# Pipeline Safety: Pipeline Damage Prevention Programs > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2012-7550 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** April 2, 2012 - **Citation:** 77 FR 19800 ## Text DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration 49 CFR Parts 196 and 198 [Docket No. PHMSA-2009-0192] RIN 2137-AE43 Pipeline Safety: Pipeline Damage Prevention Programs AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation (DOT). ACTION: Notice of Proposed Rulemaking. SUMMARY: This Notice of Proposed Rulemaking (NPRM) seeks to revise the Pipeline Safety Regulations to: Establish criteria and procedures for determining the adequacy of state pipeline excavation damage prevention law enforcement programs; establish an administrative process for making adequacy determinations; establish the Federal requirements PHMSA will enforce in states with inadequate excavation damage prevention law enforcement programs; and establish the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. Pursuant to the Pipeline Inspection, Protection, Enforcement, and Safety (PIPES) Act of 2006, establishment of review criteria for state excavation damage prevention law enforcement programs is a prerequisite should PHMSA find it necessary to conduct an enforcement proceeding against an excavator in the absence of an adequate enforcement program in the state where the violation occurs. The development of these criteria and the subsequent determination of the adequacy of state excavation damage prevention law enforcement programs is intended to encourage states to develop effective excavation damage prevention law enforcement programs to protect the public from the risk of pipeline ruptures caused by excavation damage, and allow for Federal administrative enforcement action in states with inadequate enforcement programs. DATES: Persons interested in submitting written comments on this NPRM must do so by June 1, 2012. ADDRESSES: Comments should reference Docket Number PHMSA-2009-0192 and may be submitted in the following ways: • Web Site: Comments should be filed at the Federal eRulemaking Portal, http://www.regulations.gov . Follow the online instructions for submitting comments. • Fax: 1-202-493-2251. • Mail: Docket Operations Facility (M-30), U.S. Department of Transportation, West Building, 1200 New Jersey Avenue SE., Washington, DC 20590. • Hand Delivery: Docket Operations Facility, U.S. Department of Transportation, West Building, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590 between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Instructions: Identify the docket number, PHMSA-2009-0192, at the beginning of your comments. If you mail your comments, we request that you send two copies. To receive confirmation that PHMSA received your comments, include a self-addressed stamped postcard. Note: Comments are posted without changes or edits to http://www.regulations.gov, including any personal information provided. There is a privacy statement published on http://www.regulations.gov . FOR FURTHER INFORMATION CONTACT: Sam Hall, Program Manager, PHMSA by email at sam.hall@dot.gov or by telephone at (804) 556-4678 or Larry White, Attorney Advisor, PHMSA by email at lawrence.white@dot.gov or by telephone at (202) 366-9093. SUPPLEMENTARY INFORMATION: I. Executive Summary This NPRM proposes to amend the Federal Pipeline Safety Regulations to: (1) Establish criteria and procedures PHMSA will use to determine the adequacy of state pipeline excavation damage prevention law enforcement programs. Such determination is a prerequisite should PHMSA find it necessary to conduct an administrative enforcement proceeding against an excavator for violation of the Federal requirements proposed in this NPRM in the absence of adequate state enforcement of state excavation damage prevention laws; (2) establish an administrative process for states to contest notices of inadequacy from PHMSA should they elect to do so; (3) establish the Federal requirements PHMSA will enforce in states with inadequate excavation damage prevention law enforcement programs; and (4) establish the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. In the absence of regulations specifying the criteria that PHMSA will use to evaluate a state's excavation damage prevention law enforcement program, PHMSA would take no enforcement action. Executive Orders 12866 and 13563 require agencies to regulate in the “most cost-effective manner,” to make a “reasoned determination that the benefits of the intended regulation justify its costs,” and to develop regulations that “impose the least burden on society.” The expected benefit of this rulemaking action is an increased deterrent to violations of one-call requirements (though requirements vary by state, a one-call system allows excavators to call one number in a given state in order to ascertain the presence of underground utilities) requirements and the attendant reduction in pipeline incidents and accidents caused by excavation damage. Based on incident reports submitted to PHMSA, failure to use an available one-call system is a known cause of pipeline accidents. PHMSA analyzed the costs and benefits of the proposed rule. To determine the benefits, PHMSA was able to obtain data for three states over the course of the establishment of their excavation damage prevention programs (additional information about these states can be found in the regulatory analysis that is in the public docket). Each of the three states had a decrease of at least 63 percent in the number of excavation damage incidents occurring after they initiated their enforcement programs. While many factors can contribute to the decrease in state excavation damage incidents, PHMSA found these states to be a helpful starting point on which to estimate the benefits of this rulemaking. PHMSA utilized three separate effectiveness rates to conservatively evaluate the benefits of this rulemaking. The rates are based on the reduction of incidents of the three states studied and more conservative effective rates because state pipeline programs vary widely, which may lead to a lower effective rate than the three states analyzed. In addition, we compared the overall costs of this rule to the average costs associated with a single excavation damage incident. PHMSA expects the total cost of this rule to be $1.2 million while the benefits are $23 million. 1 1 These numbers are discounted over 10 years at 7%. This rulemaking has three separate potential cost impacts. The costs to excavators to comply with the Federal excavation standard, the cost to states to have their enforcement programs reviewed, to appeal a determination of ineffectiveness and to ask for reconsideration, and the cost impact on the Federal government to enforce the Federal excavation standard. With regard to the potential cost impacts on excavators, PHMSA believes that excavators will not incur any additional costs because the Federal excavation standard, which is also a self-executing standard, mirrors the excavation standard in each state and does not impose any additional costs on excavators. The cost impacts on states are those costs associated with having their enforcement programs reviewed (estimated to be $20,000 per year), to appeal a determination of ineffectiveness (estimated to be a one time cost of $125,000) and to ask for reconsideration (estimated to be a one-time cost of $350,000). Therefore, the total estimated first year cost impacts on states are (($20,000 (annually) + (14 × $25,000) + (5 × $25,000)) = $495,000. The annual cost impacts on states in subsequent years are estimated to be $20,000. The annual cost impacts on the Federal government are estimated to be approximately $80,000. Therefore, the total first year cost of this rulemaking is estimated to be $547,688 ($470,000 + $77,688). The following years the costs are estimated to be approximately $100,000 per year. The total cost over ten years, with a 3% discount rate is $1,331,876 and at a 7% discount rate is $1,182,602. PHMSA is specifically asking for comments on whether it has adequately captured the scope and size of the costs of this rulemaking. The average annual benefits range from $10,939,602 to $3,445,975. Evaluating just the lower range of benefits over ten years results in a total benefit of over $29,000,000, with a 3% discount rate, and over $23,000,000, with a 7% discount rate. In addition, over the past 22 years, the average reportable incident caused $272,200 in property damage alone. Therefore, if this proposed regulatory action prevents just one average reportable incident per year, this rulemaking would be cost beneficial. Interested readers should refer to the Regulatory Evaluation that is posted in the docket for additional information. II. Objective Based on incident data PHMSA has received from pipeline operators, excavation damage is a leading cause of natural gas and hazardous liquid pipeline failure incidents. 2 Better, more effective enforcement of state excavation damage prevention laws is a key to reducing pipeline excavation damage incidents. Though all states have a damage prevention program, not all states adequately enforce their state damage prevention laws. Pursuant to the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 (PIPES Act), PHMSA is proposing criteria and procedures for determining whether a state's enforcement of its excavation damage prevention laws is adequate. As mandated by the PIPES Act, such determination is a prerequisite should PHMSA find it necessary to conduct an administrative enforcement proceeding against an excavator for violating Federal excavation standards. This NPRM also proposes to establish the administrative process for states to contest notices of inadequacy PHMSA issues, the Federal requirements PHMSA will enforce in states with inadequate enforcement programs, and the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. 2 Data from the U.S. Department of Transportation, PHMSA Office of Pipeline Safety, Incident and Accident Reports of Gas Distribution, Gas Transmission & Gathering and Hazardous Liquid Pipeline Systems. Pipeline incident and accident summaries are available on PHMSA Stakeholders Communication Web site at: http://primis.phmsa.dot.gov/comm/Index.htm?nocache=3320 . III. Background A. Pipeline Incidents Caused by Excavation Damage Excavation damage is a leading cause of natural gas and hazardous liquid pipeline failure incidents. For the period from 1988 to 2010, 1,613 incidents, 185 fatalities, 697 injuries, and $438,785,552 in estimated property damages were reported as being caused by excavation damage on all PHMSA regulated pipeline systems in the United States, including onshore and offshore hazardous liquid, gas transmission, and gas distribution lines, except gathering lines. 3 3 Data from the U.S. Department of Transportation, PHMSA Office of Pipeline Safety, Incident and Accident Reports of Gas Distribution, Gas Transmission & Gathering and Hazardous Liquid Pipeline Systems. Pipeline incident and accident summaries are available on PHMSA Stakeholders Communication Web site at: http://primis.phmsa.dot.gov/comm/Index.htm?nocache=3320 . While excavation damage is the cause in a significant portion of all pipeline failure incidents, it is cited as the cause in a relatively higher portion of natural gas distribution incidents. To look at this issue, PHMSA initiated and sponsored in 2005 an investigation of the risks and threats to gas distribution systems. This investigation was conducted through the efforts of four joint work/study groups, each of which included representatives of the stakeholder public, the gas distribution pipeline industry, state pipeline safety representatives, and PHMSA. The areas of their investigations included excavation damage prevention. The Integrity Management for Gas Distribution, Report of Phase I Investigations (DIMP Report) was issued in December 2005. 4 As noted in the DIMP Report, the Excavation Damage Prevention work/study group reached four key conclusions. 4 This report is available in the rulemaking docket. • Excavation damage poses by far the single greatest threat to distribution system safety, reliability and integrity; therefore, excavation damage prevention presents the most significant opportunity for distribution pipeline safety improvements. • States with comprehensive damage prevention programs that include effective enforcement have a substantially lower probability of excavation damage to pipeline facilities than states that do not. The lower probability of excavation damage translates to a substantially lower risk of serious incidents and consequences resulting from excavation damage to pipelines. • A comprehensive damage prevention program requires nine important elements be present and functional for the program to be effective. All stakeholders must participate in the excavation damage prevention process. The elements are: 1. Enhanced communication between operators and excavators. 2. Fostering support and partnership of all stakeholders in all phases (enforcement, system improvement, etc.) of the program. 3. Operator's use of performance measures for persons performing locating of pipelines and pipeline construction. 4. Partnership in employee training. 5. Partnership in public education. 6. Enforcement agencies' role as partner and facilitator to help resolve issues. 7. Fair and consistent enforcement of the law. 8. Use of technology to improve all parts of the process. 9. Analysis of data to continually evaluate/improve program effectiveness. • Federal legislation is needed to support the development and implementation of damage prevention programs that include effective enforcement as a part of the state's pipeline safety program. This is consistent with the objectives of the state pipeline safety programs, which are to ensure the safety of the public by addressing threats to the distribution infrastructure. The legislation will not be effective unless it includes provisions for ongoing funding such as federal grants to support these efforts. This funding is intended to be in addition to, and independent of, existing federal funding of state pipeline safety programs. Another recent report (Mechanical Damage Report) prepared on behalf of PHMSA 5 concluded that excavation damage continues to be a leading cause of serious pipeline failures and that better one-call enforcement is a key gap in damage prevention. In that regard, the Mechanical Damage Report noted that most jurisdictions have established laws to enforce one-call notification compliance; however, the report noted that many pipeline operators consider lack of enforcement to be degrading the effectiveness of one-call programs. The report cited that in Massachusetts, 3,000 violation notices were issued from 1986 to the mid-1990s, contributing to a decrease of third-party damage incidents on all types of facilities from 1,138 in 1986 to 421 in 1993. The report also cited findings from another study that enforcement of the one-call notification requirement was the most influential factor in reducing the probability of pipeline strikes and that the number of pipeline strikes is proportionate to the degree of enforcement. 