The Railroad Commission of Texas (Commission) proposes amendments to §§8.1, 8.5, 8.101, and 8.115 and new §8.135, relating to General Applicability and Standards, Definitions, Pipeline Integrity Assessment and Management Plans for Natural Gas and Hazardous Liquids Pipelines, New Construction Commencement Report, and Penalty Guidelines for Pipeline Safety Violations; amendments to §§8.203, 8.205, 8.210, 8.215, 8.230, and 8.235, relating to Supplemental Regulations, Written Procedure for Handling Natural Gas Leak Complaints, Reports, Odorization of Gas, School Piping Testing, and Natural Gas Pipelines Public Education and Liaison; and amendments to §§8.301, 8.305, 8.310, and 8.315, relating to Required Records and Reporting, Corrosion Control Requirements, Hazardous Liquids and Carbon Dioxide Pipelines Public Education and Liaison, and Hazardous Liquids and Carbon Dioxide Pipelines or Pipeline Facilities Located Within 1,000 Feet of a Public School Building or Facility.

The Commission proposes the amendments and new rule to update the adoption by reference of federal pipeline safety provisions and citations, to address new risk management initiatives for the Commission's pipeline safety evaluation program, and to remove outdated or duplicative rule requirements.

In §8.1(a)(1)(A), the Commission proposes to remove the word "natural" and to add a new subparagraph (B) to address onshore pipelines and gathering and production facilities. In §8.1(b), the Commission changes the effective date from July 1, 2005, to August 16, 2007, to reflect a new date for the adoption by reference of federal pipeline safety statutes and proposes new wording in paragraphs (3) and (4) to add references to 49 CFR Part 40 and to another Commission rule, §3.70, relating to Pipeline Permits Required.

The Commission proposes the amendments in §8.1(b) to update the minimum safety standards and to adopt by reference the United States Department of Transportation's (USDOT) pipeline safety standards found in 49 U.S.C. §§60101, et seq.; 49 Code of Federal Regulations (CFR) Part 191, Transportation of Natural and Other Gas by Pipeline; Annual Reports, Incident Reports, and Safety-Related Condition Reports; 49 CFR Part 192, Transportation of Natural and Other Gas by Pipeline: Minimum Federal Safety Standards; 49 CFR Part 193, Liquefied Natural Gas Facilities: Federal Safety Standards; 49 U.S.C. §§60101, et seq.; 49 CFR Part 195, Transportation of Hazardous Liquids by Pipeline; and 49 CFR Part 199, Drug and Alcohol Testing. The current rule adopts the federal pipeline safety standards as of July 1, 2005; the proposed amendment will show this date as August 16, 2007. The federal safety rule amendments that will be captured are summarized in the following paragraphs.

USDOT's Amendment No. 192-101(102) and 195-85(86), published at 70 Federal Register (FR) 61571, addressed current regulations governing integrity management of gas transmission lines where an operator using direct assessment to evaluate corrosion risks must carry out the direct assessment according to PHMSA standards. In response to a statutory directive, the final rule prescribes similar standards operators must meet when they use direct assessment on certain other onshore gas, hazardous liquid, and carbon dioxide pipelines. PHMSA stated that broader application of direct assessment standards will enhance public confidence in the use of direct assessment to assure pipeline safety. The final rule took effect November 25, 2005.

USDOT's Amendment No. 192-102, published at 71 FR 13289, adopted a consensus standard to distinguish onshore gathering lines from other gas pipelines and from production operations. In addition, it established safety rules for certain onshore gathering lines in rural areas and revised current rules for certain onshore gathering lines in nonrural areas. Operators will use a new risk-based approach to determine which onshore gathering lines are subject to PHMSA's gas pipeline safety rules and which of these rules the lines must meet. PHMSA intended the action to reduce disagreements over classifications of onshore gathering lines, increase public confidence in the safety of onshore gathering lines, and provide safety rules consistent with the risks of onshore gathering lines. The final rule took effect April 14, 2006.

Amendment Nos. 192-103, 193-19, and 195-86, published at 71 FR 33402, updated the pipeline safety regulations to incorporate by reference all or parts of new editions of voluntary consensus technical standards to enable pipeline operators to utilize current technology, materials, and practices. The final rule took effect July 10, 2006.

Docket OST-2007-26828, published at 72 FR 1298, was an interim final rule regarding the National Highway Transportation Safety Administration's (NHTSA's) recently approved new breath tube alcohol screening device which will qualify for use in DOT agency-regulated testing once it appears on NHTSA's conforming products list. The interim final rule will provide procedure for use of the new device and remove procedures for a previously approved breath tube alcohol screening device which is no longer being manufactured. The interim final rule took effect January 11, 2007.

Amendment Nos. 192-103 and 195-86, published at 72 FR 4655, addressed PHMSA's amendment of a final rule published in the Federal Register on June 9, 2006, which updated the pipeline safety regulations to incorporate by reference all or parts of new editions of voluntary consensus technical standards to enable pipeline operators to utilize current technology, materials, and practices. The final rule took effect March 5, 2007.

