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Altered landscape: Pipeline safety agency expands rules to midstream operators

Posted on: November 13th, 2013

The regulatory landscape for midstream gas processing and storage could change significantly, Sutherland’s pipeline attorneys say, thanks to plans by the federal pipeline safety agency, PHMSA, to expand its oversight.

Recently, the Pipeline and Hazardous Materials Safety Administration (PHMSA) indicated it would require midstream natural gas processors and storage operators to abide by the same rules applied to pipelines that transport natural gas liquids. These midstream facilities traditionally have been regulated by OSHA, not PHMSA.

This expansion would obligate companies to reassess their operations and create new compliance programs, says Rachel Giesber Clingman, partner in the Houston office. It also may cause confusion over which specific regulatory rules or standards will be applied to midstream facilities.

The prospect of simultaneous regulation by PHMSA and OSHA is sure to increase operational uncertainty and compliance costs. In at least one case, PHMSA has fined one operator $800,000 and ordered extensive remedial action after finding its midstream process safety management program didn’t comply with the pipeline agency’s regulations.

The full analysis by Sutherland attorneys can be read here. In addition to Ms. Clingman, other Sutherland attorneys familiar with this issue are Jacob Dweck, Paul F. Forshay, Sean D. Jordan, Susan G. Lafferty, Jack Massey and Mark Thibodeaux.

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