5 Mechanical Damage Final Report, Michael Baker Jr., Inc., April 2009. With respect to the effectiveness of current regulations, the Mechanical Damage Report stated that an estimated two-thirds of pipeline excavation damage is caused by third parties and found that the problem is compounded if the pipeline damage is not promptly reported to the pipeline operator so that corrective action can be taken. It also noted “when the oil pipeline industry developed the survey for its voluntary spill reporting system—known as the Pipeline Performance Tracking System (PPTS)—it recognized that damage to pipelines, including that resulting from excavation, digging, and other impacts, is also precipitated by operators (“first parties”) and their contractors (“second parties”)”. Finally, the report found that for some pipeline excavation damage data that was evaluated, “in more than 50 percent of the incidents, one-call associations were not contacted first” and that “failure to take responsible care, to respect the instructions of the pipeline personnel, and to wait the proper time accounted for another 50 percent of the incidents.” B. State Damage Prevention Programs There is considerable variability among the states in terms of physical geography, population density, underground infrastructure, excavation activity, and economic activity. For example, South Dakota is a rural, agricultural state with a relatively low population density. In contrast, New Jersey is more densely populated and is host to a greater variety of land uses, denser underground infrastructure, and different patterns of excavation activity. These differences between states equate to differences in the risk of excavation damage to underground infrastructure, including pipelines. Denser population often means denser underground infrastructure; more rural and agricultural states will have different underground infrastructure densities and excavation patterns than more urbanized states. There is no single, comprehensive national damage prevention law. On the contrary, all 50 states in the United States have a law designed to prevent excavation damage to underground utilities. However, these state laws vary considerably and no two state laws are identical. Therefore, excavation damage prevention stakeholders in each state are subject to different legal and regulatory requirements. Variances in state laws include excavation notice requirements, damage reporting requirements, exemptions from the requirements of the laws for excavators and/or utility operators, provisions for enforcement of the laws, and many others. PHMSA has developed a reference for understanding the variability in these state laws at http://primis.phmsa.dot.gov/comm/DamagePreventionSummary.htm . C. PHMSA Damage Prevention Efforts PHMSA has made extensive efforts over many years to improve excavation damage prevention as it relates to pipeline safety. These efforts have included outreach, grants, and funding of cooperative agreements with a wide spectrum of excavation damage prevention stakeholders including: • Public and community organizations. • Excavators and property developers. • Emergency responders. • Local, state and Federal government agencies. • Pipeline and other underground facility operators. • Industry trade associations. • Consensus standards organizations. • Environmental organizations. These initiatives are described in detail in the ANPRM on this subject that PHMSA published in the Federal Register on October 29, 2009 (74 FR 55797). The ANPRM can be viewed at http://www.regulations.gov, Docket ID PHMSA-2009-0192. These initiatives appear to have contributed to an overall decline in the rate of excavation damages to pipelines and other underground utilities, but PHMSA is unaware of any studies of the direct effect of these initiatives on the national excavation damage rate to pipelines. PHMSA invites comments regarding any studies that might have evaluated the effectiveness of these initiatives. D. The Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 On December 29, 2006, the PHMSA's pipeline safety program was reauthorized by enactment of the PIPES Act. The PIPES Act provides for enhanced safety and environmental protection in pipeline transportation, enhanced reliability in the transportation of the Nation's energy products by pipeline, and other purposes. Major portions of the PIPES Act were focused on damage prevention including additional resources and clear program guidelines as well as additional enforcement authorities to encourage states in developing effective excavation damage prevention programs. The PIPES Act identifies nine elements that effective damage prevention programs should include. These are, essentially, identical to those nine elements noted in the DIMP Report discussed in the previous subsection. The PIPES Act also provided PHMSA with limited authority to conduct administrative civil enforcement proceedings against excavators who damage pipelines in a state that has failed to adequately enforce its excavation damage prevention laws. Specifically, Section 2 of the PIPES Act provides that the Secretary of Transportation may take civil enforcement action against excavators who: 1. Fail to use the one-call notification system in a state that has adopted a one-call notification system before engaging in demolition, excavation, tunneling, or construction activity to establish the location of underground facilities in the demolition, excavation, tunneling, or construction area; 2. Disregard location information or markings established by a pipeline facility operator while engaging in demolition, excavation, tunneling, or construction activity; and 3. Fail to report excavation damage to a pipeline facility to the owner or operator of the facility promptly, and report to other appropriate authorities by calling the 911 emergency telephone number if the damage results in the escape of any flammable, toxic, or corrosive gas or liquid that may endanger life or cause serious bodily harm or damage to property. The PIPES Act limited the Secretary's ability to take civil enforcement action against these excavators, unless the Secretary has determined that the state's enforcement of its damage prevention laws is inadequate to protect safety. The following is the applicable citation from the PIPES Act: SEC. 2. PIPELINE SAFETY AND DAMAGE PREVENTION. (a) ONE CALL CIVIL ENFORCEMENT.— (1) PROHIBITIONS.—Section 60114 is amended by adding at the end the following: (d) PROHIBITION APPLICABLE TO EXCAVATORS.—A person who engages in demolition, excavation, tunneling, or construction— (1) May not engage in a demolition, excavation, tunneling, or construction activity in a state that has adopted a one-call notification system without first using that system to establish the location of underground facilities in the demolition, excavation, tunneling, or construction area; (2) May not engage in such demolition, excavation, tunneling, or construction activity in disregard of location information or markings established by a pipeline facility operator pursuant to subsection (b); and (3) Who causes damage to a pipeline facility that may endanger life or cause serious bodily harm or damage to property— (A) May not fail to promptly report the damage to the owner or operator of the facility; and (B) If the damage results in the escape of any flammable, toxic, or corrosive gas or liquid, may not fail to promptly report to other appropriate authorities by calling the 911 emergency telephone number. (e) PROHIBITION APPLICABLE TO UNDERGROUND PIPELINE FACILITY OWNERS AND OPERATORS.—Any owner or operator of a pipeline facility who fails to respond to a location request in order to prevent damage to the pipeline facility or who fails to take reasonable steps, in response to such a request, to ensure accurate marking of the location of the pipeline facility in order to prevent damage to the pipeline facility shall be subject to a civil action under section 60120 or assessment of a civil penalty under section 60122. (f) LIMITATION.—The Secretary may not conduct an enforcement proceeding under subsection (d) for a violation within the boundaries of a state that has the authority to impose penalties described in section 60134(b)(7) against persons who violate that state's damage prevention laws, unless the Secretary has determined that the state's enforcement is inadequate to protect safety, consistent with this chapter, and until the Secretary issues, through a rulemaking proceeding, the procedures for determining inadequate state enforcement of penalties. E. Advance Notice of Proposed Rulemaking On October 29, 2009, PHMSA published an Advance Notice of Proposed Rulemaking (ANPRM) to seek feedback and comments regarding the development of criteria and procedures for determining whether states are adequately enforcing their excavation damage prevention laws, and for conducting Federal administrative enforcement, if necessary. The ANPRM also outlined PHMSA's excavation damage prevention initiatives and described the requirements of the PIPES Act, which authorizes PHMSA to conduct this rulemaking action. The ANPRM may be viewed at http://www.regulations.gov by searching for Docket ID PHMSA-2009-0192. Specifically, the ANPRM sought comments on the following subjects: 1. Criteria for determining the adequacy of state excavation damage prevention law enforcement programs; 2. The administrative procedures available to a state for contesting a notice of inadequacy should it receive one; 3. The Federal requirements for excavators that PHMSA would be enforcing in a state that PHMSA has determined to have an inadequate enforcement program; 4. The adjudication process that PHMSA would use if PHMSA cited an excavator for failure to comply with the Federal requirements for excavators PHMSA establishes through this rulemaking; and 5. The adequacy of PHMSA's existing requirements for pipeline operators to participate in one-call organizations, respond to dig tickets, and perform their locating and marking responsibilities. A summary of comments and our response to those comments are provided later in the document. F. Notice of Proposed Rulemaking This NPRM proposes to respond to the Congressional mandate specified in Section 2 of the PIPES Act to: 1. Establish criteria and procedures PHMSA will use to determine the adequacy of state pipeline excavation damage prevention law enforcement programs. Such determination is a prerequisite should PHMSA find it necessary to conduct an administrative enforcement proceeding against an excavator for violation of the Federal requirements proposed in this NPRM in the absence of adequate state enforcement of state excavation damage prevention laws. 2. Establish an administrative process for states to contest notices of inadequacy from PHMSA should they elect to do so. 3. Establish the Federal requirements PHMSA will enforce in states with inadequate excavation damage prevention law enforcement programs. 4. Establish the adjudication process for administrative enforcement proceedings against excavators where Federal authority is exercised. G. Summary of the Proposed Rulemaking A. Standards for Effective State Damage Prevention Enforcement Programs This NPRM proposes to establish the criteria by which PHMSA will evaluate state excavation damage prevention law enforcement programs for minimum adequacy to protect public safety. PHMSA is seeking comments on using the following criteria to evaluate the effectiveness of a state's damage prevention enforcement program: 1. Does the state have the authority to enforce its state excavation damage prevention law through civil penalties? 2. Has the state designated a state agency or other body as the authority responsible for enforcement of the state excavation damage prevention law? 3. Is the state assessing civil penalties for violations at levels sufficient to ensure compliance and is the state making publicly available information that demonstrates the effectiveness of the state's enforcement program? 4. Does the enforcement authority (if one exists) have a reliable mechanism (e.g., mandatory reporting, complaint-driven reporting, etc.) for learning about excavation damage to underground facilities? 5. Does the state employ excavation damage investigation practices that are adequate to determine the at-fault party when excavation damage to underground facilities occurs? 6. At a minimum, does the state's excavation damage prevention law require the following? a. Excavators may not engage in excavation activity without first using an available one-call notification system to establish the location of underground facilities in the excavation area. b. Excavators may not engage in excavation activity in disregard of the marked location of a pipeline facility as established by a pipeline operator. c. An excavator who causes damage to a pipeline facility: i. Must report the damage to the owner or operator of the facility at the earliest practical moment following discovery of the damage; and, ii. If the damage results in the escape of any flammable, toxic, or corrosive gas or liquid that may endanger life or cause serious bodily harm or damage to property, must promptly report to other appropriate authorities by calling the 911 emergency telephone number or another emergency telephone number. 