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This week’s Pipeliners Podcast episode features regulation expert Keith Coyle returning to the podcast to discuss the new Underground Gas Storage Rule published by PHMSA in January.

In this episode, you will learn about what led to the new final rule being passed, important aspects that were included in the rule, the pattern of incident and then regulatory response, state and federal responses to incidents, the gray area of whether natural gas storage facility control rooms are covered by Control Room Management, and more topics related to this rulemaking.

New Underground Gas Storage Rule: Show Notes, Links, and Insider Terms

  • Keith Coyle is a shareholder at Babst Calland and a shareholder in the Energy and Natural Resources, Environmental and Transportation Safety groups and Pipeline and HazMat Safety practice.
  • The Underground Natural Gas Storage Facility Rule was published by PHMSA in January 2020. The rule is in regards to pipeline safety for Underground Natural Gas Storage facilities (UNGSF).
  • Underground Natural Gas Storage Facility is now defined in the new final rule as a facility that stores natural gas in an underground facility incidental to natural gas transportation, which is constructed from a depleted hydrocarbon reservoir, an aquifer reservoir, or a solution-mined salt cavern.
  • Natural Gas Pipeline Safety Act of 1968 (Pipeline Safety Act) was authorized by the Secretary of Transportation to prescribe safety standards for the transportation of natural and other gas by pipeline, and for other purposes.
  • April 1992 in Brenham, Texas: the referred incident was an uncontrolled release of highly volatile liquids from a salt dome storage cavern in the Seminole Pipeline System near Brenham, which formed a large, heavier-than-air gas cloud that exploded.
  • January 2001 in Hutchinson, Kansas: the referred incident was a natural gas leak when a wellbore failed at the Yaggy storage field near Hutchinson. The natural gas migrated nine miles underground, where it eventually surfaced through abandoned wells and caused an explosion.
    • Kansas Corporation Commission issued state safety standards for Underground Gas Storage Facilities.
    • In 2010, a federal district court in Kansas ruled that the state’s safety regulations for underground gas storage facilities could not be applied to interstate facilities subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC).
  • July 2010 in Marshall, Michigan: The referred Marshall Incident refers to the Enbridge Incorporated Hazardous Liquid Rupture and Release incident, which occurred on July 25, 2010, in Marshall, Michigan.
  • September 2010 in San Bruno, California: The “PG&E Incident” refers to a ruptured pipeline operated by the Pacific Gas & Electric Company. The rupture created a crater near San Bruno, California, caused an explosion after natural gas was released and ignited, and resulted in fires causing loss to life and property.
  • October 2015 in Aliso Canyon, California: The referred incident occurred when Southern California Gas Company (SoCalGas) discovered a leak that manifested into the largest methane leak from a natural gas storage facility in U.S. history. Well SS-25 in the Aliso Canyon storage field, located in Los Angeles County, California, leaked for nearly four months until it was permanently sealed on February 17, 2016. While SoCalGas attempted to plug the leak, residents in nearby neighborhoods experienced health symptoms consistent with exposure to the odorants (mercaptans) added to natural gas and residual components from previous oil production in the field.
  • Administrative Procedure Act (APA) is the United States federal statute that governs the way in which administrative agencies of the federal government of the United States may propose and establish regulations and grants U.S. federal courts oversight over all agency actions.
  • FERC (Federal Energy Regulatory Commission) regulates, monitors, and investigates electricity, natural gas, hydropower, oil matters, natural gas pipelines, LNG terminals, hydroelectric dams, electric transmission, energy markets, and pricing.
  • API (American Petroleum Institute) is the only national trade association representing all facets of the oil and natural gas industry, which supports 10.3 million U.S. jobs and nearly 8 percent of the U.S. economy. API’s more than 625 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 40 million Americans.
    • API RP 1170 (Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage) and API RP 1171 (Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs) are the industry standards for Underground Gas Storage.
      • In December 2016, PHMSA issued an interim final rule (IFR) establishing regulations in response to the 2015 Aliso Canyon incident and the subsequent mandate in section 12 of the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016. The IFR incorporated by reference these two API Recommended Practices. The IFR required each provision in the API RPs to apply as mandatory (i.e., each “should” statement would apply as a “shall”) unless an operator provides written justification for not implementing the practice, including an explanation for why it is impracticable and not necessary for safety.
      • The final rule maintains the incorporation by reference of API 1170 and API 1171 as the basis of the minimum safety standards in 49 CFR Part 192.
        • Part 192 defines the transportation of natural gas by PHMSA-regulated pipeline.

