The Pennsylvania Gas and Hazardous Liquids Pipeline Act, adopted
December 22, 2011, became effective February 20, 2012. Act 127
grants authority to the Pennsylvania Public Utility Commission
("PUC") to regulate all pipeline operators in
Pennsylvania for pipeline safety purposes, to assess the costs of
that regulation and to gather information about the origin of steel
pipe used to transport natural gas from unconventional sources.
This Act is significant because, historically, gathering lines
in Pennsylvania have not been subject to any effective pipeline
safety regulation. Now, the PUC will conduct the same kinds of
inspections regarding such things as leak-detection surveys,
atmospheric corrosion, MAOP requirements, recordkeeping
requirements, and the like, as it has historically conducted with
public utility pipeline facilities.
The PUC adopted a Final Implementation Order implementing Act
127 on February 16, 2012. The Order requires all pipeline operators
in Pennsylvania to pay a $250 registration fee and file an Initial
Registration Form by March 16, 2012 and an Annual Registration Form
by March 31 of each year thereafter. A copy of the Act, the Order,
the Registration Form and other information can be found on the PUC's website. Failure to register could
result in civil penalties of up to $10,000 per day.
The Act states that any person that owns or
operates equipment or facilities in Pennsylvania for
transporting natural gas or hazardous liquids by
pipeline or pipeline facility
regulated under federal pipeline safety laws, other than a public
utility or ultimate consumer who owns a service line on his real
property, is a pipeline operator.
"Person" is defined in the usual way to include
individuals and entities of all kinds, but does not include public
utilities (public utilities are already subject to PUC pipeline
"Transporting gas" includes gathering, transmission
or distribution of gas by pipeline or storage of gas.
A "pipeline" is any part of the physical facilities
through which gas or liquids move in transportation, including a
pipe valve and other appurtenances attached to the pipe, a
compressor, metering station, or regulator station, unless
otherwise exclusively regulated by FERC.
A "pipeline facility" is a new or existing pipeline,
right-of-way, and any equipment, facility or building used in the
transportation of gas or hazardous liquids, or in the treatment of
gas or hazardous liquids during the course of transportation,
unless otherwise exclusively regulated by FERC.
Act 127 adopts all of the federal pipeline safety regulations in
49 CFR, as those regulations may be amended from time to time.
These regulations apply to all gathering lines except those in
Class 1 areas (with no farm taps – a line with farm taps
is a distribution line and subject to regulation), which is any
area extending 220 yards on either side of any one-mile length of
pipeline where 10 or fewer buildings are intended for human
occupancy. All other gathering lines are subject to the federal
pipeline safety regulations. If the PUC later finds that a pipeline
is not solely in a Class 1 area, the operator will be liable for
failing to register as a pipeline operator.
In addition to the safety regulations, pipeline operators will
be required to report, regardless of class location, in the Initial
and subsequent Annual Registrations, the location, by class and
county, the aggregate miles (to within 1/10th of a mile) of all
pipelines transporting natural gas, 50 percent or more of which is
from unconventional wells (i.e. from shale formations from the
Marcellus and below that require fracking to economically produce
gas) and the country of manufacture for all steel pipe.
On March 30, 2012, the PUC will issue invoices, payable by April
30, 2012, to all pipeline operators in Pennsylvania for an
assessment to fund the cost of the PUC's expanded pipeline
safety program from February 20, 2012 (when the Act became
effective) through June 30, 2012. The PUC will issue assessment
invoices in July 2012, payable within 30 days, to fund
implementation of the expanded program for the 2012-13 fiscal year
and each year in July thereafter.
This article is presented for informational purposes only
and is not intended to constitute legal advice.
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Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
The Mintz Levin Energy & Clean Technology practice group worked on over 45 transactions in 2013 and helped energy and clean technology clients on a wide range of matters, including financing transactions, joint ventures and other arrangements with investors and global corporations from the United States, China, Russia, Europe, India and Japan.