7. Does the state limit exemptions for excavators from its excavation damage prevention law? A state must provide to PHMSA a written justification for any exemptions for excavators from state damage prevention requirements. PHMSA will make the written justifications available to the public. PHMSA may also consider individual enforcement actions taken by a state in evaluating the effectiveness of a state's damage prevention enforcement program. PHMSA requests comments on this issue. PHMSA invites comments on the proposed criteria. In particular, are these criteria sufficient to assess the adequacy of state excavation damage prevention law enforcement programs? Do these criteria strike the right balance between establishing standards for minimum adequacy of state enforcement programs without being overly prescriptive? B. Administrative Process for States This NPRM proposes the administrative procedures that would be available to a state that elects to contest a notice of inadequacy. The proposed procedures involve a paper hearing where PHMSA finds the state's excavation damage prevention law enforcement inadequate and documents the basis for that finding (i.e., following its annual review of the state's pipeline safety program). Then, the state would have an opportunity to submit written materials and explanations. PHMSA would then make a final written determination including the reasons for the decision. PHMSA proposes to make publicly available all notices, findings and determinations. The proposed administrative procedures also provide for an opportunity for the state to petition for reconsideration of the decision. If the state's enforcement program is ultimately deemed inadequate, direct Federal administrative enforcement against an excavator who damaged a pipeline in that state could proceed. The procedures also give a state the opportunity to demonstrate at a later time that it has improved its excavation damage prevention law enforcement program to an adequate level and upon such showing, request that PHMSA discontinue Federal administrative enforcement in that state. PHMSA will respond to such requests and perform an adequacy review in a timely manner and no later than the next annual review. PHMSA invites further comments on these proposed administrative procedures. In particular, does this process strike the right balance between Congress' direction to undertake Federal administrative enforcement, where necessary, while providing a state with a fair and efficient means of showing that the state's enforcement program is adequate? PHMSA is proposing to evaluate state excavation damage prevention law enforcement programs consistent with the criteria proposed in Section 198.55 below. For states that have been deemed to have inadequate enforcement programs in their most recent annual reviews and in accordance with the established process, PHMSA could conduct Federal administrative enforcement against excavators without further state process. A state with an inadequate program will have five years from the date of the finding to make program improvements that meet PHMSA's criteria for minimum adequacy. A state that fails to establish an adequate enforcement program in accordance with 49 CFR 198.55 within five years of the finding of inadequacy may be subject to reduced grant funding established under 49 U.S.C. 60107. The amount of the reduction will be determined using the same process PHMSA currently uses to distribute the grant funding; PHMSA will factor the findings from the annual review of the excavation damage prevention enforcement program into the 49 U.S.C. 60107 grant funding distribution to state pipeline safety programs. The amount of the reduction in 49 U.S.C. 60107 grant funding shall not exceed 10% of prior year funding. If a state fails to implement an adequate enforcement program within five years of a finding of inadequacy, the Governor of that state may petition the Administrator of PHMSA, in writing, for a temporary waiver of the penalty, provided the petition includes a clear plan of action and timeline for achieving program adequacy. Even though the proposed rule does not require states to take any actions, the states have several incentives for enforcing their own excavation damage prevention laws. First, states with effective enforcement programs have lower rates of excavation damages to underground utilities, including pipelines. Lower damage rates translate to increased public and worker safety and decreased repair and outage costs for pipeline operators. This proposed rule provides several additional incentives for states to enforce their own excavation damage prevention laws. First, in the comments to the ANPRM on this subject, stakeholders expressed their desire for states to maintain control over their own excavation damage prevention programs, including the enforcement of damage prevention laws. Stakeholders agree that damage prevention is a local and state issue and would prefer to avoid Federal involvement in enforcement. Second, this NPRM proposes to reduce PHMSA base grant funding for state pipeline safety programs if states do not implement effective enforcement programs within five years of findings of inadequacy (see proposed section 198.53). The potential reduction in grant funding will provide incentive to the state to address enforcement gaps in the excavation damage prevention laws and programs. PHMSA specifically requests comments on the adequacy of these incentives and the need for additional incentives for states to enforce their own excavation damage prevention laws. Currently, states are reevaluating their pipeline safety laws. Several states, including Washington and Maryland, made significant changes to their damage prevention laws subsequent to the ANPRM on this subject. In addition, the following states are in various stages of legislative efforts to incorporate effective enforcement into their laws (these efforts range from stakeholder meetings, to building support for drafting legislation, to actually having a bill before the state legislatures): California, Ohio, Michigan, Alabama, Mississippi, Montana, Florida, Kentucky, and Delaware. C. Federal Excavation Standard This NPRM proposes to add a new Part 196 to Title 49, Code of Federal Regulations that prescribes standards for excavators to follow in conducting excavation activities in areas where underground gas or hazardous liquid pipelines may be located and the administrative enforcement process to address violations of the standards. The Federal requirements PHMSA is proposing to be contained in this Part are the standards that PHMSA would enforce against excavators in states determined to have inadequate damage prevention law enforcement programs pursuant to the procedures proposed in this rulemaking. The standard that PHMSA is proposing are effectively equivalent to the standard in 49 U.S.C. 60114(d) which states: (d) Prohibition applicable to excavators.—A person who engages in demolition, excavation, tunneling, or construction— (1) May not engage in a demolition, excavation, tunneling, or construction activity in a state that has adopted a one-call notification system without first using that system to establish the location of underground facilities in the demolition, excavation, tunneling, or construction area; (2) May not engage in such demolition, excavation, tunneling, or construction activity in disregard of location information or markings established by a pipeline facility operator pursuant to subsection (b); and (3) Who causes damage to a pipeline facility that may endanger life or cause serious bodily harm or damage to property— (A) May not fail to promptly report the damage to the owner or operator of the facility; and (B) If the damage results in the escape of any flammable, toxic, or corrosive gas or liquid, may not fail to promptly report to other appropriate authorities by calling the 911 emergency telephone number. The NPRM proposes to add new excavation standards that include requirements to use an available one-call system before digging, to excavate with proper regard for location information or markings established by a pipeline operator, to promptly report any damage to the pipeline operator, and to report any emergency release of hazardous products to appropriate authorities by calling 911 immediately. PHMSA is seeking comment in this NPRM on whether or not it should establish an upper limit on the time frame to report any damage to pipeline operators, such as two hours following discovery. D. Adjudication Process for Excavators PHMSA is proposing to use the same adjudication process established for pipeline safety violations set forth in 49 CFR Part 190. Under this process, excavators would have the same right as pipeline operators to: Receive written notice of the allegations including a description of the factual evidence the allegations are based on, file a written response to the allegations, request a hearing, be represented by counsel if the excavator so chooses, examine the evidence, submit relevant information and call witnesses on the excavator's behalf, and otherwise contest the allegations of violation. PHMSA proposes that hearings would be held as they are now for pipeline operators at one of PHMSA's regional offices or via teleconference. An excavator would also have the same opportunity as pipeline operators to petition for reconsideration of the agency's administrative decision. Judicial review of the final agency action would be available to the same extent it is available to a pipeline operator. PHMSA invites further comments on the adjudication process for excavators. In particular, is the process too formal in the sense that excavators contesting a citation would have to prepare a written response for the record and potentially appear before an administrative hearing officer? Is the process not formal enough in the sense that it does not provide for formal rules of evidence, transcriptions, or discovery? Or does this process strike the right balance by being informal enough to be efficient and at the same time providing enough formality that excavators feel the process is fair and their “due process are maintained”? E. State Base Grant PHMSA already conducts annual program evaluations and certification reviews of state pipeline safety programs. PHMSA would also conduct annual reviews of state excavation damage prevention law enforcement programs. A state that fails to establish an adequate enforcement program in accordance with 49 CFR 198.55 within five years of the finding of inadequacy may be subject to reduced grant funding established under 49 U.S.C. 60107. PHMSA would factor the findings from the annual review of the excavation damage prevention enforcement program into the 49 U.S.C. 60107 grant funding distribution to state pipeline safety programs. The amount of the reduction in 49 U.S.C. 60107 grant funding would not exceed 10 percent of prior year funding. If a state fails to implement an adequate enforcement program within five years of a finding of inadequacy, the Governor of that state may petition the Administrator of PHMSA, in writing, for a temporary waiver of the penalty, provided the petition includes a clear plan of action and timeline for achieving program adequacy. PHMSA would use the proposed 49 CFR 198.55 criteria to evaluate the effectiveness of a state's excavation damage prevention enforcement program. IV. Analysis of Public Comments on the ANPRM PHMSA received comments from 39 organizations and 152 individuals, including: • Associations representing pipeline operators (trade associations) ○ The American Gas Association (AGA) ○ The American Petroleum Institute (API) ○ The American Public Gas Association (APGA) ○ The Association of Oil Pipelines (AOPL) ○ The Interstate Natural Gas Association of America (INGAA) ○ The Texas Pipeline Association (TPA) ○ The Texas Pipeline Safety Coalition (TPSC) ○ The Texas Oil and Gas Association (TxOGA) • Transmission and distribution pipeline companies ○ Atlanta Gas Light Resources (AGL) ○ Baltimore Gas and Electric Company (BGE) ○ CenterPoint Energy ○ El Paso Pipeline Group (EPPG) ○ LDH Energy Pipeline, L.P. ○ Marathon Pipeline ○ Michigan Consolidated Gas Company ○ MidAmerican Energy Company ○ Nicor Gas ○ Northern Natural Gas Company ○ Paiute Pipeline ○ Panhandle Energy ○ San Diego Gas & Electric ○ Southern California Gas Company ○ Spectra Energy Transmission • The National Association of Pipeline Safety Representatives (NAPSR) • Individual state pipeline regulatory authorities ○ The Florida Public Service Commission ○ The Minnesota Office of Pipeline Safety ○ The Missouri Public Service Commission (PSC) ○ The Public Utilities Commission of Ohio (PUCO) ○ The Tennessee Regulatory Authority (TRA) excavator contractor associations ○ The Associated General Contractors of America (AGC) ○ The Associated General Contractors of Texas (AGC of Texas) ○ The National Utility Contractor Association (NUCA) ○ The Wisconsin Underground Contractors Association (WUCA) • One-call organizations ○ Joint Utility Locating Information for Excavators, Inc. (JULIE) ○ GulfSafe • A utilities locating service ○ The United States Infrastructure Corporation (USIC) • A local/regional damage prevention council ○ The Greater Chicago Damage Prevention Council • A citizens' interest group ○ The Pipeline Safety Trust (PST) • The Association of American Railroads • An excavation equipment manufacturer • 154 individuals, 145 of whom submitted substantially similar to comments submitted by excavation contractors. To a substantial extent, the comments supported the need for this rulemaking. When a pipeline is struck during an excavation project, not only is the public put at risk and energy supplies potentially disrupted, but the excavator personnel are also at risk of serious injury or even death. In the ANPRM, PHMSA posed some specific questions related to state excavation damage prevention programs. Many comments received were general to the entire ANPRM and others addressed specific sections and content of the ANPRM. The general comments and comments related to specific sections of the ANPRM are addressed individually below. Many commenters addressed the concept of the questions, as was intended. Others addressed the questions as they were deemed to apply currently to specific state damage prevention (SDP) programs. Additionally, many comments received are outside the scope of the proposed regulatory changes. Many of the comments were to the effect that PHMSA enforcement should be applied to all underground utilities. For example, NAPSR, the Missouri Public Service Commission, AGA, and several pipeline operators commented that any rulemaking language should clearly specify the scope to which it applies and that if PHMSA seeks to expand its enforcement authority outside of pipeline matters, its legal authority to do so should be explained. While commenters believe that many states will benefit from broadening their damage prevention programs beyond pipelines to include other underground utilities, PHMSA's authority does not extend beyond pipeline facilities and, as defined in the PIPES Act, excavators under certain specified conditions. Federal pipeline safety regulations require gas and hazardous liquid pipeline operators to have excavation damage prevention programs in place to protect their pipelines. These regulations require pipeline operators to participate in state one-call systems and enable PHMSA enforcement against regulated pipeline operators who fail to comply with applicable locating and marking requirements, including situations where their pipelines are damaged by improper excavation activities of the pipeline operator or its contractors (either excavating or locating contractors). General Comments Involve All Stakeholders in This Rulemaking Process A number of comments supported PHMSA's approach of involving all stakeholders in this rulemaking process. Several commenters, including NAPSR, Missouri