Safety Regulation for Small LPG Distribution Systems (2018)

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9 1 Introduction and Background In Section 26 of the Protecting our Infrastructure of Pipelines and Enhanc- ing Safety Act of 2016 (PIPES Act of 2016), Congress called for a study of the regulatory requirements that apply to pipeline systems that distribute liquefied petroleum gas (LPG) to 100 or fewer customers.1 Specifically, Congress requested that the Transportation Research Board of the National Academies of Sciences, Engineering, and Medicine (the National Academies) convene a committee to review how the regulatory requirements, as imposed and implemented by federal, state, and local government, pertain to these small LPG systems to assure that safe practices and techniques are used for facility design, installation, operation, and maintenance. Informed by this review and taking into account any potential opportunities for limiting federal regulation applicable to smaller systems without reducing safety, Congress asked the study committee to make recommendations on ways to improve the regulatory requirements. The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), through its Office of Pipeline Safety, is responsible for administering the federal pipeline safety pro- gram, including development and enforcement of regulatory requirements that apply to LPG pipeline facilities serving 100 or fewer customers. The Statement of Task from PHMSA to fulfill the study request is provided in Box 1-1, along with the original legislative text. This chapter gives background and context for the study. Consid- eration is first given to how LPG, which consists mainly of propane, is 1 Public Law 114-183, enacted June 22, 2016.

10 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS Box 1-1 Statement of Task The study committee will examine the safety of pipeline facilities that transport or store only petroleum gas, or mixtures of petroleum gas and air, for service to 100 or fewer customers. It will examine (a) federal, state, and local regulatory requirements applicable to these pipeline facilities; (b) techniques and best prac­ tices relating to their safe design, installation, operation, and maintenance; and (c) the costs and benefits, including safety benefits, associated with the regulatory requirements and use of the techniques and best practices. Informed by its review, and as appropriate, the committee may make recommendations concerning these regulations, techniques, and practices. Legislative Text PIPES Act of 2016 § 26, Study on Propane Gas Pipeline Facilities (a) IN GENERAL.—The Secretary of Transportation shall enter into an agree­ ment with the Transportation Research Board of the National Academies to conduct a study examining the safety, regulatory requirements, techniques, and best practices applicable to pipeline facilities that transport or store only petroleum gas or mixtures of petroleum gas and air to 100 or fewer custom­ ers, in accordance with the requirements of this section. (b) REQUIREMENTS.—In conducting the study pursuant to subsection (a), the Transportation Research Board shall analyze— (1) Federal, State, and local regulatory requirements applicable to pipeline facilities described in subsection (a); (2) techniques and best practices relating to the design, installation, opera­ tion, and maintenance of such pipeline facilities; and (3) the costs and benefits, including safety benefits, associated with such applicable regulatory requirements and the use of such techniques and best practices. (c) PARTICIPATION.—In conducting the study pursuant to subsection (a), the Transportation Research Board shall consult with Federal, State, and local governments, private sector entities, and consumer and pipeline safety ad­ vocates, as appropriate. (d) DEADLINE.—Not later than 2 years after the date of enactment of this Act, the Secretary shall submit to the Committee on Transportation and Infra­ structure and the Committee on Energy and Commerce of the House of Rep­ resentatives and the Committee on Commerce, Science, and Transportation of the Senate the results of the study conducted pursuant to subsection (a) and any recommendations for improving the safety of such pipeline facilities. (e) DEFINITION.—In this section, the term “petroleum gas” has the meaning given that term in section 192.3 of title 49, Code of Federal Regulations, as in effect on the date of enactment of this Act.

