[Federal Register Volume 77, Number 63 (Monday, April 2, 2012)]
[Proposed Rules]
[Pages 19800-19834]
[FR Doc No: 2012-7550]

Vol. 77

Monday,

No. 63

April 2, 2012

Part III

Department of Transportation

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Pipeline and Hazardous Materials Safety Administration

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49 CFR Parts 196 and 198

Pipeline Safety: Pipeline Damage Prevention Programs; Proposed Rule

Federal Register / Vol. 77 , No. 63 / Monday, April 2, 2012 /
Proposed Rules

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 196 and 198

[Docket No. PHMSA-2009-0192]
RIN 2137-AE43

Pipeline Safety: Pipeline Damage Prevention Programs

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

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: This Notice of Proposed Rulemaking (NPRM) seeks to revise the
Pipeline Safety Regulations to: Establish criteria and procedures for
determining the adequacy of state pipeline excavation damage prevention
law enforcement programs; establish an administrative process for
making adequacy determinations; establish the Federal requirements
PHMSA will enforce in states with inadequate excavation damage
prevention law enforcement programs; and establish the adjudication
process for administrative enforcement proceedings against excavators
where Federal authority is exercised. Pursuant to the Pipeline
Inspection, Protection, Enforcement, and Safety (PIPES) Act of 2006,
establishment of review criteria for state excavation damage prevention
law enforcement programs is a prerequisite should PHMSA find it
necessary to conduct an enforcement proceeding against an excavator in
the absence of an adequate enforcement program in the state where the
violation occurs. The development of these criteria and the subsequent
determination of the adequacy of state excavation damage prevention law
enforcement programs is intended to encourage states to develop
effective excavation damage prevention law enforcement programs to
protect the public from the risk of pipeline ruptures caused by
excavation damage, and allow for Federal administrative enforcement
action in states with inadequate enforcement programs.

DATES: Persons interested in submitting written comments on this NPRM
must do so by June 1, 2012.

ADDRESSES: Comments should reference Docket Number PHMSA-2009-0192 and
may be submitted in the following ways:
     Web Site: Comments should be filed at the Federal
eRulemaking Portal, http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Operations Facility (M-30), U.S. Department
of Transportation, West Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590.
     Hand Delivery: Docket Operations Facility, U.S. Department
of Transportation, West Building, Room W12-140, 1200 New Jersey Avenue
SE., Washington, DC 20590 between 9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays.
    Instructions: Identify the docket number, PHMSA-2009-0192, at the
beginning of your comments. If you mail your comments, we request that
you send two copies. To receive confirmation that PHMSA received your
comments, include a self-addressed stamped postcard.

    Note: Comments are posted without changes or edits to http://www.regulations.gov, including any personal information provided.
There is a privacy statement published on http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Sam Hall, Program Manager, PHMSA by
email at<EMAIL_ADDRESS>or by telephone at<PHONE_NUMBER> or Larry
White, Attorney Advisor, PHMSA by email at<EMAIL_ADDRESS>or by
telephone at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