Public Service Commission, INGAA, and EPPG commented that beyond reviewing the written comments, PHMSA should conduct public meetings on this topic, and should lead open and on-going discussions of the issues as they arise, through the most appropriate venues. They noted that public meetings would allow all stakeholder groups to present their viewpoints and hear similar presentations from others, thus providing an effective means of gathering additional information that would assist PHMSA in developing standards for auditing the adequacy of states' excavation damage prevention enforcement programs and in issuing an effective and practicable rulemaking. NAPSR especially wants to be involved in the rulemaking process. Response PHMSA recognizes the value of open and ongoing discussions related to this rulemaking, and, therefore, took the optional step of publishing an ANPRM in October 2009 to provide information to and solicit feedback from stakeholders. PHMSA also conducted a meeting with NAPSR to discuss NAPSR's position and concerns on the issues identified in the ANPRM. The minutes from the meeting are available on the ANPRM docket ( http://www.regulations.gov, Docket ID PHMSA-2009-0192). PHMSA does not intend to hold public meetings related to this rulemaking after the NPRM is published. As an alternative, PHMSA will post a recorded presentation pertaining to the NPRM on the PHMSA Web site. The recorded presentation will provide an overview of the proposed rule and encourage viewers to read and comment on the NPRM. Federal Administrative Enforcement USIC Locating Services, API, AOPL, INGAA, and several pipeline operators commented that PHMSA should develop the necessary processes and procedures and should not hesitate to use the Federal administrative enforcement authority granted by Congress to enforce excavation damage prevention laws where state enforcement programs are determined to be inadequate. They consider it to be in the public's best interest and that a key element of an effective excavation damage prevention program is enforcement action against excavators that do not follow the one-call laws, and that without enforcement, there is little incentive for excavators to comply with one-call laws. However, AGC, API and AOPL commented that Federal administrative enforcement should not be permanent. It should only last as long as necessary to ensure the state achieves a successful enforcement program. They noted that PHMSA should reserve enforcement to only those specific circumstances permitted by law when a state fails to meet the test for adequate enforcement of its excavation damage prevention laws. They contended that where strong and effective state excavation damage prevention laws and enforcement programs exist, PHMSA need not and should not exert its Federal authority lest a costly, potentially inefficient layer of Federal oversight result. Conversely, WUCA commented that all enforcement of state excavation damage prevention laws should be at a state or local level and that the Federal Government should not be involved at all in enforcement. WUCA commented that excavators who damage underground facilities already pay for “at fault” damages and can be removed from bid lists for specific utilities. They consider free enterprise to the best “enforcement” available and want no Federal Government involvement, and prefer, at most, state enforcement. JULIE, commented that it would seem contradictory that a particular state's excavation damage prevention enforcement program could be “taken over” by an agency (i.e., PHMSA) whose jurisdiction is limited solely to pipelines. JULIE suggested that PHMSA limit itself to providing assistance to state excavation damage prevention systems to help them improve enforcement of state excavation damage prevention laws. Response Congress provided that PHMSA undertake this rulemaking action in Section 2 of the PIPES Act. The PIPES Act requires that PHMSA must determine that a state's excavation damage prevention law enforcement program is inadequate before PHMSA may take enforcement action for a violation by an excavator occurring in that state. Thus, PHMSA cannot take enforcement actions against excavators in states determined by PHMSA to have adequate enforcement programs. PHMSA's goal is to encourage states to implement adequate enforcement programs. Federal administrative enforcement is not intended to be the primary means of pipeline damage prevention enforcement and is instead intended to provide incentives for states to develop and implement adequate programs and serve as a backstop in states with inadequate programs. State Program Evaluation Should Include an Appeals Process Several commenters noted that the process for determining whether a state's enforcement of its excavation damage prevention law is “inadequate” should contain an appeals process and timeframe by which PHMSA needs to respond to appeals. Northern Natural Gas commented that the rulemaking should provide for an arbitration element when there is a dispute over a state's enforcement program, and that the state should be allowed an opportunity to improve its excavation damage prevention program if PHMSA determines that the program does not meet the minimum Federal requirements. Response This NPRM proposes the administrative process by which a state may contest a notice of inadequacy from PHMSA. Additionally, states deemed to have inadequate excavation damage prevention law enforcement programs will have the opportunity to enhance their programs and to demonstrate their adequacy through periodic reviews. Programs PHMSA previously determined to be inadequate may later be found adequate if a state takes steps to implement an effective enforcement program (see proposed Subpart D of Part 198). Minimum Damage Prevention Program Requirements API, INGAA, several pipeline operators, and three Texas pipeline associations commented that PHMSA should establish clear, well-defined, and consistent minimum criteria for determining the adequacy of acceptable state excavation damage prevention laws and programs. API, AOPL and Nicor commented that the fundamental minimum requirements that should apply in evaluating state programs are that all excavators, including state agencies and municipalities: (1) Use state one-call systems prior to excavation, (2) follow location information or markings established by pipeline operators, (3) report all excavation damage to pipeline operators, and (4) immediately notify emergency responders by calling 911 when excavation damage results in a release of pipeline products. AGA and several pipeline operators commented that PHMSA should keep the overall review process and the criteria for determining the adequacy of state programs as simple as possible. They noted that PHMSA's evaluation of the adequacy of states' excavation damage prevention programs should be based upon a relatively short list of elements. They also noted that PHMSA will likely discover that few states have an excavation damage prevention program that would clearly meet all or even most of the criteria listed in the ANPRM. Response PHMSA agrees that the criteria for evaluating the adequacy of state excavation damage prevention law enforcement programs should be clear, well-defined, consistent, and as simple as possible. These criteria helped guide development of the criteria proposed in this NPRM. PHMSA seeks comments on these criteria. PHMSA Should Encourage States To Implement and Enforce Effective Damage Prevention Laws Many commenters, including the AGC, API, AOPL, INGAA, state regulatory agencies and many individual pipeline operators, agree with PHMSA's goal of encouraging states to implement, maintain and enforce effective excavation damage prevention laws. They encouraged PHMSA to move forward promptly to issue a final rule to accomplish the objective set forth in the ANPRM of promoting better, more effective enforcement of state excavation damage prevention laws. The NUCA and several pipeline trade associations recognized that PHMSA's jurisdiction is limited to gas and hazardous liquid pipelines. They commented, however, that this regulation's influence on how state authorities adjust their programs and enforcement practices to protect all underground facilities will be significant, and that addressing enforcement in a balanced and comprehensive manner in the proposed rule will facilitate the entire process. Three Texas pipeline associations suggested that standards consistent with key aspects of the Common Ground Alliance Best Practices should be adopted by states to ensure the scope of their enforcement programs are adequate. They noted those key provisions include tolerance zone, positive response, due care in excavating, and reporting damages. Response As noted, PHMSA supports effective state excavation damage prevention law enforcement to protect pipelines. PHMSA strongly believes that individual states should retain the primary responsibility to enforce their excavation damage prevention laws effectively. The proposed regulations do not conflict with the best practices established by the Common Ground Alliance. Apply Enforcement to All Excavators—No Exemptions Several respondents, including NUCA and EPPG, commented that state excavation damage prevention laws and enforcement processes should apply to pipeline operator “in-house” and contractor excavators. They noted that “first-party” (facility operators) and “second-party” (operator contractor) damages, although often unreported, carry the same consequences as pipeline damages caused by landscapers, home owners, and other “third-party” excavators. AGA and several pipeline operators noted that the term “excavator” is used throughout the ANPRM but that it was not clear what constitutes an excavator or excavation, thus clarification is needed. NUCA, API, AOPL, and several pipeline operators commented that the scope of enforcement for all programs, Federal and state, should encompass all excavators, including state agencies, municipalities, counties, parishes, agricultural entities, and railroads. They believe that state law should require all excavators to call the one-call center and request facilities to be located and marked before digging, and that the exclusion of a category of excavator should be considered a basis for PHMSA regulation and direct enforcement. Response PHMSA agrees that state excavation damage prevention laws and enforcement should apply to all excavators, including pipeline operators and their contract excavators and locators. Current Federal pipeline safety regulations at 49 CFR 192.614 and 195.442, require gas and hazardous liquid pipeline operators, respectively, to comply with specific excavation damage prevention requirements. PHMSA and its state partners have authority to enforce these regulations against pipeline operators and can pursue enforcement action against pipeline operators when an operator's employees or its contractors, including excavators and locators, violate the regulations. PHMSA also agrees that, in general, exemptions of categories of excavators from state excavation damage prevention laws can be problematic because exempt excavators can damage underground utilities. However, some exemptions may be justifiable in some states, especially where substantiated by data (e.g., Virginia's exemptions for VDOT). States are ultimately responsible for establishing their own excavation damage prevention laws. Under this proposed rule, only homeowners using hand tools, as opposed to than mechanized excavating equipment, on their own property are exempt from Federal administrative enforcement action. All other excavators would be subject to Federal enforcement in a state PHMSA deems to have an inadequate enforcement program, regardless of an excavator's exemption status under that state's law. Fines and Penalties Many commenters acknowledged that the use and application of civil penalties is necessary as an effective tool to deter violations of state excavation damage prevention laws that could lead to pipeline damage. Comments also indicated that civil penalties should be applied at an appropriate level to achieve such deterrence, including the escalation of fines and penalties for repeat offenders. Northern Natural Gas and others agreed that a responsible state agency should have the ability to levy fines and civil penalties similar to the Federal maximums. However, several commenters, including PUCO, noted that PHMSA could clarify the maximum civil penalties PHMSA will require for a state program to be determined “adequate.” Additionally, some commented that education and training should be considered in lieu of fines and penalties for minor violations. Response PHMSA is not proposing a specific penalty amount or schedule as a criterion in determining the adequacy of state excavation damage prevention law enforcement programs. However, state penalty levels should be sufficient to deter violations. PHMSA will review state enforcement records on a state-by-state basis. Clarification of Terminology and Parties Subject to PHMSA Enforcement Action Several comments asked for clarification of some terminology used in the ANPRM or, in some cases, clarification of the scope of the rulemaking. For example, WUCA asked for clarification of where enforcement would start—with gas mains or service lines or both. PUCO and some gas pipeline operators asked that the term “incident” be clarified. Is it as defined in 49 CFR § 191.3? Does it mean only incidents reportable under the applicable Federal or state law? Or, does it mean every event wherein damage occurs, regardless of the magnitude or consequences? PUCO also commented that the definition and implications of a state program designation of “nominally adequate” need to be clarified. NAPSR asked what “available” means, regarding the question in the ANPRM “Are records of investigations and enforcement available to PHMSA?” Additionally, NAPSR asked for clarification on the terms “reasonable care” and “timely.” Other terms noted for clarification include: all excavation damage, damage, incident, excavation, and excavator. Response This rulemaking applies to all excavators and excavation activities that affect any gas or hazardous liquid pipelines subject to the pipeline safety laws in 49 U.S.C. 60101 et seq., including gathering, transmission, and distribution pipelines (including gas mains and service lines). Those terms are defined in existing laws and regulations. PHMSA will retain the discretion to determine if enforcement action is necessary on a case-by-case basis. In response to commenters' concerns, PHMSA has taken care to clearly define terms in this regulation. Complaint-Based Enforcement Process Centerpoint Energy suggested a “complaint-based” process in which a pipeline operator or an excavator can file a complaint