DGS Legal Alert: PUC Pipeline Safety Rules to Be Revised

The Public Utilities Commission (PUC) published a Notice of Proposed Rulemaking to amend its Rules Regulating Pipeline Operators and Gas Pipeline Safety (“Pipeline Safety Rules”). The Notice recommends significant proposed changes to the Pipeline Safety Rules and moving the Rules from their present location within the Gas Utilities and Pipeline Operator Rules at 4 Code of Colorado Regulations (CCR), 723-4, to a new, standalone Part 11, 4 CCR, 723-11. The PUC’s notice of the proposed rules states that, overall, the proposal is for “rule revisions that significantly alter and aim to improve upon pipeline safety oversight, both substantively and administratively, at the Commission.”

Broadly speaking, the proposed rules, available here, attempt to make the process around pipeline safety more public, clear, and transparent. For example, the proposed rules would require all filed reports to be publicly available and all Notices of Proposed Violation, Notices of Action, pleadings, and decisions to be filed publicly. The proposed rules also provide a revised methodology for calculating civil penalties in an effort to provide clarity to both operators and the public. Relatedly, the rules envision pared-down discretion for the Chief of Pipeline Safety and an increased procedural and oversight role for the PUC Commissioners.

The scope of the proposed rules includes all gas public utilities, all municipal or quasi-municipal corporations, transporting natural gas or providing natural gas services, all operators of master meter systems, and all operators of pipelines transporting gas in intrastate commerce. The last category includes gas gathering operators although certain provisions are tailored to the location and size of the gathering systems involved. A typographical error in the proposed rules included interstate pipelines within the scope. The federal government is the enforcement authority for interstate pipelines.

The purpose of the rules is to enforce and administer, in cooperation with the United States Department of Transportation, Pipeline Hazardous Materials Safety Administration (PHMSA), the provisions of the Natural Gas Pipeline Safety Act.

The proposed rules include updates for technical accuracy, recent changes in federal law, and general clarity. The Commission’s notice requested that stakeholders review the proposed technical updates and processes and comment on proposed revisions, clarity, or efficiencies.

Though the proposed rules aim to make pipeline safety information more transparent and publicly available than what exists under the current rules, there is some concern that such a wholesale rewrite of the rules was not preceded by a robust stakeholder process. The Notice invites stakeholders to continue to raise both rule and statutory considerations as well as statutory recommendations.

The proposed rules also solicit comments on a number of other matters: (1) whether additional rule considerations are necessary, (2) whether additional reporting or support, including mapping or other reporting considerations, should be provided in addition to, or as encompassed in, reports already provided; (3) whether, and to what extent, current and supplemental report filings should be publicly available, or if confidential protections are appropriate; and (4) whether to permit certain direction from the Chief of Pipeline Safety through the Commission’s website or other means that can be updated as needed.

In two other notable changes, the PUC first proposes a fee assessment in order to fund additional inspection staff and additional staff collaboration with other state and federal agencies that oversee pipeline safety. For gas distribution pipeline operators, the proposed fee would be per number of customers served. For gas gathering operators, the proposed fee would be per mile of pipeline as submitted on the operator’s annual report.

Second, the proposed rules include requirements specific to small operators, and the Notice specifically solicits comments from these small operator stakeholders regarding the staff’s proposed approach and seeks recommendations on improvements for the efficient and effective regulation of this operator group.

Written comments are requested by January 17, 2020. The Commission encourages commenters to file through the Commission’s E-Filing system at:

https://www.dora.state.co.us/pls/efi/EFI.homepage.

A filer must be registered to use the E-Filing system. Click on “Filer Registration” on the E-Filing homepage to register. All comments filed in the E-Filing System will be publicly available (without registration) by typing the proceeding number in the search box on the homepage. The proceeding number is: 19R-0703GPS. Responsive comments are requested on or before January 31, 2020. An administrative law judge will hold a hearing on the proposed rules at 9:00 a.m. on February 10, 2020 at the PUC’s offices, which are located at 1560 Broadway, Suite 250, Denver, Colorado. Interested persons may provide oral comments at the public hearing unless the ALJ deems oral presentations unnecessary.

Davis Graham & Stubbs LLP’s attorneys have experience with regulatory proceedings affecting the oil and gas sector and frequently represents clients in related rulemakings. Please contact Judy Matlock, John Jacus, or Shalyn Kettering for further discussion on this upcoming rulemaking.