INTRODUCTION AND BACKGROUND 11 used as a fuel and how this use compares to that of natural gas.2 While the uses of the two gases in fueling home heating systems and appliances are in many ways similar, differences in physical properties have led to different applications and systems for distribution to the consumer. The background discussion explains how these differences, as well as differ- ences in the hazard characteristics of the two gases, have created a need for safety regulations tailored to each gas’s pipeline distribution system as well as regulations common to both. After providing this background, the discussion turns to issues that gave rise to this study, particularly to questions about the desirability of some of the federal regulatory requirements that apply to both natural gas and LPG pipeline distribution systems. The committee’s rationale for focus ing the study on specific regulatory matters is explained, followed by a discussion of how the committee approached and undertook its work. The chapter ends with an overview of the report’s organization. COMPARATIVE USE AND HAZARD CHARACTERISTICS OF LPG AND NATURAL GAS LPG refers to a number of hydrocarbon gases in liquid form, including propane and butane. There are three major uses of LPG in the residential and nonindustrial commercial sectors. In homes and business places, it is used to heat space and water, cook, dry clothes, and fuel gas fireplaces and backup electrical generators.3 On farms, it is used to heat livestock hous- ing and greenhouses, dry crops, and power field equipment and irrigation pumps. At jobsites, it is used to power forklifts, welders, heaters, portable generators, and other mobile equipment. Because the study charge speci- fies LPG pipeline facilities that serve multiple consumers, residential and nonindustrial commercial consumption is most relevant, as it can involve LPG storage in stationary tanks and piping systems that supply two or more consumers. As the country’s metropolitan regions have expanded and the reach of natural gas pipeline transmission and distribution networks has grown, U.S. homes and businesses that rely on LPG as a primary fuel for heating and cooking increasingly have choices in fuels. However, a feature of natu- ral gas service that has made it desirable for consumer use—convenient, on-demand delivery of a clean-burning fuel—is the same feature that ex- 2 The report uses LPG when referring to the general class of hydrocarbon gas liquids and their distribution systems and propane when treated distinctly, such as in a discussion of its specific properties. 3 U.S. Energy Information Administration, “Uses of Hydrocarbon Gas Liquids,” Energy Explained, accessed November 8, 2017, https://www.eia.gov/energyexplained/index.cfm?page= hgls_uses.

12 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS plains demand for LPG service when delivered through multi-user pipeline distribution systems. Indeed, when viewed simply from the interface with the consumer, LPG and natural gas systems can be almost identical. They each can be used in the same heating systems and appliances with slight modifications and without significant differences in performance. When considered from this vantage point, one might expect to find high degrees of similarity in other aspects of their physical characteristics and supply. However, despite the similarities between LPG and natural gas at the consumer interface, the two fuels have important differences in physical properties, such as vapor pressure and relative vapor density, that make each more or less desirable for specific applications and that must be taken into account when ensuring their safe supply and use. Because of its high vapor pressure, natural gas (predominantly methane) cannot be practically transported for direct consumer use through means other than a pipeline, as it requires too much tank storage space in its gaseous form. While natural gas must be supercooled to be transported and stored as a space-saving liquid (or kept in a compressed state in very high-pressure tanks),4 propane liquefies at relatively low pressures: 177 pounds per square inch (psi) of pressure must be applied to keep it as a liquid at 100°F (37.8°C).5 Propane liquid can therefore be readily trucked to and stored in tanks for use as a fuel at locations lacking access to the natural gas pipeline network. When released from the tank through pressure regulators, propane vaporizes for movement through piping that supplies the consumer. LPG’s portability, therefore, explains its popularity for applications such as a primary and secondary fuel for heating and cooking in residential and commercial areas with no natural gas service, as well as for outdoor grilling. That portability, however, means that LPG service involves the use of systems that do not exist for natural gas service and that create specific safety assurance demands. Those demands include making sure truck trans- portation and refilling operations are safe and that storage tanks and their associated equipment are properly located, installed, operated, and main- tained. Conversely, natural gas service has its own safety challenges that do not apply to LPG service, such as those associated with operating and maintaining a large, and often concentrated, network of distribution mains and service lines. Flammability, which is the shared physical characteristic that makes natural gas and LPG valuable as fuels, is the main source of the safety 4 Changing methane from a gas into a liquid requires cooling to temperatures of –260°F (–162°C). When liquefied at these supercool temperatures, natural gas’s volume is reduced to 1/600th of its original volume. Reducing volume substantially without cooling can be done by compressing the gas, but this requires very high-pressure tanks, pipelines, and regulators. 5 As a liquid, propane is 270 times more compact than it is as a gas. One gallon of propane liquid produces more than 36 ft3 of gas.