to petition for enforcement actions by the state, or to petition PHMSA to review the adequacy of the state's enforcement process. Centerpoint expressed the view that PHMSA should only initiate enforcement actions upon receipt of filed complaints and that one allegation in each complaint would have to be that the state's enforcement process is not adequate to prevent repeated violations. Centerpoint would prefer that the state could intervene as an interested party and dispute the claim and PHMSA would have to conduct a hearing and require specific findings concerning what aspects of the state's enforcement efforts were inadequate. Centerpoint considers that findings of inadequacy would relieve the complaining parties from the duty to resolve disputes at the state level until the state resolved those issues of inadequacy. Centerpoint commented that costs for PHMSA could be assessed to the losing party or split between the two. Centerpoint commented that a complaint-based process would allow the operator, excavator, the state agency and PHMSA to direct time and resources where they are most needed. Centerpoint believes that a pipeline operator is in the best position to determine when an excavator is willfully ignoring the excavation damage prevention program and will likely continue to do so in spite of any actions the operator takes. They also consider that an operator can collect evidence to show it was unable to change excavator behavior and that punitive enforcement is needed, and to show that Federal administrative enforcement is necessary because a state's enforcement efforts were not adequate to affect the behavior of the excavators. Similarly, Centerpoint comments that excavators should be able to file complaints against operators that will not respond to locate requests or that consistently do a poor job of locating their facilities. Response PHMSA proposes to use the criteria and procedures proposed in this NPRM to assess the adequacy of state excavation damage prevention law enforcement programs. Once those evaluations are complete, PHMSA will determine, on a state-by-state basis, if Federal administrative enforcement action is necessary in states deemed by PHMSA to have inadequate enforcement programs. Under § 198.55, PHMSA would evaluate the state enforcement program in its entirety, but may also consider individual enforcement actions taken by a state where warranted. PHMSA may become aware of a potential need for Federal administrative enforcement through a variety of mechanisms, including notifications of reportable incidents, instances of a serious and recurring nature where excavators fail to comply with the Federal requirements proposed in this NPRM, or by other means, including complaints. PHMSA requests comments on ways or mechanisms that it can utilize to become aware of these incidents. PHMSA believes it is important to retain flexibility in the process used to make decisions concerning the use of Federal administrative enforcement authority. PHMSA will only conduct enforcement in states deemed to have inadequate enforcement programs in accordance with the criteria outlined in this NPRM. Evaluate Enforcement Programs, Not Individual Enforcement Actions INGAA and others commented that the standards and procedures for adequacy proceedings should be directed toward evaluating state enforcement programs, not specific enforcement actions. INGAA holds that applying adequacy standards and procedures to individual enforcement actions invites selective PHMSA involvement contrary to vesting primary enforcement responsibility with the states. Similarly, and consistent with using adequacy proceedings to examine programs instead of decisions, INGAA commented that PHMSA should specify that inadequacy findings are not retroactive—that a finding of inadequacy should not be used to revisit and alter a state's enforcement findings and sanctions. Response In determining a state program's adequacy, PHMSA would evaluate a state's overall damage prevention enforcement program, but may evaluate past specific state enforcement actions during the evaluation process. PHMSA did consider a system of addressing the adequacy of state enforcement programs on an incident-by-incident basis instead of through an annual review of the state enforcement programs. Under that scenario, upon determining that enforcement action in a given incident may deter future incidents, PHMSA would assess the state's ability to conduct effective enforcement in that particular incident and proceed with enforcement action if PHMSA found the state program inadequate. However, PHMSA believes that such a system would be inefficient and administratively burdensome and that an annual review may be more appropriate. PHMSA seeks comment on this issue. Federal Funding API, AOPL, TRA and WUCA commented that PHMSA should continue its assistance to state agencies seeking to develop and enforce effective excavation damage prevention programs through grants and other support mechanisms. They noted that this assistance should include providing quantitative analyses that demonstrate the effectiveness of existing excavation damage prevention programs and developing incentives to ensure that agencies and other stakeholders in the states cooperate in these efforts. TRA went on to comment that a state agency that is making a concerted effort to make changes to its excavation damage prevention law to meet the nine elements should not be punished by having its level of funding decreased. PUCO was concerned that changes in how PHMSA evaluates state excavation damage prevention programs could result in a designation of a program being “inadequate” or “nominally adequate,” and that such a designation may affect funding and ultimately gas pipeline safety. PUCO commented that despite the stated assurance in the ANPRM that funding for the development and implementation of excavation damage prevention programs is “intended to be in addition to, and independent of existing Federal funding of the state pipeline safety programs,” the implications of designation of “inadequate” or “nominally adequate” on a state excavation damage prevention program's current funding is not addressed. PUCO commented that it would be beneficial for PHMSA to describe whether and how state funding for the gas pipeline safety program will be affected by a determination of “inadequate” or “nominally adequate.” The three Texas pipeline associations noted that PHMSA should evaluate the adequacy of state programs in a similar fashion to that of PHMSA's existing state program evaluation. They commented that a state's annual program performance evaluation could result in a reward of additional grant monies or a penalty of a reduction in grant moneys based on PHMSA's excavation damage prevention law enforcement program assessment, to a greater degree than is currently practiced. Response PHMSA intends to continue its support of states seeking to develop and enforce effective excavation damage prevention programs through grants and other means. PHMSA has undertaken a variety of both qualitative and quantitative initiatives that demonstrate the effectiveness of existing state excavation damage prevention programs. These initiatives are described in the ANPRM pertaining to this rulemaking ( http://www.regulations.gov, Docket ID PHMSA-2009-0192). When evaluating a state's overall pipeline safety program, PHMSA will continue to consider the extent to which a state has implemented an effective excavation damage prevention enforcement program. The effect on base grant funding of a declaration that a state's excavation damage prevention enforcement program is inadequate is proposed in this NPRM. State Authority for Interstate Pipeline Operators Paiute Pipeline and three Texas pipeline associations submitted comments regarding how interstate pipeline operators are expected to be treated under a state's excavation damage prevention program and noted that PHMSA should provide clarification in this regard. The issue they noted is whether the operator is treated as an excavator or as an operator and whether state agencies have the authority to enforce state excavation damage prevention standards on interstate pipeline operators or on excavators working near interstate pipelines. They consider this to be especially the case for states that have not applied for, or been granted, interstate agent status for natural gas and/or hazardous liquid lines. Paiute commented that authority for inspection and enforcement of interstate pipelines pursuant to Federal regulations should remain with PHMSA, and that in states that don't have interstate pipeline inspection and enforcement authority, the state should treat an interstate pipeline as an excavator, not a pipeline operator. The three Texas pipeline associations commented that there should be a process for states to clarify that they have the ability to enforce state excavation damage prevention standards with regard to interstate pipelines, through a statutory change or through a Memorandum of Understanding between PHMSA and the states when certain program standards are met. Spectra Energy commented that the existing enforcement process in 49 CFR Part 190 should continue to be applied to interstate pipeline operators. Response States that have an annual certification under 49 U.S.C. 60105 have authority to regulate the intrastate pipelines in that state covered by the certification. States that have an interstate agent agreement under 49 U.S.C. 60106 may conduct inspections and investigations on interstate pipelines, but must refer any alleged violations on interstate pipelines to PHMSA for enforcement action. While states are generally preempted from establishing or enforcing safety standards for interstate pipelines, 49 U.S.C. 60104 contains a specific provision that allows a state's pipeline damage prevention one-call program to apply to interstate pipelines as well as intrastate pipelines. Accordingly, all excavators and pipeline operators in a certified state are generally subject to the requirements of that state's excavation damage prevention laws (except when explicitly exempted by state law). The applicability of excavation damage prevention requirements within a state is determined by that state's law. Under the provisions included in this NPRM, state excavation damage prevention laws will continue to be enforced as specified by state laws except when PHMSA deems a state's enforcement program inadequate. In that case, PHMSA proposes to enforce the Federal requirements established by this rulemaking against excavators in that state who fail to comply with the Federal requirements. Regardless of the status of a state's damage prevention program, PHMSA is proposing to retain its existing enforcement authority over pipeline operators and will continue to enforce the requirements related to excavation damage prevention (49 CFR 192.614 and 195.442) for pipeline operators it regulates. Model Programs NAPSR, Missouri PSC, AGA and several pipeline operators noted that care should be exercised about urging states to adopt concepts of what a “model” excavation damage prevention program should be. They cautioned that PHMSA should be open-minded in its review of state programs, allow for alternate approaches for damage investigations, and not have preconceived ideas on what an effective state excavation damage prevention program should include. AGA and several operators noted that PHMSA should avoid taking a prescriptive approach on the overall review of the state's excavation damage prevention enforcement process. They suggested that PHMSA should adopt a holistic and data-driven approach to adequacy assessment. For a state with documented success at excavation damage prevention, compliance with specific PIPES Act criteria should be at most a basis for suggested improvement. They noted that a state program should never be deemed inadequate solely because it did not meet all of these criteria. NAPSR noted that depending on how its proposed provisions are interpreted, a program such as the one apparently envisioned by PHMSA in the ANPRM could be burdensome and costly. NAPSR noted that PHMSA should not presume that states can or will readily change their laws in response to Federal initiatives, and should be mindful of unintended consequences that may arise upon re-opening the existing state law to further amendments. NAPSR stated that it is likely that if onerous provisions are adopted in the proposed rule, some states will simply defer to Federal administrative enforcement, in which case NAPSR expects PHMSA will undertake every action it would otherwise expect a state to perform. API and AOPL commented that state excavation damage prevention program evaluations should be based primarily on the effectiveness of the overall programs in place and allow for flexibility in the statutory or regulatory language. They noted, for example, a state program may be considered adequate if it has met the fundamental requirements described in the introduction, but failed to meet other program elements required by PHMSA, as long as the state can demonstrate overall program effectiveness. They consider that an excavation damage prevention program that establishes a generally acceptable baseline should provide an objective measuring stick. Panhandle Energy commented that a template or recommended practice for enforcement of excavation safety is required, so that both PHMSA and the states have a clear understanding of the requirements, before any program evaluation takes place. Response As noted, PHMSA's goal is to provide incentives to states to develop and implement effective excavation damage prevention and enforcement programs. PHMSA believes there are some fundamental components of effective state enforcement programs. For example, an adequate enforcement program requires, at a minimum, the existence of statutory enforcement authority that includes civil penalties for violations and the use of that authority. The criteria for evaluating state enforcement programs proposed in this NPRM address those fundamental components (see proposed section 198.55). Evaluate the Entire State Program NUCA commented that PHMSA should evaluate each state's excavation damage prevention program as a whole. Even if thorough enforcement exists in a particular state, if the program itself does not adequately address the nine elements of an effective excavation damage prevention program, the entire program itself may be inadequate. If a state's excavation damage prevention program and enforcement practices were to focus exclusively on excavator responsibilities, that program is not fully addressing excavation damage prevention. AGA, APGA, and several pipeline operators commented that for a state to have a documented excavation damage prevention program alone is not