Shale Law in the Spotlight – The Pennsylvania Public Utility Commission Proposes Rulemaking Addressing Pipeline Safety Standards

On June 13, 2019, the Pennsylvania Public Utility Commission (Commission) published a notice of proposed rulemaking seeking comment on possible amendments or enhancements to regulations governing pipeline safety standards. On that same day, the Commission also published a notice of proposed rulemaking addressing financial reporting for public utilities. The Commission is looking for public input into ways of better regulating the design, construction, operations, and maintenance of public utilities, such as transportation pipelines in intrastate commerce. Ultimately, the Commission is considering whether the hazardous liquid public utility safety standards laid down in Chapter 59 of the Pennsylvania Code should be amended. In addition, with regard to financial reporting requirements, the Commission proposed to review the current public utility reporting regulations codified in Chapter 73 of the Pennsylvania Code to determine whether annual depreciation reporting, service life study reporting, and capital investment reporting requirements should be included in the legislation.

This article addresses both advance notices and provide an overview of the specific areas where comments have been requested.

Advance Notice of Proposed Rulemaking Regarding Hazardous Liquid Public Utility Safety Standards
First, the Commission is asking for observations and comments on the existing Part 195 regulations relating to the minimum construction and design standards of hazardous liquid public utilities especially with regards to pipeline materials and specifications, coverings over buried pipelines, underground clearances, and valves. Section 195.8 currently requires that all pipelines carrying hazardous liquids must be constructed with steel pipe; however, the Commission has requested discussion on other potential materials to be used in the construction of these pipelines. The Commission also is seeking comment on the depth-of-cover placement over a buried pipeline necessary to protect the pipeline from accidental damage, which is regulated under Section 195.248. Furthermore, the Commission is requesting comment on the initial distance of 12 inches set forth in Section 195.250 between a pipe installed underground, especially a hazardous liquid public utility pipeline, and other underground services. Finally, the Commission has asked for comment on the appropriate location of pipeline valves regulated under Section 195.258 to further reduce the risk of damage or pollution from accidental hazardous liquid discharge.

Second, the Commission has requested comment on the existing minimum operation and maintenance standards particularly when considering pipeline conversion, construction compliance, pressure testing and maximum operating pressure, line markers, inspection of pipeline rights-of-ways, emergency flow restricting devices, leak detection, and corrosion control and cathodic protection. The Commission is seeking comment on the question of how to improve the procedure involving the conversion of pipeline infrastructure as set out in Section 195.5 and how to best operate and maintain hazardous liquid public utility pipelines based on their ages, as specified in Section 195.401(c). In addition, the Commission is looking for input on pressure testing frequency for all hazardous liquid public utility pipelines as well as recording requirements for pressure testing and maximum operating pressure. The Commission also seeks comment involving the care of pipeline rights-of-way and inspection frequency, currently set to be “at least 26 times each calendar year,” according to Section 195.412. As for the impacts of hazardous liquid public utility pipelines on the environment, the Commission seeks comment on the installation of remote-control valves on such pipelines located in highly sensitive areas to serve as preventative measures on “whether minimum threshold requirements can be established for leak detection systems in all pipelines and what leak detection technologies are appropriate for use.” The Commission also invites the public to express opinions on the adequacy of measures aimed at preventing hazardous liquid public utility pipelines from suffering both external and internal corrosion.

Third and last, the Commission seeks public input on a variety of other topics, including utility interactions with local government officials, specific enhancements to public awareness programs, regulation of construction techniques (such as horizontal directional drilling), accident and reporting criteria and notification, protection of public and private water wells and supplies, background investigations of employees and contractors, and integration of new regulations on existing facilities. In the Advance Notice, the Commission declared that it needs to “proceed expeditiously, but cautiously, acknowledging that [its] actions must be compatible with the federal pipeline safety laws at 49 CFR Part 195” before adding that “significant improvements to hazardous liquid public utility safety standards can be accomplished by building upon the federal pipeline safety laws.”

The public has until August 28, 2019, to submit their comments, after which the Commission will review and consider all relevant comments and issue a formal Notice of Proposed Rulemaking with proposed regulations.

Notice of Proposed Rulemaking Regarding Depreciation Reporting and Capital Planning for Crude Oil, Gasoline, or Petroleum Products Transportation Pipelines
In this Notice of Proposed Rulemaking, the Commission proposes to require that crude oil, gasoline, and petroleum products transportation pipeline public utilities file annual depreciation reports, service life study reports, and capital investment plan reports. The purpose of these reports is to determine whether a public utility will be in a financial position to provide a reliable service to the community. In this regard, the Commission declared that it cannot “properly evaluate the justness and reasonableness of a public utility’s rates and rate structure without examining a company’s earnings and depreciation practices.”

The public has 30 days from the date of the Notice publication in the Pennsylvania Bulletin to submit their comments. The Notice has not yet been published in the Bulletin.

References:
Pennsylvania Public Utility Commission Press Releases, “PUC Seeks Comment on Potential Enhancements to Pipeline Safety Regulations; Also Considers Additional Financial Reporting on Pipelines” (June 13, 2019)
Pennsylvania Public Utility Commission; Hazardous Liquid Public Utility Safety Standards; Advanced Notice of Proposed Rulemaking, 49 Pa.B. 3316 (June 29, 2019)

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

Written by Chloe Marie – Research Specialist