    This NPRM proposes to amend the Federal Pipeline Safety Regulations
to: (1) Establish criteria and procedures PHMSA will use to determine
the adequacy of state pipeline excavation damage prevention law
enforcement programs. Such determination is a prerequisite should PHMSA
find it necessary to conduct an administrative enforcement proceeding
against an excavator for violation of the Federal requirements proposed
in this NPRM in the absence of adequate state enforcement of state
excavation damage prevention laws; (2) establish an administrative
process for states to contest notices of inadequacy from PHMSA should
they elect to do so; (3) establish the Federal requirements PHMSA will
enforce in states with inadequate excavation damage prevention law
enforcement programs; and (4) establish the adjudication process for
administrative enforcement proceedings against excavators where Federal
authority is exercised. In the absence of regulations specifying the
criteria that PHMSA will use to evaluate a state's excavation damage
prevention law enforcement program, PHMSA would take no enforcement
action.
    Executive Orders 12866 and 13563 require agencies to regulate in
the ``most cost-effective manner,'' to make a ``reasoned determination
that the benefits of the intended regulation justify its costs,'' and
to develop regulations that ``impose the least burden on society.'' The
expected benefit of this rulemaking action is an increased deterrent to
violations of one-call requirements (though requirements vary by state,
a one-call system allows excavators to call one number in a given state
in order to ascertain the presence of underground utilities)
requirements and the attendant reduction in pipeline incidents and
accidents caused by excavation damage. Based on incident reports
submitted to PHMSA, failure to use an available one-call system is a
known cause of pipeline accidents. PHMSA analyzed the costs and
benefits of the proposed rule. To determine the benefits, PHMSA was
able to obtain data for three states over the course of the
establishment of their excavation damage prevention programs
(additional information about these states can be found in the
regulatory analysis that is in the public docket). Each of the three
states had a decrease of at least 63 percent in the number of
excavation damage incidents occurring after they initiated their
enforcement programs. While many factors can contribute to the decrease
in state excavation damage incidents, PHMSA found these states to be a
helpful starting point on which to estimate the benefits of this
rulemaking. PHMSA utilized three separate effectiveness rates to
conservatively evaluate the benefits of this rulemaking. The rates are
based on the reduction of incidents of the three states studied and
more conservative effective rates because state pipeline programs vary
widely, which may lead to a lower effective rate than the three states
analyzed. In addition, we compared the overall costs of this rule to
the average costs associated with a single excavation damage incident.
PHMSA expects the total cost of this rule to be $1.2 million while the
benefits are $23 million.\1\
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    \1\ These numbers are discounted over 10 years at 7%.
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    This rulemaking has three separate potential cost impacts. The
costs to excavators to comply with the Federal excavation standard, the
cost to states to have their enforcement programs reviewed, to appeal a
determination of ineffectiveness and to ask for reconsideration, and
the cost impact on the Federal government to enforce the Federal
excavation standard. With

regard to the potential cost impacts on excavators, PHMSA believes that
excavators will not incur any additional costs because the Federal
excavation standard, which is also a self-executing standard, mirrors
the excavation standard in each state and does not impose any
additional costs on excavators. The cost impacts on states are those
costs associated with having their enforcement programs reviewed
(estimated to be $20,000 per year), to appeal a determination of
ineffectiveness (estimated to be a one time cost of $125,000) and to
ask for reconsideration (estimated to be a one-time cost of $350,000).
Therefore, the total estimated first year cost impacts on states are
(($20,000 (annually) + (14 x $25,000) + (5 x $25,000)) = $495,000. The
annual cost impacts on states in subsequent years are estimated to be
$20,000. The annual cost impacts on the Federal government are
estimated to be approximately $80,000. Therefore, the total first year
cost of this rulemaking is estimated to be $547,688 ($470,000 +
$77,688). The following years the costs are estimated to be
approximately $100,000 per year. The total cost over ten years, with a
3% discount rate is $1,331,876 and at a 7% discount rate is $1,182,602.
PHMSA is specifically asking for comments on whether it has adequately
captured the scope and size of the costs of this rulemaking. The
average annual benefits range from $10,939,602 to $3,445,975.
Evaluating just the lower range of benefits over ten years results in a
total benefit of over $29,000,000, with a 3% discount rate, and over
$23,000,000, with a 7% discount rate. In addition, over the past 22
years, the average reportable incident caused $272,200 in property
damage alone. Therefore, if this proposed regulatory action prevents
just one average reportable incident per year, this rulemaking would be
cost beneficial. Interested readers should refer to the Regulatory
Evaluation that is posted in the docket for additional information.

