Interpretation Response #PI-23-0008

Below is the interpretation response detail and a list of regulations sections applicable to this response.

Interpretation Response Details

Response Publish Date: 03/24/2023

Company Name: Pennsylvania Public Utility Commission

Individual Name: Mr. Adam D. Young

Location State: PA Country: US

View the Interpretation Document

Response text:

March 22, 2023

Mr. Adam D. Young
Assistant Counsel
PA Public Utility Commission
P.O. Box 3265
Harrisburg, PA 17105

Dear Mr. Young:

In a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA), dated November 09, 2021, you requested, on behalf of the Pennsylvania Public Utility Commission's (PA PUC) Law Bureau, an interpretation regarding whether a proposed amendment to the PA PUC's regulations is inconsistent with or preempted by the federal pipeline safety regulations in 49 Code of Federal Regulations (CFR) Part 195.

You explained that Pennsylvania participates as a certified state in the federal pipeline safety program administered by PHMSA under 49 U.S.C. § 60105(a) and has incorporated 49 CFR Part 195 in its regulations for intrastate pipelines, in part, to comport with PHMSA's requirements for state programs. You acknowledged that participating certified states must adopt the minimum federal pipeline safety standards but are permitted to adopt “additional or more stringent” regulations pursuant to § 60104(c), so long as they are "compatible" with the minimum federal pipeline safety standards.

You stated that the PA PUC has existing regulations which require electric, natural gas, and water public utilities to file service life study reports every five years; however, hazardous liquid transportation pipeline utilities are presently exempted from this regulation. See, 52 Pa. Code § 73.5. You explained that the PA PUC, in the interest of public safety, proposed to amend the service life study reporting regulation to remove the exemption, thereby making hazardous liquid transportation pipeline utilities subject to the same reporting requirement. You stated that the PA PUC believes that the service life study reports can indicate whether aging infrastructure will affect a utility's ability to continue providing safe, efficient, and adequate service.

During the Notice of Proposed Rulemaking for this amendment, as you indicated, some commenters asserted that mandating reoccurring service life study reporting requirements for hazardous liquid transportation pipeline utilities would be inconsistent with PHMSA's regulations in 49 CFR Part 195, specifically Integrity Management (§§ 195.450 and 195.452) and Corrosion Control (§§ 195.551 - 195.589).¹ You stated that those commenters objected to the service life study reporting requirement because it would require operators to average and estimate service life or average remaining life of utility facilities and commenters asserted "the concept that a pipeline has a finite life is wholly inconsistent with the federal statutory and regulatory scheme."²

In response to these comments, the PA PUC adopted a motion to seek PHMSA's guidance regarding the concerns of the commenters. To aid in PHMSA's review of the proposed regulation, you also provided the following: a list of the type of information that the PA PUC intends to require service life study reports to include; explanation that operators would need to include a list of the next year's planned preventative and mitigative actions (such as system improvements) and a list of integrity enhancements that were performed on the pipeline the prior year, as required by and consistent with the applicable 49 CFR Part 195 requirements; and statement that the proposed service life study reports would be confidential but operators would also need to file a public version of the report.

On May 5 and May 6, 2022, PHMSA sought clarification from the PA PUC's Law Bureau regarding the meaning of certain terms used in the current PA PUC's service life study reporting regulation, 52 Pa. Code § 73.5, including "gas service," and "gas and petroleum transportation pipeline companies." On August 1, 2022, PHMSA requested additional information concerning how the service life study reports are currently utilized. You explained that they were used during rate proceedings, but moving forward, the intent is to use the hazardous liquid transportation pipeline utilities service life study reports for pipeline safety purposes.

Statement of the Law

The purpose of the Pipeline Safety Act (PSA) is to "provide adequate protection against risks to life and property posed by pipeline transportation and pipeline facilities" by empowering the Secretary of Transportation to "prescribe minimum safety standards for pipeline transportation and for pipeline facilities." 49 U.S.C. § 60102(a)(1)-(2). These minimum federal safety standards apply to both interstate and intrastate pipeline facilities; however, the Secretary "may not prescribe or enforce safety standards and practices for an intrastate pipeline facility or intrastate pipeline transportation to the extent that the safety standards and practices are regulated by a [s]tate authority ... that submits to the Secretary annually a certification for the facilities and transportation."³ § 60105(a). For intrastate pipelines, the PSA further provides an express preemption provision, stating:

A State authority that has submitted a current certification under section 60105(a) of this title may adopt additional or more stringent safety standards for intrastate pipeline facilities and intrastate pipeline transportation only if those standards are compatible with the minimum standards prescribed under this chapter. Id. at § 60104(c).

Therefore, a state authority may regulate intrastate pipelines and impose safety requirements in addition to the minimum federal standards only if: the state authority has a current certification pursuant to § 60105; and the additional safety standard is compatible with the federal standards.

Prior Legal Decisions

In order to provide a roadmap to answer your question, PHMSA has reviewed applicable decisions by courts analyzing preemption under the Pipeline Safety Act. While courts have not often dealt with the application of the PSA's preemption provision to intrastate pipeline facilities, the following cases provide insight into how to apply the preemption provision to intrastate pipeline facilities.

