CHAPTER 14 NATURAL GAS GATHERING LINE SAFETY REGULATION: POTENTIAL IMPACT ON OIL AND GAS DEVELOPMENT
| Jurisdiction | United States |
(Nov 2004)
NATURAL GAS GATHERING LINE SAFETY REGULATION: POTENTIAL IMPACT ON OIL AND GAS DEVELOPMENT
Chair, Independent Petroleum Association of America's
Pipeline Safety Task Force
Vorys, Sater, Seymour and Pease LLP
Columbus, Ohio
Mr. Airey is a Partner with the firm of Vorys, Sater, Seymour and Pease LLP in Columbus, Ohio. He specializes in oil and gas law with emphasis on federal and state regulatory matters, oil and gas marketing and development agreements, gas purchase agreements and disputes arising from gas purchase contracts. During law school Mr. Airey served on the Law Review and he was admitted to the practice of law in Ohio (1973) and California (1974).
Mr. Airey is the author of "Transportation of Direct Sale Natural Gas", 5th Annual Proceeding of Eastern Mineral Law Foundation, Matthew Bender, 1985; "Price Controls for Natural Gas and Crude Oil", Ohio Legal Center Institute, 1980; "Crude Oil Price Regulation," Proceedings of Eastern Mineral Law Foundation, Matthew Bender, 1980; with John K. Keller, "Basic Revision in the Ohio Oil & Gas Law", Ohio Bar, Volume LII, No. 46, December 1, 1980.
Mr. Airey is Chairman of the Law Committee, Independent Petroleum Association of America, 1999-present; Chairman of the Legal Committee, Ohio Oil and Gas Association, 1982-present; Member of Board of Trustees Ohio Oil and Gas Association, 1988-present and Member of the Executive Committee of the Board of Trustees of the Ohio Oil and Gas Association, 1994-present; Trustee of the Eastern Mineral Law Foundation, 1980-present; Member of the Executive Committee, Eastern Mineral Law Foundation, 1990-1993; Member of Gas Committee and Gas Subcommittee of the Independent Petroleum Association of America, 1993-present; Member: Ohio State (Member, Natural Resources Committee, 1977-present; Vice Chairman, 1979-1982; Chairman, 1983-1985); California; American (former Vice Chairman of the Natural Gas Marketing & Transportation Committee, Section on Natural Resources, Energy and Environmental Law); and Federal Energy Bar Association.
I. Introduction
Over the past two decades, oil and gas producers have repeatedly disagreed with regulators over whether federal pipeline safety regulations could be lawfully applied to certain upstream pipeline operations. The issue, generally, is whether the operations are properly characterized as production or gathering, and if gathering, whether they are nonetheless exempt from regulation due to their rural character. Recognizing the need to resolve those disagreements, the U.S. Department of Transportation has revitalized a rulemaking effort to clearly define natural gas gathering for purposes of enforcing federal pipeline safety regulations.
The potential impact of that rulemaking could be enormous, costing producers hundreds of millions of dollars to upgrade their facilities and causing the shut-in of significant volumes of needed natural gas resources. This is especially true for production operations located in urbanized settings. This outline tracks the historical development of that rulemaking and discusses the impact that those regulations could have on natural gas production. In addition, this outline briefly examines U.S. Department of Labor, Occupational Safety & Health Administration ("OSHA") and state regulations relevant to oil and gas production activities in urbanized settings.
II. Historical Development of Natural Gas Line Safety Regulation
A. Natural Gas Pipeline Safety Act of 1968
Overview
1. Enacted to establish "minimum Federal safety standards for the transportation of natural and other gas by pipeline and for pipeline facilities." 1
(a). Congress believed that the rapid growth of the natural gas industry, and in particular the significant increase in pipeline mileage since the Second World War, required a consideration of the industry's pipeline safety record, with a view towards ensuring the safety in design, installation, inspection, testing, construction and operation of pipeline facilities. 2
2. Definitions and key terms:
(a). Transportation of gas is the touchstone of federal regulation and includes:
(i) the gathering, transmission, or distribution of gas by pipeline, or the storage of gas, in interstate or foreign commerce; and
(ii) the movement of gas through regulated gathering lines. 3
(b). Transportation of gas excludes:
"The gathering of gas . . . in those rural locations that are located outside the limits of any . . . populated area that the Secretary of Transportation determines to be a nonrural area, except that the term 'transporting gas' includes the movement of gas through regulated gathering lines." 4
(c). "Gathering Line" means a pipeline that transports gas from a production facility to a transmission line or main. 5
(d). "Distribution Line" means a pipeline other than a gathering or transmission line. 6
(e). "Transmission line" means a pipeline, other than a gathering line, that transports gas from a gathering line or storage facility to a gas distribution center, storage facility or large volume customer that is not downstream from a gas distribution center; a pipeline that operates at a hoop stress of 20 percent or more of SMYS; or a pipeline that transports gas within a storage field. 7
(f). Note that the definitions are circular (e.g., transmission is defined in terms of gathering, which in turn is defined in terms of transmission and production, which is not defined). It is this ambiguity that has led to the disagreements between producers and regulators.
3. Accordingly, pipeline facilities subject to the Act include only those facilities used for the transmission and distribution of natural gas, as well as a limited group of gathering lines. 8
4. Noticeably excluded by Congress from the Pipeline Safety Act's jurisdiction, however, are those facilities used to transfer natural gas during production operations. 9
Legislative History and Amendments
5. The Senate initially excluded gathering lines entirely from the Pipeline Safety Act's jurisdiction based on their remarkable safety record:
"This jurisdiction had not been in the bill as reported by the Senate committee, but had been added on the floor of the Senate. There is no question that there exist certain gathering lines which are located in populous areas but the tremendous bulk of such lines is located in rural areas. Testimony was offered as to the safety record of these lines and that no man-days had been lost as the result of accidents on gathering lines during the past 6 years. The safety record is impressive." 10
6. Congress, mindful of the safety of those citizens in more populous areas, however, eventually included within the Act's jurisdiction those gathering lines located within municipalities, but maintained the exclusion for those lines located in rural areas. It did so through the Pipeline Safety Act's definition of "transportation of gas."
Transportation of gas means "the gathering, transmission or distribution of gas by pipeline . . .; except that it shall not include the gathering of gas in those rural locations which lie outside the limits of any incorporated or unincorporated city, town, village, or any other designated residential or commercial area such as a subdivision, a business or shopping center, a community development, or any similar populated area which the Secretary may define as a nonrural area." 11
7. In 1992, and again in 1996 (although without altering the deadline), Congress directed the Department's Research and Special Program Administration (the "RSPA") to determine which, if any, rural gathering lines needed to be regulated based on the specific physical safety risks that the lines presented:
"Not later than October 24, 1995, the Secretary, if appropriate, shall prescribe standards defining the term "regulated gathering line." In defining the term, the Secretary shall consider factors such as location, length of line from the well site, operating pressure, throughput, and the composition of the transported gas or hazardous liquid, as appropriate, in deciding on the types of lines that functionally are gathering but should be regulated under this chapter because of specific physical characteristics." 12
(a). The legislative history shows that this determination was to be based on the actual -- as opposed to merely speculative -- risks presented by those lines. The Department was directed to:
"Find out whether any gathering lines presented a risk to people or the environment, and if so how large a risk and what measures should be taken to mitigate the risk. A possible outcome of the DOT rulemaking is...
To continue reading
Request your trial