II. Objective

    Based on incident data PHMSA has received from pipeline operators,
excavation damage is a leading cause of natural gas and hazardous
liquid pipeline failure incidents.\2\ Better, more effective
enforcement of state excavation damage prevention laws is a key to
reducing pipeline excavation damage incidents. Though all states have a
damage prevention program, not all states adequately enforce their
state damage prevention laws. Pursuant to the Pipeline Inspection,
Protection, Enforcement and Safety Act of 2006 (PIPES Act), PHMSA is
proposing criteria and procedures for determining whether a state's
enforcement of its excavation damage prevention laws is adequate. As
mandated by the PIPES Act, such determination is a prerequisite should
PHMSA find it necessary to conduct an administrative enforcement
proceeding against an excavator for violating Federal excavation
standards. This NPRM also proposes to establish the administrative
process for states to contest notices of inadequacy PHMSA issues, the
Federal requirements PHMSA will enforce in states with inadequate
enforcement programs, and the adjudication process for administrative
enforcement proceedings against excavators where Federal authority is
exercised.
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    \2\ Data from the U.S. Department of Transportation, PHMSA
Office of Pipeline Safety, Incident and Accident Reports of Gas
Distribution, Gas Transmission & Gathering and Hazardous Liquid
Pipeline Systems. Pipeline incident and accident summaries are
available on PHMSA Stakeholders Communication Web site at: http://primis.phmsa.dot.gov/comm/Index.htm?nocache=3320.
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III. Background

A. Pipeline Incidents Caused by Excavation Damage

    Excavation damage is a leading cause of natural gas and hazardous
liquid pipeline failure incidents. For the period from 1988 to 2010,
1,613 incidents, 185 fatalities, 697 injuries, and $438,785,552 in
estimated property damages were reported as being caused by excavation
damage on all PHMSA regulated pipeline systems in the United States,
including onshore and offshore hazardous liquid, gas transmission, and
gas distribution lines, except gathering lines.\3\
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    \3\ Data from the U.S. Department of Transportation, PHMSA
Office of Pipeline Safety, Incident and Accident Reports of Gas
Distribution, Gas Transmission & Gathering and Hazardous Liquid
Pipeline Systems. Pipeline incident and accident summaries are
available on PHMSA Stakeholders Communication Web site at: http://primis.phmsa.dot.gov/comm/Index.htm?nocache=3320.
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    While excavation damage is the cause in a significant portion of
all pipeline failure incidents, it is cited as the cause in a
relatively higher portion of natural gas distribution incidents. To
look at this issue, PHMSA initiated and sponsored in 2005 an
investigation of the risks and threats to gas distribution systems.
This investigation was conducted through the efforts of four joint
work/study groups, each of which included representatives of the
stakeholder public, the gas distribution pipeline industry, state
pipeline safety representatives, and PHMSA. The areas of their
investigations included excavation damage prevention. The Integrity
Management for Gas Distribution, Report of Phase I Investigations (DIMP
Report) was issued in December 2005.\4\ As noted in the DIMP Report,
the Excavation Damage Prevention work/study group reached four key
conclusions.
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    \4\ This report is available in the rulemaking docket.
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     Excavation damage poses by far the single greatest threat
to distribution system safety, reliability and integrity; therefore,
excavation damage prevention presents the most significant opportunity
for distribution pipeline safety improvements.
     States with comprehensive damage prevention programs that
include effective enforcement have a substantially lower probability of
excavation damage to pipeline facilities than states that do not. The
lower probability of excavation damage translates to a substantially
lower risk of serious incidents and consequences resulting from
excavation damage to pipelines.
     A comprehensive damage prevention program requires nine
important elements be present and functional for the program to be
effective. All stakeholders must participate in the excavation damage
prevention process. The elements are:
    1. Enhanced communication between operators and excavators.
    2. Fostering support and partnership of all stakeholders in all
phases (enforcement, system improvement, etc.) of the program.
    3. Operator's use of performance measures for persons performing
locating of pipelines and pipeline construction.
    4. Partnership in employee training.
    5. Partnership in public education.
    6. Enforcement agencies' role as partner and facilitator to help
resolve issues.
    7. Fair and consistent enforcement of the law.
    8. Use of technology to improve all parts of the process.
    9. Analysis of data to continually evaluate/improve program
effectiveness.
     Federal legislation is needed to support the development
and implementation of damage prevention programs that include effective
enforcement as a part of the state's pipeline safety program. This is
consistent with the objectives of the state pipeline safety programs,
which are to ensure the safety of the public by addressing threats to
the distribution

