[Federal Register Volume 85, Number 29 (Wednesday, February 12, 2020)]
[Rules and Regulations]
[Pages 8104-8127]
[FR Doc No: 2020-00565]

Vol. 85

Wednesday,

No. 29

February 12, 2020

Part II

Department of Transportation

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Pipeline and Hazardous Materials Safety Administration

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49 CFR Parts 191, 192, and 195

Pipeline Safety: Safety of Underground Natural Gas Storage Facilities;
Final Rule

Federal Register / Vol. 85, No. 29 / Wednesday, February 12, 2020 /
Rules and Regulations

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 191, 192, and 195

[Docket No. PHMSA-2016-0016; Amdt. Nos. 191-27; 192-126; 195-103]
RIN 2137-AF22

Pipeline Safety: Safety of Underground Natural Gas Storage
Facilities

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA),
Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: The Pipeline and Hazardous Materials Safety Administration is
publishing this final rule to amend its minimum safety standards for
underground natural gas storage facilities (UNGSFs). On December 19,
2016, PHMSA issued an interim final rule (IFR) establishing regulations
in response to the 2015 Aliso Canyon incident and the subsequent
mandate in section 12 of the Protecting our Infrastructure of Pipelines
and Enhancing Safety Act of 2016. The IFR incorporated by reference two
American Petroleum Institute (API) Recommended Practices (RPs): API RP
1170, ``Design and Operation of Solution-mined Salt Caverns Used for
Natural Gas Storage'' (First Edition, July 2015); and API RP 1171,
``Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon
Reservoirs and Aquifer Reservoirs'' (First Edition, September 2015).
The IFR required each provision in the API RPs to apply as mandatory
(i.e., each ``should'' statement would apply as a ``shall'') unless an
operator provides written justification for not implementing the
practice, including an explanation for why it is impracticable and not
necessary for safety. Based on the comments received to the IFR and a
petition for reconsideration, PHMSA has determined that the RPs, as
originally published, will provide PHMSA with a stronger basis upon
which to base enforcement than the IFR. This final rule also addresses
recommendations from commenters and a petition for reconsideration of
the IFR by modifying compliance timelines, revising the definition of a
UNGSF, clarifying the states' regulatory role, reducing recordkeeping
and reporting requirements, formalizing integrity management practices,
and adding risk management requirements for solution-mined salt
caverns.

DATES: This final rule is effective on March 13, 2020. The Director of
the Federal Register approved the incorporation by reference on January
18, 2017.

FOR FURTHER INFORMATION CONTACT:
    Technical questions: Byron Coy, Senior Technical Advisor, by
telephone at<PHONE_NUMBER> or by email at<EMAIL_ADDRESS>    General information: Ashlin Bollacker, Technical Writer, by
telephone at<PHONE_NUMBER> or by email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
I. Executive Summary
    A. Purpose of This Final Rule
    B. Summary of the Major Provisions
    C. Costs and Benefits
II. Background
    A. Overview of Underground Natural Gas Storage
    B. Underground Storage Incidents and Regulatory History
    C. Aliso Canyon Incident
    D. The PIPES Act of 2016
    E. Interagency Task Force
    F. Interim Final Rule
    G. Petition for Reconsideration
III. Comment Summaries and PHMSA's Responses
    A. Introduction
    B. Incorporation by Reference of API Recommended Practices 1170
and 1171
    C. Compliance Timelines
    D. Placement of Underground Storage Regulations in a New Part
for Title 49 of the 49 CFR
    E. Suitability of API RPs 1170 and 1171 as the Basis for
Rulemaking
    F. Integrity Management Practices
    G. Notification Criteria Under 49 CFR Part 191 for Changes at a
Facility
    H. The States' Role in Regulating UNGSFs
    I. Definitions and Terminology
    J. Requests for Additional or More Stringent Requirements
IV. Regulatory Analyses and Notices

I. Executive Summary

A. Purpose of This Final Rule

    The Pipeline and Hazardous Materials Safety Administration (PHMSA)
is amending the pipeline safety regulations applicable to underground
natural gas storage facilities (UNGSFs). PHMSA is amending the UNGSF
regulations in response to comments and recommendations received on its
interim final rule (IFR) published on December 19, 2016 (81 FR 91860).
The IFR implemented PHMSA's authority to regulate UNGSFs and the
Congressional mandate in section 12 of the PIPES Act (Pub. L. 114-183)
to establish minimum safety standards for depleted-hydrocarbon
reservoirs, aquifer reservoirs, and solution-mined salt caverns used
for the storage of natural gas.\1\ Congress issued the mandate to PHMSA
following a large-scale natural gas leak at the Aliso Canyon UNGSF in
Southern California on October 23, 2015. The mandate required PHMSA to
establish minimum safety standards for UNGSFs within two years of the
PIPES Act issuance on June 22, 2016. To meet the mandate's deadline--
and address the urgent need for safer storage of natural gas--PHMSA
published the IFR with a 60-day comment period. The IFR went into
effect on January 18, 2017.
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    \1\ For a description of these storage types and other basic
information about underground natural gas storage, see https://www.eia.gov/naturalgas/storage/basics/.
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    Since that time, PHMSA has considered public comments and a
petition for reconsideration of the IFR and is modifying the minimum
safety standards for UNGSFs in this final rule accordingly. PHMSA has
also further reviewed the Final Report of the Interagency Task Force on
Natural Gas Storage Safety \2\ to ensure any amendments in this final
rule are consistent with the Task Force's recommendations to PHMSA.\3\
As detailed in this final rule, PHMSA believes these changes will
reduce regulatory burdens and reduce costs for industry and gas
consumers while sustaining safety and protecting the environment.
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    \2\ ``Ensuring Safe and Reliable Underground Natural Gas
Storage,'' Final Report of the Interagency Task force on Natural Gas
Storage Safety; October 2016. See https://www.energy.gov/downloads/report-ensuring-safe-and-reliable-underground-natural-gas-storage.
    \3\ In addition to their comments on the IFR, on March 17, 2017,
the State of Texas and the Texas Railroad Commission petitioned the
U.S. Court of Appeals for the Fifth Circuit for review of the IFR
under 49 U.S.C. 60119(a). See State of Texas v. PHMSA, No. 17-60189
(5th Cir. Mar. 17, 2017). On April 24, 2017, the court granted INGAA
and AGA's motions to intervene in the litigation. On July 19, 2017,
the court granted a joint motion to hold the petition for review in
abeyance pending the issuance of this final rule.
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B. Summary of the Major Provisions

    Consistent with the IFR, this final rule maintains the
incorporation by reference of American Petroleum Institute (API)
Recommended Practices (RPs) 1170 and 1171 (the RPs) as the basis of the
minimum safety standards in 49 CFR part 192. API RP 1170, ``Design and
Operation of Solution-mined Salt Caverns Used for Natural Gas Storage''
\4\ has recommended practices for solution-mined salt cavern facilities
used for natural gas storage and covers facility geomechanical
assessments, cavern well design and drilling, solution mining
techniques,

and operations, including monitoring and maintenance practices. API RP
1171, ``Functional Integrity of Natural Gas Storage in Depleted
Hydrocarbon Reservoirs and Aquifer Reservoirs'' \5\ has recommended
practices for natural gas storage in depleted oil and gas reservoirs
and aquifers, and focuses on storage well, reservoir, and fluid
management for functional integrity in design, construction, operation,
monitoring, maintenance, and documentation practices. Both RPs describe
ways to maintain the functional integrity of design, construction,
operation, monitoring, maintenance, and documentation practices for
UNGSFs. The RPs contain numerous provisions that use the term ``shall''
to denote a minimum requirement necessary to comply with the RP. The
RPs also use non-mandatory terms such as ``should,'' ``may,'' and
``can'' to denote a recommendation that is advised, but not required.
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    \4\ API Recommended Practice 1170 ``Design and Operation of
Solution-mined Salt Caverns used for Natural Gas Storage (First
Edition, July 2015).
    \5\ API Recommended Practice 1170 ``Functional Integrity of
Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer
Reservoirs'' (First Edition, September 2015).
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    This final rule amends the IFR in six primary ways. First, PHMSA
adopts the RPs without modification to the non-mandatory terms. In the
IFR, PHMSA adopted the RPs by modifying the non-mandatory provisions
(i.e., statements containing ``should'' and other non-mandatory terms)
as mandatory requirements (i.e., ``shall''). PHMSA provided that
operators could deviate from the modified statements by providing a
justification in their procedure manuals as to why the provision was
``not practicable and not necessary for safety'' at their specific
facility. Accordingly, with this final rule, PHMSA also no longer
requires operators to provide written justifications as to why they
would not have performed a ``should'' provision.
    Second, this final rule is formalizing requirements and deadlines
for operators to develop and implement their integrity management (IM)
programs and to conduct their baseline risk assessments for UNGSFs. As
noted by commenters and petitioners, the API RPs function as an IM
system for UNGSFs, which requires more time to implement than the IFR
allowed. After considering these comments and recommendations, PHMSA is
relaxing the timeline for completing initial assessments of the
reservoirs, caverns, and wells. PHMSA discusses these new requirements
and deadlines in Section III-C, ``Compliance Timelines.''
    Third, this final rule includes a requirement for solution-mined
salt caverns to follow the same risk management practices as depleted-
hydrocarbon reservoirs and aquifers that apply to the physical
characteristics and operations of the facility (i.e., follow section 8
of API RP 1171). Since the publication of the IFR, PHMSA has observed
that many operators of solution-mined salt caverns are voluntarily
using section 8 of API RP 1171 to supplement the risk management
practices in section 10 of API RP 1170. While most salt-cavern UNGSFs
have a risk-management program in place, section 8 of API RP 1171
provides more prescriptive practices than API RP 1170 for how an
operator must develop, implement, and document a program to manage
risks that could affect the functional integrity of the storage
operation. Extending the applicability of the recommended practices in
section 8 of 1171 closes a potential critical safety gap for salt-
cavern storage facilities and may prevent future failures at these
facilities. PHMSA has codified this practice in the final rule to
ensure consistency across all UNGSF facilities.
    Fourth, PHMSA is narrowing the scope of reportable events and
changes at facilities. In addition to annual data reporting and
National Registry information, the IFR required operators to notify
PHMSA of certain changes and events and their facilities, such as
incidents and safety-related conditions. Since the IFR, PHMSA received
many notifications for routine maintenance activities, which was not
the intent of the regulation. Operators are not required to notify
PHMSA of regular maintenance. To make this clear, PHMSA is limiting
notification of changes to a facility 60 days prior to the following
events: (1) All plugging or abandonment activities (regardless of
costs), and (2) construction or maintenance that requires a workover
rig and costs $200,000 or more. PHMSA is also applying an emergency
exemption to the 60-day notification requirements, which PHMSA
overlooked in the IFR.
    Fifth, this final rule is revising the definition of an
``underground natural gas storage facility.'' The PIPES Act amended 49
U.S.C. 60101(a) to define an ``underground natural gas storage
facility'' as ``a gas pipeline facility that stores natural gas in an
underground facility, including--a depleted hydrocarbon reservoir, an
aquifer reservoir; or a solution-mined salt cavern reservoir.'' The IFR
incorporated a modified version of this definition in part 192. Part
192 covers the transportation of natural gas by pipeline. PHMSA
discovered through the public comments on the IFR that the placement of
the definition in part 192 created questions for operators as to where
a gas pipeline facility ended, and regulations for a UNGSFs began. To
remedy this confusion, PHMSA is revising the definition of an
``underground natural gas storage facility'' to exclude other
components of a gas pipeline or gas pipeline facility covered elsewhere
in part 192, and eliminate any potential overlap. PHMSA discusses the
revised definition and the reason for keeping it in part 192 later in
this document.
    Sixth, PHMSA is changing the name of the reporting portal to the
``National Registry of Operators'' (formerly the ``National Registry of
Pipeline and LNG Operators''). Additionally, PHMSA is revising the name
of the online portal's web address from ``http://opsweb.phmsa.dot.gov''
to ``https://portal.phmsa.dot.gov.'' These changes are throughout parts
191, 192, and 195.