INTRODUCTION AND BACKGROUND 13 challenge. Natural gas will ignite with a spark at concentrations of just 5 percent by volume in air, while propane will ignite with concentrations of just 2 percent. As a result, vapor leaking from either a natural gas or LPG distribution system that enters an enclosed area, such as a poorly ventilated room where vapor can concentrate and mix with air, can result in an explosion.6 However, a key difference between natural gas and pro- pane is how each behaves when released. When natural gas escapes into a confined space, the highest concentration of gas will move upward as air is displaced from the top down. Because natural gas is lighter than air, it will rise and diffuse rapidly when it reaches an open area. When LPG escapes, it will settle to low places because it is heavier than air. A risk from LPG is that the escaping gas will pool in low-lying, confined spaces such as base- ments, reaching concentrations that risk a fire or explosion if there is an ignition source. An additional hazard characteristic for both gases is the lack of odor. Because natural gas and LPG are odorless in their natural state, odorants are usually added to the fuels to alert consumers and responders to vapor escaping from tanks, pipelines, and appliances. Although both gases are susceptible to odor fade, LPG is vulnerable to loss of odorant when refur- bished storage tanks are not properly prepared or when rust is present in tanks. The metal surface or rust inside the tank can leach odorant from the gas. The safety hazards of natural gas and LPG are well known, which is why their storage and transportation systems are regulated and subject to numerous industry safety standards. Because of the similarities between the two gases, including their common use in environments where people live and work, they share many of the same safety requirements, such as the aforementioned gas odorization. Their differences in physical proper- ties and use characteristics, however, also mean that certain regulatory requirements differ. Because LPG distribution systems involve delivery by truck and storage in tanks close to users, they are subject to many federal, state, and local regulatory requirements and industry codes that have no counter parts among natural gas distribution systems. Meanwhile, these latter systems, which are part of larger pipeline networks, have regulations that address system components that have no counterpart in LPG distribu- tion systems, such as compressor stations, supervisory control and data ac- quisition systems, and the staffing and functioning of central control rooms. Recognition of these similarities and differences among the two leading fuel gases—spanning their use and hazard characteristics and their distribu- tion and delivery methods—is important for understanding the regulatory concerns that gave rise to this study. These concerns have tended to center 6 If the gas displaces oxygen in an enclosed space, a suffocation risk can also occur.

14 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS on the regulations that apply to both types of gas distribution systems, and whether some of these common regulations are warranted or should be made more applicable to each fuel system’s individual use characteristics, hazards, size, components, configuration, and operations. STUDY SCOPE AND ISSUES The study committee was asked to examine pipeline systems that deliver LPG to 100 or fewer users, and potentially as few as two users. Tank and piping facilities that provide LPG to a single home or business are outside the scope of this study because virtually none of these single-user systems is subject to federal safety regulation. For reasons explained above, a pipe- line distribution system that is intended to serve two to 100 homes and/ or businesses is generally suited to LPG service rather than natural gas service, which effectively requires a larger network of connected users to be efficient. Even small municipal natural gas systems that receive gas from a transmission line will have miles of multiple mains and service lines that connect hundreds of customers, and in this respect such a system will have less in common with an LPG pipeline system that has a fraction of these customers. At the same time, however, an LPG pipeline system that serves close to 100 consumers will have characteristics that may be very differ- ent than those of an LPG facility that serves only a handful of users with aboveground tanks and piping. The larger LPG system is more likely to resemble a natural gas system inasmuch as both systems will have buried mains and service lines that connect many homes and businesses. In regulating the safety of gas pipeline distribution systems, PHMSA recognizes similarities and differences among natural gas and LPG systems. PHMSA’s regulations governing gas pipeline systems are contained in the Code of Federal Regulations (CFR) Title 49, Part 192, Transportation of Natural and Other Gas by Pipeline (hereafter, “Part 192”). These regula- tions in particular recognize that LPG systems are configured and operated differently than natural gas systems and have different components, includ- ing storage tanks. To account for the distinct characteristics and hazards of LPG systems, the Part 192 regulations incorporate by reference the consensus standards developed by the National Fire Protection Association (NFPA).7 NFPA 58, Liquefied Petroleum Gas Code, the most frequently refer- 7 The codes are developed through a consensus process that meets the requirements of the American National Standards Institute. A technical committee that consists of federal and state regulators, fire service officials, emergency responders, industry, engineering consultants, testing laboratories, insurers, and academic experts develops the codes, which are approved by the membership of NFPA. The process is open to the public, though it is not widely known.