Docket No. PHMSA-2005-22642, published at 72 FR 20055, concerned a final rule requiring operators to use design and construction features in new and replaced gas transmission pipelines to reduce the risk of internal corrosion. The design and construction features required by the rule will reduce the risk of internal corrosion and related pipeline failures by reducing the potential for accumulation of liquids and facilitating operation and maintenance practices that address internal corrosion. The final rule took effect May 23, 2007.

Amendment Nos. 192-104 and 195-87, published at 72 FR 39012, modified the integrity management regulations for hazardous liquid and natural gas transmission pipelines. The modifications included adding an eight-month window to the period for reassessing hazardous liquid pipelines; modifying notification requirements for operators of hazardous liquid and natural gas pipelines; repealing a requirement for gas operators to notify local authorities; and allowing alternatives in calculating pressure reduction when making an immediate repair on a hazardous liquid pipeline. The action was intended to improve pipeline safety by clarifying the integrity management regulations and providing operators with increased flexibility in implementing their integrity management programs. The final rule was effective August 16, 2007.

Proposed amendments in §8.5(18), (24), and (28) add references to 49 CFR Part 40, clarify the definition of master metered system and add a reference to onshore pipeline, gathering, and production facilities to the definition of "transportation of gas."

In §8.101(b), the Commission proposes to remove the word "gathering" from the description of intrastate transmission lines; a similar change is also proposed in the title of Table 1 in subsection (b)(2).

The Commission proposes new wording in §8.115 to add a reference to Form PS-48 and describe requirements for new construction reports.

The Commission proposes new §8.135 to move the penalty guidelines for pipeline safety violations from Subchapter C, which applies to requirements for natural gas pipelines only, to Subchapter B, so that the guidelines will apply to all pipelines. The text of the rule is the same as §8.245, which is proposed for repeal in a concurrent proposal. The changes are found in two of the tables. These changes mean that penalty provisions for violations of the federal and Commission rules for hazardous liquids and carbon dioxide pipelines and specific provisions for operator qualification and integrity management on both natural gas and liquids pipelines will be included in the rule.

In §8.203, the Commission proposes to update references to federal statutes that have been changed and with which operators already must comply.

The Commission proposes clarifying wording in §8.205 to state that supervisory review of leak complaints must be completed and documented by 10:00 a.m. each day for calls received by midnight on the previous day.

In §8.210(a)(1), the Commission adds a reference to 49 CFR Part 192.3 and deletes some specific wording that is now covered by Part 192.3. In paragraph (3), proposed to be renumbered to paragraph (2), the Commission adds new subparagraphs (F) and (G) to require including the phone number of the operator's on-site person and estimated property damage, including cost of gas lost, of the operator, others, or both. Redesignated subparagraph (H) includes new wording to state that ignition, explosion, rerouting of traffic, evacuation of any building, and media interest are considered significant facts. In paragraph (3), the Commission adds a reference to 49 CFR Part 191 and adds new wording to describe Department of Transportation reports.

Section 8.210(b)(1) includes a proposed addition of the word "intrastate" for systems which must file pipeline safety annual reports.

A new subsection (e) is proposed to be added to require natural gas operators to submit on a semi-annual basis information regarding repaired leaks on their pipeline system as well as unrepaired leaks. Each operator will be required to submit a summary of repaired leaks on a form created by the Safety Division that describes the leak and the method of repair. A second report will also be required that will list the number of unrepaired leaks on the pipeline system. Each of the reports will be submitted online into the Commission's Pipeline Safety Integrity system on June 30 and December 31 of each calendar year.

In §8.215(a)(3), the Commission proposes to add that gas odorization must be verified by the supplier. In subsection (b), the Commission proposes that commercially available odorization equipment must be used and proposes to delete references to shop-made equipment.

In subsection (c), the Commission proposes that commercially available malodorants must be used and changes the reference from 1.0% or less by volume to one-fifth of the lower explosive limit. In subsection (d)(2), the Commission clarifies that malodorant tests must be done at intervals not exceeding 15 months, but at least once each calendar year; a similar change is proposed in subsection (e)(1) for malodorant concentration tests.

The Commission proposes clarifications in §8.230(c)(1) and (2); new subparagraph (A) is proposed to state that school facility pipe testing includes all gas piping from the outlet of the purchase meter to each inlet valve of each appliance.

In §8.235, the Commission proposes clarifying wording to state that liaison activities must be conducted at intervals not exceeding 15 months, but at least once each calendar year, and in subsection (e), to add a specific date of January 15 of each even-numbered year for certain information to be filed.

The Commission proposes to clarify §8.301(a)(1)(A) with new wording in clauses (vi), (vii), and (viii) to include the telephone number of the operator; the operator's on-site person; and to specify that ignition, explosion, rerouting of traffic, evacuation of any building, and media interest are considered significant facts. In subparagraph (B), the Commission proposes clarifying wording concerning reports submitted to the Department of Transportation. In paragraph (2)(A) and (B), the Commission adds the Commission's emergency telephone number and a reference to the Department of Transportation reports.