C. Costs and Benefits

    Consistent with Executive Order (E.O.) 12866, PHMSA has prepared a
Regulatory Impact Analysis (RIA) that includes an assessment of the
benefits and costs of this final rule, as well as reasonable
alternatives. PHMSA published an RIA to accompany the IFR as well. This
final RIA incorporates input from public comments on the IFR and the
initial RIA. PHMSA has issued the final RIA concurrently with this
final rule, and it is available in the docket (PHMSA-2016-0016).
    The annualized cost savings for this final rule, relative to the
IFR, are estimated to be $11 million, applying a 7 percent discount
rate. The benefits of this final rule come from making permanent the
safety measures in the IFR and RPs 1170 and 1171, which API and other
stakeholders developed to prevent leaks and blowouts before they occur.
The safety measures adopted through the IFR and this final rule will
prompt operators to undertake or hasten preventive and mitigative
measures, as well as IM actions, such as mechanical integrity tests,
that will reduce the probability of releases.
    The IFR reduced the likelihood and magnitude of catastrophic or
operational natural gas releases by promoting safer practices through
the incorporation of the recommended practices into the pipeline safety
regulations. This final rule continues to require these same practices.
For example, operators are required to assess the mechanical integrity
of each storage well, evaluate the likelihood of failures at these
wells, and determine the next steps to remedy conditions that could
precede the

failures. Operators are also required to incorporate safety best
practices when designing and constructing new wells, which could
further prevent catastrophic failures.
    This final rule also adds a requirement for all solution-mined salt
caverns to follow the risk management practices in section 8 of RP
1171. Per the IFR, PHMSA had only required operators of solution-mined
salt caverns to follow the risk management practices in section 10 of
RP 1170. The language in section 10, requires operators to take a
``holistic and comprehensive approach to monitoring cavern integrity,''
without providing specifics as to how to implement that approach. Post-
IFR, during preliminary inspections, PHMSA observed operators of
solution-mined salt caverns applying the framework of the risk
management practices in section 8 of RP 1171. While RP 1171 applies to
depleted hydrocarbon reservoirs and aquifer reservoirs, it offers a
framework for risk management and monitoring that is translatable to
other types of underground storage facilities. PHMSA expects that other
operators of solution-mined salt caverns would benefit from a more
specific framework for implementing the ``holistic and comprehensive
approach to monitoring cavern integrity'' required in section 10 of
1170.
    Additionally, codifying the requirement for these operators to
follow both section 8 of RP 1171 and section 10 of RP 1170 ensures
consistent safety requirements across all UGS facilities. This change
may cause those operators who were not already (voluntarily) applying
API RP 1171 as a framework for monitoring cavern integrity to undertake
stronger risk management practices, which could ultimately reduce the
risk of an incident. However, PHMSA considers this action part of the
baseline requirements to follow a ``holistic and comprehensive approach
to monitoring cavern integrity'' already prescribed through the IFR. As
a result, PHMSA does not expect an additional financial burden to
operators beyond that already in place through the IFR.
    The IFR required operators to provide a written justification for
each non-mandatory provision of the RPs that they did not perform. This
final rule removes that recordkeeping burden on operators. Operators
experience cost savings from the removal of requirements associated
with deviations from the RPs, including technical reviews by subject
matter experts and recordkeeping burdens, and reductions in the
notifications burden.

II. Background

A. Overview of Underground Natural Gas Storage

    Underground storage of natural gas plays a critical role in the
nation's energy independence and reliability. Notably, having a surplus
of natural gas provides a buffer from the seasonal variations in supply
and demand, creating price stability for customers. Over the past ten
years, natural gas storage has increased 16 percent, prompted, in part,
by significant growth in domestic shale-gas production.
    There are three principal types of underground natural gas storage
fields, each with different geological characteristics and capabilities
that govern their suitability for storage. The three types are depleted
hydrocarbon reservoirs, aquifer reservoirs, and solution-mined salt
caverns. Depleted hydrocarbon reservoirs are the most common type of
storage, representing approximately 80 percent of the total working gas
capacity in the United States. As the name implies, these facilities
are repurposed from previous oil or gas production and converted to gas
storage fields.\6\ Aquifer reservoirs are natural water-bearing
formations, also converted to gas storage, and represent roughly 9
percent of the total working gas capacity in the United States.
Solution-mined salt caverns (salt domes) are geological formations that
leached out of salt deposits. These facilities represent only about 10
percent of the total working-gas capacity but provide high withdrawal
and injection rates relative to their working gas capacity.\7\
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    \6\ Energy Information Administration (EIA). 2015. ``The Basics
of Underground Natural Gas Storage.'' November 16, 2015. Retrieved
from http://www.eia.gov/naturalgas/storage/basics/ (Accessed March
2019).
    \7\ Total working gas capacity percentages do not sum to 100
percent due to rounding.
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    Of the 403 active UNGSFs in the United States, approximately 60
percent of the facilities are interstate, and 40 percent of the
facilities are intrastate.\8\ The total storage capacity at these
fields was 9,236 billion cubic feet (Bcf), and the total working gas
capacity was 4,815 Bcf. Facilities identified as interstate represented
63 percent of total storage capacity and 65 percent of working gas
capacity.
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    \8\ PHMSA's 2018 annual report data show 403 active underground
natural gas storage fields in the United States as of 2017,
distributed across 31 states.
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    Interstate UNGSFs serve interstate facilities, such as providing
storage for interstate gas transmission pipelines.\9\ These types of
storage facilities commonly receive surplus gas from interstate
pipelines during warmer months and then send it back into the product
stream during colder winter months. Since these UNGSFs serve interstate
facilities and PHMSA has exclusive pipeline safety jurisdiction over
the design, construction, operation, and maintenance of interstate gas
pipeline facilities, the standards in this final rule will affect all
interstate UNGSFs.
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    \9\ Under 49 U.S.C. 60101(a)(6), an ``interstate gas pipeline
facility'' (including an interstate UNGSF) is defined as ``a gas
pipeline facility--(A) used to transport gas; and (B) subject to the
jurisdiction of the [FERC] under the Natural Gas Act (15 U.S.C. 717
et seq.).'' The term ``transporting gas'' is defined in Sec.
60101(a)(21) as ``the gathering, transmission, or distribution of
gas by pipeline, or the storage of gas, in interstate or foreign
commerce . . .''
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    Intrastate UNGSFs, on the other hand, are facilities that provide
gas storage for intrastate pipelines, most notably local gas
distribution companies (LDCs). These storage facilities serve
intrastate pipelines that are contained entirely within a particular
State and that do not fall within the jurisdiction of the Federal
Energy Regulatory Commission (FERC). As discussed more fully below,
these intrastate ``gas pipeline facilities'' are generally subject to
the IFR and this final rule. Intrastate UNGSFs may continue to also be
subject to State regulations provided that: (a) The otherwise
applicable State regulation does not conflict with the Federal minimum
safety standards established in the final rule, and (b) the applicable
State authority has filed a certification with PHMSA to participate as
a full State partner under the new Federal program and to receive
Federal funding through PHMSA.

B. Underground Storage Incidents and Regulatory History

    While rare, serious incidents at underground storage facilities
have occurred. For instance, on April 7, 1992, an uncontrolled release
of highly volatile liquids from a salt-dome storage cavern near
Brenham, Texas, formed a heavier-than-air gas cloud that exploded.
Three people died in the accident, with an additional 21 people treated
for injuries at area hospitals. Property damage from the accident
exceeded $9 million.
    Following its accident investigation, the National Transportation
Safety Board (NTSB) published pipeline safety recommendation No. P-93-9
regarding underground storage. Recommendation P-93-9 asked PHMSA's
predecessor agency, the Research and Special Programs Administration
(RSPA), to develop safety requirements for storage of highly volatile
liquids and natural gas

in underground facilities, including a requirement that all pipeline
operators perform safety analyses of new and existing underground
geologic storage systems to identify potential failures, determine the
likelihood that each failure will occur, and assess the feasibility of
reducing the risk.\10\
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    \10\ National Transportation Safety Board, Pipeline Accident
Report PAR-93/01 (Nov. 4, 1993).
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    In response to the NTSB's safety recommendation, RSPA held a public
meeting \11\ to determine what actions it should take, if any,
regarding the regulation of underground storage of natural gas and
hazardous liquids. The participants expressed mixed views on whether
RSPA should begin to regulate ``downhole'' pipe and underground
storage. Most participants spoke favorably of industry safety practices
and State regulation but saw no immediate need for Federal regulatory
action.
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    \11\ (Docket PS-137, 59 FR 30567, June 14, 1994).
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    On July 1, 1997, RPSA issued an advisory bulletin (ADB-97-04) to
inform UNGSF owners and operators of the availability of guidelines for
the design and operation of underground storage facilities.
Specifically, the advisory bulletin pointed to the safety standards
guide from the Interstate Oil and Gas Compact Commission (IOGCC) \12\
and API as appropriate for use by pipeline operators and State
regulatory agencies. The IOGCC guide provided safety standards for the
design, construction, and operation of gas storage caverns. API had
published guidelines for the underground storage of liquid
hydrocarbons. RP 1114, ``Design of Solution-Mined Underground Storage
Facilities,'' June 1994, provided basic guidance on the design and
development of new solution-mined underground storage facilities. RP
1115, ``Operation of Solution-Mined Underground Storage Facilities,''
September 1994, provided guidance on the operation of solution-mined
underground hydrocarbon liquid or liquefied petroleum gas storage
facilities.
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    \12\ Interstate Oil and Gas Compact Commission, ``Natural Gas
Storage in Salt Caverns: A Guide for State Regulators.'' (IOGCC
Guide), 1995.
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    Another catastrophic natural gas leak happened in January 2001
after a wellbore failed at the Yaggy storage field near Hutchinson,
Kansas. The natural gas migrated nine miles underground, where it
eventually surfaced through abandoned wells. Once at the surface, the
natural gas exploded, killing two people and destroying two
businesses.\13\ After a month, the flares burned off, with the ultimate
loss of 143 million cubic feet (MCF) of natural gas from the storage
field.
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    \13\ Allison, M. Lee, 2001, The Hutchinson Gas Explosions:
Unraveling a Geologic Mystery, Kansas Bar Association, 26th Annual
KBA/KIOGA Oil and Gas Law Conference, v1, p3-1 to 3-29.
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    These incidents at UNGSFs alerted operators and regulators to
consider assessing the safety of these facilities. By 2012, API had
begun developing additional guidance for the safety of UNGSFs. API
developed RP 1170 and 1171 over several years, based on input from many
industry stakeholders, including regulators such as PHMSA, FERC, and
five State regulatory agencies, as well as the API Midstream Group. In
July 2015, API issued RP 1170, ``Design and Operation of Solution-mined
Salt Caverns Used for Natural Gas Storage.'' API RP 1170 provides
recommendations and requirements for geo-mechanical assessments, cavern
well design and drilling, solution mining techniques, operations and
maintenance procedures, and practices for salt caverns. In September
2015, API issued RP 1171, ``Functional Integrity of Natural Gas Storage
in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs,'' which
focuses on storage well, reservoir, and fluid management for functional
integrity in design, construction, operations and maintenance
procedures, monitoring, and documentation practices. The RPs
appropriately recognize the variety and diversity of UNGSFs used
throughout the United States and are not limited to addressing
facilities in a single State, basin, geological setting, or well type.

C. Aliso Canyon Incident

    Shortly after the publication of the industry safety standards RP
1170 and RP 1171, another major UNGSF incident occurred. On October 23,
2015, Southern California Gas Company (SoCalGas) discovered a leak that
manifested into the largest methane leak from a natural gas storage
facility in U.S. history. Well SS-25 in the Aliso Canyon storage field,
located in Los Angeles County, California, leaked for nearly four
months until it was permanently sealed on February 17, 2016. While
SoCalGas attempted to plug the leak, residents in nearby neighborhoods
experienced health symptoms consistent with exposure to the odorants
(mercaptans) added to natural gas and residual components from previous
oil production in the field. The incident temporarily displaced more
than 5,000 households from their homes, according to the Aliso Canyon
Incident Command briefing report issued on February 1, 2016, although
some sources place the number of related households at approximately
8,000.\14\
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    \14\ For example, see KPCC news report on August 4, 2016, ``Cost
estimate of Aliso Canyon gas leak hits $717 million''. http://www.scpr.org/news/2016/08/04/63268/cost-estimate-of-aliso-canyon-gas-leak-hits-717-mi/.
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    The leak at Aliso Canyon ultimately released approximately 5.7 Bcf
of natural gas into the atmosphere, translating to 109,000 metric tons
\15\ of methane, a potent greenhouse gas, as well as numerous other
pollutants.\16\ Additional reports identified other potential health
effects that lasted even after the well was sealed. A report by the Los
Angeles County of Public Health suggests that the continued health
symptoms may be due to contaminants in indoor air and dust.\17\ As of
December 31, 2016, SoCalGas and its parent company, Sempra Energy,
recorded estimated costs of $913 million to control the release,
monitor air emissions, relocate residents, and cover legal and other
expenses.\18\ The singular well that failed in the Aliso Canyon
accident (SS-25) had originally been drilled in 1953 and was re-
purposed for natural gas storage in 1972. The age of this well is not
unusual. Per data from the American Gas Association (AGA),
approximately 60 percent of active storage wells are located in fields
that were activated before 1960.
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    \15\ CARB estimates that the incident resulted in a total
emission of 99,650  9,300 metric tons of methane (CARB,
2016a) and seeks mitigation of 109,000 metric tons.
    \16\ California Air Resources Board (CARB), 2016; County of Los
Angeles Public Health.
    \17\ Ibid. CARB.
    \18\ Of the $913 million of costs, approximately 60 percent is
for the temporary relocation program (including cleaning costs and
certain labor costs). Other estimated costs include amounts for
efforts to control the well, stop the Leak, stop or reduce the
emissions, and the estimated cost of the root cause analysis being
conducted by an independent third party to investigate the cause of
the Leak. The remaining portion of the $913 million includes legal
costs incurred to defend litigation, the value of lost gas, the
costs to mitigate the actual natural gas released, the estimated
costs to settle certain actions and other costs. The value of lost
gas reflects the replacement cost of volumes purchased through
December 2017 and estimates for purchases in 2018. As of mid-January
2018, SoCalGas has replaced all lost gas. SoCalGas adjusts its
estimated total liability associated with the Leak as additional
information becomes available.'' (SoCalGas/Sempra, 2018).
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    The Aliso Canyon incident created serious energy-supply challenges
for the region and prompted public concerns about the safety of UNGSFs,
including the extent and effectiveness of Federal and State oversight.
On February 5, 2016, PHMSA issued an advisory bulletin (ABD-2016-02),
identifying specific minimum actions that operators of UNGSFs should
take, in addition to the recommendations of ADB-97-04,

