Pipeline Safety: Hazardous Liquid Pipeline Operator Annual Reports

AGENCY:

Research and Special Programs Administration (RSPA), DOT.

ACTION:

Final rule.

SUMMARY:

This action requires operators of pipeline systems subject to RSPA's hazardous liquid pipeline safety regulations to prepare and file annual reports containing information about these systems. This data will provide the basis for more efficient and meaningful analyses of the safety status of hazardous liquid pipelines. RSPA's Office of Pipeline Safety (RSPA/OPS) will use the information to compile a national pipeline inventory, identify and determine the scope of safety problems, and target inspections.

DATES:

This final rule is effective on February 5, 2004.

FOR FURTHER INFORMATION CONTACT:

Shauna Turnbull by phone at (202) 366-3731, by e-mail at shauna.turnbull@rspa.dot.gov, or by mail at the U.S. Department of Transportation, Research and Special Programs Administration, Office of Pipeline Safety, Room 2103, 400 7th St., SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Background

The Federal pipeline safety regulations at 49 CFR part 195 apply to more than 160,000 miles of hazardous liquid and carbon dioxide pipelines. RSPA/OPS shares responsibility for inspecting and overseeing the safety of these pipelines with many State pipeline safety offices.

RSPA/OPS uses pipeline accident data to identify safety issues and target risk-based inspections. The data are from accident reports that operators submit on Form F7000-1, Accident Report—Hazardous Liquid Pipelines (§§ 195.50 and 195.54).

In recent years, Congress, the National Transportation Safety Board (NTSB), and DOT's Office of the Inspector General (OIG) have urged RSPA/OPS to improve the quality of its accident data and data analyses. In response, RSPA/OPS reduced the volumetric threshold for accident reporting from 5 barrels to as little as 5 gallons of product released during an accident (67 FR 831; January 8, 2002). However, RSPA/OPS still lacks the information necessary to improve accident analyses.

To obtain this information, RSPA/OPS published a notice of proposed rulemaking (NPRM) that would require operators to submit an annual report of pipeline inventory and other information about their pipeline systems (67 FR 48844; July 26, 2002). This information would provide a foundation for more efficient and meaningful analyses of accident data. For example, to help determine the effect of system improvements and other safety practices, RSPA/OPS would use information from annual reports to calculate leaks by cause on a per mile basis. The information could also be used for trending accident data, assessing risk, prioritizing safety inspections, determining appropriate remedial actions, comparing individual operator performance with industry performance, assessing costs and benefits of safety regulations, monitoring industry performance and regulatory compliance, and allocating RSPA/OPS resources.

RSPA/OPS already collects similar annual report information for gas transmission and gathering systems (RSPA F 7100-2.1, Natural Gas Transmission Pipeline Operator Annual Report; revised August 8, 2001). This information is currently used by RSPA/OPS, State pipeline safety programs, State governors, congressional committees, metropolitan planners, pipeline research engineers, industry safety experts, the media, and the public. Similarly, a hazardous liquid pipeline annual report would provide these stakeholders with information they need to manage the safety of hazardous liquid pipelines.

In response to a petition from the American Petroleum Institute (API) and the Association of Oil Pipelines (AOPL), RSPA/OPS extended the period for public comment on the NPRM until November 22, 2002 (67 FR 59045; September 19, 2002). Based on written comments on the NPRM, RSPA revised the proposed annual report form and sought advice from the statutorily mandated hazardous liquid pipeline advisory committee—the Technical Hazardous Liquid Pipeline Safety Advisory Committee—at its March 25, 2003, meeting (see Docket No. RSPA-01-9832 for meeting minutes). RSPA/OPS then published the revised report form for further public comment (68 FR 28884; May 27, 2003).

Comments

RSPA/OPS received comments on the proposed rule from API, Enbridge Energy Company, Inc. (Enbridge), and Marathon Pipe Line, LLC (Marathon). API, Enbridge, and BP Pipelines North America also commented on the revised annual report form. This section of the preamble summarizes the comments and explains how we considered them in this final rule.

