Gas Pipeline Safety Under Heightened State and Federal Scrutiny - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Gas Pipeline Safety Under Heightened State and Federal Scrutiny Navigating the New Regulatory Landscape and Preparing for Increased Testing and Penalties THURS DAY, MARCH 15, 2012 1pm East ern | 12pm Cent ral | 11am Mount ain | 10am Pacific Today’s faculty features: Darren J. Hunt er, Counsel, Dewey & LeBoeuf , Chicago Ahren S . Tryon, Associat e, Dewey & LeBoeuf , Washingt on, D.C. Vidhya Prabhakaran, Associat e, Davis Wright Tremaine , S an Francisco The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Natural Gas Pipeline Safety Under Heightened State and Federal Scrutiny Stafford Webinars and Publications March 15, 2012 Darren J. Hunter Ahren S. Tryon 312.794.8018 202.346.8059 dhunter@dl.com atryon@dl.com Dewey & LeBoeuf LLP dl.com

I-A OVERVIEW OF STRUCTURE: STATE AND FEDERAL GAS PIPELINE SAFETY Dewey & LeBoeuf LLP | 6

Over a Million Miles of Pipeline in the US ● Interstate Gas Transmission ● Intrastate Gas Transmission and Distribution ● Interstate Liquids (crude oil, petroleum products and hazardous liquids) ● Intrastate liquids, including gathering lines Dewey & LeBoeuf LLP | 7

Dewey & LeBoeuf LLP | 8

Federal Regulatory Authority ● U.S. DOT regulates pipeline safety and sets national safety standards ● U.S. DOT administers pipeline safety through the Office of Pipeline Safety (OPS) ● OPS operates within the Pipeline and Hazardous Materials Safety Administration (PHMSA) ● OPS Offices – Washington, D.C. – Atlanta – Kansas City – Houston – Denver Dewey & LeBoeuf LLP | 9

State Regulatory Authority ● States: Can assume regulatory authority over intrastate pipelines and sometimes act as interstate inspection agents. ● State standards must be at least as stringent as Federal standards, but may be more stringent. Dewey & LeBoeuf LLP | 10

Other Federal Agencies with Pipeline Safety Oversight ● FERC (siting, abandonment) ● Transportation Security Administration (security, terrorist threats) Dewey & LeBoeuf LLP | 11

I-B FEDERAL PIPELINE SAFETY ACTS & REGULATIONS Dewey & LeBoeuf LLP | 12

Acts & Regulations A. Background: Prior Pipeline Safety Acts Dewey & LeBoeuf LLP | 13

Federal Statutes ● Natural Gas Pipeline Safety Act of 1968 ● Pipeline Safety Improvement Act of 2002 – Integrity Management Programs for Transmission ● Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 (PIPES Act) – Integrity Management Programs for Distribution ● Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 ● 49 USC §§ 60101 et seq. Dewey & LeBoeuf LLP | 14

Acts & Regulations B. Key Regulations Implementing Pipeline Safety Acts Dewey & LeBoeuf LLP | 15

Federal Regulations Part 190: Pipeline Safety Programs and Rulemaking Procedures ● Enforcement mechanisms – NOPVs and Warnings – Compliance Orders and Notices of Amendment – Corrective Action Orders – Safety Orders ● Hearings – Former combined prosecutorial and adjudicatory functions ● Civil penalties – The old maximum: $100,000 per violation daily, max of $1,000,000 per violation continued > Dewey & LeBoeuf LLP | 16

Federal Regulations Part 191: Transportation of Natural and Other Gas To Pipelines; Reporting ● Procedures for reporting by natural gas pipelines ● Incident Reports ● Safety-Related Conditions Reports ● Annual Reports continued > Dewey & LeBoeuf LLP | 17

Federal Regulations Part 192: Minimum Federal Safety Standards (Natural Gas) ● Subpart A: General Provisions Keys: Scope, class locations (1 through 4), company procedures ● Subpart B: Materials Keys: Strength of steel and plastic pipes, marking of materials ● Subpart C: Pipe Design Keys: Design formula for pipe (i.e., thickness of pipeline wall) ● Subpart D: Design of Pipeline Components Keys: Design of fittings, valves, vaults, compressor stations, etc. ● Subpart E: Welding of Steel in Pipelines Keys: Welding procedures, inspection and testing continued > Dewey & LeBoeuf LLP | 18

Federal Regulations ● Subpart F: Joining of Materials Other Than by Welding Keys: Design of mechanical fittings to withstand force ● Subpart G: General Construction Requirements For Transmission Lines and Mains Keys: Standards, materials, inspection, etc. ● Subpart H: Customer Meters, Service Regulators, and Service Lines Keys: Meter installations, service installations, valves, connections to mains, etc. ● Subpart I: Requirements for Corrosion Control Keys: External corrosion control (i.e., protective coating, cathodic protection), internal corrosion control, atmospheric corrosion control ● Subpart J: Test Requirements Keys: Pressure testing to establish MAOP, mains, service lines, plastic Dewey & LeBoeuf LLP | 19 continued >

Federal Regulations ● Subpart K: Uprating Keys: Pressure testing to increase MAOP ● Subpart L: Operations Keys: Procedural manual for operations, maintenance and emergencies, surveillance, damage prevention program, emergency plans, investigation of failures, odorization, purging, etc. ● Subpart M: Maintenance Keys: Leak surveys, repairs, inspections, abandonment, etc. ● Subpart N: Qualification of Pipeline Personnel Keys: OQ, pipeline personnel must be qualified to perform specific tasks, recordkeeping continued > Dewey & LeBoeuf LLP | 20

Federal Regulations ● Subpart O: Gas Transmission Pipeline Integrity Management Keys: Identify high consequence areas, develop and follow program that addresses risks in each pipeline segment, consensus standard ANSI B31.8S, baseline assessments, identify threats, continuing evaluation, address anomalous conditions, reporting, etc. ● Subpart P: Gas Distribution Pipeline Integrity Management Keys: Identify risk factors, tank risks, leak management, address risks, reporting, etc. continued > Dewey & LeBoeuf LLP | 21

Federal Regulations Where is the regulatory focus now? ● Integrity Management ● Maximum Allowable Operating Pressure – Records ● Control Room Management Dewey & LeBoeuf LLP | 22

E nsuring Ga s Pipe line Sa fe ty T he State ’ s Re spo nse to the San Bruno and Ranc ho Co rdo va trag e die s Vidhya Pra b ha ka ra n 415.276.6568 vidhya pra b ha ka ra n@ dwt.c o m 23

Ba c kg ro und o n T he T ra g e die s • Ra nc ho Co rdo va – De c 24, 2008 • Sa n Bruno – Se p 9, 2010 24

I mme dia te Afte rma th o f Ra nc ho Co rdo va E xplo sio n  1 de a d, 2 se rio usly injure d, 3 o the rs injure d  Spa rk fo r the e xplo sio n wa s a lig hte r  1 ho use c o mple te ly de stro ye d, 2 a dja c e nt ho use s with se ve re da ma g e , a nd o the r ho use s with mino r da ma g e  NT SB a nd CPSD imme dia te ly inve stig a te d the g a s e xplo sio n a nd fire 25

Co nse q ue nc e s fo r PG&E  L a unc he d OI I o f PG&E o n No v 19, 2010 to de te rmine if vio la tio ns o c c urre d a nd le vy a fine , fo llo wing CPSD a nd NT SB inve stig a tio n re po rts  $38 millio n fine  Pre vio us fine o f $26 millio n wa s re je c te d  Pa yme nt o f the c o sts o f the inve stig a tio n b y CPSD 26