API RP 1170, API RP 1171, and the IOGCC Guide. The 2016 advisory
bulletin recommended that operators begin reviewing their operating,
maintenance, and emergency response activities and apply the new RPs
accordingly.
    On July 14, 2016, PHMSA held a public meeting to discuss
potentially extending its regulations to include transportation-related
UNGSFs. PHMSA heard from a diverse group of stakeholders, including
State regulators, emergency responders, and residents, including those
impacted by the Aliso Canyon incident. PHMSA concluded that it should
take action to incorporate by reference API RP 1170 and API RP 1171
into part 192. The RPs describe a range of measures that UNGSF
operators should undertake to ensure the safe operations of their
facilities. The RPs also include construction, maintenance, IM,
security, and emergency response procedures.

D. The PIPES Act of 2016

    The Aliso Canyon incident prompted broader public concerns as to
how to prevent similar UNGSF accidents in the future. Congress
addressed these concerns in two sections of the PIPES Act, enacted on
June 22, 2016 (Pub. L. 114-183). Section 12 of the PIPES Act required
PHMSA to issue minimum safety standards for all UNGSFs within two years
of enactment. The statute defines an ``underground natural gas storage
facility'' as a ``gas pipeline facility that stores natural gas in an
underground facility.'' Because title 49 United States Code (U.S.C.)
60101(a) already defines ``gas pipeline facility'' as ``a pipeline, a
right of way, a facility, a building, or equipment used in transporting
gas or treating gas during its transportation,'' PHMSA interprets the
PIPES Act as directing it to regulate only those UNGSFs that store
natural gas incidental to transportation.
    The PIPES Act requires that in issuing minimum safety standards for
UNGSFs, PHMSA must: (1) Consider consensus standards for the operation,
environmental protection, and integrity management of underground
natural gas storage facilities; (2) consider the economic impacts of
the regulations on individual gas customers; (3) ensure that the
regulations do not have a significant economic impact on end users; and
(4) consider the recommendations of the Aliso Canyon natural gas leak
task force established under section 31 of the PIPES Act of 2016.
    The Secretary of Transportation (the Secretary) delegated this
responsibility under chapter 601 of title 49 U.S.C. to the PHMSA
Administrator (49 CFR 1.97). PHMSA fulfilled this mandate by publishing
the IFR on December 19, 2016. The PIPES Act provides that states may
adopt additional or more stringent safety standards for intrastate
UNGSFs if such standards are compatible with these Federal regulations.

E. Interagency Task Force

    In addition to section 12 of the PIPES Act, Congress included a
second mandate, section 31, directing the Department of Energy (DOE) to
establish an Interagency Task Force on Natural Gas Storage Safety to
perform an analysis of the Aliso Canyon events and make recommendations
to reduce the occurrence of similar events in the future. PHMSA and DOE
co-led the effort. The Task Force established several working groups,
comprised of premier scientists, engineers, and technical experts from
the Executive Office of the President and various Federal agencies. The
working groups examined three key areas:
     The integrity of natural gas wells at storage facilities;
     The public health and environmental effects from natural
gas leaks; and
     The nation's vulnerability to reduced energy reliability
in the event of future leaks.
    In October 2016, the Task Force issued its final report on natural
gas storage safety and made 44 recommendations to operators and
regulators. The main recommendation to PHMSA was to incorporate
existing industry consensus standards, API RP 1170 and 1171, into part
192 of the regulations in an enforceable manner, and consider
supplementing the regulations with recordkeeping and reporting
requirements as necessary. The Task Force recommended that operators
develop comprehensive risk-management plans that addressed risks based
on their potential severity and probability of occurrence. These plans
should document an operator's risk-management strategy, identify risks,
define responsibilities among stakeholders, assess risks, and take
appropriate action to reduce risks to well integrity.
    The Task Force's report also highlighted growing concerns regarding
the age of the nation's natural gas storage infrastructure. For
example, wells reflect material, technology, and design factors that
may have been appropriate at the time they were constructed, but may
not meet design criteria for wells drilled today. Over time, corrosion,
other environmental processes, and mechanical stresses from the
injection and withdrawal of natural gas can impact well integrity.
Wells in depleted oil fields may have been designed for lower operating
pressures than what they may be subject to now. Many of these wells
were designed without redundant barriers to reduce the risk of gas
migration. One of the lessons from the Aliso Canyon incident is that
wells without redundant barriers present higher risks because they have
a single point of possible failure that may be extremely difficult to
shut off or kill.

F. Interim Final Rule

    On December 19, 2016, PHMSA issued the IFR that satisfied section
12 of the PIPES Act, exercising the agency's statutory authority to
regulate underground natural gas storage facilities. The IFR amended
the pipeline safety regulations found at 49 CFR parts 191 and 192, to
address critical safety issues related to ``downhole'' UNGSF
facilities, including wells, wellbore tubing, casing, and wellheads (81
FR 91860). Additionally, the IFR added a definition of ``underground
natural gas storage facility'' to Sec. Sec.  191.3 and 192.12 and
applied reporting requirements to operators of UNGSFs similar to those
applicable to operators of other gas pipeline facilities, including
annual reports, incident reports, reports of major construction and
organizational changes, and registration with the National Operator
Registry.
    Effective January 18, 2017, all UNGSFs, both intrastate and
interstate, now had to meet the minimum standards outlined in RPs 1170
and 1171 and were subject to inspection by PHMSA or a PHMSA-certified
State entity. The IFR made each provision in the RPs 1170 and 1171
mandatory unless the operator documented a technical justification why
compliance with a provision was not practicable and not necessary for
safety. Operators were required to incorporate the RPs into their
written operations, maintenance, and emergency response program manuals
following Sec.  192.605. PHMSA, or a certified State partner, would
review any of the operators' justifications and its procedure manuals
during compliance inspections.
    After publishing the IFR, PHMSA took significant steps to educate
the regulated community on the new requirements, to promote a better
understanding of issues concerning integrity assessments of UNGSFs and
the implementation of the RPs. The first action was to publish
frequently asked

questions (FAQs).\19\ The FAQs provided guidance on the procedures,
implementation plans, and schedules that operators should have in place
to meet the requirements in the applicable RPs. For example, while the
IFR did not provide clear timelines for operators to complete the
integrity assessments required by the RPs, the FAQs provided a
recommended implementation schedule. With the issuance of this final
rule, PHMSA will revise the FAQ guidance material to reflect these
regulations as amended.
---------------------------------------------------------------------------

    \19\ ``Underground Natural Gas Storage: FAQs.'' (revised April
2017) https://primis.phmsa.dot.gov/ung/faqs.htm.
---------------------------------------------------------------------------

    In preparation for the development of inspection and enforcement
efforts, PHMSA subject matter experts conducted preliminary site
assessments at a cross-section of UNGSFs from May to July of 2017.
    Additionally, PHMSA has instituted a program for training Federal
and State inspectors on the new minimum Federal standards affecting all
UNGSF facilities. As it promulgates this final rule, PHMSA is prepared
to modify the program through future regulations and guidance to keep
pace with evolving consensus safety standards, academic research, and
lessons learned from the firsthand experience of its inspectors, State
regulators, affected stakeholders, and the public.

G. Petition for Reconsideration

    On January 18, 2017, the American Gas Association (AGA), American
Petroleum Institute (API), American Public Gas Association (APGA), and
Interstate Natural Gas Association of America (INGAA) (the
``Associations'') jointly filed a petition for reconsideration of the
IFR. AGA represents local energy companies, as well as residential,
commercial, and industrial natural gas customers. API is a national
trade association representing the oil and natural gas industry,
including gas pipelines and UNGSF operators. APGA is a national, non-
profit association of publicly-owned natural gas distribution systems.
INGAA is an industry trade association representing interstate natural
gas pipeline companies in the United States.\20\
---------------------------------------------------------------------------

    \20\ On April 17, 2017, INGAA withdrew from the petition for
reconsideration, but the other three Associations have remained as
petitioners.
---------------------------------------------------------------------------

    In the petition, the Associations affirmed their support for
PHMSA's efforts to regulate the safety of UNGSFs. They reminded PHMSA
that the Associations and their members had supported PHMSA's
incorporation by reference of the RPs as Federal standards for natural
gas storage. They stressed the importance of adopting the RPs to
advance the safety of the pipeline transportation system but asked
PHMSA to revise the IFR to incorporate RP 1170 and API RP 1171 without
modification and to provide for reasonable implementation periods. The
Associations stated that the changes requested in the petition would
ensure that PHMSA's regulations would be practical, reasonable, and
effective.
    On June 20, 2017, PHMSA issued a notice stating that it would
provide an answer to the petition in the final rule (82 FR 28224).
PHMSA announced that in the interim, it would not issue any enforcement
citations for failure to meet any of the non-mandatory provisions of
the RPs that the IFR converted to mandatory ones until one year after
the issuance the final rule. PHMSA has considered the recommendations
from the Associations and is answering their petition in this final
rule.

III. Comment Summaries and PHMSA's Responses

A. Introduction

    PHMSA received 82 comments and one petition for reconsideration in
response to the IFR issued on December 19, 2016. PHMSA provided a 60-
day comment period initially but re-opened it on October 19, 2017 (82
FR 48655), for an additional 30 days to provide all interested parties
with the opportunity to comment on the IFR and the merits and claims of
the petition for reconsideration. During the initial 60-day comment
period, PHMSA received 28 comments. PHMSA received 54 additional
comments during the re-opened 30-day comment period, but only 14 of
those 54 related to this rulemaking.\21\ Half of those 14 comments were
from organizations that had already submitted comments during the
initial, 60-day comment period.
---------------------------------------------------------------------------

    \21\ The 40 comments that PHMSA deemed not relevant appear to
have been submitted anonymously using automated technology (i.e.,
bots). While these comments raise generalized issues related to
environmental protection (climate change, renewable/alternative
energy, streamlining environmental reviews, etc.), the comments do
not connect their generalized statements to any of the specific
provisions of this rulemaking, such that they would become
meaningful to the issue of the safety of underground natural gas
storage systems.
---------------------------------------------------------------------------

    PHMSA discusses and responds to these comments and recommendations
in sections B through J, below. For organizational purposes, PHMSA has
grouped comments by subject matter. Below is a list of entities who
submitted comments on the IFR.