State-by-State reporting. Both Enbridge and API commented on alleged difficulties that could result from the proposal to collect hazardous liquid pipeline information on a State-by-State basis. RSPA/OPS recognizes that the hazardous liquid pipeline industry has not had business reasons for maintaining the requested data by State. And, because pipeline companies now report mileage of the hazardous liquid pipelines to the National Pipeline Mapping System (NPMS), RSPA/OPS already has the data to determine operator mileage by State. RSPA/OPS is examining how future enhancements to the NPMS might enable us to efficiently obtain additional State-by-State information without imposing additional data collection requirements on hazardous liquid pipeline operators.

Enbridge urged RSPA/OPS to collect only mileage information by State and to collect all other data by pipeline system. It noted that volume, capacity, construction, and integrity assessment data is now maintained only for pipeline systems, and that reporting this information by State would require extensive manual sorting of data. Enbridge alleged that such data would be challenging for RSPA/OPS to validate, decipher, and analyze. For example, Enbridge noted that State-by-State data could not be used to trend commodity-specific information or integrity assessment data by line size or decade of construction. Moreover, for pipelines crossing two or more States, the same volumes would appear on the reports for upstream and downstream States, greatly complicating any cumulative volume analysis.

API had similar concerns, alleging that the proposed annual report form would result in poor quality national data and an inability to analyze or understand the national pipeline system. As an example, it noted that if operators were to report only aggregate data for all pipelines operated in a State, RSPA/OPS could not discern differences in corrosion rates based on commodities transported. API also noted that the part 195 integrity management rules require operators to integrate a wide range of risk-related information on particular pipelines. It sees no need to maintain this information by State. API suggested that RSPA/OPS develop a form similar to the one used in the industry's Pipeline Performance Tracking System (PPTS) that would focus on data about each operator's system rather than on data aggregated by State. Separate entries could provide interstate and intrastate mileage in each State. API alleged that this approach would reduce erroneous data and the reporting burden and give RSPA/OPS a good understanding of nationwide performance. In addition, API suggested the approach should satisfy the needs of individual States because each State's leaks per mile—determined from the mileage data and the operators' accident reports—could be compared to the national leak rate.

RSPA response. In this final rule RSPA/OPS has simplified the form by dropping the State-by-State requirement and separating the decade-installed information into a separate category, similar to that requested for gas transmission lines on the Gas Transmission Operator Annual Report form. These changes reduce the complexity of the form and the reporting burden.

As stated above, RSPA/OPS is considering how State-by-State information might be obtained through the NPMS or by other methods. RSPA/OPS believes it is important to have State-by-State information for various purposes, including meeting the informational needs of the State pipeline safety programs and other interested stakeholders, and for a variety of trending purposes, such as examining State population increase and encroachment impacts on pipelines.

Historical integrity assessment. Enbridge alleged that requiring operators to report annually the percentage of pipeline integrity assessments (hydrostatic testing and internal inspection) done in the decade before the reporting year would not yield meaningful data. It explained that as total system mileage changes (through purchases, sales, abandonments, or conversions), the reported percentages would also change, leading to invalid data and conclusions. API observed that the proposed internal inspection information would not be useful as a baseline for comparison with inspections in future years under the integrity management requirements because operators would have to estimate much of the data. Enbridge suggested that we limit assessment information to the number of miles assessed during the reporting year and that we use a different approach, such as an industry survey, to collect historical assessment information. API thought the percentage assessed question could result in a percentage larger than the nationwide pipeline mileage because some systems may be pigged several times in a 10-year period, some with deformation tools only, and others with both metal loss tools and deformation tools. Both Enbridge and API said internal inspection results be reported by type of defect rather than by the technology of the inspection tool.

RSPA response. RSPA/OPS agrees that the collection of historical integrity assessment information should be closely aligned with RSPA/OPS’ Integrity Management Program. In response to comments, RSPA/OPS published a revised form on May 27, 2003, to reflect this approach. RSPA/OPS will obtain historical information through the Integrity Management inspections. The final form adopted herewith requests more detailed information about integrity assessments done during each calendar year.

