PHMSA has finally published guidance to better delineate federal oversight of midstream processing facilities for public comment. The guidance, in the form of Frequently Asked Questions (FAQs), is intended to avoid gaps or overlaps in regulatory oversight of midstream facilities, particularly between PHMSA and OSHA. Comments are due by January 4, 2021. An example of the success of working groups where industry and agencies partner to provide additional regulatory clarity, the FAQs should — if finalized after notice and comment — provide more certainty to both regulated midstream processing operators and state and federal agencies.

The guidance consists of seven FAQs that were presented to PHMSA management and the pipeline technical advisory committees for both the liquid and gas industries in August 2015. This represents the culmination of efforts initiated by former PHMSA Associate Administrator Jeff Wiese’s establishment of a Midstream Facility Safety Subcommittee to address multi-agency boundaries at midstream facilities in 2014. The subcommittee was comprised of one representative from the Gas Pipeline Advisory Committee and the Liquid Pipeline Advisory Committee, three senior representatives from industry at large, PHMSA, and OSHA.

While these new FAQs essentially confirm existing practices at most facilities and are consistent with prior guidance letters issued by PHMSA over the years, these boundaries have become increasingly unclear over time. The guidance defines a “midstream processing facility” to include a processing facility that receives products transported by PHMSA-jurisdictional pipelines and reinjects those products for continued transportation by pipeline. Most notably, the FAQs provide the following:

• Definitions: PHMSA provides definitions for “processing” and “processing facility.”
• Jurisdiction stops and starts at pressure control devices: PHMSA 49 C.F.R. Part 192 or 195 oversight will end at the first pressure control device entering a processing facility and begin at the last pressure control device leaving the facility. While not expressly stated, the implication is that OSHA’s Process Safety Management (PSM) oversight will apply within the facility.
• Pipelines that bypass pressure control devices: Any pipelines that predominantly bypass pressure control devices or pass through such midstream facilities without pressure control remain under PHMSA jurisdiction at all times. PHMSA revised the original draft FAQs to define “predominantly” to mean “more than 50% of the time during the preceding calendar year.”
• Underground storage: Underground storage and associated piping remain under OSHA PSM oversight if the storage is associated with the processing facility activities (i.e., used for the “purpose of managing processing facility inventory”). If the storage and associated piping is used solely or predominantly for transportation purposes, however, it remains under PHMSA oversight. The FAQs also include reference to the new underground storage tank regulations, which were promulgated after the FAQs were initially prepared in 2015.

Although the FAQs only constitute guidance and do not affect existing statutes or rules, they reflect agency policy and priorities for inspections and enforcement and help clarify regulatory expectations for operators. In the notice, PHMSA states that the guidance will delineate where PHMSA and OSHA will perform inspection and enforcement activities for midstream processing facilities when overlapping authority occurs.

Pipeline and facility operators are encouraged to review the FAQs, prepare comments for further clarity if needed, and ultimately confirm the locations at their facilities where PHMSA/OSHA oversight changes. In particular, since these FAQs were finalized after the underground natural gas storage rules and other new PHMSA rulemakings became effective, operators should request relevant clarifications if appropriate. While many years in the making, the success of the Midstream Facility Safety Subcommittee and related midstream working group illustrates how regulators and the regulated entities can effectively use informal dialogue to address potential problems more efficiently than through prolonged and costly litigation.