infrastructure. The legislation will not be effective unless it
includes provisions for ongoing funding such as federal grants to
support these efforts. This funding is intended to be in addition to,
and independent of, existing federal funding of state pipeline safety
programs.
    Another recent report (Mechanical Damage Report) prepared on behalf
of PHMSA \5\ concluded that excavation damage continues to be a leading
cause of serious pipeline failures and that better one-call enforcement
is a key gap in damage prevention. In that regard, the Mechanical
Damage Report noted that most jurisdictions have established laws to
enforce one-call notification compliance; however, the report noted
that many pipeline operators consider lack of enforcement to be
degrading the effectiveness of one-call programs. The report cited that
in Massachusetts, 3,000 violation notices were issued from 1986 to the
mid-1990s, contributing to a decrease of third-party damage incidents
on all types of facilities from 1,138 in 1986 to 421 in 1993. The
report also cited findings from another study that enforcement of the
one-call notification requirement was the most influential factor in
reducing the probability of pipeline strikes and that the number of
pipeline strikes is proportionate to the degree of enforcement.
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    \5\ Mechanical Damage Final Report, Michael Baker Jr., Inc.,
April 2009.
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    With respect to the effectiveness of current regulations, the
Mechanical Damage Report stated that an estimated two-thirds of
pipeline excavation damage is caused by third parties and found that
the problem is compounded if the pipeline damage is not promptly
reported to the pipeline operator so that corrective action can be
taken. It also noted ``when the oil pipeline industry developed the
survey for its voluntary spill reporting system--known as the Pipeline
Performance Tracking System (PPTS)--it recognized that damage to
pipelines, including that resulting from excavation, digging, and other
impacts, is also precipitated by operators (``first parties'') and
their contractors (``second parties'')''.
    Finally, the report found that for some pipeline excavation damage
data that was evaluated, ``in more than 50 percent of the incidents,
one-call associations were not contacted first'' and that ``failure to
take responsible care, to respect the instructions of the pipeline
personnel, and to wait the proper time accounted for another 50 percent
of the incidents.''

B. State Damage Prevention Programs

    There is considerable variability among the states in terms of
physical geography, population density, underground infrastructure,
excavation activity, and economic activity. For example, South Dakota
is a rural, agricultural state with a relatively low population
density. In contrast, New Jersey is more densely populated and is host
to a greater variety of land uses, denser underground infrastructure,
and different patterns of excavation activity. These differences
between states equate to differences in the risk of excavation damage
to underground infrastructure, including pipelines. Denser population
often means denser underground infrastructure; more rural and
agricultural states will have different underground infrastructure
densities and excavation patterns than more urbanized states.
    There is no single, comprehensive national damage prevention law.
On the contrary, all 50 states in the United States have a law designed
to prevent excavation damage to underground utilities. However, these
state laws vary considerably and no two state laws are identical.
Therefore, excavation damage prevention stakeholders in each state are
subject to different legal and regulatory requirements. Variances in
state laws include excavation notice requirements, damage reporting
requirements, exemptions from the requirements of the laws for
excavators and/or utility operators, provisions for enforcement of the
laws, and many others. PHMSA has developed a reference for
understanding the variability in these state laws at http://primis.phmsa.dot.gov/comm/DamagePreventionSummary.htm.

C. PHMSA Damage Prevention Efforts

    PHMSA has made extensive efforts over many years to improve
excavation damage prevention as it relates to pipeline safety. These
efforts have included outreach, grants, and funding of cooperative
agreements with a wide spectrum of excavation damage prevention
stakeholders including:
     Public and community organizations.
     Excavators and property developers.
     Emergency responders.
     Local, state and Federal government agencies.
     Pipeline and other underground facility operators.
     Industry trade associations.
     Consensus standards organizations.
     Environmental organizations.
    These initiatives are described in detail in the ANPRM on this
subject that PHMSA published in the Federal Register on October 29,
2009 (74 FR 55797). The ANPRM can be viewed at http://www.regulations.gov, Docket ID PHMSA-2009-0192. These initiatives
appear to have contributed to an overall decline in the rate of
excavation damages to pipelines and other underground utilities, but
PHMSA is unaware of any studies of the direct effect of these
initiatives on the national excavation damage rate to pipelines. PHMSA
invites comments regarding any studies that might have evaluated the
effectiveness of these initiatives.