enough; it is critical for the state agency to have the resources and the incentive to exercise its authority, when necessary. In this regard, NAPSR commented that an important factor to consider in assessing the overall adequacy of a state excavation damage prevention program would be the relative weight given to the various proposed individual assessment factors listed in the ANPRM. NAPSR noted, for example, that enforcement of excavation damage prevention laws has been shown to be an essential element of a successful excavation damage prevention program. The issuance of appropriate civil penalties has been a demonstrated deterrent to non-compliant behavior. When assessing the adequacy of excavation damage prevention programs, this factor could be given a heavier weight than, for example, exempting certain parties who perform less risky excavations. Similarly, APGA commented that some of the assessment factors should receive more weighting than others and that weighting should be discussed with the affected parties. APGA noted that the ANPRM is a good start in opening a dialogue with the affected public, industry and state governments. With regard to weighting the assessment factors, AGA commented that the most important criteria are the ones involving timely reporting of pipeline damages, a universal requirement for all parties to notify the one-call center prior to excavation, establishment of a single agency responsible for oversight of excavation damage prevention laws, and an effective enforcement process. AGA noted that the list of criteria listed in the ANPRM appears thorough, but how the criteria are weighted and actually evaluated is open to several different approaches. Michigan Consolidated Gas commented that consideration should be given to states that are working on revising their state laws. Response Effective excavation damage prevention law enforcement is critical to an effective excavation damage prevention program, but enforcement is just one component of an effective program. PHMSA has undertaken several efforts to document state excavation damage prevention programs in their entirety. Information regarding those efforts is available at http://primis.phmsa.dot.gov/comm./ damagepreventionsummary.htm. However, the PIPES Act states: “(f) LIMITATION.—The Secretary may not conduct an enforcement proceeding under subsection (d) for a violation within the boundaries of a state that has the authority to impose penalties described in section 60134(b)(7) against persons who violate that state's damage prevention laws, unless the Secretary has determined that the state's enforcement is inadequate to protect safety, consistent with this chapter, and until the Secretary issues, through a rulemaking proceeding, the procedures for determining inadequate state enforcement of penalties.” While evaluating state excavation damage prevention programs in their entirety is part of the annual review of a state's overall pipeline safety program performed by PHMSA in connection with the state grant process, this proposed rulemaking is focused solely on the enforcement component. In this NPRM, PHMSA has proposed the criteria for evaluating state excavation damage prevention law enforcement programs. PHMSA does not propose to weight the criteria used in evaluating state excavation damage prevention law enforcement programs. Weighting the criteria could create an overly-prescriptive set of criteria. PHMSA believes the proposed criteria are simple enough to not warrant a specific scoring or weighting method. PHMSA specifically asks for comments on whether it should weight the criteria, how the critieria might be weighted, and the rationale for weighting the criteria in evaluating state excavation damage prevention law enforcement programs. Evaluation of state enforcement programs will pertain to state laws and regulations in effect at the time of evaluation. PHMSA believes that states should have the opportunity to demonstrate improvements in their enforcement programs and petition PHMSA for reevaluation of their programs as necessary and appropriate. Damage Reporting Many commented that they do not support reporting all pipeline damages as this will create an unnecessary burden on the operator, the state, and PHMSA. Conversely, Northern Natural Gas commented that excavators should be required to report all pipeline damage to the affected pipeline operator. Response This proposed rulemaking does not address requirements for damage reporting by pipeline operators. However, the reporting of damages that provides enough detail for analysis and resource allocation is critical in developing effective excavation damage prevention programs because inadequate reporting will result in a failure to investigate incidents that should be investigated. Therefore, PHMSA encourages all states to develop effective excavation damage reporting requirements. The CGA Damage Information Reporting Tool (DIRT) is an effective means of collecting data on damages to pipelines and other underground facilities. This is a voluntary filing requirement that can assist in the collection of data on damages. The data is made available to the Federal government, states and the public by the CGA. As provided in the PIPES Act, this proposed rulemaking requires an excavator who causes damage to a pipeline facility to report the damage to the owner or operator of the facility promptly. Perform Annual Reviews Only for State Enforcement Programs Deemed Inadequate AGA and several pipeline operators commented that annual excavation damage prevention program reviews are not necessary for those states with adequate programs. They noted that it would be reasonable for PHMSA to establish a five-year review cycle for those states. Their basis is that a state's overall program will change minimally over the course of a year and that an annual audit of every program seems unnecessary. From the standpoint of administrative efficiency, it would be far better for PHMSA to lengthen its review cycle for programs found adequate after an initial audit, and focus its resources on the programs it found inadequate or adequate subject to specific corrective action. PHMSA should only perform annual reviews for states found to have a “nominally adequate” or inadequate program so that these states have the opportunity to have their status re-evaluated to identify areas for improvement and additional emphasis. JULIE, Inc. commented that there appears to be no probationary period or other opportunity for states to improve upon PHMSA's recognized “deficiencies” prior to PHMSA undertaking enforcement actions. Response PHMSA agrees that resources and attention should be focused on state excavation damage prevention law enforcement programs that are deemed inadequate. However, PHMSA proposes that all SDP enforcement programs be evaluated concurrently with PHMSA's annual state pipeline safety program evaluations, or at the request of states as appropriate. PHMSA does not believe the addition of these evaluations will be overly cumbersome. PHMSA also proposes that states be given a five-year grace period after notification that their enforcement programs have been deemed inadequate to address deficiencies in their programs before state pipeline safety base grant funding levels are potentially affected. However, PHMSA proposes that Federal excavation damage prevention enforcement may take place at any time after a state's enforcement program is deemed inadequate. The process for evaluating state enforcement programs is described in this NPRM. Comments on Section IV Issues on Which PHMSA Sought Comment In Section IV of the ANPRM, pipeline operators, excavators, states and the public were urged to consider the appropriate procedures for determining the adequacy of state excavation damage prevention law enforcement programs, as well as the need for Federal administrative enforcement in the absence of an adequate state program. PHMSA posed specific questions to solicit stakeholder input. These included questions related to: A. Criteria for Determining the Adequacy of SDP Enforcement Programs; B. Administrative Process; C. Federal Requirements for Excavators; D. Adjudication Process; and E. Existing Requirements Applicable to Owners and Operators of Pipeline Facilities. Many of the comments received were repetitious of those noted above under General Comments. A: Criteria for Determining the Adequacy of SDP Enforcement Programs In Section IV.A of the ANPRM, PHMSA noted that “a threshold criterion for determining the adequacy of a state's damage prevention enforcement program will be whether the state has established and exercised its authority to assess civil penalties for violations of its one-call laws. PHMSA will likely consider the following issues in further evaluating the enforcement component of [state damage prevention] programs.” The ANPRM then listed 13 items for consideration and comment. Following are comments received relative to those items: Item 1: “Does state law contain requirements for operators to be members of and participate in the state's one-call system (similar to current federal pipeline safety regulations, 49 CFR 192.614 and 49 CFR 195.442)?” Several commented that Federal pipeline safety regulations adequately address this requirement for pipeline operators. Several commenters also said that each state excavation damage prevention program should require all underground facilities operators to be members of the state's one-call system(s). NUCA commented that “participation” in excavation damage prevention includes calling the one-call center before excavating. However, NUCA also commented that underground facility operators being members of the appropriate one-call center is fundamental to the excavation damage prevention process and that exemptions only increase the likelihood of facility damages. NUCA cites the Common Ground Study of One-Call Systems and Damage Prevention Best Practices, for which “the underlying premise for prevention of damage to underground facilities, and the foundation for this study, is that all underground facility owners/operators are members of one-call centers, and that it is always best to call before excavation.” Michigan Consolidated Gas questioned how the state and/or PHMSA would take into account operators that do not have the resources, equipment, funding, etc., to locate their facilities. Response Sections 192.614 and 195.442 of the pipeline safety regulations require regulated pipeline operators to be members of qualified one-call systems in the states in which they operate. All states certified to regulate gas operators will have adopted § 192.614 allowing them to enforce it against the intrastate gas operators they regulate. Items 2 and 3: “Does state law require all excavators to use the state's one-call system and request that underground utilities in the area of the planned excavation be located and marked prior to digging? Has the state avoided giving exemptions to its one-call damage prevention laws to state agencies, municipalities, agricultural entities, railroads, and other groups of excavators?” NAPSR commented that the standards to which PHMSA would hold a state in terms of “excavation” must be consistent with the terms used in that state's law. NAPSR noted that there may be very legitimate reasons for exemptions in a state one-call law. For example, agricultural exemptions may recognize the total impracticality of attempting to include normal farm tillage. Others may conclude that the risk of an activity is so low that regulation is not justified, such as opening a grave in a cemetery. Still others may be the result of carefully crafted legislative compromises to achieve passage of one-call legislation, the reopening of which could have negative consequences. NAPSR also noted that 49 U.S.C. 60114(d), which lists demolition, excavation, tunneling, or construction, or excavation as defined in paragraph 192.614(a), is far from all-inclusive, in that it seems to exclude farm tillage and gardening, and perhaps activities such as pipe or cable plowing. NAPSR considers that PHMSA must determine to what extent certain exemptions in individual states will be acceptable. AGA, along with Nicor, Paiute Pipeline and Southwest Gas Corporation, agreed that exemptions are a critical consideration in evaluating the adequacy of state excavation damage prevention law enforcement programs. They noted that exemptions are inherently counter to the entire concept of excavation damage prevention being a shared responsibility. They noted that in several states, exemptions have been granted, for example, to state DOTs, counties, municipalities, railroads, and private land owners. The exemptions can take on different forms; some apply so that the entity does not need to belong to the one-call center for the purpose of marking its underground facilities, while others allow an entity to excavate freely without having to notify the one-call center, and still others allow certain parties to be free of enforcement penalties. The commenting organizations hold that exemptions often exist only because of private interests that enable certain entities to escape responsibility in the excavation damage prevention process. They also commented that exemptions serve as an impediment when stakeholders attempt to craft new legislation for state excavation damage prevention laws. They referred to the DIMP Phase 1 Report ( http://primis.phmsa.dot.gov/dimp/docs/IntegrityManagementforGasDistributionPhase1Investigations2005.pdf ), in commenting that all stakeholders must participate in the excavation damage prevention process for it to be successful. Spectra Energy commented that PHMSA's criteria should force states to eliminate all exemptions from their one-call requirements. Spectra noted that a number of states continue to exempt from the one-call requirements certain types of excavators, such as agriculture, railroads and state/county road commissions. Spectra considers that to provide exemptions is contrary to the goal of pipeline safety, noting that the pipeline operator is the most qualified entity to determine if a pipeline exists within the area of interest, to locate and mark the facility, and to determine the safety precautions necessary to ensure the pipeline is not impacted. JULIE, Inc. expressed a concern that some states' cultures provide for the successful existence of more than one excavation damage prevention system (one-call center) that does not have overlapping geographic areas. There appears to be no process in the ANPRM to recognize separate evaluation results in those states, particularly when possibly one or both of the systems may have unique but strong enforcement programs in place. Response As noted in the response to the General Comments above, some exemptions may be justifiable in some