In subsection (b), the Commission proposes to add that each operator must file an annual report for its intrastate systems located in Texas in the same manner as required by 49 CFR Part 195 using forms supplied by the Department of Transportation. The Commission proposes new subsection (c) concerning safety-related condition reports as specified in 49 CFR 195.

The Commission proposes to delete from §8.305 the requirement for atmospheric corrosion control and to change the requirements for cathodic protection test stations. The Commission also proposes to delete some wording from the monitoring and inspection requirement in current paragraph (5), proposed to be renumbered as paragraph (4).

In §8.310(a), the Commission proposes to add wording that liaison activities must be conducted at intervals not exceeding 15 months, but at least once each calendar year.

Finally, in §8.315(c), the Commission proposes to clarify that pipeline owners and operators must file certain information on January 15 of each odd-numbered year.

Mary McDaniel, P.E., Director, Safety Division, has determined that, for each of the first five years the proposed new rules will be in effect, there will be no fiscal implications for state government. There may be fiscal implications for local governments that operate natural gas distribution systems, which would be similar to those for operators of similarly-sized investor-owned distribution systems. Some record-keeping requirements are proposed to be removed from the rules; in addition, the Commission proposes to reduce the number of incident reports that will need to be telephonically reported to the Commission. There will, however, be an increased cost of compliance for natural gas operators, both municipally-owned and investor-owned, for the proposal to require the semi-annual reporting of identified and repaired leaks in their pipeline systems. Ms. McDaniel anticipates that the costs will vary by operator depending on the data collection process currently used by each natural gas operator. Many of the data items requested are already tracked by operators and the associated costs will be the tabulation of their data; while others may need to add data collection fields in order to provide the requested information.

For a municipally-owned distribution system, Ms. McDaniel anticipates that the fiscal implications will be minimal. For example, one city last year included on its DOT annual report a total of seven leaks that were eliminated during the year. The Commission's proposal would require the reporting of additional information on the type of pipe, type of soil, leak repair method, and more detail on the cause of each leak. Most operators already use the Commission's leak repair reporting form or a modified version of it. For this municipally-owned system, the additional fiscal implications would arise from having to compile the additional information on system leaks and repairs and reporting it online. Ms. McDaniel estimates additional costs of no more than $100.

Ms. McDaniel has determined that, for each year of the first five years that the proposed amendments and new rule will be in effect, the primary public benefit will be accurate reference to federal pipeline safety standards enforced by the Commission and an increased level of safety for the pipeline systems by the identification of additional risk factors. In addition, the amendments and new rule are expected to provide enhanced public safety and increased awareness of safety requirements in the transportation of natural gas, carbon dioxide, and hazardous liquids because the rules will be correctly stated.

Ms. McDaniel has also developed the following analysis of the probable economic cost to persons required to comply with the proposed new rules for each year of the first five years that they will be in effect, as well as the analysis required by Texas Government Code, §2006.002. That statute requires a state agency considering adoption of a rule that would have an adverse economic effect on small businesses or micro-businesses to reduce the effect if doing so is legal and feasible considering the purpose of the statutes under which the rule is to be adopted. Before adopting a rule that would have an adverse economic effect on small businesses, a state agency must prepare a statement of the effect of the rule on small businesses, which must include an analysis of the cost of compliance with the rule for small businesses and a comparison of that cost with the cost of compliance for the largest businesses affected by the rule, using cost for each employee, cost for each hour of labor, or cost for each $100 of sales. The statute defines "small business" as a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit, is independently owned and operated, and has fewer than 100 employees or less than $1 million in annual gross receipts. A "micro-business" is a legal entity, including a corporation, partnership, or sole proprietorship, that is formed for the purpose of making a profit, is independently owned and operated, and has not more than 20 employees. A sole proprietorship is assumed to consist of an individual owner who is the only employee. The following analyses are based on the assumption that the owner of a sole proprietorship is the only employee; a micro-business has five employees; a small business has 50 employees; and a large business has 1,000 employees. Because the Commission does not collect from entities within the Commission's pipeline safety jurisdiction any information about their labor costs or their sales revenues, the comparisons of the cost of compliance and the impact on small businesses and micro-businesses are stated as the cost per employee, based on these stated assumptions.

With respect to compliance with proposed new leak and leak repair reporting requirements in §8.210(e), the following assumptions apply. The hourly cost for an employee is based on information from the Texas Workforce Commission. For 2005, the average hourly wage for experienced workers in the oil and gas extraction industry was $44. Currently, all operators must repair leaks and keep data about the leaks they report. The costs for the largest companies (1,000 employees) will not be very much, if any, because they already record all of this information. Some operators have no leaks; those operators will experience no increased cost of compliance. An operator that repairs 3,000 leaks on a large system might experience up to $5,000 in computer programming costs to sort data for reporting purposes.

The smaller operators may need to change their forms to include more information about the leaks they repair, but the Commission is developing a form to be provided to operators. Ms. McDaniel estimates that reporting the additional data may take an additional ten minutes per leak reported. There will be additional time needed to compile the information.

The following table shows a comparison of the cost per employee under various assumptions regarding compliance with the proposed new leak and leak repair reporting requirements in §8.210(e):

Figure: 16 TAC Chapter 8 - Preamble

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