Rulemaking Process and Cost Benefit Analysis

John A. GaleDirector

Office of Standards & Rulemaking- 1 -

Goals

• Regulatory Process– Improve your knowledge of the regulatory

process– Improve your knowledge of how you can be

involved in the process

• Cost Benefit Analysis– Better understanding of how “Cost Benefit

Analysis” affects rulemaking development – in particular rulemakings affecting pipeline safety

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Steps 1-5

• Step 1 – Initiating event – THE PROBLEM”• Steps 2 & 3 – Development of the Notice of

Proposed Rulemaking– Development of cost benefit analysis (Regulatory

Impact Analysis”– Small Business Impact – Information Collection

• Step 4 – OMB Review – Significant rule• Step 5 – Publication of NPRM in the Federal

Register– Public comment period

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www.regulations.gov

• Please comment!!!– Positive or negative comments.– Additional data– https://www.federalregister.gov/

agencies

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Steps 6-9 (Plus one more)

• Extra Step – Pipeline Advisory Committees– GPAC/LPAC

• Steps 6-7 – summarize comments, develop final rule, revise proposed regulatory changes based on comments and data

• Step 8 OMB Review• Step 9 Publish in the Federal Register

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Rule Process

• Non-Significant rules• PHMSA - Federal Register

• Significant rules• PHMSA - OST – OMB – Federal Register

• OMB Determines what rules are Significant– Most PHMSA Pipeline Safety Rulemakings are

deemed Significant- 7 -

Rule Process

• Significant vs Non-Significant Rulemakings (EO 12866)

• Have an annual effect on the economy of $100 million or more…

• Create a serious inconsistency or with another agency;

• Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

• Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this Executive order.

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Statute(s)

OMB

Secretary of DOT

Administrator of PHMSA

Office of Pipeline Safety

Relational ReferenceSignificant Rulemakings

Rule Process

• Where can I find information on the Status of rulemakings?– PHMSA – www.phmsa.dot.gov– DOT

• DOT Significant Rulemakings (Monthly reports)

– www.dot.gov/regulations/report-on-significant-rulemakings

– OMB• www.reginfo.gov

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DOT Significant Rulemaking report

Milestone Originally Scheduled

Date

New Projected

Date

Actual Date

To OST 11/18/2011 05/22/2012 06/13/2012

Returned to Mode 06/28/2012

Resubmitted to OST 07/16/2012 09/17/2012

Returned to Mode/2 10/04/2013

Resubmitted to OST 12/05/2013

Returned to C-1 02/21/2014

Returned to S-1 03/07/2014

To OMB 12/16/2011 04/15/2014 05/01/2014

OMB Clearance 03/19/2012 09/22/2015 09/17/2015

Publication Date 03/30/2012 10/02/2015 10/13/2015

End of Comment Period 05/30/2012 12/02/2015 01/08/2016

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Cost Benefit Analysis

• EO 12866, EO 13563 and OMB guidance A4– Provides Federal agencies guidance and

direction on the development of regulatory analysis

– …agencies should propose or adopt a regulation only upon a reasoned determination that is its benefits justify its costs…

– Select those regulatory approaches that maximize net benefits

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Cost Benefit Analysis

• Cost benefit analysis– 49 USC 60102(b)(5) – Federal Pipeline

Safety Statute• “… the Secretary shall propose or issue a

standard under this chapter only upon a reasoned determination that the benefits of the intended standard justify its costs.”

• Pipeline Advisory Committees

• Mandate vs Discretion• if appropriate; reasonable; practicable;

minimize costs

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Cost Benefit Analysis

Averages over last 20 years for Gas Transmission incidents: Fatalities – 2 Injuries – 9 Property damages - $88.6 million

Excluding excavation damage/Outside or natural force damage incidents: Fatalities - 1 Injuries - 6 Property damages - $52.3 million

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Cost and Benefits

• Number of Gas Transmission miles that would be affected to Hydro-test a mile of pipeline:

• 45,000 miles

• Estimated cost to implement NPMS amendments:• PHMSA – $85 million over three years– INGAA - $820m covering 180,000 miles of

GT– API - $10.8m-$21m per operator

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THOUGHTS

• Rulemaking development is a process

• Improve our “benefit formula”• Bring additional economic expertise

into the organization• Public

involvement/engagement/education

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QUESTIONS

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Current Rulemakings in Process

• Hazardous Liquid NPRM• Gas Transmission NPRM• Excess Flow Valve NPRM• Plastic Pipe NPRM• Operator Qualification and Cost Recovery

NPRM• Rupture Detection and Automatic shutoff

Valve NPRM• Standards Update• Excavation Damage Final Rule• Miscellaneous Final Rule

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