 Atmos Energy
 Consumers Energy
 Dow Chemical Company (Dow)
 ENSTOR
 Environmental Defense Fund (EDF)
 Gas Free Seneca
 Gas Piping Technology Committee (GPTC)
 Geological Maps Foundation
 GPA Midstream Association (GPA)
 Hilcorp Alaska
 Hon. Brad Sherman, representing 30th Congressional District of
California
 Independent Petroleum Association of America (IPAA)
 Joint Comment from American Gas Association (AGA), the
American Petroleum Institute (API), the American Public Gas Association
(APGA), and the Interstate Natural Gas Association of America (INGAA)
 Joint Comment from the States First Initiative, the Interstate
Oil and Gas Compact Commission (IOGCC), and Groundwater Protection
Council (GWPC)
 Louisiana Mid-Continent Oil and Gas Association (LMOGA)
 Michigan Department of Environmental Quality
 New York State Department of Environmental Conservation
 Northern Natural Gas
 Pacific Gas and Electric Company (PG&E)
 Private Citizens (50)
 Railroad Commission of Texas
 Southern California Gas Company (SoCalGas)
 Texas Pipeline Association
 TransCanada
 Vectren

B. Incorporation by Reference of API Recommended Practices 1170 and
1171

    In the IFR, PHMSA required operators to treat non-mandatory
language in the RPs as mandatory. For each provision modified by the
IFR, an operator could deviate from the recommended practice by
providing in its procedures manual a technical justification for each
deviation. Under the IFR, PHMSA required an operator to use a subject
matter expert to review and document the technical justification, and a
member of the operator's executive leadership was required to review,
approve, and document the date of approval. During routine inspections,
PHMSA would review an operator's justifications for deviating from the
modified provisions.
1. Comments on PHMSA's Modification of the RPs
    Many commenters disagreed with PHMSA's modification of the non-
mandatory provisions of the RPs. Almost all commenters supported the
Associations' position concerning the

conversion of the non-mandatory provisions in RPs 1170 and 1171 to
mandatory. Generally, commenters supported the need for consistent
minimum safety standards for all UNGSFs and supported regulations to
that effect. Those same commenters asserted that if PHMSA adopted the
IFR without modification, it would impose burdensome and impracticable
requirements on operators.
    In their petition, the Associations stated that ``changing the
[RPs] in this manner is not necessary for enforcement, nor is it
practicable or reasonable.'' The Associations stated their belief that
there was ``no regulatory justification for making all `non-mandatory'
provisions `mandatory,' '' and requested that PHMSA eliminate this
provision. Further, the Associations said that although the RPs use
both non-mandatory and mandatory language, this alone does not affect
their enforceability. They said that the RPs contain enough mandatory
provisions to ensure enforceability. The Associations used the
mandatory provisions in section 8 to demonstrate that the RPs are broad
enough, as written, to be enforced. Additionally, they stated that the
non-mandatory statements in the RPs do not compromise the
enforceability of the broad requirements imposed on operators through
the mandatory provisions.
    The Texas RRC stated that it strongly disagreed with PHMSA's
modification of the RPs. The Texas RRC noted that the wholesale
adoption of RPs would lead to confusion and have unintended
consequences. It said that if PHMSA kept the modification to the non-
mandatory provisions in the final rule, it would undermine the
integrity of the original RPs, ultimately making them even more
difficult to enforce. Lastly, the Texas RRC stated that, while the IFR
allowed an operator to deviate from particular provisions, PHMSA did
not provide a process or timeframe by which the agency would review,
approve, or deny the operator's alternative procedure(s). The Texas RRC
requested that, if PHMSA chose to incorporate the RPs as modified by
the IFR, the agency should add a review process and timeline for
consideration of requests for deviation from the modified provisions.
    ENSTOR Operating Company, LLC (ENSTOR), asserted that converting
all non-mandatory provisions in the RPs to mandatory requirements would
undermine the risk-based approach of the RPs and create unintended
results. ENSTOR stated that PHMSA's conversion of non-mandatory RP
statements in sections 8, 9, 10, and 11 of RP 1171 to mandatory
provisions could establish statutorily-impermissible retroactive
requirements, such as requiring the use of observation wells drilled
around, above, and below a reservoir. ENSTOR added that PHMSA ``can
simply require operators to discontinue any deviations that the agency
does not agree with,'' and ``there are no standards to guide the
agency's determination and no means for review or appeal of a denial of
an operator deviation.''
    Some operators stated that the process for justifying deviations
from a specific non-mandatory RP would be time-intensive, expensive,
and unworkable for many operators. LMOGA stated that requiring
technical documentation for each deviation was excessive since the RPs
themselves already identified the non-mandatory practices as applicable
on a case-by-case and site-specific basis. Further, LMOGA noted that
the IFR required each deviation must be ``technically reviewed and
documented by a subject matter expert to ensure that there will be no
adverse impact on the facility. . . .'' LMOGA argued that the term
``subject matter expert'' was vague and imprecise.
    EDF said that PHMSA would not be reviewing an operator's technical
justifications until after the operator had already deviated from a
recommended practice and contended that this could allow harmful
activities to persist until an inspection took place at the facility.
Further, EDF said that operators might make significant financial
commitments in reliance on unapproved deviations, only to see their
decisions overturned after the fact, without practical recourse, by
PHMSA. Regarding the IFR's treatment of non-mandatory provisions as
mandatory, EDF stated its preference would be for PHMSA to adopt the
API RPs but examine the non-mandatory provisions of the API RPs on a
provision-by-provision basis to determine if any should be made
mandatory, and adopt additional regulatory requirements to fill in
potential gaps in the final rule.
    TransCanada, which participated in the development of RP 1171,
stated that the inclusion of both ``should'' and ``shall'' in the RPs
reflected a deliberate, iterative, consensus-building effort that
resulted in the selection of those specific words. TransCanada went on
to say that it would not be prudent to make such recommendations
mandatory because doing so could lead to a misplaced effort to document
exceptions when operators should be focusing on the imperatives of IM
and the development of effective procedures.
2. PHMSA's Response to Comments on Its Modification of the API RPs 1170
and 1171
    After considering the petition for reconsideration and public
comments, PHMSA is accepting the recommendation to adopt the RPs 1170
and 1171 as originally written by API, without modification. When
drafting the IFR, PHMSA needed to provide an immediate and reasonable
means by which it could begin regulating UNGSFs, while, at the same
time, implementing sections 12 and 31 of the PIPES Act. As discussed
earlier, section 12 of the PIPES Act required PHMSA to consider
existing industry standards and recommendations from the Interagency
Task Force (created by section 31) as the basis for its pending
regulations. In its 2016 report, the Interagency Task Force recommended
that PHMSA consider ``incorporating existing industry-recommended
practices API RP 1170 and 1171 into the part 192 regulations, and they
should be adopted in a manner that can be enforced.'' Historically,
PHMSA has successfully incorporated by reference many industry
standards, guidance, and recommended practices in lieu of developing
its own regulations.
    After additional review, PHMSA has determined that adopting the RPs
as originally published by API would still provide significant benefits
for safety, the environment, and public health but would be much easier
for the regulated industry and the public to understand and for PHMSA
to interpret and enforce. The non-mandatory provisions in the RP
provide operators with guidance for optional considerations based on
the features and characteristics of individual storage facilities.
However, the RPs still require all operators to develop policies and
procedures to ensure the functional integrity of UNGSFs and to inspect
and verify the operational integrity of these facilities on a site-
specific basis and will provide PHMSA with a stronger basis upon which
to base enforcement than the IFR.
    As the Associations pointed out in their petition for
reconsideration, the existence of ``non-mandatory provisions in the RPs
does not affect their overall enforceability.'' Throughout the RPs,
there are many broad mandatory provisions that operators of UNGSFs must
implement, using a range of options considered in accompanying non-
mandatory provisions. The non-mandatory provisions provide operators
with illustrations, examples, or choices of action for how to achieve
compliance with the mandatory provisions. Because these non-mandatory
provisions are

closely tied to the mandatory provisions that operators must meet, any
non-mandatory provision remains enforceable to the extent that it is
necessary, in the context of a particular operator or facility, to
ensure compliance with a mandatory provision in the Recommended
Practice.
    Based on the petition for reconsideration, the post-IFR comments
received, as well as its experience with the application and
enforcement of similar consensus standards and recommended practices,
PHMSA believes that adopting the RPs in their original published form,
will accomplish the goal of the IFR, which was to improve safety. The
means of achieving this goal was to establish, for the first time,
minimum Federal safety standards that would require operators of all
UNGSFs to meet certain basic, uniform, and risk-based policies and
procedures as outlined in the RPs. In evaluating regulatory
alternatives, PHMSA did consider adopting a portion of the ``should''
provisions to identify and address any potential gaps, but PHMSA
ultimately decided not to because the Agency does not have sufficient
information to identify whether there are ``should'' statements that
are, on average, more or less practical and necessary at each site, and
thus would be more or less likely to cause operators to seek
deviations. In light of this factor and the comments received, PHMSA is
convinced that treating the non-mandatory provision as written in the
RPs is the better course of action because it adds clarity to the
provisions which should help improve compliance while providing at
least an equivalent level of safety as the IFR.
    The IFR and this final rule are PHMSA's first effort to establish a
national regulatory program for UNGSFs. This program includes features
such as basic reporting requirements, Federal and State inspections,
and a Federal-State partnership that will enable States to go beyond
the RPs by adding additional or more stringent requirements. As the
agency and the industry gain experience implementing this new
regulatory program, they will learn what improvements need to be made.
If experience shows that the RPs do not provide an adequate level of
safety for certain activities or risks, PHMSA will consider the need to
modify the regulations, as appropriate.

C. Compliance Timelines

    The IFR required that UNGSFs constructed before July 18, 2017, meet
all operations, maintenance, integrity demonstration and verification,
monitoring, threat and hazard identification, assessment, remediation,
site security, emergency response and preparedness, and recordkeeping
provisions of the applicable RPs within one year from the effective
date of the IFR, i.e., January 18, 2018. Specifically, existing UNGSFs
using a solution-mined salt cavern for storage were required to meet
the requirements of RP 1170, sections 9, 10, and 11, and operators of
existing UNGSFs using a depleted hydrocarbon reservoir or an aquifer
reservoir for gas storage were required to meet the requirements of RP
1171, sections 8, 9, 10, and 11, by the same date.
    Following the publication of the IFR on December 19, 2016, PHMSA
published FAQ guidance (April 2017) to assist operators in applying the
RPs. The FAQs included a suggested timeline for operators to complete
the risk analysis and baseline assessments for the requirements in the
IFR.
1. Comments on the Compliance Timelines
    PHMSA gave operators one year from the effective date of the IFR to
comply with the IFR. Commenters stated that the timeline for compliance
provided in the IFR was unreasonable, and PHMSA's expectations for
operators were unclear. Commenters requested that the final rule adopt
phased-in compliance timelines, as PHMSA has done in previous
rulemakings. Most commenters recommended that PHMSA follow the
timelines published in its Underground Natural Gas Storage FAQs (April
2017).
    Most industry commenters asked that PHMSA modify the compliance
timelines to break it up into phases and extend the overall schedule,
similar to what the FAQs outlined, which suggested that operators
complete the baseline integrity assessments of each storage field
within three to eight years. These commenters agreed that the FAQ's
timelines for baseline integrity assessments were realistic and that
any shorter timeframe was unrealistic and impracticable. They supported
including clear, phased-in timelines in the final rule. Most said it
would take longer than 12 months to implement all aspects of the RPs
fully and that the PHMSA should extend the compliance deadline.
    The Associations requested that the final rule incorporate the risk
assessment and integrity-management timelines currently outlined in the
FAQs.\22\ The Associations doubted that PHMSA had intended to require
operators to implement all actions under the applicable sections of the
RPs within one year. In their comment, the Associations spoke of an
operator that had recently implemented the RPs at its facility. The
operator reported that it took over 18 months to gather the subject
matter experts and complete the integrity plans and operating
procedures. The Associations added that operators should expedite the
implementation of preventive and mitigative measures for high-risk or
imminent-risk facilities, as identified by their risk assessments.
---------------------------------------------------------------------------

    \22\ ``Underground Natural Gas Storage FAQs,'' issued by PHMSA
in April 2017.
---------------------------------------------------------------------------