Gathering lines. Enbridge argued that the annual report requirement should not apply to gathering lines, particularly gathering lines that RSPA/OPS does not regulate. It reasoned that the information collected would be incomplete because the requirement would not apply to all operators of gathering lines, just those who operate pipelines regulated by part 195. API added that because the vast majority of gathering lines not regulated by part 195 are operated by companies that do not operate part 195 regulated pipelines, the proposed annual report would not disclose the nation's total gathering line mileage.

RSPA response. In the final annual report form, RSPA/OPS has eliminated the information on gathering pipeline mileage not subject to part 195, but will require information on gathering lines that are subject to part 195.

Anhydrous ammonia. API commented that anhydrous ammonia pipeline data should not be combined with carbon dioxide pipeline data for the purposes of analysis. It suggested that anhydrous ammonia be included with highly volatile liquids (HVL) because the physical properties are similar.

RSPA response. RSPA/OPS concurs. The final annual report form includes anhydrous ammonia with HVLs.

Pre-1940 pipe. API commented that lumping all pre-1940 pipe into a single category could diminish the understanding of technological differences between 1920s and 1930s pipe. It called the differences major, and was concerned that whole decades of pipe might be unwittingly condemned.

RSPA response. RSPA/OPS concurs. The final annual report form requires reporting by decade of installation beginning with pre-1920s and for each decade thereafter.

Cost of compliance. API disputed RSPA/OPS’ estimate of the cost of compliance with the proposed annual report requirement, calling it grossly underestimated. It said most data is not readily available electronically, is not subdivided or identified in operator records by State, and would require extensive hands-on research and correlation. Further, API said the assumed hourly rate ($40/hour) is unrealistically low, since the identification, coordination and oversight of data collection, interpretation, and management would be conducted by experienced engineering personnel at two to three times this rate.

RSPA response. The final Regulatory Evaluation (included herein) takes this comment into account in estimating industry costs.

Further notice and response time. API urged RSPA/OPS to publish another notice for public comment based on comments to the NPRM before adopting a final annual report form. It also said operators would not be able to respond to the NPRM's proposed data collection in the 60-90 days suggested in the NPRM.

RSPA response. As stated above, following the close of the extended comment period on the NPRM, RSPA posted a revised form in the docket and invited further public comment (68 FR 28884; May 27, 2003). API and Enbridge submitted additional comments on details, organization, and design of the form that helped to clarify entries, correct errors, and provide consistency. The final report form reflects these additional comments. The final annual report form substantially addresses all objections to the proposed form. Recognizing that industry will need some time to gather the requested information, RSPA/OPS is delaying the filing of the initial hazardous liquid pipeline annual report form until June 15, 2005. This initial report would be for calendar year 2004. Recognizing that many operators are prepared for early submission because of industry's need for having an earlier submission for a variety of purposes, including measuring national progress of meeting new integrity management requirements, RSPA/OPS will accept voluntary submissions at an operator's discretion at any time.

User fees. Marathon questioned how the proposed annual report data would relate to the annual user fee assessments.

RSPA response. RSPA/OPS will use information from the new hazardous liquid pipeline annual report to calculate annual user fee assessments. This is similar to the procedure used for calculating the gas transmission pipeline user fees based on information in the gas transmission pipeline annual reports.

Reporting Details

In compliance with the new § 195.49, each operator must submit by March 15 of each year an annual report on Form RSPA F7000.1-1 for each of the following types of pipeline systems operated at the end of the previous year: crude oil, highly volatile liquid (including anhydrous ammonia), petroleum products, and carbon dioxide. System type is determined by the commodity the system transported in largest volume. For example, if a pipeline system transports only crude oil, it would be a crude oil type system. If a pipeline system transports batches of crude oil and petroleum products, it would be either a crude oil or petroleum product type system, depending on which commodity is transported in larger volume.

