PHMSA Interpretation #11-0012

Feb 28, 2012

PHMSA Response Letter

U.S. Department of Transportation
Pipeline and Hazardous Materials
Safety Administration
1200 New Jersey Ave, S.E.
Washington, D.C. 20590

FEB 28, 2012

Mr. Wesley Christensen
Senior Vice President
NGL Operations
ONEOK NGL Pipeline, L.P.
100 West Fifth Street
Tulsa, OK 74103-4298

 

Dear Mr. Christensen:

By letter dated August 4, 2011, you asked the Pipeline and Hazardous Materials Safety Administration (PHMSA) for a written interpretation on the applicability of 49 CFR Part 195 to your natural gas liquids (NGLs) processing plant in Bushton, Kansas.  Specifically, you asked whether certain facilities at the plant fall within the scope of the exception in 49 CFR 195.1(b)(8) for the transportation of hazardous liquids through production, refining, or manufacturing facilities and associated storage and in-plant piping systems under 49 CFR 195.2.

The minimum Federal safety standards in Part 195 apply to any facilities at the Bushton plant that are used directly for the transportation of hazardous liquids by pipeline, but not to any facilities that are only used to fractionate NGLs.

Background
In your letter, you state that the plant receives NGLs from pipelines that are owned by your company or other third parties, that the NGLs are processed on the grounds of the plant using certain piping systems and underground storage facilities, and that refined products are then re-injected back into pipelines for continued transportation.

You further state that you agree that Part 195 applies to the incoming and outgoing pipelines and any devices within the boundaries of the plant that are necessary to ensure the safe operation of those pipelines under 49 CFR § 195.406(b).  However, you believe that Part 195 does not apply to any of the other facilities at the plant by virtue of the exception in § 195.1(b)(8) for production, refining, or manufacturing facilities (and associated storage or in-plant piping systems).

You note that those facilities are covered by the Occupational Safety and Health Administration's Process System Management requirements in 29 CFR 1910.119, and that the Bushton plant is not used for the transportation or storage of oil; therefore, the limitations established in PHMSA's Memoranda of Understanding with the U.S. Environmental Protection Agency are not relevant.

After providing additional information on the inspection history of the Bushton plant, you conclude by asking for a response to two questions:

  1. If a pipeline delivers or receives product to or from the Bushton facility, is the jurisdictional boundary between the PHMSA-regulated pipeline and the facility processing operations delineated as described by the definition of "in-plant piping system'' in § 195.2 and, therefore, not subject to PHMSA's jurisdiction?
  2. Is the underground storage at the Bushton facility (here, underground caverns) "storage associated with refining" and, as such, within the exception set forth in §195.1(b)(8) and, therefore, not subject to PHMSA's jurisdiction?

Analysis
Section 195.1(b)(8) states that the pipeline safety standards in Part 195 do not apply to the "[t]ransportation of hazardous liquid or carbon dioxide through onshore production (including flow lines), refining, or manufacturing facilities or storage or in-plant piping systems associated with such facilities."  Section 195.2 further states that "[i]n-plant piping system means piping that is located on the grounds of a plant and used to transfer hazardous liquid or carbon dioxide between plant facilities or between plant facilities and a pipeline or other mode of transportation, not including any device and associated piping that are necessary to control pressure in the pipeline under § 195.406(b)."

The exception in § 195.1(b)(8) is based on section 60101(a)(22) of the Pipeline Safety Laws.   That provision states that PHMSA does not have the authority to regulate the "mov[ement] of hazardous liquid through . . . onshore production, refining, or manufacturing facilities; or storage or in-plant piping systems associated with onshoreproduction, refining, or manufacturing facilities."  According to the legislative history, Congress enacted that prohibition in the Hazardous Liquid Pipeline Safety Act (HLPSA) of 1979 (P.L. 96-129) after concluding that "such lines present[ed] insufficient risk to life and property to require regulation."  S. REP. NO. 96-182 (May 15, 1979), reprinted in 1979 U.S.C.C.A.N. 1971, 1988.

PHMSA's predecessor agency, the Research and Special Programs Administration (RSPA), established the definition in § 195.2 for in-plant piping systems in a 1994 final rule (59 FR 33388).  RSPA explained that "the physical distinction between a regulated pipeline serving a plant and unregulated in-plant piping [wa]s unclear" without that definition.  RSPA also noted that "[t]he aim of the proposed definition was to distinguish unregulated piping, not to limit the jurisdiction of other government agencies," and further stated that if the in-plant piping did not include a device to control pipeline pressure, then the application of Part 195 would terminate at the plant boundary (59 FR 33389).  RSPA observed that "[s]ince neither the HLPSA nor its legislative history explain "in-plant piping," the agency had "adopt[ed] an ordinary, reasonable understanding of the term."  Id. 

With regard to your first question, the exception in § 195.1(b)(8) applies to any facilities at the Bushton plant that are used for the production, refining, or manufacturing of NGLs, including any associated storage or in-plant piping systems as defined in § 195.2.  It does not, however, apply to any facilities that are used directly in the transportation of hazardous liquids by pipeline.   Such facilities fall within the scope of PHMSA's statutory authority to regulate the movement of hazardous liquids by pipeline under 49 U.S.C. § 60101(a)(22) and present a sufficient risk to public safety to warrant regulation under Part 195.

The information submitted with your request and obtained from PHMSA's Central Region Office indicates that Bushton is not a traditional NGL processing plant.  In most cases, all of the NGLs that are delivered to these plants undergo a chemical transformation as part of the fractionation process before being sent out for continued transportation as refined products.  In the case of your plant, however, a shipper has the ability to direct NGLs to bypass the plant, or to divert those products to private or co-mingled storage, without processing.  Consequently, only the piping and equipment used to facilitate the fractionation process meets the "in-plant piping" definition for purposes of the exception in § 195.1(b)(8).

With regard to your second question, some of the products received at the Bushton plant are stored underground and placed back into the pipeline system without processing.  Product is also transported through the manifold piping and directly back into regulated pipelines without being processed.  These portions of the storage field and manifold piping are used for transportation of hazardous liquids by pipeline and are regulated by PHMSA under Part 195. 

Because PHMSA does not have specific regulations at this time for underground hazardous liquid storage facilities, the application of Part 195 would stop at the wellhead site valve.  The specific valve at the wellhead site can be wellhead, casing head, choke assembly, or line valve based on your operations and maintenance manual.

I hope that this information is helpful to you.  If I can be of further assistance, please contact me at 202-366-4046.

 

Sincerely,

John A. Gale
Director, Office of Standards
and Rulemaking

cc: Environmental Protection Agency
Occupational Safety and Health Administration


1 Another PHMSA predecessor, the Materials Transportation Bureau, relied on that provision in promulgating the original regulatory exception for production, refining, or manufacturing facilities and associated storage or in-plant piping systems in a 1981 final rule (46 FR 38358).

2 In the preamble to the 1994 final rule, RSPA stated that the definition of in-plant piping would include piping that crosses a single public thoroughfare on the grounds of plant.  In a subsequent letter of interpretation, RSPA stated that railroad crossings, like road crossings, would qualify as public thoroughfares for purposes of that definition as well.  Interpretation #PI-98-006 (Nov. 18, 1998).

3 See PHMSA Interpretation #PI-96-015 (stating that "[a]lthough Part 195 does not define manufacturing facilities, furthering pipeline transportation is not the primary function of such facilities," and that "[t]he Skid 50 Pad facilities are operated primarily to further the transportation of natural gas liquids by pipeline;" therefore, those facilities are not exempt from Part 195) (Jul. 22, 1996).