    Similarly, TransCanada stated that it was impractical to implement
the IFR by January 18, 2018, and asked that PHMSA clarify in the final
rule what the agency expected operators to have achieved by January 18,
2018, and beyond. TransCanada agreed, with certain reservations, that
baseline risk assessments could begin within one to two years of the
effective date of the final rule. They also agreed that three to eight
years was enough time to complete risk assessments for all individual
wells at UNGSFs.
2. Response to Comments on the Compliance Timelines
    PHMSA is accepting the commenters' recommendations to reconsider
the compliance timelines in the final rule. These timelines are similar
to the ones published PHMSA's Underground Natural Gas Storage FAQs
(April 2017). Below is a summary of the compliance timelines for
implementing a UNGSF program.
Deadline for Written Procedures
    Consistent with the IFR, operators must prepare and follow written
procedures for the operations, maintenance, and emergency management
and response activities outlined by the applicable RPs. However, this
final rule removes the requirement in the IFR that these procedures be
incorporated into an operator's existing procedural manuals required
for gas pipelines under Sec.  192.605. Instead, the final rule replaces
this provision with a similar requirement that UNGSF operators develop
written procedures for carrying out the final rule and maintain and
update them in a similar fashion as required by Sec.  192.605 for gas
pipelines. In the final rule, the new requirement is in a new paragraph
exclusive to UNGSFs under Sec.  192.12.
    Accordingly, operators must establish and follow written procedures
for implementing their UNGSF programs. By January 18, 2018, all
operators with

facilities constructed on or before July 18, 2017, must have
established and put into service procedures for operations,
maintenance, and emergency preparedness. All other operators must have
these procedures in place prior to commencing operations. Operators
must also establish an interval for reviewing and updating these
written procedure manuals, not exceeding 15 months, but at least once
each calendar year.
Integrity Management Framework
    By January 18, 2018, all operators with facilities constructed on
or before July 18, 2017, must have established a framework for IM under
the IFR. All other operators must have this framework in place prior to
commencing operations. An initial framework means a written explanation
of the mechanisms or procedures the operator will use to implement each
program and API RP to ensure compliance with this final rule. These
procedures, implementation framework, and schedules do not need to be
fully fleshed out but must be sufficient for putting the program in
place over the long term. PHMSA expects that each operator's
implementation framework and schedules will evolve into a more
detailed, comprehensive, and robust program as the operator's program
matures. An operator must make continual improvements to the program.
    The IM framework for a UNGSF must include:
     A plan for developing and implementing each program
element;
     An outline of the procedures to be developed;
     The roles and responsibilities of UNGSF staff assigned to
develop and implement the procedures;
     A plan for how staff will be trained in awareness and
application of the procedures;
     Timelines for implementing each program element, including
the risk analysis and baseline risk assessments; and
     A plan for how to incorporate information gained from
experience into the IM program on a continuous basis.
Timelines for Conducting Risk Assessments
    By four years after the effective date of this final rule, each
operator must have completed baseline risk assessments for 40 percent
of all its wellbores, wellheads, and associated components. Operators
should generally prioritize assessments on higher-risk wells first,
based on a matrix of identified threats, hazards, and the likelihood of
their occurrence. Operators must complete baseline assessments of all
reservoirs and caverns by the same date. By seven years after the
effective date of this final rule, operators must have completed
baseline risk assessments for all remaining wellbores, wellheads, and
associated components. This implementation period is similar to the one
published in PHMSA's Underground Natural Gas Storage FAQs (revised
April 2017).\23\
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    \23\ https://primis.phmsa.dot.gov/ung/faqs.htm.
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D. Placement of Underground Storage Regulations in a New Part for Title
49 of the 49 CFR

    The IFR added requirements in parts 191 and 192 for UNGSFs that
cover reporting, recordkeeping, design, construction, and operation and
maintenance procedures and practices. Before the IFR, there were no
Federal regulations pertaining directly to UNGSFs. While part 192
already covered much of the surface piping at these facilities, up to
the wing-valve assemblies on the wellhead at UNGSFs served by pipeline,
PHMSA had not previously issued rules for the actual wellhead or
``downhole'' portion of these facilities.
1. Comments Requesting a New Part for Title 49 of the CFR
    The IFR amended parts 191 and 192 to add underground natural gas
storage regulations. For several reasons, commenters requested that
PHMSA create a new ``part 19x'' in subchapter D of title 49 of the CFR
that would contain regulations exclusively for underground storage.
Generally, their interest was in differentiating the requirements for
UNGSF from those requirements for other types of regulated gas
facilities.
    The Associations and some operators recommended that PHMSA remove
the underground storage regulations from part 192 and place them in a
new part under subchapter D in 49 CFR. They asserted that moving UNGSF
regulation to a new part in the pipeline safety regulations would
clarify the application of the regulations both now and in future
rulemakings. The commenters stated that because the existing
definitions of pipeline and pipeline facility in Sec.  192.3 were so
similar to the definition of underground natural gas storage facility
(also in Sec.  192.3) that it was unclear how to apply the regulations.
    The Associations also expressed concern that because the IFR placed
the underground storage regulations in part 192, operators might
mistakenly apply the engineering regulations specific to other pipeline
facilities to UNGSFs--or vice-versa. The RPs contain design,
construction, and IM practices for UNGSFs that the Associations
believed are considerably different from the practices for other
pipeline facilities outlined throughout part 192. They provided
examples of regulations that, if misapplied, might result in unsafe
practices. The Associations asserted that PHMSA could avoid these
potential conflicts by placing the UNGSF regulations in a new part
under 49 CFR subchapter D, separate from part 192.
    Several commenters, including Dow Chemical Company, claimed that
adding underground storage regulations to part 192 would generate
confusion. Specifically, commenters said that the IFR was unclear as to
which sections of part 192 applied to UNGSFs and which ones to other
gas pipeline facilities. The GPTC expressed the view that the
definition of underground natural gas storage facilities in Sec.  192.3
overlapped with the existing definitions of pipeline facilities and
transmission pipelines and that it believed PHMSA intended to expand
the regulatory scope of parts 191 and 192 to UNGSFs. However, GPTC
implied that the overlap between the new definitions and the new
regulations' placement in part 192 would create confusion as to the
applicability of the RPs to pipeline facilities already regulated under
other subparts of part 192.
    Similarly, PG&E requested that the final rule revise the pipeline
safety regulations to specify which parts of 49 CFR subchapter D
applied to underground natural gas storage, instead of providing
clarification through agency guidance materials (e.g., FAQs). They
stated that PHMSA historically had not incorporated FAQs addressing
additional programs, such as ``Integrity Management,'' ``Drug and
Alcohol Testing,'' and ``Gathering Lines,'' into regulatory language.
PG&E stated that it believed this practice would leave operators at
risk of being forced to comply with requirements that did not appear in
regulatory language. Therefore, PG&E encouraged PHMSA to clarify Sec.
192.12 by adding an exclusion for the subparts of part 192 that would
not apply to underground natural gas storage. Other commenters shared
this view and expressed concern that PHMSA would attempt to use FAQs or
similar guidance documents instead of properly promulgated regulations.
2. Response to Commenters' Request for a New Part
    Section 60101(a)(21) defines the term ``transporting gas'' as ``the
gathering, transmission, or distribution of gas by

pipeline, or the storage of gas, in interstate or foreign commerce.''
The statute specifically lists the ``storage'' of natural gas as one
component of ``transporting gas.'' Since all PHMSA's substantive
regulations pertaining to the transportation of natural gas are in part
192, PHMSA believes the UNGSF regulations also belong in part 192.
    Along with the public comments, PHMSA reviewed recommendations from
the Interagency Task Force and a petition for rulemaking from INGAA.
The Task Force recommended that PHMSA incorporate the RPs into part
192, with supplemental recordkeeping and reporting procedures as
necessary. The IFR noted that INGAA had petitioned PHMSA on January 20,
2016--while the Aliso Canyon accident was still ongoing--to incorporate
the RPs into part 192. Because UNGSFs are part of the broader natural
gas transportation systems, part 192 is the most logical place for the
new substantive regulations. Incorporating the requirements into parts
191 and 192 also subjects UNGSF operators to the requirements of part
190, for enforcement and regulatory procedures, and part 199, for drug
and alcohol testing. Therefore, PHMSA had adopted these recommendations
and by adding the UNGSF regulations in parts 191 and 192.
    PHMSA agrees that the language in the IFR resulted in a certain
level of ambiguity about the applicability of Sec.  192.12 to other gas
pipeline facilities and, vice versa, the applicability of other
existing regulations to UNGSFs. PHMSA has addressed this issue by
making two changes in this final rule. First, PHMSA is adding an
introduction to Sec.  192.12, which provides that the section contains
minimum requirements for UNGSFs. This introduction means to clarify
that Sec.  192.12 only applies to UNGSFs and no other pipeline
facilities. Second, the final rule also modifies the definition of a
UNGSF to eliminate any potential overlap with other gas pipeline
facilities covered elsewhere in part 192.
    PHMSA also agrees with the commenters that the FAQs are guidance
documents to help operators understand and implement rulemakings. FAQs
are not the basis for PHMSA's enforcement of the rule. However, they
can and should be used to clarify or explain PHMSA's interpretation of
the scope and applicability of the regulation. For example, while not
explicitly stated in the preamble or the amendatory language of the
IFR, PHMSA explained through FAQs that operators of UNGSFs are subject
to regulation under 49 CFR part 199, ``Drug and Alcohol Testing.'' Any
operator of a ``pipeline facility'' that is subject to any subset of
the part 192 regulations is required to test covered employees for the
presence of prohibited drugs and alcohol. PHMSA also explained in the
FAQs that operators of UNGSFs were not required to comply with the
``Qualification of Pipeline Personnel'' requirements contained in
subpart N of 49 CFR part 192. The FAQs explained that operators must
comply with the training requirements in API RP 1170 (section 9.7.5) or
API RP 1171 (section 11.12), dependent upon the type of storage field.
Both API RP sections describe general training parameters and
specifically identify the need to train personnel for normal, abnormal,
and emergency conditions. Additionally, this final rule makes it clear
that UNGSFs are not subject to any requirements of part 192, aside from
Sec.  192.12.

E. Suitability of API RPs 1170 and 1171 as the Basis for Rulemaking

    In the IFR, PHMSA incorporated by reference two industry
Recommended Practices, API RPs 1170 and 1171, into 49 CFR part 192.
1. Comments Concerning the Suitability of the RPs for Rulemaking
    PHMSA used RPs 1170 and 1171 as the foundation for the new minimum
safety standards for UNGSFs. Commenters cited the forewords of both
RPs, which state that the RPs were not intended to substitute for
Federal or State regulations as the basis for objecting to their use as
the basis for new regulatory requirements. Other commenters identified
potential gaps in regulatory coverage in the RPs, such as risk
management practices for solution-mined salt caverns. For these
reasons, commenters stated that the RPs were not an adequate basis for
regulation.
    Some commenters were concerned with the suitability of the RPs as
the basis for regulations. Texas RRC and EDF criticized PHMSA's
approach to incorporating the RPs into the underground natural gas
storage regulations. The Texas RRC stated that the RPs were neither
drafted nor intended to operate with the force and effect of Federal
regulations and, as such, should not be adopted as written. Similarly,
EDF pointed to the scope section of RP 1170, which states that the
document is ``intended to supplement, but not replace, applicable
local, State, and Federal regulations.'' Both the Texas RRC and EDF
said they understood the engineering merit behind the RP, but expressed
a belief that the RPs were more suitable as guidance material for
operators.
    Most private citizens urged PHMSA to go beyond the safety
provisions in the RPs. Notably, these commenters expressed concern over
the lack of a specific ``risk management'' section in RP 1170 for
solution-mined salt caverns. They asked that the final rule provide
additional risk management practices for solution-mined salt caverns.
    A few commenters were concerned that the provisions in the RPs were
vague, ambiguous, and insufficient in detail. For instance, States
First said that while the RPs contain substantial information and
guidance for operators, ``it is [States First's] belief that [the RPs]
require considerable wording revisions and additions to make them
effective as regulations.'' Similarly, MDEQ stated that the IFR lacked
clear timeframes and provided little regulatory oversight and approvals
for certain actions taken. MDEQ expressed concern that in many
instances, the IFR left it up to operators to determine the risks
facing their facilities and the methods for addressing them. It went on
to say that IFR created inconsistencies and uncertainties in providing
the level of protection needed. These inconsistencies and uncertainties
in the IFR, in turn, could make it difficult for State regulators to
address safety issues for intrastate gas storage operations by
implementing additional regulations beyond the IFR.
2. Response to Comments Concerning the Suitability of the RPs for
Rulemaking
    PHMSA disagrees with the commenters' broad assertion that the API
Recommended Practices are an inadequate basis for regulations. PHMSA
routinely participates in consensus-standards-setting organizations
that address pipeline design, construction, maintenance, inspection,
and repair. These standards represent the best practices of the
industry and, therefore, should be considered in the development of
potential regulation. Agency participation in the development of these
voluntary consensus standards is vital to eliminate the necessity for
development or maintenance of separate, government-unique standards.
    Further, the PIPES Act specifically directs the Secretary to
consider ``consensus standards for the operation, environmental
protection, and integrity management of underground natural gas storage
facilities'' and ``the recommendations of the Aliso Canyon natural gas
leak task force established under section 31 of the PIPES Act of 2016''
(49 U.S.C. 60141(b)). As

discussed above, the Interagency Task Force issued a final report,
titled ``Ensuring Safe and Reliable Underground Natural Gas Storage,''
making several recommendations. With respect to API RP 1170 and API RP
1171, the report recommended that ``[t]he incorporation of API RP 1170
and 1171 into the part 192 regulations will be an important step in
improving the safety and reliability of underground gas storage
facilities.'' \24\ As a result, the report recommended that PHMSA
consider incorporating the standards into part 192 in a manner that
would make the standards enforceable.\25\ After consideration of the
RPs and the comments received concerning their incorporation, PHMSA
concludes that the standards are sufficient to establish an initial,
baseline level of regulation with the additions incorporated into this
final rule. This initial regulatory framework will undoubtedly evolve
and improve over time as PHMSA gains greater experience in this
industry.
---------------------------------------------------------------------------

    \24\ ``Ensuring Safe and Reliable Underground Natural Gas
Storage,'' Final Report of the Interagency Task force on Natural Gas
Storage Safety; October 2016. See pg. 63-64 of the final report at
https://www.energy.gov/downloads/report-ensuring-safe-and-reliable-underground-natural-gas-storage.
    \25\ Ibid.
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F. Integrity Management Practices

