Safety Regulation for Small LPG Distribution Systems (2018)

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1 Summary Propane and other types of liquefied petroleum gas (LPG) are important fuels for homes and businesses that do not have access to natural gas ser- vice. More than 12 million households and businesses use LPG as their primary fuel for heating, including hundreds of thousands of people who use it as secondary fuel for applications such as cooking, gas fireplaces, and backup power generation. In those cases where the fuel is stored on a single user’s premises, the storage tank and its piping are not subject to federal regulations that govern the safety of gas distribution pipelines. However, some distribution systems transport LPG from a single tank or set of con- nected tanks to multiple users in households and businesses for consump- tion as a primary or secondary fuel. When these multi-user systems serve either 10 or more customers or two or more customers when located in a public place, their operators must comply with federal gas pipeline safety regulations.1 Approximately 3,800 to 5,800 multi-user LPG pipeline systems are subject to these federal safety regulations,2 which are administered by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) under the Code of Federal Regulations 1 Technically, a single-user, private system is subject to federal regulation if part of the system is in a public place. Such a configuration, in which part of a private system is sited off the premises of the system’s owner and sole user, would be exceptional and very rare. It was thus not considered relevant for the purposes of this study. 2 This range is based on the count of regulated multi-user LPG systems from the National Association of Pipeline Safety Representatives at the low end of the range and an estimate of the same by the National Propane Gas Association at the high end of the range.

2 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS (CFR) Title 49, Part 192, Transportation of Natural and Other Gas by Pipeline (herein referred to as “Part 192”). Congress requested this study of the means by which LPG pipeline distribution systems are regulated to learn how the Part 192 requirements, in combination with the require- ments of state, local, and industry standards, assure that safe practices and techniques are used for the design, installation, operation, and maintenance of systems that serve 100 or fewer customers.3 Congress asked for recom- mendations on ways to improve this regulatory regime as it applies to these small systems where appropriate. A multi-user LPG pipeline system will usually serve dozens, sometimes hundreds, of customers from a pressurized storage tank or tanks that will need to be periodically refilled by truck, in contrast with a natural gas distribution system that will usually serve thousands of customers. To ac- count for these differences in system scale and configuration, and for the particular physical and hazard characteristics of LPG, the federal pipeline safety regulations have special provisions for LPG. Notably, the federal regulations require that operators of LPG pipeline distribution systems comply with the safety codes of the National Fire Protection Association (NFPA) that govern the design, installation, operations, and maintenance of LPG facilities. When an NFPA requirement conflicts with a Part 192 requirement, the federal regulation states that the NFPA requirement will prevail. If a Part 192 requirement has no corresponding NFPA requirement, the LPG pipeline operator must comply with the Part 192 requirement. In addition, many states have their own pipeline safety regulations that apply to LPG systems, and local jurisdictions will often have building and fire codes that control the installation and placement of the tanks and piping, both of which typically incorporate the NFPA requirements. By federal law, state and local requirements cannot be any less stringent than the federal Part 192 requirements. With guidance and funding assistance from PHMSA, states are largely responsible for enforcing the federal regulations in addition to their own. Because NFPA safety codes are developed and regularly updated specifi- cally for LPG, and because compliance is mandated by federal regulation and often by state and local regulation, the LPG industry has a strong familiarity with the codes. Some operators of LPG pipeline systems— especially smaller ones—claim that strict compliance with the NFPA codes should be viewed as sufficient for ensuring safety and that the additional Part 192 requirements are unnecessary because they were developed with the risks of larger natural gas systems in mind. Dozens of Part 192 require- ments must be observed by operators of LPG systems because there is no 3 Public Law 114-183, enacted June 22, 2016. The Statement of Task, included in the legis- lative text, can be found in Chapter 1.

SUMMARY 3 corresponding NFPA requirement. Some of these Part 192 requirements are highly targeted and prescriptive, such as a stipulation to use an instru- ment to test for odorant in gas, while others contain broader mandates, such as a requirement for the development and maintenance of an integrity management program and emergency response plan. The operators of LPG systems question the purpose of Part 192 requirements that are prescriptive when the NFPA code, which is LPG-specific, does not see the same need for them. The operators also question the applicability of some of the broader safety planning and program mandates in Part 192, which they contend are suited for large gas distribution systems and not LPG systems having as few as two users. With these issues as a backdrop, the study committee commenced an examination of the regulatory requirements for LPG pipeline systems serv- ing 100 or fewer customers. In light of the hundreds of federal, state, and NFPA safety requirements that apply to LPG systems in areas ranging from component design and installation to system maintenance and operations, the committee realized that it could not assess each requirement in an informed and authoritative manner, and thus interpreted its charge more broadly to consist of a review of the overall regulatory framework and its application to small LPG systems. Moreover, the committee came to learn that such a requirement-by- requirement assessment would have been impractical regardless because of the paucity of data on small LPG systems, including their number, loca- tion, condition, and safety performance. Records of LPG incidents do not identify system size, design, and configuration, while records of system condition (e.g., incidence of leaks and damage) are not available for small LPG systems. Without such data, the committee could not have examined the relevance of specific safety regulatory requirements to the range of LPG systems serving 100 or fewer customers, as these systems are not uniform in their installation, design, operations, maintenance, and the like. Only with good data on the setting, design, configuration, and safety performance of small LPG systems would it be possible to assess the applicability of specific regulatory requirements (and of the practices and techniques referenced in those requirements) to the reduction of risk. To inform the study, the committee met with federal and state pipeline safety regulators, LPG industry representatives and individual operators, and experts in engineering and utilities. The committee sought information on the configuration, design, operations, and use of LPG pipeline systems and reviewed the physical properties and hazard characteristics of LPG, noting similarities and differences with natural gas. The committee also examined pipeline incident and condition data maintained by PHMSA and the U.S. Fire Administration (USFA), and reviewed reports of notable LPG pipeline incidents, some of which were investigated by the National