D. The Pipeline Inspection, Protection, Enforcement, and Safety Act of
2006

    On December 29, 2006, the PHMSA's pipeline safety program was
reauthorized by enactment of the PIPES Act. The PIPES Act provides for
enhanced safety and environmental protection in pipeline
transportation, enhanced reliability in the transportation of the
Nation's energy products by pipeline, and other purposes. Major
portions of the PIPES Act were focused on damage prevention including
additional resources and clear program guidelines as well as additional
enforcement authorities to encourage states in developing effective
excavation damage prevention programs. The PIPES Act identifies nine
elements that effective damage prevention programs should include.
These are, essentially, identical to those nine elements noted in the
DIMP Report discussed in the previous subsection.
    The PIPES Act also provided PHMSA with limited authority to conduct
administrative civil enforcement proceedings against excavators who
damage pipelines in a state that has failed to adequately enforce its
excavation damage prevention laws. Specifically, Section 2 of the PIPES
Act provides that the Secretary of Transportation may take civil
enforcement action against excavators who:
    1. Fail to use the one-call notification system in a state that has
adopted a one-call notification system before engaging in demolition,
excavation, tunneling, or construction activity to establish the
location of underground facilities in the demolition, excavation,
tunneling, or construction area;
    2. Disregard location information or markings established by a
pipeline facility operator while engaging in demolition, excavation,
tunneling, or construction activity; and
    3. Fail to report excavation damage to a pipeline facility to the
owner or operator of the facility promptly, and report to other
appropriate authorities

by calling the 911 emergency telephone number if the damage results in
the escape of any flammable, toxic, or corrosive gas or liquid that may
endanger life or cause serious bodily harm or damage to property.
    The PIPES Act limited the Secretary's ability to take civil
enforcement action against these excavators, unless the Secretary has
determined that the state's enforcement of its damage prevention laws
is inadequate to protect safety.
    The following is the applicable citation from the PIPES Act:

SEC. 2. PIPELINE SAFETY AND DAMAGE PREVENTION.

    (a) ONE CALL CIVIL ENFORCEMENT.--
    (1) PROHIBITIONS.--Section 60114 is amended by adding at the end
the following:
    (d) PROHIBITION APPLICABLE TO EXCAVATORS.--A person who engages
in demolition, excavation, tunneling, or construction--
    (1) May not engage in a demolition, excavation, tunneling, or
construction activity in a state that has adopted a one-call
notification system without first using that system to establish the
location of underground facilities in the demolition, excavation,
tunneling, or construction area;
    (2) May not engage in such demolition, excavation, tunneling, or
construction activity in disregard of location information or
markings established by a pipeline facility operator pursuant to
subsection (b); and
    (3) Who causes damage to a pipeline facility that may endanger
life or cause serious bodily harm or damage to property--
    (A) May not fail to promptly report the damage to the owner or
operator of the facility; and
    (B) If the damage results in the escape of any flammable, toxic,
or corrosive gas or liquid, may not fail to promptly report to other
appropriate authorities by calling the 911 emergency telephone
number.
    (e) PROHIBITION APPLICABLE TO UNDERGROUND PIPELINE FACILITY
OWNERS AND OPERATORS.--Any owner or operator of a pipeline facility
who fails to respond to a location request in order to prevent
damage to the pipeline facility or who fails to take reasonable
steps, in response to such a request, to ensure accurate marking of
the location of the pipeline facility in order to prevent damage to
the pipeline facility shall be subject to a civil action under
section 60120 or assessment of a civil penalty under section 60122.
    (f) LIMITATION.--The Secretary may not conduct an enforcement
proceeding under subsection (d) for a violation within the
boundaries of a state that has the authority to impose penalties
described in section 60134(b)(7) against persons who violate that
state's damage prevention laws, unless the Secretary has determined
that the state's enforcement is inadequate to protect safety,
consistent with this chapter, and until the Secretary issues,
through a rulemaking proceeding, the procedures for determining
inadequate state enforcement of penalties.