New Underground Gas Storage Rule: Full Episode Transcript

Russel Treat:  Welcome to the Pipeliners Podcast, episode 116, sponsored by iPIPE, an industry-led consortium advancing leak detection and leak prevention technologies to eliminate spills as pipeliners move toward zero incidents. To learn more about iPIPE or to become an iPIPE partner, please visit ipipepartnership.com.

[background music]

Announcer:  The Pipeliners Podcast, where professionals, Bubba geeks, and industry insiders share their knowledge and experience about technology, projects, and pipeline operations.

Now your host, Russel Treat.

Russel:  Thanks for listening to the Pipeliners Podcast. I appreciate you taking the time. To show that appreciation, we give away a customized YETI tumbler to one listener each episode.

This week our winner is Jim Wynn with DCP Midstream. To learn how you can win this signature prize pack, stick around till the end of the episode.

This week Keith Coyle returns to the Pipeliners Podcast. He’s going to be talking to us about a very recent new final rule from PHMSA for underground gas storage. Keith, welcome back to the Pipeliners Podcast.

Keith Coyle:  Thanks for having me on again, Russel. I really enjoy the show.

Russel:  Might you remind the listeners a little bit about your background and what you do before we dive into our topic of the day here?

Keith:  Sure. I’m a shareholder with Babst Calland. That’s a law firm in Washington, D.C. I work primarily on PHMSA related regulatory matters. Issues involving the safety standards and practices for gas pipelines, hazardous liquid pipelines, LNG facilities, and underground gas storage facilities.

I’ve been doing this for a few years. I used to work over at PHMSA as an attorney there. I’ve been in private practice for a while now doing this with the firm.

Russel:  Underground storage is what I asked you to come on and talk about because as we’re on the microphone recording it was just yesterday that the new final Underground Gas Storage Rule came out. I think maybe a good way to start is…We’ll build up before we talk about the details of what there is, where it came from.

Maybe you can give the listeners a little bit of background on how PHMSA went about gathering information and their role in regulating underground gas storage.

Keith:  I would say the Underground Gas Storage Rules have been several decades in the making. PHMSA has always had the authority under its statutes to regulate underground natural gas storage facilities, but the agency didn’t exercise that authority for several decades for policy reasons.

When Congress enacted the Natural Gas Pipeline Safety Act of 1968, the definition of transportation of gas included the gathering, transmission, or distribution of gas by pipeline, as well as its storage in or affecting interstate commerce.

That original grant of authority gave PHMSA the power to establish regulations not only for pipelines, but for underground gas storage facilities that were used in connection with pipelines. For several decades after the passage of that statute, PHMSA focused primarily on regulating pipeline facilities, both gas pipelines and hazardous liquid pipelines.

Then, it picked up some safety standards for LNG facilities, as well. It really wasn’t until the early 1990s that the agency started to take a look at whether it needed to exercise its authority to regulate underground gas storage facilities.

The primary driver that came about in the early ’90s was there was an incident at a highly-volatile liquid underground storage facility in Texas. The National Transportation Safety Board initiated an investigation of that incident and then provided a recommendation to PHMSA to consider developing safety standards for underground gas and hazardous liquid storage facilities.

That’s a story that we’ve seen over and over again in this field of pipeline safety where we have an incident. The NTSB comes in and does an investigation and makes a recommendation to PHMSA to take action.

In response to this early NTSB safety recommendation in the 1990s, PHMSA held some public meetings, but they ultimately decided not to issue regulations at that time. Instead, they issued an advisory bulletin to the industry, basically encouraging operators to follow other standards that had already been established by other bodies.

Russel:  You said they issued an advisory bulletin. What is an advisory bulletin?

Keith:  An advisory bulletin is basically guidance to the industry on conduct that the agency would like it to take.

We see these things a lot of times in response to incidents or accidents where PHMSA will issue an advisory bulletin either reminding operators of their obligations under existing regulations or advising them to take action, just general safety actions, that may not necessarily be required under the federal regulations but that are just general good practice.