INTRODUCTION AND BACKGROUND 15 enced code, contains minimum requirements for the safe design, place- ment, and installation of LPG systems ranging in size from small cylinders to large bulk storage facilities that can exceed 100,000 gallons.8 NFPA 58 also contains requirements for handling LPG liquid transfer operations, including operator qualifications, maximum filling quantity in containers, and pre-filling inspections to ensure containers are fit for service. In addi- tion, the federal pipeline safety regulations contain references to NFPA 59, Utility LP-Gas Code.9 However, this code has limited applicability to the LPG pipeline systems of interest in this study because its focus is largely on the construction and maintenance of LPG bulk plants that, for example, receive shipments from railcars and fill trucks for retail delivery. LPG distribution systems must meet the requirements of Part 192 that apply to all gas distribution systems as well as the NFPA requirements that apply specifically to LPG pipeline facilities. In cases where NFPA requirements conflict with Part 192 requirements, the NFPA requirements prevail.10 Importantly, if a Part 192 requirement does not have a cor- responding NFPA requirement, the operator of the LPG pipeline facility must comply with that Part 192 requirement. As a general matter, the NFPA codes focus on materials and equipment (e.g., storage tank valves, fittings, pipe and tubing materials), installation procedures, facility siting, and repair methods. The applicable Part 192 reg- ulations cover construction, testing, operation, and maintenance, including the planning of emergency response, the documentation of damage preven- tion programs, and the implementation of integrity management programs. The respective areas of coverage of the NFPA and Part 192 requirements are discussed in more detail later in the report. In addition to these federal regulations and consensus standards, most states impose their own safety regulations that apply to gas pipeline dis- tribution facilities. All but a few states have partnership agreements with PHMSA to enforce their state regulations along with the Part 192 require- ments and referenced NFPA codes. By federal law, state pipeline safety regulations cannot be less stringent than the Part 192 requirements; how- ever, states can adopt requirements that are more stringent or that cover areas not covered by Part 192. Like the federal pipeline regulations, state regulations also reference the NFPA codes, as do many local government building and fire prevention codes. Congress has asked the study committee to examine this collection of 8 National Fire Protection Association, NFPA 58, Liquefied Petroleum Gas Code (Quincy, MA, 2004). 9 National Fire Protection Association, NFPA 59, Utility LP-Gas Plant Code (Quincy, MA, 2004). Note, LP-gas is NFPA’s abbreviation for LPG. 10 49 CFR § 192.11.

