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Less than 100 days into the term of apresidentwho vowedto reduce regulation by at least 75 percent, operators of pipelines that transport hazardous liquids are waiting to see if he will make good on his promise.
Numerous amendments to pipeline safety regulations adopted by the Pipeline and Hazardous Materials Safety Administration are among the new or pending federal rules subject to a government-wide freeze issued in an Inauguration Day memorandum by White House chief of staff Reince Priebus. The action, which is not uncommon when a new administration takes over from the other party, halts pending policies from being finalized before further review.
As it stands now, changes to regulations on everything from drug and alcohol testing to accident and spill notification timing to inspection requirements remain in limbo and may do so for several months, experts say.
In the case of the pipeline safety administration’s amended regulations, they could be delayed 60 days for review, with a potential renewed notice-and-comment period. Alternatively, depending upon how language in the memo that turns on the rules’ publication date in the Federal Register is interpreted, they could be subject to review and approval by a department or agency head appointed by President Donald Trump. The regulations were scheduled to go into effect March 24, absent the so-called pause memo.
“The real question for operators will be, “What portions of these regulations remain in effect after the reconsideration that the Trump administration may do?,’” says Scott Janoe, a partner at Baker Botts and deputy chair of its environmental department. “It all remains to be seen.”
But pipeline operators aren’t completely in the dark, given past actions in the area, Janoe and others say. Because authority for the new rules is provided by the Pipeline Safety, Regulatory Certainty and Jobs Creation Act of 2011, a federal law designed to examine and improve the state of pipeline safety regulation, some changes will be implemented, he says. The law was passed in the wake of the September 2010 San Bruno, California, natural gas pipeline explosion that killed eight people, and other incidents.
In addition, the regulations represent the “culture of meaningful compliance” that the pipeline safety administration has been emphasizing over the past few years, says Susan Olenchuk, a pipeline safety defense partner at law firm Van Ness Feldman in Washington, D.C.
To the agency, compliance is “not just lip service and having a bunch of compliance manuals on your shelf,” Olenchuk says. “It means engaged compliance from top to bottom, all employees.”
Arguably the most high-profile amendments are new rules shortening the amount of time operators have to report accidents and spills, and narrowing the exemption from the requirement to perform drug and alcohol testing of employees after an incident.
Specifically, under the amended rules, operators would have one hour, rather than two, from the “confirmed discovery of the event” to report it to the National Response Center. “PHMSA expects that quicker accident and incident reporting will lead to a safety benefit to the public, the environment, and limit property damage,” the amended rules’ executive summary states.
Also, the amended rules exempt drug and alcohol testing of an employee after an event only when there is enough information to establish that he or she had no role in the accident. Previously, the rules required testing of an employee who could not be completely discounted as a contributing factor to the incident. Significantly, the burden of proof is now on the operator, and the decision not to test must be documented and maintained for at least three years.
“I don’t think the [amendment] is meant to change who is required to be tested, but it’s meant to be clearer and to encourage operators to do more testing,” says Bryn Karaus, an associate in the pipeline safety practice at Van Ness Feldman and former senior attorney at PHMSA. The agency “was finding some employees who weren’t being tested who should have been and was issuing several notices of probable violations. They decided it was because operators didn’t understand the requirements.”
Olenchuk says that she expects, at the very least, approval of the amended notification requirement since it is mandated by the 2011 statute. Thus, despite the uncertainty surrounding the regulations, it’s never too early for operators to start implementing measures that would help ensure their compliance, she and Karaus say.
For example, companies could establish a feedback loop, whereby employees participate in a particular activity, training exercise or mock drill and report to the higher-ups what procedures did not work and which processes could be improved—information that would then be incorporated into company-wide training and procedures, Olenchuk says.
“The whole company should always be looking for ways to constantly improve safety and processes,” she says. “It should respond to lessons learned because PHMSA looks for that when they go out for an inspection.”
It is also crucial, Karaus adds, to ensure that the National Response Center’s telephone number is at operators’ fingertips so that they don’t waste part of their likely soon-to-be-shorter notification time hunting for it, thereby jeopardizing their compliance with the deadline.
“This is something that in the shuffle of craziness, while an operator is responding to an accident, that PHMSA does not want them to forget to do,” she says. “It’s all about planning ahead of time.”
Janoe of Baker Botts says pipeline operators could use this time of regulatory uncertainty to take stock.
“We’re advising our clients to get a grasp on how the set of regulations would affect them and where, if anywhere, they see areas where they should be working with the agency to address their concerns,” he says. “Right now is a time to pick your battles and understand how it is that changes can be made to improve this set of regulations.”
One of the biggest unknowns, Janoe says, is whether the Trump administration, in reviewing the pending regulations, will “pull back and change some of the areas that prove to be controversial.”
Janoe says these could include proposed changes to the frequency and type of inspections, including inspections of pipelines in areas affected by extreme weather and similar events, and the extension of reporting requirements to gravity lines, or pipelines that carry product by means of gravity.
“I don’t see [the regulations] disappearing all together, so it comes down to how the industry is best able to work with the current administration and the agency to create a set of rules that works and makes sense for all stakeholders,” he says.