That’s what the agency did, at least originally, in the 1990s on this issue of underground gas storage. They said, “Look. The universe of underground gas storage operators. Here’s some safety standards and practices that you should consider following. We’re not going to establish federal rules at this time that are going to mandate federal regulation of the industry.”

There was another incident in the early 2000s that happened in Kansas with an underground gas storage facility that started this cycle again. There was a significant event in Kansas.

In that situation, the state of Kansas actually responded with the legislature, and then the Kansas Corporation Commission issuing state safety standards for underground gas storage facilities. Kansas was basically like, “Look. If the federal regulators aren’t going to take action here, we’re going to take action as a state and establish our own rules and regulations.”

They issued those regulations in the 2000s. They remained in effect for several years, but in 2010 the state of Kansas ran into a federal court decision where the operator of an interstate natural gas storage facility challenged the state’s ability to apply their regulations to an interstate underground gas storage facility.

Russel:  I know a lot of the listeners probably know what all these words are, but let’s talk. What is an interstate versus an intrastate? What would make a storage facility interstate?

Keith:  That’s a good question. Under the Pipeline Safety Act, the way that interstate and intrastate are defined is based on FERC jurisdiction or regulation by the Federal Energy Regulatory Commission.

On the pipeline side, if you’re a gas transmission line and you are subject to regulation by the Federal Energy Regulatory Commission, by definition you are an interstate pipeline facility. The same test applies for underground gas storage facilities.

If an underground gas storage facility is subject to the jurisdiction of FERC, by definition that underground gas storage facility is treated as an interstate facility under the Pipeline Safety Act.

The Pipeline Safety Act, like other federal laws, contains what is known as a preemption provision. A preemption provision is basically where the federal government says, “We are regulating this. We are preempting or precluding state and local authorities from applying regulations where the federal government has exercised its authority.”

There’s a preemption provision in the Pipeline Safety Act that says if a facility is an interstate facility, the only regulations that can apply to that facility for safety purposes are regulations issued by PHMSA.

Russel:  Let me unpack this a little bit. What led to this rulemaking was this conflict between the state of Kansas regulating and their, if you will, claiming, “Look, if you’re not going to regulate it, then we will.”

Then, an operator came back later and said, “But you can’t regulate us because we’re covered by federal requirements.”

Keith:  Precisely. What that decision did was it created a gap in the regulations. The federal court said to Kansas, “Your rules can’t apply to this interstate facility.” Because PHMSA had already previously decided not to issue its own rules, there were no binding legal regulatory requirements that applied to that interstate facility in Kansas or to any other interstate facility in the United States.

What that decision did was it highlighted this gap in federal safety standards for underground gas storage facilities.

Russel:  If you listen to PHMSA talk about how they view their mission, they’ll talk about…and how they view their relationship with the state is they want to set minimum standards. If the state wants to do something more rigorous, I guess would be the word to use, then the states are able to do that.

In this particular case, what they actually ended up happening is the feds were doing something less rigorous than the state, which I think, just as a matter of policy would be an issue for the federal guys.

Keith:  That’s spot on. The way that PHMSA operates the program under the statues is the states can get a certification to regulate intrastate gas facilities, the non FERC jurisdictional facilities. They have to apply the PHMSA standards as a floor, but they’re also allowed to apply additional or more stringent standards that are compatible with the federal rules.

The problem that Kansas ran into was they weren’t trying to apply their rules to an intrastate, non-FERC gas storage facility. They were applying their rules directly to an interstate FERC regulated gas storage facility. The court said there is no room there at all for state regulation. That is a federal province that needs to be regulated by PHMSA.

Russel:  Then you hit it up. Well, but they’re not regulating, hence the gap. Got it. Okay. Helpful.

Keith:  Into this gap, PHMSA started to step into this gap after that federal court decision came out. They issued an advanced notice of proposed rulemaking that had a bunch of questions about other issues.

One of the things they asked about was, “Should we issue regulations for underground gas storage?” They asked for public comment. There were some comments received at that point. The American Petroleum Institute (API) also initiated a separate effort to develop two industry standards that would contain recommended practices for the safety of underground gas storage facilities.

In those standards, they addressed the two types of facilities. One standard applied to solution mined caverns. The other standard applied to depleted hydrocarbon reservoirs or aquifer reservoirs that are used for gas storage.