16 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS federal, state, and local safety regulations and consider specifically whether the requirements contained in them are (1) consistent with best practices and techniques relating to the safe design, installation, operation, and maintenance of LPG systems having 100 or fewer customers and (2) cost- effective when applied to LPG systems having 100 or fewer customers. The committee can only surmise why Congress chose 100 or fewer customers as the threshold for this analysis. To be sure, the number of customers on a system can be relevant to an assessment of whether Part 192, NFPA, and state requirements reflect best practices and techniques, some of which will differ according to the scale of the system. Indeed, Congress may have selected the 100-customer threshold because PHMSA already requires that operators of LPG systems having 100 or more customers go to greater length than operators of smaller systems in documenting their integrity management programs and in reporting on system safety performance and condition. Another relevant consideration for systems serving 100 or fewer cus- tomers is that some of them—unlike larger systems—could have been configured into a series of smaller systems that are exempt from federal regulation, especially those smaller systems with closer to 10 customers. Notably, the federal regulations do not apply to all LPG systems, but only to those having either 10 or more customers or two or more customers when a portion of the pipeline facility is sited in a public place. LPG systems that meet these criteria are subject to federal jurisdiction and thus described by PHMSA as being “jurisdictional.” This jurisdictional cutoff can be rel- evant to assessing regulatory costs because an operator facing a high cost of compliance may choose to avoid this burden by subdividing a larger system into smaller systems that are not regulated. Indeed, the National Propane Gas Association (NPGA), whose members are LPG suppliers, contends that some pipeline systems that would have been configured to serve dozens of customers are being divided into smaller, non-jurisdictional systems to avoid some federal regulatory requirements that are viewed by operators as being too costly or inapplicable.11 NPGA maintains that careful con- sideration needs to be given to regulatory compliance costs as they apply to operators of small LPG systems, because a response that leads to more non-jurisdictional systems could result in more LPG deliveries by truck and the added risks associated with product transfer. The demands placed on regulators also warrant consideration when ex- amining regulatory benefits and costs, particularly the demands associated with enforcing regulations that apply to smaller systems. As documented 11 National Propane Gas Association, “Propane Jurisdictional Systems: The Need to Review Existing Federal Regulations,” accessed August 7, 2018, http://www.npga.org/wp-content/ uploads/2018/08/Propane-Jurisdictional-Systems-White-Paper.pdf.

INTRODUCTION AND BACKGROUND 17 in this report, most LPG pipeline systems serve closer to 10 customers than 100. State pipeline safety agencies that are responsible for regula- tory enforcement must make choices about how to allocate enforcement resources among systems, including decisions about whether to concentrate on smaller versus larger systems given their relative risks and the applicabil- ity of the regulations to those risks. STUDY FOCUS Early in its deliberations when reviewing the study charge, the committee recognized the challenge that the 100-customer threshold would present, not only because of the potential for variability (e.g., in age, configura- tion, and setting) among systems spanning two to 100 customers, but also because of the possibility that information on the number of these systems and their respective safety performance would not be available. These con- cerns proved valid, as the committee had little success obtaining the kinds of data that would be needed for meaningful analyses of regulatory costs and benefits even with the assistance of the LPG industry and federal and state regulators. Also of concern was any implication that the study committee could undertake a comprehensive review of whether all safety requirements im- posed on small LPG systems by PHMSA, states, localities, and the NFPA codes are reflective of best practices and techniques. Moreover, the com- mittee determined that such a requirement-by-requirement review would have been impractical because of the paucity of data on these small systems. Incident data that account for LPG system size, as well as configuration and system condition reporting that describes the frequency of leaks and damage related to the effectiveness of regulatory requirements, are entirely unavailable for small systems. Without that data, the applicability of the federal requirements to the range of sizes and configurations for LPG sys- tems cannot be determined. Therefore, the available data have only limited benefit for evaluating the usefulness of the federal requirements for risk management. Only with good data on the location, design, configuration, and safety performance of small LPG systems would it be possible to assess the applicability of specific regulatory requirements, and the best practices and techniques referenced in those requirements, to these systems and the risks they pose. The committee also recognized that such an exercise would be both impractical, given the large number of such requirements, and inadvisable, given that the NFPA codes are developed by American National Standards Institute–approved consensus committees having far more expertise on LPG hazard, facility, and emergency response matters than this committee could bring to bear. Indeed, it is notable that the NFPA codes are regularly

