195.1, Onshore to an Island. Is it a regulated pipeline?

Code section §195.1 Which pipelines are covered by this part? identifies those pipelines that are and are covered by Part 195.  A key determination operators must first make is if their pipeline is used in “transportation” as defined in §195.2 Definitions.  If the answer is “yes”, then the criteria in §195.1 must be considered.

One operator questioned whether it’s pipeline was subject to the regulations.  The pipeline starts at the operator’s onshore facility, crosses a body of water and terminates at the operator’s facility on an island.

PHMSA has provided an answer in the following interpretation.

Interpretation 195.1  111

September 28, 2015

Mr. J. Patrick Foley
Senior Vice President
Caelus Energy Alaska LLC
3700 Centerpoint Drive, Suite 500
Anchorage, AL 99503

Ref. No. PI-15-0003

Dear Mr. Foley:

In response to your request of December 5, 2014, by letter dated March 11, 2015, the Pipeline and Hazardous Materials Safety Administration (PHMSA) provided you with information concerning a diesel fuel pipeline operated by Caelus Energy Alaska LLC, that transports diesel fuel from onshore facility to a production facility on a man-made gravel island located offshore in the Beaufort Sea. Specifically, the March 11 2015, letter advised you that it appeared the diesel pipeline is subject to regulation under § 195.1(a)(2) because it transports petroleum products to the gravel island where they will be consumed.

In a subsequent letter to PHMSA dated April 22, 2015, you requested that PHMSA revisit its response to your December 5, 2014, request. You stated that Caelus purchases diesel fuel from vendors that deliver it by truck to onshore tanks where the pipeline originates and you questioned whether the diesel fuel is in the stream of transportation. In addition, you noted that the diesel fuel pipeline never leaves the State of Alaska and questioned whether such transportation is in or affecting interstate commerce under 49 U.S.C. 60101.

With regard to the fact that the diesel fuel arrives at the onshore tanks by truck as opposed to some other mode of transportation, such as rail, marine vessel, or another pipeline, we appreciate the additional information but it does not mean that the movement of the diesel fuel through the diesel fuel pipeline is not in the stream of transportation. With regard to the issue of PHMSA’s authority over an intrastate pipeline that does not transport products to another state, it is true that a state can assert authority over intrastate pipelines in accordance with the certification process set forth in 49 U.S.C. 60105 and PHMSA would not directly regulate the intrastate pipelines in that state. In the case of Alaska, however, the state does not have a § 60105 certification and, therefore, PHMSA has authority to regulate non-exempt hazardous liquid pipelines used in transportation in Alaska.

Finally, with regard to the idea that the onshore facility where the pipeline originates and the gravel island are one entity and the pipeline “never leaves” what you term your production facility, PHMSA cannot agree. The fact is that there are surface waters between the onshore facility and the island that you do not own or control all physical access to (as might be the case with a facility on land that can be fenced in). A pipeline failure or spill into these waters would impact parties other than Caelus. The fact that a pipeline runs between the onshore facility and the island does not make the portion of the pipeline crossing the water body part of your production facility; in fact, this water crossing constitutes a “High Consequence Area” under 49 CFR part 195.

We appreciate the additional information you provided; however, it does not change our preliminary determination that the diesel fuel pipeline is subject to regulation under part 195. In addition, we appreciate your expression of intent to comply with the applicable requirements.

If we can be of further assistance, please contact Tewabe Asebe of my staff at 202-366-5523.

Sincerely,

 

John A. Gale
Director, Office of Standards and Rulemaking

DMS ID# PI-15-0003

All this and more in WinDOT on the Web, the online Pipeline Safety Encyclopedia. 

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