair requirements are expected to increase. Implementing the new rules will also create financial burdens; however, there is considerable disagreement to what extent. PHMSA estimated an industry-wide cost of about $600 million while a recent study commissioned by the American Petroleum Institute produced an estimate of more than $30 billion.
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