PHMSA came out after that court decision and said, “Give us some feedback.” Then, API also took the lead and started to develop these two new industry standards to provide more direction to the industry in anticipation of potential federal regulation.

Russel:  I’m going to unpack your legal language a little bit. You said solution-mined caverns, which I think would generally be salt caverns.

Keith:  That’s right.

Russel:  The other was depleted reservoirs, which means a natural gas field where the gas has been pulled out. I want to put it back in to store it.

Keith:  Yeah, or also aquifer reservoirs. My understanding is that something like 80 percent of the gas storage in the United States is depleted hydrocarbon reservoir storage. There’s another 10 percent that uses solution mine for the salt caverns. There’s another 10 percent or so that use aquifer reservoirs for storage.

API, they broke up their recommended practices to target the two separate categories of storage facilities.

Russel:  I think it’s interesting, because if you work on the Gulf Coast you’re probably a lot more familiar with solution-mined or salt caverns. If you work in the Northeast you probably have more experience with depleted reservoirs. Just the nature of the geology.

Keith:  I think that’s accurate.

What we have, the state of play was we had PHMSA getting these comments. API’s putting these standards into place. Then, we have another significant event which was basically the turning point.

There was a natural gas storage well that leaked for several months out in Aliso Canyon, California. It ended up being the largest methane leak from a natural gas storage well in U.S. history. It went on for about four months before they could stop it.

There was a significant public response to that event, both in the state of California and then, eventually, at the federal level with Congress and PHMSA and some of the other agencies that have a role in regulating underground gas storage.

While this event was unfolding, at the same time Congress was also looking at reauthorizing the Federal Pipeline Safety Act. That’s the statute that I talked about earlier in the podcast that gives PHMSA the authority to establish these federal regulations for underground gas storage facilities.

In response to this significant event that was happening at the time and had just gotten under control, Congress put a rulemaking mandate into the Pipeline Safety Act that said PHMSA, you must establish regulations for underground gas storage facilities.

Congress also included another provision that created an interagency task force to examine the safety of underground natural gas storage facilities. Basically, with Aliso Canyon, what you had was the event that broke the camel’s back. It happened at the same time that Congress was reopening the pipeline safety statute.

You ended up getting this rulemaking mandate where Congress is basically saying, “Look. PHMSA, you’re going to go out and do this. Here’s some guidance on the things we want you to consider in getting the rules in place, but these rules need to get issued.”

Russel:  Basically, it becomes a congressional mandate. They’re using reauthorization as a way to do that.

Keith:  We saw this. We talked about this on some of the earlier shows with San Bruno and Marshall, Michigan. In this area of the law, that is a pattern that you see over and over again, where you have an incident or a series of incidents. Depending on when they happen, you end up getting a congressional response.

The congressional response is usually a direction to the agency to go do something about it.

Russel:  Basically, pipeline operator, if you don’t want additional regulation, don’t make additional mistakes.

Keith:  Easier said than done. This is an extremely safe industry. These events like Aliso Canyon, they’re extremely rare events that occur. The industry has a very good safety record, even with respect to underground gas storage.

Russel:  I say this all the time, Keith. Being a pipeline operator is a little bit like being an offensive lineman. You only get your name called on the public address when you mess up.

Keith:  That’s exactly right. They only care when they see the flag, right?

Russel:  That’s right. That’s exactly right.

I say that a little tongue in cheek, but there is a reality to it. Most rulemaking comes out of recommendations following accidents or incidents.

Keith:  I think that’s the pattern that we’ve seen in the past. I think it’s a pattern we’re going to continue to see in the future.

Russel:  In fact, if anything, I think that pattern is going to accelerate.

Keith:  We have this congressional mandate that came out in the 2016 reauthorization. PHMSA took its marching orders and in a very quick amount of time, we’re talking months after President Obama signed that law, PHMSA issued an interim final rule establishing an initial set of rules and requirements for underground gas storage facilities.

Interim final rules are unique because it’s a mechanism that federal agencies use to issue final binding regulations without providing notice and comment before the rules get issues. The standard way that federal regulations are usually developed is the federal agency will issue a proposed rule, or in some cases even an advanced notice of proposed rules.

The public will get to see the proposal and comment on it. Then, the agency will develop a final rule that has the force and effect of law.