    Integrity management is PHMSA's risk management program for
identifying, assessing, and addressing potential threats that can have
adverse consequences and a finite probability of occurring. The
regulations in 49 CFR parts 192 (for gas pipelines) and 195 (for
hazardous liquid pipelines) are a type of integrity management that
PHMSA has applied to traditional pipeline systems. In place for over
ten years, PHMSA's integrity management regulations had aided in the
removal of thousands of defects from pipeline facilities before they
failed and in the identification of preventive and mitigative measures
to reduce the likelihood and consequences of failures potentially
affecting high consequence areas. PHMSA expects that applying similar
integrity and risk management practices to UNGSFs will have a similar
effect on improving safety.
    As discussed throughout this final rule, API RP 1170 and API RP
1171 outline the concepts of risk-based integrity management and
provide instructions for the risk assessment and analysis process for
UNGSFs. The IFR required operators of depleted hydrocarbon reservoirs
and aquifer reservoirs to meet the risk-management requirements
outlined in section 8 of RP 1171, which resembled PHMSA's existing IM
program for gas and hazardous liquid pipelines. This section outlines
the components of a process, including data collection, threat and
hazard analysis, risk assessment methodology, preventative and
mitigative measures, risk monitoring, and recordkeeping procedures.
    The IFR did not contain a similar provision for operators of
solution-mined salt cavern UNGSFs. The term ``Integrity Management'' is
a systematic approach to analyzing and mitigating risk to promote the
safe management and operations at a given facility. The IFR required
operators of solution-mined salt caverns to meet the requirements of RP
1170, section 10, ``Cavern Integrity Monitoring,'' which directs
operators to develop a holistic approach to maintaining well integrity
but does not outline the components of an integrity-management process
as explicitly as section 8 of RP 1171.
1. Comments Concerning Integrity Management Practices
    As written, the risk-management practices in API RP 1170 (for
solution-mined salt caverns) lack the specificity of the risk-
management practices in section 8 of API RP 1171 (for depleted
hydrocarbon reservoirs and aquifer reservoirs). Commenters identified
the lack of robust risk management practices as a safety gap in the
integrity program for solution-mined salt caverns and requested that
the final rule supplement what is currently prescribed in API RP 1170.
    Several commenters expressed concern that the RPs and,
consequently, the IFR, lacked specific risk management criteria for
solution-mined salt caverns. As Gas Free Seneca stated, RPs 1170 and
1171 mirror each other in every respect except for risk management. Gas
Free Seneca, EDF, and some private citizens requested that the final
rule add risk management standards for solution-mined salt caverns like
the standards that exist for depleted hydrocarbon and aquifer
reservoirs contained in section 8 of RP 1171.
    EDF stated that the IFR called for depleted hydrocarbon and aquifer
reservoir operators to develop risk management plans that address risks
and provide plans to mitigate those risks. In its comments, EDF
suggested that such a plan would be a good supplement to the
regulations for solution-mined salt caverns. It stated that adding a
risk management plan as a requirement in the final rule would be
consistent with the natural gas storage rules being considered by
California regulators following the incident at Aliso Canyon.
    Gas Free Seneca, States First, EDF, and some private citizens
requested that PHMSA mandate risk-acceptance criteria for underground
natural gas storage facilities. Gas Free Seneca and private citizens
asked that PHMSA set a measurable limit for risk and specify the types,
frequency, and methods operators must use to collect and conduct risk
analyses. States First asked that PHMSA set an acceptable level of risk
so that operators would be required to meet an established standard,
irrespective of their self-defined ``capabilities.'' EDF added that the
final rule would benefit from the use of a risk-management
``heuristic'' such as ``ALARP,'' an acronym that stands for ``As Low as
Reasonably Practicable.'' According to EDF, ALARP provides a process by
which the regulated industry and the regulator can work together ``to
systematically set appropriate levels of risk reduction.'' \26\
---------------------------------------------------------------------------

    \26\ ALARP is a principle more common in European law that sets
an acceptable level of risk as low as reasonably practicable.
---------------------------------------------------------------------------

2. Response to Comments Concerning Integrity Management Practices
    Based on the commenters' suggestions, and supported by an
Interagency Task Force recommendation, PHMSA is making several
enhancements to the integrity management provisions of the final rule.
First, PHMSA is extending the risk management provisions of section 8,
to salt-cavern UNGSFs, to the extent they apply to the physical
characteristics and operations of solution-mined salt caverns, within
one year of the effective date of the final rule. In other words, the
final rule requires that UNGSFs using solution-mined salt caverns
generally conform to the risk management practices that apply to UNGSFs
using depleted hydrocarbon and aquifer reservoirs.
    There are several reasons for this change. As discussed earlier,
risk management is a standard concept in the oil and gas industry,
although different programs may use slightly different terminology.
Additionally, the Interagency Task Force recommended that PHMSA
incorporate risk management practices into its regulations. During its
initial site assessments, PHMSA observed that operators of solution-
mined salt caverns were already in the process of conforming to risk
management practices like those detailed in section 8. RP 1170 does
address certain aspects of risk management practices but is less

comprehensive than RP 1171. For instance, section 10.2 of RP 1170
requires operators to ``take a holistic and comprehensive approach to
monitor cavern integrity,'' which would include the identification and
assessment of risks. Section 10.2 of RP 1170 goes on to say there is no
single best method to achieve thorough cavern-integrity monitoring,
thus leaving it up to an operator to evaluate the risks of each
specific facility.
    While the scope of RP 1171 is specific to depleted-hydrocarbon and
aquifer reservoirs, much of section 8 is general enough that operators
can readily apply the practices across all types of UNGSFs. PHMSA
believes requiring the risk-management practices outlined in section 8
to all UNGSFs is the most practical method of directing all operators
to manage the risks of gas storage releases on a case-by-case,
facility-specific basis. This approach gives operators the flexibility
to determine what actions are appropriate.
    Second, Sec.  192.12(d) uses slightly different terminology than
what was used in the IFR to describe the risk management provisions
that operators must follow. Whereas subsection 8.1 is titled ``Risk
Management for Gas Storage Operations,'' Sec.  192.12(d) is titled
``Integrity management program.'' This change is intended to confirm
that the risk management program under the final rule has been
broadened beyond what is provided solely under the RPs and that it is a
variation of the IM programs established under parts 192 and 195 for
gas transmission pipelines, interstate liquid pipelines, and gas
distribution systems. The industry generally uses the term IM to
describe the risk-management provisions of section 8, so it should be
less confusing and more consistent to use the term IM to refer to all
four integrity-management programs applicable to PHMSA-regulated
pipeline facilities,\27\ even though the details of each program vary
slightly.
---------------------------------------------------------------------------

    \27\ The integrity management provisions for gas transmission
pipelines are found at Sec. Sec.  192.901 through 192.951, for gas
distribution pipelines at Sec. Sec.  192.1001 through 192.1015, for
hazardous liquid pipelines at Sec.  195.452, and for UNGSFs at Sec.
192.12, as amended by this final rule.
---------------------------------------------------------------------------

    Third, as noted in the FAQs, this initial IM framework for depleted
hydrocarbon and depleted aquifer reservoir UNGSFs that were constructed
prior to July 18, 2017, and were subject to section 8 under the IFR,
had to be in place by January 18, 2018. These operators must now
implement a full IM program that includes the new provisions in the
final rule within one year from the final rule's effective date.
    Fourth, this final rule requires a slightly different process for
UNGSF operators to develop a robust IM program, depending upon whether
the facility is a depleted hydrocarbon or a depleted aquifer reservoir
or whether it is a solution-mined salt cavern. For the former, the
first step is to put together an initial ``framework'' based on the
provisions of section 8, including:
     A general discussion or definition of risk management;
     Data collection and integration;
     Threat and hazard identification and analysis;
     Risk assessment;
     Preventive and mitigative measures;
     Periodic review and reassessment; and
     Recordkeeping.
    For existing solution-mined salt cavern UNGSFs, they must implement
a full IM program within one year from the effective date of the final
rule. For new facilities constructed after the effective date of the
final rule, they must have a full IM program in place before they
commence operations. In addition, the final rule allows solution-mined
salt cavern UNGSFs greater flexibility in meeting the provisions of
section 8 by requiring that they meet only those provisions of section
8 that are applicable to the physical characteristics and operations of
a solution-mined salt cavern. The two timelines differ because
operators of solution-mined salt cavern facilities did not receive
notice of having to meet the IM provisions of section 8 ``that are
applicable to the physical characteristics and operations of a
solution-mined salt cavern UNGSF.'' PHMSA believes that such a
limitation on the IM program for solution-mined salt caverns is
reasonable and readily ascertainable by operators of such facilities.
    Fifth, in addition to the general framework outlined in section 8,
the final rule includes several specific IM requirements for all UNGSF
operators. Each operator's plan must include the following:
     A plan for developing and implementing each program
element to meet the requirements of the final rule;
     The roles and responsibilities of UNGSF staff tasked with
developing and implementing the IM program;
     An outline of the IM procedures to be developed;
     A plan for how staff will be trained in awareness and
application of the operator's IM program;
     Timelines for implementing each IM program element,
including the risk analysis and baseline risk assessments; and
     A plan for how to incorporate information gained from
experience into the IM program on a continuous basis.

Because these are new, more specific requirements than those contained
in the IFR, operators of existing UNGSFs will have an additional year
to comply.
    Sixth, PHMSA establishes a schedule for conducting the initial or
``baseline'' assessments for each reservoir or cavern and all wells.
PHMSA has based this schedule on commenters' recommendations to use a
``phase-in'' timeline, similar to the UNGSF FAQs published in April
2017. The final rule requires that operators complete all baseline
assessments for reservoirs and salt caverns and 40 percent of the
baseline assessments for individual wells within four years from the
effective date of this final rule. Operators must start with the
higher-risk wells, as identified through the operator's risk-analysis
process. The remaining 60 percent must be completed within seven years
from the effective date of this final rule.
    Seventh, the final rule requires that operators conduct periodic
reassessments under API RP 1171, subsection 8.7, on a risk-based
schedule. This final rule establishes that reassessment intervals must
be no more than seven years. PHMSA assumed that the stress conditions
for the downhole piping used at the well site are similar to the stress
conditions for buried pipe. Because of this, PHMSA chose a seven-year
reassessment (maximum) interval to be consistent with other gas
pipeline regulations. However, an operator could determine its
reassessment interval should be less than seven years based on its
risk-based assessments.
    Seventh, the final rule makes clear that operators may use one or
more risk assessments completed before the effective date of the rule
to establish a baseline assessment, so long as they meet the
requirements of section 8 of RP 1171, and continue to be relevant and
valid for the current operating conditions and environment. These
requirements are consistent with the FAQs published in April 2017.\28\
This requirement is intended to prevent operators from reproducing
assessments that already meet the requirements of this final rule. The
criteria and timing for reassessments should be determined using
results from baseline assessments and updated risk analyses in
accordance with section 8. Operators may also conduct new or additional
assessments to supplement prior assessments as

necessary to establish a thorough understanding of a facility's risks.
---------------------------------------------------------------------------

    \28\ https://www.phmsa.dot.gov/pipeline/underground-natural-gas-storage/ungs-frequently-asked-questions.
---------------------------------------------------------------------------

    Eighth, the final rule requires that operators maintain IM records
in the same manner as pipeline operators are required to keep records
under other IM provisions in parts 192 and 195. Maintaining IM records
is critical if operators are to properly understand their systems,
track and learn from experience, and to make continuous improvements.
These records document how and why decisions are made to identify
risks, set priorities among risks, conduct assessments, and identify
and carry out preventive and mitigative measures. Further, operators
must maintain IM records for the life of the UNGSF to demonstrate
compliance with all the requirements under Sec.  192.12(d). This level
of documentation includes any calculation, amendment, modification,
justification, deviation and determination made, and any action that is
taken to implement and evaluate any element of an IM program. This
level of documentation is the same standard found in Sec.  192.947 for
gas transmission systems and Sec.  195.452(l) for hazardous liquid
transmission systems.
    Regarding the commenter's suggestion that PHMSA should apply a
``risk-tolerance'' model such as ALARP, PHMSA believes such a change is
unnecessary. Integrity Management (IM) is one of many different
varieties of risk management models used by different industries and
organizations to handle safety risks to people and the environment.
PHMSA's IM regulations require pipeline operators to identify the
unique risks specific to their facilities comprehensively and to
address those risks through a continuous program of gathering and
analyzing data and learning from experience. PHMSA's approach places
the onus on operators to identify, prioritize, and handle the risks
posed by pipeline accidents. The IM requirements in this final rule are
designed to be interpreted and applied essentially the same as the IM
regulations currently applied to gas and hazardous liquid pipelines.
    PHMSA believes that the integrity program outlined in Sec.
192.12(d) and the RPs provides a flexible model that accounts for the
diversity and variability of all UNGSFs, so long as the practices are
risk-based and rigorously applied. To introduce a new model, such as
ALARP, just for underground gas storage facilities and not other
pipeline facilities, could be confusing for operators, PHMSA
inspectors, and the public. Further, PHMSA is not aware of evidence
that the ALARP model would provide an increase in safety.