4 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS Transportation Safety Board and the U.S. Chemical Safety and Hazard Investigation Board. Based on a review of the incident reports submitted by pipeline opera- tors to PHMSA and supplemental reports of incidents submitted by local fire departments to USFA, the committee finds that consequential incidents involving LPG pipeline distribution systems of all sizes are rare. Records of federally regulated LPG systems for the past 30 years indicate an aver- age of less than one incident involving a fatality or serious injury per year; when USFA records are considered for completeness, the number of annual incidents averages in the single digits. However, when they do occur, the consequences of LPG pipeline incidents can be severe, as illustrated by a few specific cases discussed in the report. Because LPG is heavier than air—unlike natural gas—its escape from a pipeline or tank can create spe- cial hazards as it can migrate to, and concentrate in, low-lying areas where it can mix with air and explode if ignited. LPG also presents risks during truck delivery and tank filling operations, which do not exist for natural gas systems. These hazards are one reason for the development of LPG-specific NFPA codes and their reference in federal regulation, and they are also a reason for industry efforts to ensure vigilant compliance. LPG systems that serve 100 or fewer customers are not complex, but their configurations, components, designs, and uses are by no means uni- form across systems that can serve as few as two to several dozen custom- ers. The multi-user systems can vary from a single aboveground tank that is connected to customers by several feet of piping to a few connected underground tanks that supply an entire neighborhood through a network of buried service lines. Based on information obtained from the results of a questionnaire administered by the National Association of Pipeline Safety Representatives (NAPSR), whose members are state pipeline regulators, it would appear that most of the multi-user LPG systems that should be subject to federal Part 192 requirements—and thus considered “ jurisdictional”— serve fewer than 50 customers and are much more likely to have a number of customers closer to 10 than 100. The NAPSR data, however, show wide dis- crepancies among states in the number of very small multi-user systems that are identified as being jurisdictional, potentially indicating large geographic variability in the size and uses of LPG distribution systems, differential state application and enforcement of the federal Part 192 regulations, or both. The vast majority of jurisdictional systems with two to nine customers are reported from four states, which may be indicative of states having differ- ent views on the risk these very small systems pose and/or interpretations of what constitutes a “public place,” which is a determinant of whether systems having fewer than 10 customers are jurisdictional. Because the PHMSA and USFA data indicate that incidents are rare for all LPG system sizes and that many operators of small systems are

SUMMARY 5 apparently not being identified as jurisdictional and actively compelled by regulators to follow the Part 192 requirements, one might reason that LPG industry claims about the inapplicability of these federal requirements to ensuring the safety of small systems are valid. The committee did not reach this specific conclusion because of the shortage of information on the number of these small systems, their risk characteristics, and their actual level of regulatory compliance. However, the data are sufficient to conclude that most jurisdictional LPG pipeline systems have relatively few customers and are more likely to resemble non-jurisdictional systems that are subject only to NFPA requirements than to the few large jurisdictional systems that have 100 or more customers. It stands to reason that more of the Part 192 requirements developed for natural gas distribution systems will be relevant to the larger LPG systems than to the smaller ones. Indeed, the observed variability among states in the identification of small LPG systems for the enforcement of federal regulations may be indicative of some states viewing these small systems as having a lower safety risk than the larger systems that regulators identify for more enforcement attention. Whether states are making risk-appropriate choices about how to en- force regulatory compliance by operators of LPG systems is difficult to judge without knowing the full spectrum of demands on their enforcement programs. However, because many small LPG systems are apparently not being identified as jurisdictional, their compliance with federal regulatory requirements is largely unknown and unassured, and their specific size, con- figuration, design, setting, and other characteristics that may be indicative of their potential risk are not being documented. It is thus difficult to know whether more rigorous enforcement of the federal regulations is warranted for some of the systems and whether that compliance obligation should be eased for some others in cases where they do not have applicable risk factors. A more effective means of identifying and distinguishing among small LPG systems to better align their regulation with risk is warranted. It is with this aim in mind—to inform the development, application, and enforcement of safety regulations commensurate with risk—that the com- mittee makes the following recommendations to Congress and PHMSA. SUMMARY ASSESSMENT AND RECOMMENDATIONS Based on the information and assessment in this report, the committee recommends a set of actions aimed at providing more effective regulatory oversight and safety assurance of small LPG distribution systems. These actions are intended to address the following findings and conclusions that raise questions about the efficacy of the current state of regulatory oversight and safety assurance:

