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This is what happens when PHMSA doesn't follow the law

August 22, 2024

 

On August 16, 2024, the U.S. Court of Appeals for the District of Columbia Circuit issued a significant ruling regarding several natural gas pipeline safety standards adopted by the Pipeline and Hazardous Materials Safety Administration (PHMSA). This ruling was directly related to the cost-benefit analysis requirements outlined in the Pipeline Safety Act.

 

Court Decision and Pipeline Safety Act

 

The court vacated several pipeline safety standards that were finalized by PHMSA in 2022. This decision was based on PHMSA's failure to adequately justify that the benefits of these standards outweighed their costs, as required by the Pipeline Safety Act.

 

Overturned Standards

 

The court vacated four out of five challenged standards:

1. High-frequency electric resistance welding (ERW) standard

2. Crack maximum allowable operating pressure (MAOP) standard

3. Dent-safety-factor standard

4. Corrosive-constituent standard

 

Cost-Benefit Analysis Requirement

 

The Pipeline Safety Act requires PHMSA to conduct a thorough cost-benefit analysis for its proposed regulations. This requirement serves several purposes:

1. It helps PHMSA and stakeholders compare alternatives and identify the best regulatory options.

2. It provides a clear, legally-defensible standard for evaluating proposed rules.

3. It allows for transparent public discussion and input on the impacts of proposed regulations.

 

Court's Reasoning

 

The court found that PHMSA's analysis of the costs of the new standards was "inadequate, inconsistent or missing." This failure to properly conduct and present a cost-benefit analysis as required by the Pipeline Safety Act was the primary reason for overturning these standards.

 

Industry Perspective

 

The Interstate Natural Gas Association of America (INGAA) has expressed support for retaining the cost-benefit analysis requirement in the Pipeline Safety Act. They argue that it helps identify the most effective regulatory options and provides a clear, legally-defensible standard.

 

Impact and Future Implications

 

This ruling represents a significant setback for PHMSA's efforts to enhance pipeline safety regulations. It underscores the importance of thorough cost-benefit analyses in the rulemaking process. Moving forward, PHMSA will need to ensure that its proposed regulations are supported by comprehensive cost-benefit analyses that clearly demonstrate how the benefits justify the costs, as required by the Pipeline Safety Act.

 

 

Sources and Additional Resources:

[1] https://www.congress.gov/116/meeting/house/109651/witnesses/HHRG-116-IF03-Wstate-OsmanC-20190619.pdf

[2] https://www.nationalacademies.org/documents/embed/link/LF2255DA3DD1C41C0A42D3BEF0989ACAECE3053A6A9B/file/DBDBC21715C09EE04ED51CE2E6B629787E7B32202090?noSaveAs=1

[3] https://policyintegrity.org/documents/Comments_of_IPI_PHMSA_Lease_Sale.pdf

[4] https://www.ogj.com/general-interest/government/article/14297865/proposed-gas-pipeline-safety-rule-has-big-problems-trade-groups-say

[5] https://www.spglobal.com/marketintelligence/en/news-insights/trending/637xGrE4T9pCm6VScr9R9g2

[6] https://www.phmsa.dot.gov/legislative-mandates/pipeline-safety-act/pipeline-safety-regulatory-certainty-and-job-creation-act-2011

[7] https://www.transportation.gov/fueling-americas-economy-legislation-improve-safety-and-expand-us-pipeline-infrastructure

[8] https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/regulatory-compliance/pipeline/enforcement/5776/o-m-enforcement-guidance-part-192-7-21-2017.pdf