states, especially where substantiated by data. If having absolutely no exemptions were a “pass/fail” criterion for evaluating state excavation damage prevention law enforcement programs, PHMSA believes that nearly every state (if not all states) would be declared inadequate. PHMSA does not propose an absolute prohibition on exemptions from state one-call damage prevention requirements. States are ultimately responsible for establishing the excavation damage prevention laws that best suit their own circumstances. PHMSA policy strongly encourages states to limit exemptions, for both excavators and utility owners/operators, from excavation damage prevention laws to the extent practicable. To that end, one of the criteria for determining the adequacy of state excavation damage prevention law enforcement programs proposed in this NPRM is “limited and justified” exemptions for excavators from the requirements of state excavation damage prevention laws. In assessing state excavation damage prevention law enforcement programs, PHMSA will assess all programs if the state under evaluation has multiple enforcement programs. In that case, PHMSA may declare one or more of the enforcement programs inadequate, thereby allowing PHMSA to conduct Federal administrative enforcement actions in geographic areas covered by the inadequate program. Item 4: “Are the state's requirements detailed and specific enough to allow excavators to understand their responsibilities before and during excavating in the vicinity of a pipeline?” Paiute Pipeline and Southwest Gas Corporation recommended that PHMSA extend this objective to include excavating in the vicinity of any underground facility and supported PHMSA's objective of states providing clarity to excavators to ensure that detailed and specific information is available so they understand their responsibilities before and during excavation within the vicinity of a pipeline. Similarly, AGL Resources commented that this item is an appropriate consideration when determining the adequacy of a state's excavation damage prevention program, and noted that ensuring that excavators understand expectations and consequences is an important aspect of promoting compliance. NAPSR commented that addressing this criterion could be very subjective and that specific criteria would be needed for determining what is “detailed and specific enough.” They noted that some states may have extensive regulations, while others may have successful excavation damage prevention programs with limited regulatory intervention. MidAmerican Energy Company commented that the detail and specificity of each state's law need not match the level of detail of the proposed Federal requirements. They noted that there is value in allowing states to tailor their statutory and regulatory requirements to the specific circumstances presented in that state. They further noted that the level of detail of responsibilities is best determined by each situation, condition and scheme and operator requirements for excavations on or near its underground facilities, given that underground pipelines are constructed and operated in varied geographic locations such as remote wilderness, prairie, active agricultural lands, forests, residential, commercial, industrial, and subsea environments. AGA considers that state requirements for most professionals in the excavation industry adequately convey the responsibilities involved in proper excavation. However, it noted excavators are often non-professionals who do not understand safe digging practices or even the importance of notifying the one-call center. AGA noted that according to CGA's 2008 DIRT Report, occupants and farmers have been the excavator in 8 to 10 percent of the damage reports collected over the three-year period between 2006 and 2008. Response PHMSA encourages states to utilize plain language principles 6 when drafting their pipeline safety regulations. At the same time, though, PHMSA does not want to be overly subjective in establishing criteria for determining adequacy and PHMSA continues to believe that states can and should develop excavation damage prevention laws that best suit their particular needs. Therefore, PHMSA is not proposing to use the detail and specificity of state law as a criterion at this time. However, PHMSA believes that states should collect and manage data that is detailed enough to demonstrate that excavators clearly understand the requirements of state excavation damage prevention laws. 6 Further information on plain language principles can be found in Federal guidance here: http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-15.pdf. Item 5: “Are excavators required to report all pipeline damage incidents to the affected pipeline operators?” Many commenters considered this item to be essential in evaluating the adequacy of state excavation damage prevention law enforcement programs. The TRA commented that mandatory reporting of damages to pipeline facilities should be a part of any effective excavation damage prevention program. AGA views this as one of the most important issues for evaluation and cited it as being included in the PIPES Act. AGA noted that the failure of excavators to notify the pipeline operator of damage promptly has resulted in some significant pipeline ruptures involving fatalities, injuries, and property loss. AGA cited that past incidents have been a painful reminder that just nicking the pipe coating or cutting a cathodic protection wire can affect the long-term integrity of the pipe and lead to a leak or rupture. Nicor commented that despite the requirement, excavators have waited up to several hours before reporting damages, thereby exacerbating circumstances. Nicor also cited instances where excavators considered damage to be minor (coating knick or broken tracer wire) and backfilled an excavation prior to reporting it, requiring the operator to then re-expose the area of reported damage to make repairs. AGL Resources also commented that in addition to excavators reporting damages to the operator, all utility operators should be required to report damages to provide a more complete picture of damage and prevention needs. To whom operators should report was not addressed. An additional comment received was that PHMSA should clarify how “damage” would be applied to the operator as an excavator, or operator's contract excavator and how this might be enforced. NUCA commented that while excavators are subject to extensive damage reporting requirements in most state laws, the lack of state requirements to report “near misses” obstructs efforts to provide accurate data trends. NUCA considers that when underground facility operators fail to locate and mark their lines accurately, that data should be captured regardless of whether the facility was damaged. Even if reporting of “near misses” is required by state law, NUCA believes these requirements are rarely enforced. Response Reporting pipeline damages to affected pipeline operators is an essential component of pipeline safety. To that end, PHMSA believes that states must require that excavators report to pipeline operators all incidents that actually result in physical damage to pipelines as a criterion for evaluating a state's program. As noted above, states should also consider establishing criteria for operators in turn to report damage incidents to allow the state to determine whether an investigation and enforcement should be undertaken. Therefore, PHMSA is proposing, as part of the criteria for determining the adequacy of a state's program, that each state has a reliable means for learning about excavation damages to underground pipelines (see proposed section 198.55). PHMSA agrees with the importance of damage reporting by all underground facility operators. However, PHMSA does not propose to use damage reporting by operators as a criterion for evaluating state enforcement programs. PHMSA has the authority to require pipeline operators to report damages, but does not have the authority to require other utility operators to report damages. PHMSA is concerned that this special requirement for pipeline operators would be confusing for utility operators and cumbersome for the states. With regard to the comment about PHMSA's treatment of pipeline operators as excavators, PHMSA's existing regulations at 49 CFR 192.614 and 195.442 address these issues. PHMSA is not proposing to require reporting pipeline excavation damage near-misses at this time. While data on near-misses would be valuable in guiding state excavation damage prevention program improvements, this proposed rule pertains specifically to excavators who actually damage PHMSA regulated pipelines. In addition, this requirement could impose a significant cost on excavators. However, there is nothing stopping a state from adopting more stringent reporting requirements such as including near-misses. PHMSA seeks comments on the potential cost impacts of requiring reporting of pipeline excavation damage near-misses. Item 6: “Does state law contain a provision requiring that 911 be called if a pipeline damage incident causes a release of hazardous products? ” AGA and several gas pipeline operators commented that some states may adopt statutory language that does not exactly match the Federal legislation. For example, a state may adopt language that affords pipeline operators some latitude so that they do not need to dial 911 if they damage their own pipeline. Since operating personnel are already on the jobsite, AGA and the commenting companies agree that operators should not be required to dial 911 if they cause damage to their own pipeline that results in a release that the operators can safely control without the aid of emergency response personnel prior to making the necessary repair. Paiute Pipeline and Southwest Gas Corporation also commented that this provision should apply only if the damage may endanger life or cause serious bodily harm or damage to property, and results in the escape of any flammable, toxic or corrosive gas, and that all releases of natural gas do not need to be reported by making a 911 phone call. They noted that PHMSA should distinguish between natural gas and other gases or liquids instead of trying to include all of these under the umbrella of “hazardous products.” NAPSR commented that with regard to calling 911, the question should be whether the excavator by law—or appropriate regulation—is required to notify local emergency responders and/or law enforcement if a release of product poses a danger to the public. NAPSR anticipates that where 911 is available the excavator would most likely use it to make that notice, but considers that it should not be necessary for state law to specify that method if the desired end is achieved. NAPSR noted that state laws may predate the advent of 911 emergency call systems, and therefore would not specify that 911 must be called. NAPSR also noted that calling 911 is generally promoted through state one-call centers and operators' public awareness programs, and the practice may best be achieved through best practices and not through Federal or state regulations. Response The PIPES Act requires excavators to promptly call the 911 emergency telephone number if damage to a pipeline results in the escape of any flammable, toxic, or corrosive gas or liquid that may endanger life or cause serious bodily harm or damage to property. PHMSA understands that excavators are often required to reimburse 911 centers for the cost of dispatching emergency response personnel to a damage site. Therefore, PHMSA proposes that states require excavators to call 911 in these instances, but is proposing to permit the excavator to exercise discretion as to whether to request that the 911 operator dispatch emergency response personnel to the damage site. However, the 911 operator will always have the discretion to dispatch emergency response personnel. Item 7: “Has the responsible state agency established a reliable mechanism to ensure that it receives reports of pipeline damage incidents on a timely basis?” Paiute Pipeline and Southwest Gas Corporation commented that states that do not have interstate pipeline inspection and enforcement authority should treat an interstate pipeline operator as an excavator, not a pipeline operator. They consider that authority for inspection and enforcement of interstate pipelines should remain with PHMSA and no reporting of pipeline damage to the state is needed. Southwest Gas Corporation commented that if PHMSA desires individual incident report information on non-Federally reported incidents from the states, PHMSA should recommend establishing a reporting time period with the state agencies. Southwest Gas Corporation noted that to eliminate any increased burden on the state agency, PHMSA should consider specific criteria levels for those state-only reportable incidents of which they want notification. Paiute and Southwest Gas Corporation also commented that notification requirements are different than reporting requirements. They noted that state and Federal reporting requirements provide initial notification to the respective agency within a very short time (usually one to two hours) after discovery. The extent of product release, service interruptions, product loss, property damage, evacuations, injuries, fatalities, or environmental damage, which may not be known for days, are generally included on a written report form filed with the appropriate agency, within 30 days or less in accordance with state or Federal requirements. They noted that for interstate pipelines not subject to state jurisdiction, PHMSA has requirements for reporting incidents that meet certain criteria. The requirements include an initial notification deadline and a documented incident report deadline. NAPSR inquired whether PHMSA is going to require that all reports be sent to PHMSA, or that specific reports be made available upon request, and commented that if PHMSA wants reports of all damages, it should simply require the operators report directly to PHMSA instead of placing an additional burden on the states. Response For a state to have an effective excavation damage prevention enforcement program, the enforcement authority must have a reliable mechanism for learning about excavation damage incidents. The details of how this mechanism functions, however, may vary considerably from state-to-state. For example, some state law may require mandatory reporting of excavation damages, while other states use complaint-based systems of reporting damages. Because PHMSA must evaluate state enforcement programs, PHMSA's goal is to assess how states learn of excavation damages and how this mechanism drives enforcement decisions, which has an effect on the adequacy of states' enforcement programs. PHMSA will not be collecting state damage