6 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS 1. Responses to the NAPSR questionnaire by state pipeline safety regulators suggest that many small, multi-user LPG systems that should be subject to the federal Part 192 pipeline safety regulatory requirements—that is, “jurisdictional”—are not being identified by enforcement programs, and thus are not being regularly inspected for compliance with these federal requirements. 2. Although the exact reasons for state-to-state variability in the iden- tification of small, multi-user LPG systems for enforcement of the Part 192 regulations could not be ascertained from the NAPSR questionnaire, one possible cause is ill-defined criteria for jurisdic- tional coverage, especially in what constitutes a public place, which is a determinant of jurisdictional coverage by multi-user systems having nine or fewer customers. It is possible that the observed variability stems from inconsistent interpretation and application of this definitional criterion by system operators and state regulators. Another possible cause is that states differ in their efforts to oversee and enforce regulatory compliance by operators of small, multi- user LPG systems. Some states may perceive a low safety risk from these smaller systems, causing them to allocate fewer resources to their identification and inspection relative to the larger systems. The committee cannot know for sure whether states are making such risk-balancing choices and whether those choices are appropriate given other state enforcement demands. 3. Irrespective of the reasons that many small, jurisdictional LPG sys- tems are not being identified for compliance with federal Part 192 requirements, the result is incomplete information on the number, location, characteristics, condition, and safety performance of these systems, which complicates assessments of their safety risks, how the specific requirements of federal regulations pertain to those risks, and the extent to which the requirements are being complied with and effective in controlling risks. Given this evidence of variability in regulatory implementation and lack of assurance that many small, multi-user LPG systems are indeed comply- ing with the federal regulations, the committee believes that it would be a mistake to view the current regulatory regime as being operative and that steps should be taken to better identify small multi-user systems to ensure that regulatory requirements and their enforcement are appropriate to the safety risks they present. It is with these safety aims in mind, and out of concern about discrepant implementation of the current regulatory regime, that the committee offers the following recommendations:

SUMMARY 7 Recommendation 1: Congress should direct PHMSA to ensure that the regulatory term “public place” is defined in such a way that regulators and regulated entities alike will uniformly interpret that definition to establish jurisdiction over LPG pipeline systems under CFR Title 49, Part 192, Trans- portation of Natural and Other Gas by Pipeline. Recommendation 2: Congress should direct PHMSA to require • Operators of LPG pipeline systems to report to regulators the loca- tion and number of customers served by each of their jurisdictional systems; and • States to confirm that all identified jurisdictional systems are sub- ject to regular enforcement and inspection activity, which should include a review of operator-reported data on leaks and damage. Recommendation 3: Seeking the authority and resources from Congress as needed, PHMSA should • Allow only those states that have confirmed the identification and inspection of their jurisdictional LPG pipeline systems, as recom- mended above, to seek the agency’s permission to implement a waiver program in which a regularly inspected jurisdictional system with fewer than 100 customers is eligible to apply to opt out of any Part 192 requirement the state determines is inapplicable to that system’s risk factors, other than the NFPA requirements incor- porated by reference in Part 192 and requirements for a Damage Prevention Program (49 CFR § 192.614); • Stipulate that in addition to having fewer than 100 customers, sys- tems eligible for a waiver should meet certain low-risk profiles as identified by the state with guidance and approval from PHMSA; and • Require that states periodically seek permission from PHMSA to renew their waiver programs by providing evidence that public safety has not been compromised by the waivers. CONCLUDING COMMENTS The committee believes that its recommendations are complementary and will work together to inform sound decisions about the application of regulatory requirements and their enforcement. A commonly understood definition of public place will better ensure the identification of all small, jurisdictional LPG systems by PHMSA and state regulators. A requirement that operators of LPG pipeline systems report the location and number of customers served by their jurisdictional systems will assist regulators in identifying systems for enforcement and inspection activity. The require-

8 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS ment to perform such inspections of operator-identified systems on a regular basis should increase the state regulators’ familiarity with the characteris- tics, conditions, and safety performance of the LPG systems, which in turn will assist states and PHMSA in making more risk-informed determinations of regulatory requirements that are most suitable to small LPG systems and deserving of enforcement attention. The recommended authorization of a waiver program is intended to allow states and PHMSA to make such risk- informed determinations about regulatory application and enforcement, as opposed to determinations that are based simply on system size.