Nothing terrifies the public more than a gas pipeline explosion or leak of hazardous material, so it was no surprise that with the surging development of the Marcellus Shale, Pennsylvania moved quickly to enact legislation to enhance pipeline safety. On December 22, 2011, Governor Corbett signed into law the Gas and Hazardous Liquids Pipelines Act, Act 127 of 2011, authorizing the Pennsylvania Public Utility Commission (the "Commission") to enforce Federal pipeline safety laws as they relate to pipeline operators in Pennsylvania.
The Act takes effect on February 20, 2012 and means that pipeline operators will be subject to new registration requirements and a new assessment to pay for the anticipated costs of the pipeline safety program.
The Act plugs a major hole in the regulatory framework for pipeline safety in Pennsylvania. The federal Office of Pipeline and Hazardous Materials Safety Administration has jurisdiction over pipeline facilities, but historically has relied on agreements with individual states to inspect and enforce federal pipeline safety regulations. Before the Pipeline Act, the Commission's authority to enforce the federal regulations extended only to those pipeline operators that were also public utilities. After the Act takes effect, the Commission will have jurisdiction over all "pipeline operators," which the Act defines as any entity that owns or operates equipment or facilities in the Commonwealth for the transportation of gas or hazardous liquids by pipeline or pipeline facility regulated under Federal pipeline safety laws.
The broad definition of "pipeline operator" means that the Act will apply to gathering companies, midstream companies, pipeline companies, gas distribution systems that are not public utilities (cooperatives, municipalities, and municipal authorities), master meter systems that provide service to property owned by third parties, and propane distribution systems subject to the federal pipeline safety laws. Not included are public utilities and city natural gas distribution operations, ultimate consumers who own service lines on their real property (including master meter systems serving their own property), pipelines subject to the exclusive jurisdiction of the Federal Energy Regulatory Commission (FERC), and petroleum gas distributors who are not subject to the federal pipeline safety laws.
Under the Act, the Commission will have the authority to conduct safety inspections and investigations, respond to complaints, and assess fines or penalties. But the Commission may not promulgate regulations that are more stringent than or inconsistent with Federal pipeline safety laws, as the same may be amended from time to time.
At its Public Meeting on January 12, 2012, the Commission released a Tentative Implementation Order outlining the steps it would take to implement the Pipeline Act. To ensure that its approach is reasonable and consistent with the Act, the Commission is allowing interested parties to file formal comments on the tentative plan on or before February 1, 2012.
The Pipeline Act requires the Commission to develop and maintain a registry of all pipeline operators within the Commonwealth, with the registration renewing annually and including the location of the pipeline by class location and approximate aggregate miles of pipeline serving unconventional wells. Registrants are also required to provide the country of manufacture for all tubular steel product installed in Pennsylvania for the exploration, gathering or transportation of natural gas or hazardous liquids during the prior calendar year.
The Tentative Order specifies that the annual registration must be submitted to the Commission by March 31 of each year, but for 2012, the registration will be due by March 16, together with a registration fee of $250.
The Commission will provide mail notification of the registration requirements to those entities who it believes are pipeline operators pursuant to the Pipeline Act, noting that entities who believe they are not pipeline operators may email a justification to the Commission in order to be removed from the mailing list. The Tentative Order cautions, however, that an entity's determination that it is not required to register under the Act is subject to review by the Commission, and any entity that does not register that is subsequently found to be a jurisdictional pipeline operator under the Act may be subject to an enforcement action and fine.
In the Tentative Order, the Commission also explained the methodology it would use to calculate each pipeline operator's annual assessment. The assessment will be based upon the Commission's costs for its fiscal year, which runs from July 1 through June 30, and will be apportioned to pipeline operators based upon the number of miles of pipeline operated in the previous calendar year, as reported by each pipeline operator on its current registration form.
The Commission will estimate its costs for the initial stub period that runs from February 20, 2012, the effective date of the Pipeline Act, through June 30, 2012. Invoices for that assessment will be issued by March 30, 2012, with payment due no later than April 30, 2012.
Invoices for the 2012-2013 fiscal year (July 1, 2012 through June 30, 2013) will be issued in July, 2013, with payment due 30 days thereafter.
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