E. Advance Notice of Proposed Rulemaking

    On October 29, 2009, PHMSA published an Advance Notice of Proposed
Rulemaking (ANPRM) to seek feedback and comments regarding the
development of criteria and procedures for determining whether states
are adequately enforcing their excavation damage prevention laws, and
for conducting Federal administrative enforcement, if necessary. The
ANPRM also outlined PHMSA's excavation damage prevention initiatives
and described the requirements of the PIPES Act, which authorizes PHMSA
to conduct this rulemaking action. The ANPRM may be viewed at http://www.regulations.gov by searching for Docket ID PHMSA-2009-0192.
Specifically, the ANPRM sought comments on the following subjects:
    1. Criteria for determining the adequacy of state excavation damage
prevention law enforcement programs;
    2. The administrative procedures available to a state for
contesting a notice of inadequacy should it receive one;
    3. The Federal requirements for excavators that PHMSA would be
enforcing in a state that PHMSA has determined to have an inadequate
enforcement program;
    4. The adjudication process that PHMSA would use if PHMSA cited an
excavator for failure to comply with the Federal requirements for
excavators PHMSA establishes through this rulemaking; and
    5. The adequacy of PHMSA's existing requirements for pipeline
operators to participate in one-call organizations, respond to dig
tickets, and perform their locating and marking responsibilities.
    A summary of comments and our response to those comments are
provided later in the document.

F. Notice of Proposed Rulemaking

    This NPRM proposes to respond to the Congressional mandate
specified in Section 2 of the PIPES Act to:
    1. Establish criteria and procedures PHMSA will use to determine
the adequacy of state pipeline excavation damage prevention law
enforcement programs. Such determination is a prerequisite should PHMSA
find it necessary to conduct an administrative enforcement proceeding
against an excavator for violation of the Federal requirements proposed
in this NPRM in the absence of adequate state enforcement of state
excavation damage prevention laws.
    2. Establish an administrative process for states to contest
notices of inadequacy from PHMSA should they elect to do so.
    3. Establish the Federal requirements PHMSA will enforce in states
with inadequate excavation damage prevention law enforcement programs.
    4. Establish the adjudication process for administrative
enforcement proceedings against excavators where Federal authority is
exercised.

G. Summary of the Proposed Rulemaking

A. Standards for Effective State Damage Prevention Enforcement Programs

    This NPRM proposes to establish the criteria by which PHMSA will
evaluate state excavation damage prevention law enforcement programs
for minimum adequacy to protect public safety. PHMSA is seeking
comments on using the following criteria to evaluate the effectiveness
of a state's damage prevention enforcement program:
    1. Does the state have the authority to enforce its state
excavation damage prevention law through civil penalties?
    2. Has the state designated a state agency or other body as the
authority responsible for enforcement of the state excavation damage
prevention law?
    3. Is the state assessing civil penalties for violations at levels
sufficient to ensure compliance and is the state making publicly
available information that demonstrates the effectiveness of the
state's enforcement program?
    4. Does the enforcement authority (if one exists) have a reliable
mechanism (e.g., mandatory reporting, complaint-driven reporting, etc.)
for learning about excavation damage to underground facilities?
    5. Does the state employ excavation damage investigation practices
that are adequate to determine the at-fault party when excavation
damage to underground facilities occurs?
    6. At a minimum, does the state's excavation damage prevention law
require the following?
    a. Excavators may not engage in excavation activity without first
using an available one-call notification system to establish the
location of underground facilities in the excavation area.
    b. Excavators may not engage in excavation activity in disregard of
the marked location of a pipeline facility as established by a pipeline
operator.
    c. An excavator who causes damage to a pipeline facility:
    i. Must report the damage to the owner or operator of the facility
at the earliest practical moment following discovery of the damage;
and,
    ii. If the damage results in the escape of any flammable, toxic, or
corrosive gas