reports, but may review them during evaluation of the state's program. Item 8: “Does the responsible state agency conduct investigations of all excavation damage to pipeline incidents to determine whether the excavator appropriately used the one-call system to request a facility locate, whether a dig ticket was generated, how quickly the pipeline operator responded, whether the pipeline operator followed all of its applicable written procedures, whether the excavator waited the appropriate time for the facilities to be located and marked, whether the pipeline operator's markings were accurate, and whether the digging was conducted in a responsible manner?” NAPSR commented that the listing of anticipated review items during an excavation damage incident investigation may be helpful during investigation of an event reportable as a pipeline incident or accident. However, it is unrealistic to expect an investigation of this magnitude into each and every event where a pipeline is damaged. NAPSR considers that the resources required would exceed those of entire state pipeline safety programs, and noted that PHMSA is considering these regulations at a time when many states are suffering financial hardship and their pipeline safety programs are struggling to remain afloat. Other commenters repeated this consideration. NAPSR commented that the following listed items should be clarified and that, to the extent that any of them are incorporated into Federal regulations, PHMSA should clarify its intent and expectation for each item: ○ “Whether the excavator appropriately used the one-call system to request a facility locate ” —Does having a ticket number suffice? ○ “Whether the excavator appropriately used the one-call system to request a facility locate ” —Does one need to determine if the site was pre-marked? ○ “Whether the dig ticket was generated ” —Does having the ticket number suffice? [Or] Does transmission of the ticket to operators need to be confirmed? ○ “How quickly the pipeline operator responded ” —Is the question here whether the operator responded within the time frame allowed by the law or regulation in that state? And, would this information be relevant if the incident cause is that the facilities were marked and excavation practices were insufficient? ○ “Whether the pipeline operator followed all of its applicable written procedures ” —Would this require a field audit and review of the operator's (employee or contract) locator on the site of the incident? ○ “Whether the excavator waited the appropriate time for the facilities to be located and marked ” —Would this require verifying that all utilities had marked the site prior to the excavator performing the work? [Or] Would comparing the start date on the ticket to the incident date suffice? ○ “Whether the pipeline operator's markings were accurate ” —Would this require field verification of the marks? If yes, how much delay can be justified in an excavator's downtime while the marks are being verified? Can the word of the operator and excavator be taken as fact? Can an emergency locate be performed and excavation activities resumed before arrival of a government inspector on site? ○ “Whether the digging was conducted in a responsible manner ” —Would this require a field investigation including interviews with the foreman, operator and laborers? Can the results of the investigation by the operator be considered as fact? If it is ascertained that best practices were not followed, would this constitute a “violation”? What are the essential elements of an “investigation”? NAPSR also commented that all DOT-reportable excavation damage incidents should be investigated. However, it noted that there are many thousands of DOT non-reportable incidents each year that involve superficial damage and no escaping gas. NAPSR considers that a one-size-fits-all investigation approach is not practical, and that the extent of investigation of non-reportable incidents should be on a state-by-state basis, left to the discretion of the responsible state agency. The state should be allowed to adopt a basis for investigation, such as establishing thresholds, or perform periodic sampling coupled with enforcement proceedings on the incidents sampled, so a deterrent effect is achieved. NAPSR further commented that it may be possible that the PHMSA Office of Pipeline Safety Failure Investigation Policy document will play a role in connection with this aspect of the proposed rulemaking. NAPSR, therefore, suggested that this policy be considered along with other factors before formalizing a notice of proposed rulemaking. AGA commented that the evaluation process should recognize those states that have adopted some basis for investigation. The basis could be event significance or it could investigate some subset of the damages, such as state reportable incidents. AGA noted that it is not feasible for a state agency to conduct a formal investigation for every occurrence of excavation damage to pipelines in a state. AGA also commented that most importantly, the state should have a mechanism that enables all stakeholders to express formal concerns and complaints with non-compliant parties, citing, for instance, that excavators should have a process to file complaints against utilities that fail to mark their facilities accurately or on time. Additionally, pipeline operators should have a process to file complaints or seek injunctions against excavators who either fail to notify the one-call center, fail to respect the markings or fail to wait the required time before beginning excavation activity. APGA commented that this consideration should apply only to reportable incidents as defined in 49 CFR Part 191 because it would not be reasonable to expect operators and/or state agencies to investigate and report in this detail on all excavation damage events. APGA noted that some lesser level of reporting may be considered for events that do not meet the reportable incident criteria. Nicor suggested that states should have a process for determining which reported excavation damages will be investigated. APGA also noted that under the Distribution Integrity Management Programs (DIMP) rule, operators will annually report the number of excavation damages to PHMSA, and that these reports could also be made available to states. Southwest Gas Corporation commented that if PHMSA means only reportable incidents (as defined by each state) that result from excavation damage, then determining the effectiveness of the state excavation damage prevention program should include a review of all excavation damage, not just excavation damage to pipelines, and include analysis of any trends and areas for improvement. NUCA commented that states must ensure that those conducting damage investigations look at the entire excavation damage prevention process, from the excavator notifying the one-call center to the facility operator providing accurate and timely markings, to safe excavation and backfill practices by the excavator. NUCA believes that the ANPRM adequately addressed the factors needed to be investigated, but that several state authorities fail to fulfill their investigative responsibilities in all areas of excavation damage prevention, especially with regard to locating and marking of facilities. Response PHMSA's primary interest with regard to pipeline damage investigations is to ensure that state enforcement is fair and balanced and is targeted to the at-fault party in an excavation damage incident. PHMSA recognizes that states have resource issues to contend with and need the ability to focus investigatory resources on significant incidents as opposed to minor incidents. PHMSA intends to address this consideration in determining the adequacy of enforcement programs by reviewing state enforcement records and the adequacy of the investigations that preceded enforcement actions. In addition, PHMSA intends to assess states' incident investigation practices to ensure their adequacy in determining the at-fault party in an excavation damage incident involving a pipeline subject to PHMSA pipeline safety regulations. PHMSA does not intend to use PHMSA's Failure Investigation Policy as a model for assessing the adequacy of state damage incident investigation practices. Item 9: “Does the state's damage prevention law provide enforcement authority including the use of civil penalties, and are the maximum penalties similar to the federal maximums (see 49 U.S.C. 60122(a))?” With regard to the amount of the civil penalty, PUCO noted that the ANPRM does not indicate how large state maximum civil penalties would have to be in order to be considered “similar” to Federal maximums or the appropriateness of Federal maximum penalties against non-gas pipeline excavators. NAPSR commented that for pipeline operators some states' fines are equal to the Federal maximums, but that for excavators, fines may vary from small amounts per violation and gradually increase, depending on the circumstances, with no maximum. NAPSR noted that in practice, some states have found that an administrative process with modest fines (i.e., large enough to have a financial impact on the offender) works well. The larger the fine, the harder it is to collect and the collection process tends to consume a lot of the state agency's resources. NAPSR also commented that in state legislatures, the authorized amount of a civil penalty can be a serious issue. Legislatures may be reluctant to approve penalties so high that small companies could be put out of business, noting that although the assessed penalty does not have to be the maximum, the possibility remains a concern. NAPSR notes that the penalties incorporated in state laws may be the product of laborious and protracted negotiations—and the penalties provided for in 49 U.S.C. 60122 are quite high by many state standards. NAPSR notes that there is no evidence that state penalties must be comparable to Federal penalties for state enforcement to be effective, and that if such a comparison must be a consideration it should be a minor one. MidAmerican Energy commented that the amount of the maximum civil penalty that may be assessed may not be the critical factor in evaluating a state's enforcement program. Instead, the aggressiveness and consistency by which a state investigates and enforces the excavation damage prevention laws may be a more effective gauge. Michigan Consolidated Gas noted that consideration should be made regarding a state's funding and resources to administer its enforcement program, i.e., does the state have the manpower to investigate, hold hearings, document findings, etc., for every violation found or complaint filed especially if this includes non-regulated or non-pipeline entities? The PST commented that if PHMSA is going to ascertain whether the amounts of civil penalties assessed reflect the seriousness of the incident, then PHMSA must develop a set of guidelines that sets out each type of offense and the range of penalties that PHMSA deems appropriate. PST noted that this will also help to provide clarity regarding the question in the ANPRM about whether a state program's civil penalties “are the maximum penalties similar to the Federal maximums.” The several Texas pipeline associations commented that a substantial portion of state grant monies should be tied to enforcement and collection of substantial civil penalties for failure to comply with a state one-call law that is found to be adequate. They also suggested that penalties related to excavation damage prevention being collected by states should be dedicated to pipeline safety, and not just the general revenue fund. Spectra Energy Transmission commented that PHMSA's criteria should consider a state's historical enforcement action against excavators that fail to place one-call tickets prior to excavating or fail to adhere to the mandatory waiting period following one-call notification. Spectra also commented that states should take enforcement action against intrastate pipeline or distribution system operators that fail to respond to one-call tickets or fail to properly locate or mark their facilities. They noted that penalties should escalate for repeated violations and that the existence of repeat violations may signal a weakness of deterrents and need for PHMSA action. Response While state civil penalty levels must be high enough to deter violations, PHMSA recognizes that states will often be conducting enforcement against smaller entities. Therefore, penalty levels lower than the Federal levels may be sufficient to achieve deterrence. Accordingly, PHMSA does not propose to require states to assess civil penalties at a level equal to Federal civil penalties. PHMSA's primary interest with regard to state civil penalties is that (1) civil penalty authority exists within the state, and (2) civil penalty authority is used by the state consistently enough to deter violation of state excavation damage prevention laws. PHMSA seeks comments on this issue. PHMSA does not intend to address impacts to pipeline safety grant funding levels for states with excavation damage law enforcement programs PHMSA deems adequate. Item 10: “Has the state designated a state agency with responsibility for administering the damage prevention laws?” Marathon Pipeline commented that a state agency should be responsible for receiving and investigating reports of pipeline damage and near miss incidents caused by excavation. Paiute Pipeline agrees that the agency responsible for administering the excavation damage prevention laws should be designated in states where excavation damage prevention laws exist. Echoing this comment, the Texas pipeline associations commented that the first criterion for a state should be a single state agency designated to oversee the state's underground excavation damage prevention program. They noted that a state agency must not only be designated as the agency responsible for the program, but must also have the authority to enforce the safety standards to protect underground facility operators, excavators, and the public. Going further, AGA and AGL Resources commented that effective excavation damage prevention requires more than merely designating a state agency with responsibility for administering the excavation damage prevention laws. They noted that although many states have agencies that have been delegated authority for administering the excavation damage prevention laws, often the state agency has not been given either the personnel, financial resources, or the incentives needed to exercise its authority. The three Texas pipeline associations commented that the adequacy of funding should be documented and reported by the states through several basic data elements. Such ele [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2012-7550. Public record. Not legal advice.