The annual report form asks whether the report is for crude oil, highly volatile liquid (including anhydrous ammonia), petroleum products, or carbon dioxide type systems and the volumes of these commodities transported by the system. The form also asks for pipeline mileage, cathodically protected versus unprotected, coated versus bare steel, steel pipeline by decade and diameter, electric resistance welded (ERW) pipeline by decade and weld type, miles of regulated gathering lines, and information on breakout tanks and integrity assessment.

The first annual report form is due March 15, 2005, and includes data for calendar year 2004 for systems operated at the end of 2004. Operators can submit the form in hard copy to the RSPA/OPS Information Resources Manager, at the same address for filing hazardous liquid accident reports: Information Resources Manager, Office of Pipeline Safety, Room 2301, 400 7th St., SW., Washington, DC 20590.

Alternatively, reports may be submitted electronically via the RSPA/OPS Online Data Entry System, a Web-based reporting system accessible at http://ops.dot.gov. Electronic submission will be available by the end of 2004. RSPA/OPS is examining how much of the information requested on the annual report form may, in the future, be submitted via the National Pipeline Mapping System.

The final annual report form and instructions for completing the form are published with this Final Rule. Blank forms and instructions may also be obtained at http://ops.dot.gov under the Forms section of Online Library, or from the Information Resources Manager at the address provided above.

Regulatory Analyses and Notices

Executive Order 12866 and DOT Policies and Procedures

RSPA does not consider this rulemaking to be a significant regulatory action under section 3(f) of Executive Order 12866 (58 FR 51735; October 4, 1993). RSPA also does not consider this rulemaking to be significant under DOT's regulatory policies and procedures (44 FR 11034; February 26, 1979). Below is a summary of the regulatory evaluation which can be found in the public docket for this final rule.

Regulatory Evaluation

Two comments were received on the cost/benefit analysis of the proposed rule from a major hazardous liquid operator and a trade association representing hazardous liquid operators. They criticized the cost-benefit analysis for underestimating the costs of the proposed rule. Specifically the trade association stated that the $40 per hour labor cost used is too low. RSPA concurs that we may have underestimated the fully loaded labor cost for hazardous liquid pipeline personnel. Therefore, RSPA is doubling the per hour labor cost for hazardous liquid pipeline personnel to $80 per hour.

RSPA was also criticized for underestimating the time to perform the necessary paperwork. RSPA concurs in part. RSPA believes that the most burdensome of the proposals was the requirement for collection of the data by state. This provision is being removed from the final rule. Additionally, RSPA is removing the provision for the collection of data on integrity management as well. RSPA was also criticized for proposing the collection of data on currently unregulated gathering lines. RSPA agrees with these comments and is removing these requirements in the final rule. Additional changes were made in regards to collection of cathodic protection and pipe diameter information, as discussed in the preamble.

Even with these changes, RSPA's time estimates for preparing hazardous liquid pipeline annual reports need to be adjusted. RSPA is doubling the estimated time for completion of an annual report from that used in the proposed rule. We now estimate each operator will need, on average, 24 hours to complete the annual report in the first year and 12 hours in each subsequent year.

Benefits

The hazardous liquid pipeline system inventory information is needed for: meaningful trending of hazardous liquid pipeline accident safety data; risk assessment; recommendations regarding rehabilitation or replacement of pipeline segments; analysis of costs and benefits; and comparison of individual operator performance against industry performance. This safety information will be used by RSPA/OPS for assessment of pipeline risks, regulatory development, and programmatic resource allocation. RSPA/OPS also uses the information in monitoring industry performance and regulatory compliance, and for planning standard safety inspections of operators. States, local community planners, and emergency responders will benefit from access to information about hazardous liquid pipeline systems. Industry will benefit when RSPA/OPS establishes a baseline measurement for pipeline company safety performance using the collected data.

Costs

The form asks for information that should be readily available to the operator on their own databases. RSPA expects that the time required to complete the form will decrease as operators adjust their computerized systems to track the requested information. RSPA estimates it will take an operator 24 hours to complete the form the first year and half as long (12 hours annually) in subsequent years.

