E8-10627. Pipeline Safety: Notice to Operators of Gas Transmission Pipelines on the Regulatory Status of Direct Sales Pipelines

AGENCY:

Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.

ACTION:

Notice; Issuance of Advisory Bulletin.

SUMMARY:

PHMSA advises gas transmission pipeline operators that the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 eliminated the former exception of direct sales natural gas pipelines from the definition of an interstate gas pipeline facility. As a result, direct sales gas transmission pipelines subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC) formerly considered to be intrastate pipelines for purposes of the pipeline safety laws are now defined as interstate pipelines. As interstate pipelines, direct sales pipelines are subject to the applicable Federal pipeline safety regulations and PHMSA is responsible for regulatory oversight and enforcement. In some cases, inspections of these pipelines may continue to be conducted by a State pipeline safety agency acting as PHMSA's representative.

FOR FURTHER INFORMATION CONTACT:

Cheryl Whetsel, [phone], or by e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

I. Background

The Federal pipeline safety laws (49 U.S.C. 60101 et seq.) define an “interstate gas pipeline facility” as a facility subject to the jurisdiction of the FERC under the Natural Gas Act (15 U.S.C. 717 et seq.). Prior to the passage of the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 (PIPES Act) (Pub. L. 109-468), the interstate gas pipeline facility definition contained an exception for a gas pipeline facility transporting gas from an interstate gas pipeline in a State to a direct sales customer in that State buying gas for its own consumption. Because of this exception, these pipelines were considered to be intrastate pipelines and were regulated on a state-by-state basis. Section 7 of the PIPES Act changed this by eliminating the exception. As a result, direct sales gas transmission pipelines subject to FERC jurisdiction formerly considered to be intrastate pipelines for purposes of the pipeline safety laws are now considered to be interstate pipelines.

As interstate gas pipeline facilities, direct sales pipelines are subject to the applicable Federal pipeline safety regulations and PHMSA is responsible for regulatory oversight and enforcement. Subjecting direct sales gas pipelines to the same requirements as other interstate gas pipelines should provide improved regulatory certainty and ensure consistency in regulatory requirements.

In cases where a State has both an annual certification for gas under 49 U.S.C. 60105 and an agreement under 49 U.S.C. 60106(b), inspections of these direct sales pipelines may continue to be conducted by a State pipeline safety agency acting as PHMSA's representative although any enforcement action must be referred to PHMSA. If the line has a State certification from the State Public Utility Commission (PUC) that such State PUC has regulatory jurisdiction over the rates and service of the line and is exercising it, that would be grounds for concluding that the line is not subject to FERC jurisdiction and therefore can be regulated as an intrastate pipeline by a State having a certification for gas under 49 U.S.C. 60105. This change does not affect direct sales pipelines that are intrastate pipelines because they extend from another intrastate line to the consumer.

II. Advisory Bulletin (ADB-08-01)

To: Owners and Operators of Gas Transmission Pipeline Systems.

Subject: Notice to Operators of Gas Transmission Pipelines on the Regulatory Status of Direct Sales Pipelines.

Advisory: PHMSA advises gas transmission pipeline operators that the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 eliminated the exception of direct sales natural gas pipelines from the definition of an interstate gas pipeline facility. As a result, direct sales gas transmission pipelines subject to the jurisdiction of FERC formerly considered to be intrastate pipelines for purposes of the pipeline safety laws are now defined as interstate pipelines. As interstate pipelines, direct sales pipelines are subject to the applicable Federal pipeline safety regulations and PHMSA is responsible for regulatory oversight and enforcement. In some cases, inspections of these pipelines may continue to be conducted by a State pipeline safety agency acting as PHMSA's representative.

Authority: 49 U.S.C. chapter 601; 49 CFR 1.53.

Issued in Washington, DC, on May 7, 2008.

Jeffrey D. Wiess,

Associate Administrator for Pipeline Safety.