18 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS updated to reflect current safety knowledge and best practices; for instance, the 2017 edition of NFPA 58 was released during the course of this study. Instead, the committee interpreted its charge as being a review of the regula- tory regime or framework, but not at the level of individual requirements. What the committee noted, however, is that the federal Part 192 regulations reference the 2004 edition of NFPA 58, suggesting that the challenge of keeping this reference up to date is a matter deserving attention. As the study committee learned from its discussions with PHMSA officials, benefit–cost analyses are required during the federal rulemaking process and routinely undertaken during development of new federal regu- latory requirements. A practical challenge facing the committee, however, is that the study charge implies that benefits and costs should be reviewed for the entire body of regulations that apply to LPG systems having 100 or fewer customers. Here again, the committee determined that such a compre- hensive analysis would be impractical given limited data and the hundreds of regulatory requirements that would need to be examined. Nevertheless, an issue that was raised by LPG suppliers who briefed the committee, in- cluding NPGA, is that some of the Part 192 regulations were designed for larger natural gas distribution systems and have questionable applicability to small LPG systems. In cases where such inapplicability could be shown, the safety benefit of the regulation could be considered zero. Thus, the identification of any such requirements became a study priority, particularly because of the potential for inapplicable regulations to impose unnecessary compliance burdens on industry, divert enforcement resources from federal and state regulators, and potentially cause LPG facility operators to take avoidance measures that could have safety implications. STUDY APPROACH Having determined that the study focus should be on identifying Part 192 regulatory requirements that may have questionable applicability to smaller LPG pipeline systems, the committee proceeded to gather information about the regulatory requirements; the design, use, operations, and haz- ard characteristics of multi-user LPG pipeline systems; and the prevalence and safety performance of these systems. The committee sought a range of informa tion on the number of LPG pipeline systems by size and loca- tion, the safety performance of these systems, and the record of regulatory enforce ment and compliance. These data-gathering efforts produced mixed results. The committee learned that PHMSA does not have an inventory of all LPG jurisdictional systems, although it maintains records of operators of systems with 100 or more customers because they are required to annually report information on their system conditions. To obtain information on the number of LPG

INTRODUCTION AND BACKGROUND 19 systems serving 100 or fewer customers and their relative sizes and configu- rations, NPGA shared results from a poll of its members. Additionally, the National Association of Pipeline Safety Representatives (NAPSR), whose members include state pipeline safety regulators, agreed to poll its member agencies for the number of systems in their respective states and to provide information on their enforcement programs and compliance records. The NPGA and NAPSR membership surveys were informative, but not suffi- ciently comprehensive to estimate the number of jurisdictional systems with precision, much less to stratify system counts by size, configuration, and setting. Indeed, the NAPSR results suggest wide variability among states in the criteria used for classifying LPG systems as jurisdictional. PHMSA’s incident reporting systems were examined to identify inci- dents involving LPG pipeline systems with 100 or fewer customers and incidents involving delivery trucks. The study committee examined records of fires reported to the National Fire Incident Reporting System (NFIRS), looking for incidents involving smaller LPG pipeline facilities. Unfortu- nately, neither the PHMSA nor the NFIRS incident reporting systems dis- tinguish pipeline systems by size (i.e., customers served). The reporting data, however, suggest that LPG distribution pipeline incidents are rare events—sufficiently rare that there would be little value in categorizing reported incidents by system size. Given the data limitations, the study committee recognized that quantitative analyses of individual regulatory requirements would not be possible and that a more productive course would be a review of the requirements and their purpose and applicability based on the data avail- able. Information on major incidents was gleaned from sources other than incident reporting systems, including investigations by the National Trans- portation Safety Board, the U.S. Chemical Safety and Hazard Investigation Board, and news media narratives. Representatives from the LPG indus- try, PHMSA, state regulatory agencies, and NFPA briefed the committee, along with technical experts in the fields of utilities and engineering. The review of major incidents illustrates how LPG pipeline releases can present specific hazards, some of which the regulatory interventions are intended to address. The industry and regulator briefings were also invaluable for understanding the safety issues the regulations are intended to address, the regulatory framework and its enforcement at the federal and state levels, and the concerns of LPG system operators. REPORT ORGANIZATION The remainder of this report is organized into four chapters. The next chap- ter provides more background on the uses, configurations, key components, supply, and operations of LPG pipeline distribution systems. The physical

20 SAFETY REGULATION FOR SMALL LPG DISTRIBUTION SYSTEMS properties and hazard characteristics of LPG and the safety performance of LPG pipeline systems are then discussed in Chapter 3. Chapter 4 outlines the regulatory regime for LPG pipeline system safety, reviews the number and size of systems subject to regulation, and includes the committee’s assess ment of it. The final chapter provides the committee’s advice to Con- gress and PHMSA on ways to make more informed decisions about the regulation of small LPG pipeline systems.