or liquid that may endanger life or cause serious bodily harm or damage
to property, must promptly report to other appropriate authorities by
calling the 911 emergency telephone number or another emergency
telephone number.
    7. Does the state limit exemptions for excavators from its
excavation damage prevention law? A state must provide to PHMSA a
written justification for any exemptions for excavators from state
damage prevention requirements. PHMSA will make the written
justifications available to the public.
    PHMSA may also consider individual enforcement actions taken by a
state in evaluating the effectiveness of a state's damage prevention
enforcement program. PHMSA requests comments on this issue.
    PHMSA invites comments on the proposed criteria. In particular, are
these criteria sufficient to assess the adequacy of state excavation
damage prevention law enforcement programs? Do these criteria strike
the right balance between establishing standards for minimum adequacy
of state enforcement programs without being overly prescriptive?

B. Administrative Process for States

    This NPRM proposes the administrative procedures that would be
available to a state that elects to contest a notice of inadequacy. The
proposed procedures involve a paper hearing where PHMSA finds the
state's excavation damage prevention law enforcement inadequate and
documents the basis for that finding (i.e., following its annual review
of the state's pipeline safety program). Then, the state would have an
opportunity to submit written materials and explanations. PHMSA would
then make a final written determination including the reasons for the
decision. PHMSA proposes to make publicly available all notices,
findings and determinations. The proposed administrative procedures
also provide for an opportunity for the state to petition for
reconsideration of the decision. If the state's enforcement program is
ultimately deemed inadequate, direct Federal administrative enforcement
against an excavator who damaged a pipeline in that state could
proceed. The procedures also give a state the opportunity to
demonstrate at a later time that it has improved its excavation damage
prevention law enforcement program to an adequate level and upon such
showing, request that PHMSA discontinue Federal administrative
enforcement in that state. PHMSA will respond to such requests and
perform an adequacy review in a timely manner and no later than the
next annual review.
    PHMSA invites further comments on these proposed administrative
procedures. In particular, does this process strike the right balance
between Congress' direction to undertake Federal administrative
enforcement, where necessary, while providing a state with a fair and
efficient means of showing that the state's enforcement program is
adequate? PHMSA is proposing to evaluate state excavation damage
prevention law enforcement programs consistent with the criteria
proposed in Section 198.55 below. For states that have been deemed to
have inadequate enforcement programs in their most recent annual
reviews and in accordance with the established process, PHMSA could
conduct Federal administrative enforcement against excavators without
further state process. A state with an inadequate program will have
five years from the date of the finding to make program improvements
that meet PHMSA's criteria for minimum adequacy. A state that fails to
establish an adequate enforcement program in accordance with 49 CFR
198.55 within five years of the finding of inadequacy may be subject to
reduced grant funding established under 49 U.S.C. 60107. The amount of
the reduction will be determined using the same process PHMSA currently
uses to distribute the grant funding; PHMSA will factor the findings
from the annual review of the excavation damage prevention enforcement
program into the 49 U.S.C. 60107 grant funding distribution to state
pipeline safety programs. The amount of the reduction in 49 U.S.C.
60107 grant funding shall not exceed 10% of prior year funding. If a
state fails to implement an adequate enforcement program within five
years of a finding of inadequacy, the Governor of that state may
petition the Administrator of PHMSA, in writing, for a temporary waiver
of the penalty, provided the petition includes a clear plan of action
and timeline for achieving program adequacy.
    Even though the proposed rule does not require states to take any
actions, the states have several incentives for enforcing their own
excavation damage prevention laws. First, states with effective
enforcement programs have lower rates of excavation damages to
underground utilities, including pipelines. Lower damage rates
translate to increased public and worker safety and decreased repair
and outage costs for pipeline operators.
    This proposed rule provides several additional incentives for
states to enforce their own excavation damage prevention laws. First,
in the comments to the ANPRM on this subject, stakeholders expressed
their desire for states to maintain control over their own excavation
damage prevention programs, including the enforcement of damage
prevention laws. Stakeholders agree that damage prevention is a local
and state issue and would prefer to avoid Federal involvement in
enforcement. Second, this NPRM proposes to reduce PHMSA base grant
funding for state pipeline safety programs if states do not implement
effective enforcement programs within five years of findings of
inadequacy (see proposed section 198.53). The potential reduction in
grant funding will provide incentive to the state to address
enforcement gaps in the excavation damage prevention laws and programs.
PHMSA specifically requests comments on the adequacy of these
incentives and the need for additional incentives for states to enforce
their own excavation damage prevention laws.
    Currently, states are reevaluating their pipeline safety laws.
Several states, including Washington and Maryland, made significant
changes to their damage prevention laws subsequent to the ANPRM on this
subject. In addition, the following states are in various stages of
legislative efforts to incorporate effective enforcement into their
laws (these efforts range from stakeholder meetings, to building
support for drafting legislation, to actually having a bill before the
state legislatures): California, Ohio, Michigan, Alabama, Mississippi,
Montana, Florida, Kentucky, and Delaware.