Under the Administrative Procedure Act, there is this exception that allows federal agencies to dispense with the notice and comment requirements if they can demonstrate that good cause exists. PHMSA relied on that good cause exception to issue these interim final regulations in the months right after the passage of the 2016 act.

The agency basically cited the Aliso Canyon event, the lack of federal rules, some of the adverse safety environmental and economic effects that could result from another incident at the same level as an Aliso Canyon event to issue these interim final regulations without notice and comment.

That was unusual. We’ll talk a little bit later about what the implications of that have been for the rest of the rulemaking process, but in this case the rules came first and the comment period came second.

In terms of what PHMSA actually did in the rules from the overall framework perspective, they incorporated those two API industry standards that I mentioned before by reference into the rules. They told operators, “Go follow these two API standards.”

They also did something that proved to be a little more controversial.

They included language in the regulation that actually overrode some of the language in the API recommended practices and had the effect of transforming all of the permissive provisions, the ones that use should language, and turned those into mandatory provisions, or ones that used shall language.

I know you’ve worked on some of these industry standards committees. There’s always a significant debate in developing an industry standard about whether we should use a “shall” for this provision, which connotes a mandatory obligation, or should we use a should for this provision, which is a permissive or a discretionary obligation.

What PHMSA did in the interim final rules for gas storage is they said, “We are going to transform all the shoulds into shalls. We’re going to give operators a way out by providing a deviation clause in the rules that allows you to deviate if you document the basis for doing so with a sufficient technical justification.”

That was a very significant and unexpected action by the agency. There’s always been this tension when they’re adopting industry standards on what provisions they want to pull into the code, what provisions they may want to override or change.

This isn’t the first time, at least in the PHMSA rulemaking, where they used this conversion clause to turn all of these permissive requirements into mandatory requirements.

Russel:  To me, that’s kind of interesting simply because the way this typically works is when I want to go and…As an industry, I’m going to take a standard and I’m going to update it, there’s this…If this is a standard that’s part of the code because it’s incorporated by reference, what does that mean?

If that code’s incorporated by reference and it’s should statements versus shall statements, what does that mean in terms of what do we do as an industry to respond to all of that? That actually becomes quite complex.

Keith:  It is. The concern that PHMSA has, or at least some of the inspection and enforcement staff have always had with the should statements is enforceability. If a provision in a recommended practice says that someone should do something, what happens if they don’t?

What can we do from an enforcement perspective to make sure that operators are following appropriate provisions in these recommended practices? I think what PHMSA did was maybe got over its skis a little bit in addressing that problem with this provision that transformed all the shoulds to the shalls.

I understand the concern that they were trying to address by doing it.

Russel:  I try to look at these things when I’m being serious, and I’m often not being serious, but I try to look at these things from both perspectives. When you look at this from the regulators’ perspective and the length of time they went without having any rules, and then they get a black eye.

They need to show that, “We actually are managing this. I’ll show you how I’m managing this.”

Keith:  I think that’s right. I think they were reacting to the pressures that they were under in the moment, given the history and all of the concerns surrounding the Aliso Canyon event and the desire to want to do something to demonstrate to the public and to the congress that they were taking the issue seriously and that there were rules in place now.

Beyond the issue with the should to shall conversion, PHMSA included some other provisions about developing procedures to implement those requirements. Then, they extended some of their reporting requirements to operators of underground natural gas storage facilities.

That’s where the story ended, at least with respect to the first round of these regulations. But because PHMSA had issued these as interim final rules without notice and comment, what they did is they provided the public with the opportunity to submit comments after the IFR got issued.

They received lots of comments from industry and other concerned stakeholders about what was in the IFR. Then, they also had two challenges that were filed to the IFR itself. There was a joint industry trade association petition for reconsideration that was filed with the agency asking PHMSA to reconsider some of the provisions in the interim final rule.

Then, there was a separate lawsuit that was filed by the state of Texas in the U.S. Court of Appeals for the Fifth Circuit challenging the interim final rule, as well.

You had this pool of comments that were coming in to PHMSA that they needed to consider. You got a petition for reconsideration that was filed at the administrative level. Then, you had a litigation initiated in the federal courts.

There was a lot of activity that happened and a lot of things that PHMSA had to consider after issuing the interim final rules before they took the next step in the rulemaking process.

