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New Regulations Place All Onshore Natural Gas Gathering Pipelines Under Federal Oversight:

All Operators (Even Unregulated!) Now Have Material Safety Compliance and Reporting Obligations

Client Updates

The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a final rule on November 2, 2021 expanding federal oversight, which now includes certain major transmission and distribution pipelines, to also include all onshore gas gathering pipelines.(1)  The final rule increases federal oversight in two ways: (1) for the first time, it requires operators of all onshore gas gathering lines to report safety incidents and file annual reports with PHMSA; and (2) for the first time, it subjects previously unregulated gathering lines in rural areas to federal minimum safety standards by establishing a new category of regulated gathering line.(2)  The final rule will become effective six months after its publication in the Federal Register.(3)

With this rule, PHMSA states that it is seeking to close a “regulatory gap.”(4)  The agency notes that there are more miles of unregulated natural gas gathering lines than regulated transmission lines – and this rule aims to bring the more than 400,000 additional miles of such gathering lines under PHMSA oversight.(5)

Gas gathering lines are pipelines used to gather natural gas from production sites and deliver it to transmission lines or distribution main lines.  Unlike natural gas transmission lines, which are regulated regardless of their location, many natural gas gathering lines were exempt from federal safety regulation because they are typically lower-pressure, smaller-diameter pipelines located in lesser-populated, rural areas.(6)  However, increased natural gas production, together with substantial new or re-conceptualized natural gas transportation infrastructure built out over the last 15 years, have resulted in the construction of gas gathering lines that share many of the same (or substantially similar) physical, functional, and operational characteristics and risks as gas transmission lines.(7)  This, along with the occurrence of incidents involving unregulated gathering lines, has prompted PHMSA to expand its oversight of gas gathering lines.(8)

As noted above, PHMSA’s final rule increases federal oversight through two primary means:

Reporting Requirements

The final rule requires operators of all onshore gas gathering lines to report incidents and file annual reports with PHMSA.(9)  Operators of newly regulated gathering lines must submit an annual report for the first time no later than March 15, 2023 that covers operations in 2022.(10)

PHMSA’s rationale for this requirement is that reports “will provide data for monitoring the safety performance of these pipelines and a sound basis for evaluating if future regulatory changes are needed.”(11)

Creation of New Category of Regulated Gathering Pipelines and Associated Safety Requirements

The final rule creates a new classification of regulated gathering line known as Type C.(12) Type C lines are gathering lines that: (1) are located in Class 1 locations, the most sparsely populated of PHMSA’s four-tier system, (2) have outer diameters of 8.625 inches or greater, and (3) operate at higher stress levels or pressures.(13) Prior to the issuance of this rule, gathering lines in Class 1 locations were exempt from federal safety requirements.(14)  Under the rule, these gathering lines must meet federal minimum safety requirements which vary based on the outer diameter of the pipeline and its proximity to populated areas.(15)  These requirements are summarized in the table below.(16)

 

 

Applicability of Type C Requirements Based on Size and Location of a Given Segment[1]

Outside diameter

 

Not located near a building intended for human occupancy or other impacted site (§ 192.9(f))

 

Located near a building intended for human occupancy or other impacted site (§ 192.9(f))

Greater than or equal to 8.625 inches up to and including 12.75 inches

 

- Design, Construction, Initial Testing (new/replaced/relocated/changed lines)

- Damage Prevention,

- Emergency plans

 

- Design, Construction, Initial Testing (new/replaced/relocated/changed lines)

- Damage Prevention

- Emergency Plans

- Corrosion Control

- Line Markers

- Public Awareness

- Leakage Surveys

Greater than 12.75 inches up to and including 16 inches

 

- Design, Construction, Initial Testing (new/replaced/relocated/changed lines)

- Damage Prevention

- Emergency Plans

All Type C Requirements

 

Greater than 16 inches

All Type C Requirements

 

All Type C Requirements

 


 

In addition to the reporting requirements, operators of Type C gathering lines must take two actions to comply under the final rule.  First, operators must identify the endpoints of Type C lines on or before 6 months after the effective date of the final rule.(17)  Second, operators must achieve compliance with the applicable Type C requirements no later than 1 year after the effective date of this rule, unless PHMSA approves an alternative compliance schedule for the operator.(18)

PMHSA projects the rule will cost operators approximately $13.7 million in total per year, with new requirements for leakage surveys required for some Type C lines accounting for more than half of the annual costs.(19)

Next Steps

Baker Botts’ full-service energy practice regularly advises clients on federal regulatory compliance for gas gathering systems as well as other categories of pipelines.  If you need assistance with respect to the new PHMSA rule or any other matter related to the regulation, construction, or operation of U.S. pipelines and associated facilities, please contact Scott LooperEmil Barth or Gerry Morton.



(1) Final Rule: Safety of Gas Gathering Pipelines: Extension of Reporting Requirements, Regulation of Large, High-Pressure Lines, and Other Related Amendments - Federal Register Submission | PHMSA (last updated, November 2, 2021); Gas Gathering Final Rule Submission - 11.2.2021.pdf (dot.gov), 9.

(2) Gas Gathering Final Rule Submission at 9-10.

(3) The final rule has been submitted to the Office of the Federal Register for publication.  As of 11/4/21, it has not yet been published.

(4) Infra note 2, at 27.

(5) Id.

(6) Id. at 5.

(7) Id. at 6. 

(8) See id. at 26.

(9) Id. at 9.

(10) Id. at 41.

(11) Id. at 82.

(12) Id. at 10.

(13) Id.

(14) Id. at 4.

(15) Id. at 67.

(16) Id

(17) Id.

(18) Id. at 59.

(19) Id. at 70.

(20) Id. at 11.

 

 

 

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