All or Nothing: Regulators Strictly Define Pipeline Abandonment

September 19 2016 | Committees



Written by Catherine Sens NapolitanoMatthew Simone and Cheryl Mollere Kornick

On August 16th, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued an advisory bulletin to clarify the regulatory requirements that may vary depending on the operational status of a pipeline under 49 C.F.R. Parts 192 and 195 (2016).

This clarification comes after a number of leaks in 2014 and 2015 from pipelines that were believed to be “abandoned.”  In two incidents, the current owners or operators of the pipelines had purchased the pipelines from previous owners or operators with the understanding that the pipelines had been properly abandoned before purchase.  In both cases, the prior owner or operator allegedly had not followed the proper procedure for abandoning a pipeline, specifically regarding purging the pipeline of hazardous material.

The operational status of a pipeline has often been referred to offhandedly as “idled,” “inactive,” or “decommissioned.”  These pipelines may still contain hazardous materials.  The formal operational status of a pipeline is either “active” or “abandoned,” and not “idled,” “inactive,” or “decommissioned.”  Each status invokes a certain procedure for safety and maintenance of the pipelines by the owner or operator.  For example, in order to properly abandon a pipeline, all combustibles must be purged and all remaining facilities sealed.  §§ 192.727 and 195.402(c)(10).  Importantly, “abandoned,” as defined by the PHMSA, means permanently removed from service and subject to “an irreversible process of discontinuing the use of a pipeline.”  § 192.3.  “No attempts are made to maintain the serviceability” of an abandoned pipeline.  Id.  If a pipeline does not comply with the abandonment procedures and may be used at a later time, this is considered “active” by PHMSA.  These pipelines are subject to all safety and maintenance requirements for “active” pipelines.  Pipelines that contain hazardous material and were once classified as “idled” are now deemed active until the owner or operation follows all formal procedures for changing the status to “abandoned.”

PHMSA has recognized that some pipelines are exceptional.  There are a number of pipelines that were informally abandoned prior to the abandonment regulations taking effect.  To the extent feasible, the operators or owners of these pipelines should ensure that these facilities “do not present a hazard to people, property or the environment.”  Additionally, PHMSA recognizes that some pipelines are purged but with the expectation that they will be used at a later time.  At this time, PHMSA is permitting these purged but active pipelines to defer certain regulatory activities.

PHMSA’s requirement that a pipeline is either “active” or “abandoned” potentially can affect State servitude or easement rights if the contractual agreement between an owner of those rights and a landowner automatically terminates upon abandonment of a pipeline.  However, a determination on whether a pipeline is terminated will necessarily depend on the contractual terms and individual state laws.

Ultimately, the advisory bulletin concludes as follows: “Pipeline owners and operators are fully responsible for the safety of their pipeline facilities at all times and during all operational statuses.”

 



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