Based on an analysis of operators who pay user fees, there are 208 regulated operators of hazardous liquid pipelines in the U.S.

RSPA previously estimated the hourly cost of the person completing the form at $40. This was based on the U.S. Department of Labor's National Occupational Employment and Wage Earnings data for 1999. According to that data, the hourly wage for a Transportation, Storage, and Distribution Manager (the closest category to a pipeline manager) was $26.03 per hour. The $26.03 figure was multiplied by 1.35 to account for fringe benefits ($26.03 × 1.35 = $35.14). RSPA added an inflation factor of 14% to account for inflation from 1999 to 2002 ($35.14 × 1.14 = $40.05). However, based on comments from industry trade associations, RSPA is revising its estimate to $80 per hour.

RSPA estimates that it will take an operator about 24 hours to complete the form the first year. Based on an average cost of $80 per hour, the cost to industry of completing the form for the first year will be approximately $400,000 (208 forms × 24 hours × $80 per hour = $399,360). Total hours expended by industry to complete the form in the first year will be approximately 5,000 hours (208 forms × 24 hours = 4,992 hours).

After the first year, adjustments to company databases and computer systems will likely reduce the annual industry cost to approximately $200,000 (208 × 12 × $80 = $199,680). After the first year, total hours expended by industry to complete the form will be approximately 2,500 hours (208 forms × 12 hours = 2,496 hours).

Conclusion

RSPA believes that the initial annual cost of $400,000 and ongoing annual cost of $200,000 is a modest burden on the hazardous liquid pipeline industry. The benefits accruing to RSPA and the pipeline industry through the increased utility of the hazardous liquid accident data should easily outweigh this modest cost. The additional information will allow RSPA/OPS and the hazardous liquid pipeline industry to identify safety issues and trends, and allow operators to make changes to procedures and practices that will ultimately reduce pipeline accidents and improve pipeline safety.

Regulatory Flexibility Act

The final rule's first year industry cost of $400,000, divided by the 208 hazardous liquid pipeline operators, results in an average cost of $2,000 per operator. Subsequent annual cost to complete the form is approximately $1,000 per operator ($200,000 divided by 208 operators).

The Small Business Administration (SBA) criteria for defining a small entity in the hazardous liquid pipeline industry is 1,500 employees, as specified in the North American Industry Classification System (NAICS) codes. The NAICS codes relevant to hazardous liquid pipelines are code 486110—Pipeline Transportation of Crude Oil and code 486910—Pipeline Transportation of Refined Petroleum Products. RSPA does not collect information on number of employees or revenues for pipeline operators. Such a collection would require OMB approval. RSPA nevertheless continues to seek information about the number of small pipeline operators from which to more fully determine impact on small entities, i.e. companies with less than 1,500 employees, including employees of parent corporations.

RSPA has reviewed the data it collects from the hazardous liquid pipeline industry and has estimated there are probably 10-20 small entities in this industry. Several of the operators do not transport petroleum products, but rather transport carbon dioxide, ammonia, or chlorine and may not be indirect competition with large pipeline operators. Other small operators remain competitive as they have developed niche markets and may supply only a small number of customers.

In the proposed rule on Hazardous Liquid Pipeline Accident Reporting Revisions (66 FR 15681; March 20, 2001), RSPA/OPS sought input from the public on the impact of the proposed annual report on small entities. We received no responses to this request for comments from small entities. However, the SBA Chief Counsel for Advocacy provided comments on behalf of small businesses. SBA asked how many hazardous liquid pipeline operators RSPA/OPS would characterize as small operators. We believe the answer is between 10 and 20, as noted above. And, we believe the impact of this rule will be proportionate to the size of the company. Smaller companies tend to have less pipeline mileage and will likely have to collect less information at a lower cost. This rule will cost an average company less than $2,000 the first year and $1,000 per year thereafter. RSPA believes this will be even less for small operators.