Russel:  It’s never easy, right?

That’s all great background. How did PHMSA go about actually addressing this mandate? What did they do to rationalize the rules and make sure that what they were doing was making sense?

Keith:  At the end of the day when all the dust settled and they issued the final rule earlier this month, what PHMSA did was, from an overall approach perspective, was consistent with what they did in the interim final rule.

They issued this new final rule that incorporates the provisions in those two industry standards by reference. It tells underground storage operators to follow those provisions. Provide some staggered compliance deadlines for existing facilities, and some additional compliance deadlines we’ll talk about in a little bit for some of the other provisions.

From an overall philosophical perspective, PHMSA continued to incorporate those two industry standards by reference.

Russel:  What’s actually in this final rule?

Keith:  What you’ll see in the final rule, and it’s actually pretty short in terms of the regulatory language…You’ll see an updated version of the old regulation that PHMSA had for underground gas storage facilities. You will see some new language that will go into effect next month on the effective date of the rule.

You’ll see provisions that provide obligations for operators to comply with the respective provisions in those two RPs. You will no longer see that override requirement that we spent a lot of time talking about. PHMSA took out that should to shall provision. That’s no longer in the rule. There’s no longer a provision for deviations.

Then, you’ll also see some additional language relating to development of operation and maintenance procedures to implement the rule. Then, some provisions relating to integrity management, which are probably the more significant changes, in addition to elimination of the should-to-shall requirement.

On the integrity management side, what PHMSA basically said was it told operators of both types of underground storage facilities to follow the integrity management requirements that are in the API RP for depleted hydrocarbon reservoirs and aquifer reservoirs.

PHMSA said that the language of the integrity management provision in that recommended practice was superior so they wanted everybody to follow it. Then, they put some additional overriding language related to integrity management that sets up a framework that looks a lot like the framework that PHMSA uses for gas transmission integrity management.

There’s a provision that sets out what the basic elements of the integrity management program need to look like. Then, there are provisions that set deadlines for when operators need to conduct their baseline assessments, both of the reservoirs themselves and of the wells and related facilities.

Then, there’s a provision that sets the reassessment interval for integrity management purposes, uses the same seven-year interval that you see on the gas transmission integrity management side.

Russel:  I have a question. I’m going to put you on the spot here a little bit, if I might. I know that being an attorney you don’t want to make any representations that are wrong. If you want to not answer the question, that’s perfectly okay.

One of the things that always comes up for me in these conversations is what are the unintended consequences? When I make a rule thinking I’m covering a certain aspect of operations or a certain kind of facility, what actually gets brought in that I wasn’t thinking about when I was making the rule?

To that point, I want to ask a specific question. We work in the control room. We’re very involved in Control Room Management. What I’m wondering is, does this mean that now all natural gas storage facility control rooms are covered by control room management?

Keith:  I’m going to take a stab at that question. I’m going to give an answer. This answer is free and you get what you pay for in my business. PHMSA put language at the beginning of the regulation for underground storage facility in 192.12 that says the rules in here are the only rules that apply.

Based on that language, I would say that the only rules that the operators for underground gas storage facilities need to apply are the ones that are in 192.12. That would not extend to the control room management provisions or any of the other provisions in 192 that apply to gas pipeline facilities.

I will reserve my right to be completely wrong about that …but that is my early answer.

Russel:  I’ve asked this question to three different people, now two attorneys and one regulatory consultant. I’m happy to say I’ve gotten three different answers. [laughs]

Keith:  I guess time and better heads will tell if I’m completely off on that. The other thing I will say about unintended consequences is the reason that we have a rulemaking process is to avoid unintended consequences as much as we can.

That’s one of the reasons why, when we talked about the interim final rule early on under that good cause exception, those exceptions are very narrowly written because we don’t want federal agencies issuing final rules without prior review and comment because that increases the likelihood that something in that rule will have an unintended consequence.

One of the things that comes out of the rulemaking process, it’s slow, it’s laborious, there are multiple levels of review. What you’re trying to do there is get a product at the end of the day that is clear, that avoids unintended consequences as much as possible.

That’s my philosophical statement on unintended consequences. I’m sure you or the other attorneys you talk to will let me know at some point if I’m wrong about CRM.

Russel:  Or everybody’ll get paid money to argue about it. [laughs]

Keith:  Right, and then all the lawyers will if we’re arguing about something.

