Last week, the U.S. Court of Appeals for the District of Columbia Circuit vacated four pipeline-safety standards promulgated by the Pipeline and Hazardous Materials Safety Administration (PHMSA) and denied the petition of a fifth challenged standard. Interstate Natural Gas Association of America v. Pipeline and Hazardous Materials Safety Administration and United States Department of Transportation, Case No. 23-1173.
The U.S. Secretary of Transportation is required by statute to "prescribe minimum safety standards for pipeline transportation and for pipeline facilities" and has delegated that authority to PHMSA. 49 U.S.C. § 60102(a)(2); 49 C.F.R. § 1.97(a)(1). When prescribing new pipeline-safety standards, PHMSA must follow certain procedures that are mandated by two different statutes. For example, PHMSA must publish two cost-benefit analyses: one when it first proposes the new standard and another when it finalizes the rule. Before finalizing a rule, PHMSA must consider the advisory committee's recommendation, comments and information received from the public, and other factors, including the reasonableness of the new or revised safety standard.
In 2022, PHMSA published its final rule for a long list of new and revised safety standards as well as a report analyzing the costs and benefits of the final standards. The Interstate Natural Gas Association of America (INGAA), a trade group that represents pipeline companies, filed a petition asking PHMSA to reconsider several provisions. After its petition for reconsideration was largely denied by PHMSA, INGAA filed a petition to the U.S. Court of Appeals for the District of Columbia Circuit, challenging five specific safety standards that were included in the final rule. With respect to four of the standards at issue, the court held that PHMSA failed to adequately explain why the benefits of the final standards outweigh their costs, as required by 49 U.S.C. § 60102(b)(5). For example, the final rule included a more conservative threshold in the "Crack-MAOP Standard" which would require operators to repair more cracks under the final rule than they would under the proposed rule. The court observed that the change made to the threshold was significant and PHMSA did not evaluate the costs imposed upon operators under the more conservative threshold. However, the court denied INGAA's petition with respect to the fifth and last challenged standard, citing a lack of evidence to support its claim that a change in terminology from the proposed rule to the final rule implemented a substantive change in costs.
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