G. Notification Criteria Under 49 CFR Part 191 for Changes at a
Facility

    The IFR added reporting requirements in 49 CFR part 191. PHMSA
requires four types of reports from operators of UNGSFs: (1) Annual
reports, (2) incident reports, (3) safety-related condition reports,
and (4) National Registry information. PHMSA required this information
because there was no that UNGSF operators follow the same provisions
that gas pipeline operators must follow for providing PHMSA with
notification of changes at their facilities.
    Regarding the last type of report, PHMSA required National Registry
information to identify the facility operator responsible for operators
through an Operator Identification Number (OPID). The IFR required
operators to notify PHMSA no later than 60 days before certain changes
occur, including:
     Construction of a new UNGSF facility;
     Abandonment, drilling, or ``workover'' of an injection,
withdrawal, monitoring or observation well. Concerning well workovers,
the IFR stated that such work included the replacement of a wellhead,
tubing or casing; and
     Changes in the entity (including company, municipality,
etc.) that is responsible for an existing UNGSF and the acquisition or
divestiture of an existing facility.
    PHMSA clarified the IFR's notification requirements through April
2017 FAQs. For example, an operator should notify PHMSA of a
``replacement of a wellhead, tubing or casing.'' The FAQs said a
``replacement'' in this context meant the ``complete removal of the
existing component and replacement with a new component (including
replacement of wellhead, tubing, or casing).'' The FAQs further
explained that there was no need for an operator to notify PHMSA of
routine maintenance or repairs to existing components. The FAQs went on
to say that operators should submit separate notifications for each
storage field, but could bundle multiple activities within the same
storage field in a single notification.
1. Comments on Notification Criteria Under 49 CFR Part 191 for Changes
at a Facility
    The IFR required UNGSF operators to notify PHMSA no later than 60
days before certain changes took place at their facilities took place,
including changes in the operator of a facility and major new
construction, as is currently required for other pipeline facilities.
Operators found this reporting requirement excessive and recommended a
monetary or activity threshold to reduce the volume of notifications.
These commenters believed that the IFR's 60-day notification
(reporting) requirement for new construction and construction-related
activities was ambiguous and would result in excessive notifications.
Some commenters expressed concern that the provision failed to exempt
emergencies where advance reporting would be impractical.
    LMOGA and TransCanada contended that PHMSA's notification
requirement would duplicate their reporting burdens and cause delays
because operators already had to notify states of construction
activities and permitting. LMOGA expressed concern that a 60-day-notice
to PHMSA for certain construction activities, such as well workovers,
could shut down wells for an unnecessary amount of time. It stated
that, currently, work permits for well workovers are issued by states
in one to three days. TransCanada contended that PHMSA should remove
the 60-day-notice requirement for new construction from the final rule
altogether. It suggested that PHMSA could capture this same information
through the annual report and safety-related condition reports instead
of creating a separate notification requirement.
    GPTC, PG&E, and others suggested other ways to streamline or reduce
the notification burden involving new construction. For example, GPTC
suggested that the final rule limit advance notifications to only those
well workovers where a well was killed, a plug placed in the well for
work, or a rig installed.
    Another suggestion from PG&E was for PHMSA to adopt a monetary
threshold for new-construction notifications, provide an exemption for
emergency work, and define what activities would constitute a ``well
workover.'' Regarding the monetary threshold, PG&E recommended that
PHMSA only require operators to report well-workover and new-
construction activities that cost more than $2 million. The company
noted that PHMSA currently limits pipeline notifications \29\ to those
projects involving a certain minimum mileage or monetary threshold; it
argued that applying similar thresholds for UNGSFs could reduce the
reporting burden on operators.
---------------------------------------------------------------------------

    \29\ 49 CFR 191.22(c)(1)(i).

---------------------------------------------------------------------------

2. Response to Comments on Notification Criteria Under 49 CFR Part 191
for Changes at a Facility
    The purpose of the 60-day notification requirement in the IFR is to
alert PHMSA of upcoming critical well work that requires an operator to
control well pressure. One example of such a well-control activity is
well abandonment. If an operator incorrectly performs an abandonment,
then brine fluid or natural gas may migrate through the wellbore and
escape into drinking-water aquifers or to the surface. If notified in
advance, PHMSA will have the opportunity to review the operator's pre-
work plan and observe the in-progress work. Ultimately, this process is
beneficial for the operator and public safety because it ensures a
comprehensive assessment of the operators' methods. Such notifications
could prevent an incident or more costly remediation work. PHMSA will
have the opportunity to review an operator's records of the project
but, because most of the work is underground, reviewing the work in
real-time is ideal.
    PHMSA agrees with the commenters that it should narrow the scope of
the notifications for changes to a facility that would eliminate
excessive reporting of minor or routine maintenance. Accordingly, this
final rule limits required notifications to PHMSA to only those
involving new construction and major maintenance work. Specifically,
the final rule provides that operators must notify PHMSA of (1) any new
facility construction; (2) maintenance work that requires a workover
rig and costs $200,000 or more for labor, materials, and services; and
(3) any plugging or abandonment activities, regardless of cost.
    The scope of this modified notification requirement is limited to
only those types of activities that require adherence to specific
methods and techniques to prevent damage to the formations and to
safely control pressure in the well. Bringing in a workover rig marks a
step-change in the degree of complexity and scope of work. The presence
of a workover rig means the operator is opening the well, rather than
just doing some wing valve work at the surface. Opening a well
(requiring a workover rig) usually infers serious maintenance or repair
work, performing extensive logging and integrity evaluations, or
replacement of downhole components.
    Concerning the $200,000 maintenance-work threshold, PHMSA has not
indexed this exact dollar amount across all states and activity types.
During preliminary inspections, PHMSA observed what high-risk
activities were occurring in the field and generally how much it costs
operators to complete those maintenance activities. PHMSA is aware that
the costs of pressure-control and remediation activities vary
considerably, depending upon the depth of the well, pressure, casing
type and size, and other factors. However, PHMSA believes this is an
appropriate threshold level that captures the higher-risk activities
and still reduces the volume and burden of notifications. There is the
possibility that a workover rig is needed for some minor issues, where
the cost falls below the 200k threshold. Again, most major activities
with a workover rig will cost more than $200,000, thus triggering this
type of notification. Note that PHMSA also allows operators to report
multiple well activities within the same storage field in a single
notification.
    PHMSA also recognizes that the IFR inadvertently omitted an
exception for emergency maintenance or repairs. If an operator
reasonably determines that it needs to do work immediately, for safety
reasons, then it should not delay the work because of the 60-day
notification requirement. Accordingly, the final rule adds a provision
that allows operators to notify PHMSA as soon as practicable in
instances where 60-day notice is not feasible due to an emergency. In
such cases, an operator must promptly respond to the emergency, notify
PHMSA as soon as practicable, and document the emergency and the reason
for any delay in notification.

H. The States' Role in Regulating UNGSFs

    There are approximately 403 active underground natural gas storage
facilities (UNGSFs) in the United States, with about a 60/40 split
between interstate and intrastate facilities. Interstate UNGSFs serve
interstate facilities, and PHMSA has exclusive pipeline safety
jurisdiction over the design, construction, operation, and maintenance
of these facilities. Intrastate UNGSFs, on the other hand, are
facilities that provide gas storage for intrastate pipelines, most
notably local gas distribution companies (LDCs). Generally, these
intrastate gas pipeline facilities have been subject to State
regulation by its public utility commission or oil and gas commission.
Intrastate UNGSFs continue to be subject to State regulation, but only
if the applicable State authority has filed a certification with PHMSA
to participate as a full State partner under the new Federal program
and receive Federal funding through PHMSA.
    The Federal regulatory program for UNGSFs has been set up to mirror
the existing Federal-State pipeline regulatory partnership for gas and
hazardous liquid pipelines as established by the Natural Gas Pipeline
Safety Act in 1968 and the Hazardous Liquid Pipeline Safety Act of
1979, respectively. Under this system, Congress has conferred on the
Department primary jurisdiction over all natural gas and hazardous
liquid (primarily oil) pipelines in or affecting interstate commerce
but has preserved the states' role in regulating intrastate pipelines,
as long as the State that chooses to submit an annual certification to
PHMSA and agrees to enforce the minimum Federal standards in addition
to any State regulations compatible with the Federal standards.
    The PIPES Act directed PHMSA to expand its pipeline-safety
regulatory program to include the storage of natural gas incidental to
transportation, using this same Federal-State model. Just as various
states had previously regulated intrastate natural gas pipelines before
the passage of the Natural Gas Pipeline Safety Act of 1968, so too have
many states regulated UNGSFs prior to the passage of the PIPES Act and
issuance of the IFR. These states will be able to continue this
important safety role as partners with PHMSA.
    Under the IFR and this final rule, intrastate UNGSF facilities will
be regulated in one of two ways. Depending upon State law, they will be
regulated either by a certified State entity (e.g., public utility
commission or oil and gas commission), or, in the absence of a
certified State partner, by PHMSA. Notably, section 12 of the PIPES Act
expressly allows a State authority to adopt additional or more
stringent safety standards for intrastate UNGSFs, provided such
standards are compatible with the minimum Federal requirements. PHMSA
interprets this to mean that any State authority that has filed an
annual State certification with PHMSA under 49 U.S.C. 60105 to regulate
UNGSFs may regulate and enforce its own additional or more stringent
regulations against intrastate UNGSFs that fall under that authority's
State jurisdiction, to the extent that the additional State standards
are compatible with the Federal safety regulations. This arrangement is
the same as the States' authority to regulate all other intrastate
pipeline facilities under parts 192 and 195.
    Accordingly, States that had UNGSF regulations before the adoption
of the IFR may continue to implement any