Russel:  I’m being a little bit flippant. I appreciate you laughing along with me. I think it’s an interesting question, though. Whenever these rules come out, it takes a while before these kind of details settle out. There’s analysis that needs to occur and such, and then there’s a little bit of seasoning or maturing of the implementation that has to occur as well.

I think it’s interesting, the other part of this whole conversation about the natural gas storage rule versus the 192, in total, is, “What’s a pipeline facility?” and, “When does a natural gas storage system become a pipeline facility” That’s a whole other interesting conversation, right?

Keith:  Right, and it seems they tried to address some of those concerns. They did revise the definition of underground gas storage facility in 192 because they got a lot of comments on, “Where does the underground natural gas storage facility end and the regulated 192 pipeline and storage field begin?”

They tried to address that by providing some additional language in the definition of underground gas storage facility to set up that point of demarcation. That’s always been a struggle. We’ve had clients that have struggled with that issue before these rules came out, trying to figure out, “At what point in the storage field do my 192 obligations end?”

We see the same thing with piping that goes into plants or goes into facilities. The same questions come up all the time, “When do the 192 rules end and some other set of regulatory requirements begin?” PHMSA has tried through interpretations, in this case through some additional language in the code, to clear it up a little bit. I think there will be continuing conversations about that.

Russel:  There will always be room for continuing conversation.

Keith:  Yes, there will be.

Russel:  [laughs] Let’s wrap up. Is there anything you’d like to say, Keith, that provides a capstone or a summary to all of this?

Keith:  I have two big picture takeaways from the underground gas storage rule. The first is incidents matter. We talked about that a lot during this episode and on some of the earlier episodes.

What you see with this rulemaking is what you have seen in numerous other rulemakings in the pipeline safety world. You have incidents. You have events that generate public interest, that lead to additional regulation or that lead to additional mandates from Congress. As we talked about earlier in the show, I think that’s something that’s going to continue.

The other big lesson for me from this rulemaking is having industry standards in place also matters a lot. API put itself in a position to have these two recommended practices completed before the Aliso Canyon event happened.

Because those two industry standards were in place, they had the ability and people in the industry had the ability when Congress started looking at the need for regulation, and PHMSA started looking at the need for regulation.

There was an ability to say, “Look, industry has already put a lot of effort into this. Here are two standards that we think are going to go a long way to providing a solution to this problem.” PHMSA was able to incorporate those standards by reference.

Again, I think that speaks very well to continuing efforts by industry to invest time and resources in developing industry standards, either new industry standards or updates of existing ones.

Russel:  It also says something about our industry in total that we’re interested in doing those kinds of things. We, as an industry, can typically move much faster, even though anybody that’s written a standard, it’s not a fast process. It’s still faster than a regulatory rulemaking.

I think the industry is really trying to lean in to key issues and get ahead of any kind of regulatory rulemaking by getting these standards developed and matured, looking for gaps, and covering them and all that kind of stuff.

Keith:  The industry needs to be the best advocate for what it’s doing. They know a whole lot about their business and their operations. They’re in a great position to help demonstrate what needs to be done from a safety perspective, and they should take advantage of that opportunity whenever they can.

Russel:  Absolutely. Keith, thanks so much for coming back on. I know that a lot of people are interested in knowing about this particular rulemaking and what’s in it. There’s a lot coming down the rulemaking pipeline in the next 12 to 18 months, so I’m sure we’re going to have you back as these things drop.

Keith:  I hope so. As I said before, I really looked forward to doing the program. You’ll let me know in the next episode if I was right or wrong about the CRM question.

Russel:  I don’t know that I’ll know that fast.

Keith:  [laughs]

Russel:  I don’t know that there’s necessarily a right or wrong. There’s an interpretation.

Keith:  Understood.

Russel:  Thanks, man. Good to talk to you.

Keith:  You, too. Talk to you soon.

Russel:  I hope you enjoyed this week’s episode of the Pipeliners Podcast and our conversation with Keith Coyle.

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Russel:  If you have ideas, questions, or topics you’d be interested in, please let us know on the Contact Us page at pipelinerspodcast.com, or reach out to me on LinkedIn. Thanks for listening. I’ll talk to you next week.

Transcription by CastingWords

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