If you are an operator of a small pipeline company, RSPA/OPS requests that you identify yourself to help us more accurately determine impact on small businesses in this and future rulemakings (see the ADDRESSES and SUPPLEMENTARY INFORMATION sections above for how to provide comments).

Based on the small cost to companies of any size and to the industry at large, I certify pursuant to section 605 of the Regulatory Flexibility Act (5 U.S.C. 605), that this rulemaking would not have a significant impact on a substantial number of small entities.

Paperwork Reduction Act

Below is a summary of the Paperwork Reduction Analysis. A complete copy is available for copy and review in the public docket for this final rule.

This final rule contains information collection requirements. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the DOT has submitted a copy of the Paperwork Reduction Act Analysis to the Office of Management and Budget (OMB) for its review. The name of the information collection is Transportation of Hazardous Liquids by Pipeline Recordkeeping and Annual Reporting. The purpose of this information collection is to improve the current hazardous liquid pipeline accident information collection.

Number of Respondents: 208.

Frequency of Responses: 1.

Annual Burden: 24 hours the first year and 12 hours per year thereafter for each company.

Type of Respondent: Hazardous liquid pipeline operators.

Total Annual Burden: 4,992 hours the first year and 2,496 per year thereafter.

Comments on the paperwork reduction analysis are invited on: (a) The need for the proposed collection of information for the proper performance of the functions of the agency, including whether the information will have practical utility: (b) the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who respond including the use of the appropriate automated, electronic, mechanical, or other technological collection techniques. Send comments within 30 days of the publication of this notice directly to the Office of Management and Budget, Office of Information and Regulatory Affairs, ATTN: Desk Officer, Department of Transportation, 715 Jackson Place, NW., Washington, DC. Please be sure to include the docket number in your comments.

Executive Order 13084

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. Because this final rule would not significantly or uniquely affect the communities of the Indian tribal governments and would not impose substantial direct compliance costs, the funding and consultation requirements of Executive Order 13175 do not apply.

Executive Order 13132

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, Federalism. The final rule does adopt any regulation that: (1) Has substantial direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government; (2) imposes substantial direct compliance costs on State and local governments; or (3) preempts state law. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

Unfunded Mandates

This final rule does not impose unfunded mandates under the Unfunded Mandates Reform Act of 1995. It would not result in costs of $100 million or more to either State, local, or tribal governments, in the aggregate, or to the private sector, and would be the least burdensome alternative that achieves the objective of the rule.

National Environmental Policy Act

We have analyzed the final rule for purposes of the National Environmental Policy Act (42 U.S.C. 4321 et seq.) and have concluded that this action would not significantly affect the quality of the environment. Because the final rule parallels present reporting requirements and practices for gas pipeline operators and collection of information does not result in an environmental impact.

Executive Order 13211

RSPA has determined that this rule does not constitute a significant energy action within the meaning of Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. This rule will not result in adverse effects on energy supply, distribution, or use.

Executive Order 13212

Because this rule is not an energy-related project, Executive Order 13212, Actions to Expedite Energy-Related Projects, does not apply.

Executive Order 12630

This rule does not affect or potentially affect the use or value of real, personal, or intellectual property. Therefore, Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, does not apply to this rule.

List of Subjects in 49 CFR Part 195

• Anhydrous ammonia
• Carbon dioxide
• Petroleum
• Pipeline safety
• Reporting and recordkeeping requirements

In consideration of the foregoing, RSPA amends 49 CFR part 195 as follows:

PART 195—TRANSPORTATION OF HAZARDOUS LIQUIDS BY PIPELINE

1. The authority citation for part 195 continues to read as follows:

Authority: 49 U.S.C. 5103, 60102, 60104, 60108, 60109, 60118; and 49 CFR 1.53.

2. The title of Subpart B is revised to read as follows:

Subpart B—Annual, Accident, and Safety-Related Condition Reporting

3. Section 195.49 is added to Subpart B to read as follows:

Note:

The following forms and instructions will not appear in the Code of Federal Regulations.