additional or more stringent regulations that they currently enforce
with respect to intrastate facilities, to the extent that such
regulations are compatible with the minimum standards set by this final
rule. For a State wanting to expand its authority to inspect interstate
facilities under the final rule, it will be able to apply to PHMSA for
discretionary interstate agent status under 49 U.S.C. 60106(b), just as
a State authority today, may carry out such a role for other oil and
gas pipeline facilities.
    It is worth noting that neither the PIPES Act nor this final rule
alters the existing role of the States in the siting or permitting of
UNGSFs or their regulation of natural gas production. PHMSA has never
exercised regulatory control over these issues for pipeline and will
not be doing so under the final rule. Instead, the PIPES Act provides
that all UNGSFs incidental to gas ``transportation'' are now subject to
Federal minimum safety standards promulgated by PHMSA. Section 12 of
the PIPES Act directs PHMSA to exercise this authority in conjunction
with its State partners in the same manner as other pipeline facilities
are regulated.
    This means FERC and the States will continue to exercise their
respective authorities over the permitting of UNGSFs. FERC reviews
applications for the construction and operation of UNGSFs owned by
interstate gas pipeline operators and that are integrated into their
pipeline systems. In its application review, FERC requires an applicant
to certify that it will comply with DOT safety standards. While FERC
has no jurisdiction over pipeline safety, PHMSA and FERC actively
collaborate to exercise their respective responsibilities.\30\
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    \30\ Page 28. https://www.ferc.gov/market-oversight/guide/energy-primer.pdf.
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    PHMSA received several comments regarding the effect of the IFR on
the role of the states in UNGSF regulation. These comments dealt
primarily with concerns expressed by State regulators and gas-storage
operators over PHMSA's role and the nature of the Federal-State
partnership under this new regulatory scheme. These commenters also
asked PHMSA to explain the roles of the various parties in permitting
UNGSFs, to discuss the potential conflicts that may arise between
existing State regulations affecting underground storage and the new
Federal minimum safety standards and the degree to which certain
existing State regulations will continue to apply to interstate UNGSFs.
Of particular concern was whether the IFR could serve to undermine or
reduce the existing level of safety and environmental protection that
several States have been applying to interstate UNGSFs, especially
where certain State standards could arguably be viewed as broader or
more stringent than the RPs being adopted in the final rule. These
comments are discussed below in more detail.
1. Comments on State Permitting of UNGSFs
    In its comments, the Texas RRC asked PHMSA to clarify the States'
role in permitting UNGSFs and commented that the IFR provided no
specific details regarding permitting areas that fall to the
states.\31\ The commission noted that while the IFR accurately stated
that permitting of gas wells is not a PHMSA function, PHMSA had
incorrectly concluded: ``that the traditional role of permitting
intrastate facilities falls to the states and the permitting of
interstate facilities falls to the Federal Energy Regulatory Commission
(FERC).'' According to the Texas RRC, ``FERC is not set up to conduct
permitting of individual wells, ensuring proper notification is
provided to all entitled parties, reviewing and adequately protecting
groundwater, and protecting correlative rights.'' Conversely, the Texas
RRC explained that under Texas law, the Texas RRC is directed to
regulate the downhole portion of UNGSFs to fulfill its mandate to
conserve State natural resources and to protect the environment.
Therefore, it argued, ``all of these functions must fall to the State
regardless of whether a well is part of an intrastate or interstate
facility.'' Finally, the Texas RRC argued that the failure of PHMSA to
properly address these scenarios ``indicates a lack of a clear
understanding of underground natural gas storage and the historical
role many states have had in its successful regulation of underground
hydrocarbon storage.''
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    \31\ See State of Texas v. PHMSA, No. 17-60189 (5th Cir. Mar.
17, 2017).
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    Similarly, Dow Chemical asserted that many states had established
successful regulations and standards for permitting, operations,
maintenance, monitoring, and other issues related to UNGSFs. The
company pointed out that states with underground-storage safety
regulations typically regulate both intrastate and interstate
facilities. Along with Dow Chemical, LMOGA, MDEQ, and the Texas RRC
recommended that PHMSA consult with State regulatory agencies to avoid
unnecessary reporting and compliance programs and to learn from the
states' experience in regulating UNGSFs as it continues to develop
Federal regulations.
2. Response to Comments on the State Permitting of UNGSFs
    As for the comments seeking greater clarity on how the IFR affects
State permitting of UNGSFs, PHMSA has not made any changes to the
regulatory text because PHMSA does not have the authority to prescribe
the location or siting of UNGSFs. This final rule also does not deal
with permitting, directly. Section 12 of the PIPES Act expressly states
that the Act shall not be construed to authorize PHMSA ``to prescribe
the location of an underground natural gas storage facility'' or ``to
require the Secretary's permission to construct'' a UNGSF.
3. Comments on State Regulation of UNGSFs Associated With Gas
Production
    IPAA, EDF, and Hilcorp requested that PHMSA clarify how the IFR
applied to UNGSFs associated with gas-production facilities. IPAA
stated that the Pipeline Safety Laws do not provide PHMSA with
authority to regulate gas-production facilities, citing 49 U.S.C.
60101(a)(21)(A) and 60101(a)(22)(B). IPAA, EDF, and Hilcorp requested
that PHMSA add an exception to part 192, specifically excluding UNGSFs
that are ``in direct support of'' (Hilcorp) or that are ``co-located
with and used to support of'' (IPAA) production operations.
    IPAA gave two examples of the types of production-related UNGSFs
located in active production fields that are used to manage production
operations, rather than providing ``commercial storage services.'' The
first type was facilities that store gas from a production field but
has not yet entered a PHMSA-regulated pipeline. The second type was
UNGSFs that are used for gas production purposes ``after being
delivered to the production field in a PHMSA-regulated pipeline.'' In
other words, they store gas that has either not yet entered
transportation or that has ended transportation. Under both scenarios,
IPAA contended, the stored gas at these facilities is not incidental to
transportation but is used to support gas production. According to
these industry commenters, such UNGSFs are used in the process of
extracting natural gas from the ground and should not be treated as
providing storage incidental to transportation under the Pipeline
Safety Laws.

4. Response to Comments on UNGSFs Associated With Gas Production
    The PIPES Act directed PHMSA to establish minimum Federal standards
for all UNGSFs that store natural gas incidental to transportation.
Again, the PIPES Act does not alter or expand PHMSA's jurisdiction as
it has traditionally been applied to natural gas production or
hazardous liquid production facilities. While PHMSA has never exerted
jurisdiction over gas pipeline facilities that are engaged exclusively
in production and has long recognized the authority of states to
regulate the permitting and siting of pipelines and to protect
groundwater and other State natural resources. Only after
transportation has begun and before delivery to an end-user is there
any issue of PHMSA jurisdiction, which is limited to the transportation
of gas and hazardous liquids.
    This is analogous to PHMSA's regulation of other types of temporary
storage of hazardous liquid in transit. For example, petroleum being
transported by pipeline is often stored temporarily along the line in
one or more breakout tanks. These tanks are used to relieve surges or
receive and store hazardous liquid transported by pipeline for eventual
re-injection and continued transportation by pipeline (49 CFR 195.2).
Similarly, under this final rule, a UNGSF is defined as a gas pipeline
facility ``that stores natural gas underground and incidental to the
transportation of natural gas'' in interstate or foreign commerce.
    PHMSA interprets this to mean that if a UNGSF is used in any way to
store gas that is received from a PHMSA-regulated pipeline and returns
any of that stored gas to transportation by pipeline, then such a
facility is incidental to transportation and therefore covered by this
final rule. Even if some of that gas is used to support production
operations or is mingled with produced gas that has not yet entered
transportation, the storage facility itself will be treated as a UNGSF
under the final rule and will be subject to PHMSA's full jurisdiction.
5. Comments on States' Regulation of Intrastate UNGSFs
    Several commenters expressed concern that the IFR potentially
conflicted with existing State regulation of intrastate UNGSFs and that
the IFR lacked clarity on how such conflicts could be avoided or
minimized. MDEQ, for instance, commented that its Oil, Gas and Minerals
Division ran a regulatory program affecting many safety and
environmental issues covered by the RPs and that ``Michigan's existing
regulations are needed to fill gaps in the IFR particularly in the
areas of permitting, liquid waste handling and disposal; and
environmental protection from liquid hydrocarbons, brines, and other
liquid contaminants.'' The agency further commented that the IFR
``makes no mention of pollution prevention, nor does it set standards
for remediation of spills.'' It noted that many UNGSFs are located in
oil reservoirs that still produce liquid hydrocarbons and brine, and
that the State of Michigan has comprehensive regulations covering
pollution prevention, groundwater monitoring, remediation, and clean-up
activities. In short, the State urged PHMSA to ``recognize the states'
role in these areas.''
6. Response to Comments on the States' Regulation of Intrastate UNGSFs
    First, PHMSA recognizes and supports the role that many states have
played for many years in the field of underground gas storage. Nothing
in the IFR or this final rule is intended to minimize or diminish the
states' role in ensuring the safety of UNGSFs, protecting the
environment, or safeguarding critical State resources. Section 12 of
the PIPES Act, however, mandates that PHMSA regulate all UNGSFs that
storing natural gas incidental to transportation. Under 49 U.S.C.
60104(c) and the recently-enacted 49 U.S.C. 60141(e), states with
existing regulations may continue to regulate intrastate gas storage
facilities to the extent that the proper State authority becomes
certified by PHMSA and the State regulations are compatible with the
new Federal minimum safety standards.
    Second, the PIPES Act and this final rule do not modify or
undermine established principles of Federal preemption law as applied
to pipeline safety. Any State regulation affecting PHMSA's exclusive
jurisdiction over the safety of interstate pipeline transportation
facilities is, and always has been, preempted by the Pipeline Safety
Laws.\32\ The enforceability of existing or new State regulations
affecting gas production, storage, plugging, or other areas such as
mineral rights, depends on whether the State regulations are based on
an independent basis under State law and cannot be considered safety
regulations preempted by the PIPES Act, which is necessarily a case-by-
case determination.
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    \32\ See, e.g., Colorado Interstate Gas Company v. Wright, 707
F. Supp. 2d 1169 (D. Kan. 2010).
---------------------------------------------------------------------------

    Third, the PIPES Act and this rule represent a major step forward
in extending minimum Federal safety standards to all interstate gas
storage facilities, regardless of whether individual states have
already adopted regulations governing storage facilities or whether
individual interstate operators have voluntarily complied with existing
State regulations. As PHMSA discussed in the IFR, interstate UNGSF
facilities would not be subject to any regulatory safety requirements
in the absence of this Federal action.
    Fourth, PHMSA fully recognizes that states with UNGSFs typically
have various regulations in place governing the construction,
remediation, and plugging of gas wells. Before the IFR went into
effect, many interstate UNGSF operators relied on these State
regulations to help develop best practices. State safety jurisdiction,
however, extends only to intrastate UNGSFs. Regulations differ from
State to State, making it difficult for operators to maintain
consistent performance across all their interstate facilities. Finally,
PHMSA will incorporate lessons learned from operators and states
implementing this final rule in the form of guidance and additional
rulemakings. PHMSA understands that seeking input from states is a
vital component in developing an effective underground natural gas
storage program at the Federal level.
    As for the comments regarding potential conflicts between existing
State regulation of intrastate UNGSFs, three points should be made.
First, many State agencies enjoy independent authority under their own
particular State's laws to regulate UNGSF involving public health,
protection of groundwater, allocation of mineral rights, and similar
areas not involving safety. Under established Federal preemption law,
States may regulate in such areas that are not preempted expressly by
Federal law or regulation.
    In the field of underground natural gas storage, Congress, through
the PIPES Act, has conferred authority on the Secretary (and delegated
to PHMSA) to provide for the safety of natural gas storage facilities
incidental to transportation, just as it has for other oil and gas
pipeline facilities. This authority covers the design, construction,
operation, and maintenance of UNGSF facilities. States are precluded
from regulating the safety of UNGSFs to the extent that such State
regulations conflict with PHMSA's safety-related regulations. To
determine whether specific State regulations are preempted by the PIPES
Act and this final rule may require a fact-specific analysis of whether
a particular State regulation has been preempted, an

analysis that falls within the purview of State and Federal courts.
Such preemption determinations have routinely been made by the courts
to resolve challenges to State and local governments' authority to
regulate gas and hazardous liquid pipelines.
    Second, any potential conflict between existing State regulations
governing intrastate UNGSFs and Federal safety regulations disappears,
in most cases, in those states that have submitted annual
certifications to PHMSA and become UNGSF State partners. All State
partners in this program will have the authority to adopt and enforce
additional or more stringent safety regulations than the minimum
Federal standards set forth in the IFR. PHMSA anticipates and hopes
that many states, such as Texas, Michigan, and other commenters that
already have existing regulations affecting intrastate UNGSF safety,
will decide to partner with PHMSA and enjoy the enhanced authority,
Federal funding, and other benefits that accompany State certification.
    Third, PHMSA encourages and supports State regulatory programs that
help ensure all UNGSFs, both intrastate and interstate, address
resource conservation, environmental protection, land use, emergency
response, and other important issues affecting gas wells and storage
outside the realm of safety.
    PHMSA agrees with MDEQ's comments and encourages MDEQ to examine
its existing State UNGSF regulations to determine whether any of them
are safety-related standards that could be preempted by this final rule
in the event Michigan decides that it does not wish to become a
certified State partner for intrastate UNGSFs. If Michigan does become
a State partner for UNGSFs, then MDEQ (or other State authority in
Michigan) will be able to apply additional or more stringent safety
standards, provided they are ``compatible'' with the minimum Federal
standards prescribed under the Pipeline Safety Laws and this final
rule. If it chooses not to become a State partner for UNGSFs, then the
Federal minimum safety standards will apply to all intrastate UNGSFs in
Michigan, and PHMSA will inspect such facilities and enforce the
Federal minimum standards against all intrastate UNGSFs in the State.
7. Comments on States' Regulation of Interstate UNGSFs
    Some commenters, including EDF and the Interstate Oil and Gas
Compact Commission, expressed concern that the IFR did not go far
enough in exercising jurisdiction over UNGSFs in a manner that
optimized existing State regulations. EDF commented that the new
Federal regulations would create a ``ceiling'' on State regulations for
the permitting, drilling, completion, and operation of underground
storage wells that have also been applied to interstate facilities. EDF
acknowledged that while interstate facilities are under the exclusive
safety jurisdiction of PHMSA, intrastate UNGSFs are frequently subject
to both safety regulations promulgated by PHMSA and to other gas-
storage rules promulgated by State regulators that generally apply to
all gas wells in their particular states. EDF expressed the fear that
interstate UNGSF operators who had been ``voluntarily obeying State
rules responding to the State's unique geology, level of subsurface
activity, competing surface activities and general appetite for risk
may, with the cover of PHMSA's IFR, decline to continue following those
rules, possibly to the detriment of safety and the environment.''
    To address this concern, EDF asked PHMSA to include two specific
provisions in the final rule. First, it asked PHMSA to distinguish
between those State regulations of general applicability to all oil and
gas wells (i.e., those falling within the jurisdiction ceded to states
under the Natural Gas Act of 1938) and those addressing the special
risks intrinsic to gas storage wells. EDF requested that PHMSA direct
interstate operators to adhere to State regulations for permitting,
drilling, completion and operation of storage wells, but ``only to the