American Oil and Gas Reporter - February 2018 - 104

Industry Groups Offer PHMSA Advice
WASHINGTON-A coalition of oil
and gas associations is asking the U.S.
Department of Transportation to consider
changing several rules covering sampling
and testing of petroleum-based products,
farm taps off production lines, and gathering lines and production facilities.
The Independent Petroleum Association,
Kentucky Oil & Gas Association, Ohio
Oil & Gas Association and Pennsylvania
Independent Oil & Gas Association have
submitted comments on rules that they
say are good candidates for repeal, replacement, suspension or modification.
The industry groups recommend that
DOT's Pipeline and Hazardous Materials
Safety Administration revise its sampling
and testing requirements for transporting
crude oil by truck. When PHSMA proposed
new vapor pressure requirements for oil
transported by rail (AOGR, July 2017,
pg. 16), the agency limited comments to
Bakken producers who ship by rail. According to the IPAA-led coalition, most
crude producers didn't have the opportunity
to make suggestions on how to develop a
workable sampling and testing program.
The final rule adopting PHMSA's rail
transport changes became effective in
July 2015. Included in the rule was a requirement for written sampling and testing
plans for transporting all unrefined petroleum products, although, the industry
group notes, this requirement was put
forth in a rule making devoted exclusively
to rail transport.
"PHMSA's process does not appear
to comply with the Administrative Procedure Act, as the narrow scope of the
rule making did not provide an opportunity
for producers transporting by truck to
comment," the industry comments say.
"PHMSA's enforcement of its revised
sampling and testing requirements has
resulted in producers' compliance, but
without the benefit of a coordinated response for the most effective and practical
means of promoting safe transport of
crude oil."
The industry comments note neither
the title nor content of the rule making
provided notice of its broader applicability
to modes of transport other than rail. In
the proposed rule published Aug. 2, 2014,
in the Federal Register, the industry group
says, the word "truck" in the sense of a
motor vehicle, only appears in the executive summary to describe the increasing
volumes of crude oil shipped by "rail,
barge and truck."
To remedy the deficiencies in PHMSA's promulgation of changes to its sam-

pling and testing requirement, IPAA and
its partners recommend the agency undertake a new rule making that would
provide the notice and opportunity for
producers to comment on a new program,
if one is needed.
Farm Taps
Operating farm taps-short, small-diameter lines carrying natural gas from a
production facility to a landowner's home
or farm-typically are governed by contracts
between the two parties and regulated by
local or state authorities, the industry
coalition describes, adding "PHMSA's
actions should not upend long-standing
contracts that benefit both producers and
landowners."
IPAA and its industry partners had
not noticed a change in federal regulation
of farm taps until PHMSA issued its final
rule on pipeline safety on Jan. 23, 2017,
the coalition indicates. In the operator
qualification rule, the agency clarified it
would exclude farm taps from its distribution integrity management program
while restating requirements for farm
taps to be inspected and maintained.
The industry groups report their states'
public service commissions are changing
how they will implement PHMSA's revised
farm tap requirements, with the commissions, producers and landowners facing
a number of practical considerations.
"The sheer magnitude of farm taps in
some states is overwhelming," the industry
comments state. "For example, West Virginia has a conservative estimate of 20,000
farm taps, with as many as 500 farm taps
stemming from a five-mile length of regulated pipeline. For individual residences
with existing farm taps, it is unclear how
the producer or pipeline operator can inspect customer lines beyond the tap and
regulating devices."
The oil and gas associations caution
that significant changes to farm tap regulations, the need to access devices inside
homes, and the accompanying cost increases will wreak havoc with many of
the long-standing contracts.
Instead of imposing federal regulations,
the industry groups suggest PHMSA follow the lead of the Michigan Department
of Licensing and Regulatory Affairs,
which reminded landowners via letter
how to detect gas leaks and what steps to
take in the event of a leak. "The independent producers support use of these
efforts, rather than prescriptive federal
regulations mandating inspections on
thousands of farm taps, which cannot be

104 THE AMERICAN OIL & GAS REPORTER

administered nor justified on a cost versus
risk basis," the industry comments say.
As OOGA's PHMSA comments note,
production line farm taps are nonjurisdictional under the Pipeline Safety Act,
and moreover there is no reason to regulate
them at the federal level.
"These farm taps intrinsically are lowrisk lines installed for the benefit of
landowners to provide them an inexpensive
energy supply," OOGA writes. "The application of federal pipeline safety regulation to farm taps would increase the
cost of their construction and maintenance,
with the likely harm, relative to benefits,
falling on farmers, rural families and
small businesses."
Gas Gathering
Before it expands its jurisdiction over
gathering facilities, PHMSA should collect
additional safety-related data on gathering
lines as mandated by Congress in the
Pipeline Safety, Regulatory Certainty and
Job Creation Act of 2011, and continue to
rely on industry standards (RP-80) that are
being revised, the industry coalition urges.
Natural gas production has changed
for some areas of the United States, with
high-volume hydraulic fracturing and
horizontal drilling creating dramatic production increases from shale plays, the
industry groups note.
"However, a significant percentage of
natural gas wells continue to produce in
more traditional, conventional ways, with
much lower-volume hydraulic fracturing
and vertical drilling," the associations
say. "Any changes in PHMSA's regulation
of gathering lines must not only comply
with congressional mandates, but also
must take into account the variations in
America's natural gas production."
Such recognition can be accomplished
with a revised RP, incorporating input
from interested stakeholders to support a
risk-based approach supported by data,
the industry comments recommend.
While those revisions are being prepared, the industry associations say they
can support PHMSA extending incident
reporting requirements and a limited version of its annual reporting requirements
to operators of Class I gathering lines.
However, they warn the agency to refrain
from repeating its April 2016 attempt to
dramatically expand its jurisdiction over
small-diameter, low-pressure gathering
lines and to attempt to indirectly assert
jurisdiction over production pipelines by
expanding the definition of "gathering"
back to the wellhead.
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