The first case, Olympic Pipeline Co. v. City of Seattle, 437 F.3d 872 (9th Cir. 2006), confirmed that only states with a current § 60105(a) certificate are permitted to adopt additional or more stringent safety standards for intrastate pipelines. This case involved a hazardous liquid pipeline operator seeking a declaration that the city of Seattle was preempted from imposing additional safety requirements on its pipeline. Following a pipeline accident in Bellingham, Washington, Seattle declined to renew Olympic's franchise agreement for the Seattle Lateral Segment until Olympic complied with its list of pipeline safety demands. The U.S. Court of Appeals for the Ninth Circuit held that Seattle's pipeline safety demands were expressly preempted by the PSA because the city did not have a certification with the U.S. Department of Transportation (DOT) to regulate the safety of hazardous liquid pipelines. Id. at 880. The court found that Washington Utilities and Transportation Commission (WUTC), which had a § 60105(a) certification with the DOT, was the only authority in the state with jurisdiction over intrastate operators subject to the PSA. Id. at 879. The court held that even "[a]ssuming arguendo that municipalities can seek agreements under § 60105(a) and § 60106(a) as they relate to hazardous liquid pipelines, Seattle did not seek any such agreement. Further, the City has not been delegated authority by DOT to conduct inspections of pipeline operators and facilities… Rather, the DOT delegated this authority to the WUTC..."⁴  Id at 879-880. Therefore, only states with a current § 60105(a) certificate are permitted to adopt additional or more stringent safety standards for intrastate pipelines.

The second case, Washington Gas Light Co. v. Prince George's County Council, 711 F.3d. 412 (4^th Cir. 2013), discussed safety standards and conflict preemption⁵, which is helpful for understanding what it means for a state regulation to be compatible or incompatible with federal standards. The case involved an operator challenging a county's denial of zoning approval for natural gas substation expansion. Washington Gas sought to expand its natural gas substation by adding a liquefied natural gas (LNG) storage tank, but its request was denied by the county based on its zoning plans. Washington Gas argued that the county's zoning plan, which prohibited the siting of an LNG facility and other industrial uses at its preferred location, was preempted by the PSA expressly, impliedly, and by conflict. The Fourth Circuit disagreed on all accounts. The court held that the zoning plans were land use regulations designed to foster transit-oriented development; they were not safety regulations. Id. at 420-21. In addition, the court found that the zoning plan was not in conflict with or an obstacle to the PSA because the operator could comply with the PSA and the County Zoning Plans simultaneously, by selecting another, albeit more costly, location than its preferred location. Id. at 422. Therefore, the zoning plan was not preempted.⁶

Analysis

Based on PHMSA's review of the law and relevant decisions concerning the statutory preemption provision, PHMSA advises that the PA PUC should employ the following analysis to determine whether or not its proposed state regulations would be preempted as incompatible with federal pipeline safety standards. With regard to the proposed standard, PA PUC should evaluate:

1) Does the PA PUC service life study reporting requirement apply to interstate pipelines or intrastate pipelines?

Your letter indicated that the PA PUC intends the service life study reporting requirement to apply to hazardous liquid transportation pipeline utilities, which are intrastate pipelines. As noted above, a state authority may regulate intrastate pipelines and impose safety standards in addition to the minimum federal standards only if the state authority has a current certification pursuant to § 60105 and the additional safety standard is compatible with the federal standards. Since the service life study reporting requirement only applies to intrastate pipelines, the PA PUC should proceed to the next steps.

2) Does PA PUC have a current § 60105(a) certification?

Yes, PA PUC has a current § 60105(a) certification. As noted above, only a state with a current § 60105(a) certification is permitted to adopt additional or more stringent safety standards. See, § 60104(c). See also, Olympic Pipeline Co. v. City of Seattle. If the PA PUC did not have a current § 60105(a) certification, it would not be permitted to adopt or enforce pipeline safety standards. The PA PUC should proceed to step three of the analysis.

3) Is the PA PUC service life study reporting requirement a safety standard?

If the PA PUC service life study reporting requirement is not a safety standard, it is not preempted by § 60104(c). See, Washington Gas Light Co. v. Prince George's County Council. The PSA preempts safety standards that meet certain conditions. The PSA does not preempt rules or regulations that are not related to pipeline safety (for example, zoning regulations designed to promote transit-oriented development). If the PA PUC service life study reporting requirement is a safety standard, the PA PUC should proceed to the next step.

4) If the service life study reporting requirement is a safety standard, is it an additional safety standard or a more stringent safety standard than the minimum federal pipeline safety regulations?

If the service life study reporting requirement is a safety standard, then it would be considered an additional safety standard or more stringent safety standard, because the minimum federal pipeline safety standards do not require service life study reporting. States with a § 60105(a) certification may adopt additional safety standards or safety standards that are more stringent that the minimum federal pipeline safety standards. See § 60104(c). In this case PA PUC would proceed to the final step.

5) Is the service life study reporting requirement compatible with the federal pipeline safety standards?

A state with a § 60105(a) certification may only adopt additional or more stringent safety standards if those standards are "compatible" with the minimum Federal standards. PHMSA interprets "compatible" consistent with the explanation in Washington Gas Light Co. v. Prince George's County Council, discussed above. In other words, if an operator can comply with both the state regulation and the federal pipeline safety standards, then the state regulation is likely compatible. But if an operator cannot comply with both, or if the state regulation is an obstacle to compliance with the federal safety standard, the state regulation is likely not compatible and would be preempted.⁷

PHMSA advises the PA PUC to employ the above roadmap to determine if its proposed hazardous liquid transportation pipeline utilities service life study reporting requirement would likely be preempted by the PSA, taking into consideration, as appropriate, any comments from relevant stakeholders. Please note, this interpretation is applicable only to facilities determined to be intrastate pipelines in accordance with Appendix A to 49 CFR Part 195.

If we can be of further assistance, please contact Tewabe Asebe at 202-366-5523.

Sincerely,

John A. Gale
Director, Office of Standards
and Rulemaking

Regulation Sections