C. Federal Excavation Standard

    This NPRM proposes to add a new Part 196 to Title 49, Code of
Federal Regulations that prescribes standards for excavators to follow
in conducting excavation activities in areas where underground gas or
hazardous liquid pipelines may be located and the administrative
enforcement process to address violations of the standards. The Federal
requirements PHMSA is proposing to be contained in this Part are the
standards that PHMSA would enforce against excavators in states
determined to have inadequate damage prevention law enforcement
programs pursuant to the procedures proposed in this rulemaking. The
standard that PHMSA is proposing are effectively equivalent to the
standard in 49 U.S.C. 60114(d) which states:

    (d) Prohibition applicable to excavators.--A person who engages
in demolition, excavation, tunneling, or construction--
    (1) May not engage in a demolition, excavation, tunneling, or
construction

activity in a state that has adopted a one-call notification system
without first using that system to establish the location of
underground facilities in the demolition, excavation, tunneling, or
construction area;
    (2) May not engage in such demolition, excavation, tunneling, or
construction activity in disregard of location information or
markings established by a pipeline facility operator pursuant to
subsection (b); and
    (3) Who causes damage to a pipeline facility that may endanger
life or cause serious bodily harm or damage to property--
    (A) May not fail to promptly report the damage to the owner or
operator of the facility; and
    (B) If the damage results in the escape of any flammable, toxic,
or corrosive gas or liquid, may not fail to promptly report to other
appropriate authorities by calling the 911 emergency telephone
number.

    The NPRM proposes to add new excavation standards that include
requirements to use an available one-call system before digging, to
excavate with proper regard for location information or markings
established by a pipeline operator, to promptly report any damage to
the pipeline operator, and to report any emergency release of hazardous
products to appropriate authorities by calling 911 immediately. PHMSA
is seeking comment in this NPRM on whether or not it should establish
an upper limit on the time frame to report any damage to pipeline
operators, such as two hours following discovery.

D. Adjudication Process for Excavators

    PHMSA is proposing to use the same adjudication process established
for pipeline safety violations set forth in 49 CFR Part 190. Under this
process, excavators would have the same right as pipeline operators to:
Receive written notice of the allegations including a description of
the factual evidence the allegations are based on, file a written
response to the allegations, request a hearing, be represented by
counsel if the excavator so chooses, examine the evidence, submit
relevant information and call witnesses on the excavator's behalf, and
otherwise contest the allegations of violation. PHMSA proposes that
hearings would be held as they are now for pipeline operators at one of
PHMSA's regional offices or via teleconference. An excavator would also
have the same opportunity as pipeline operators to petition for
reconsideration of the agency's administrative decision. Judicial
review of the final agency action would be available to the same extent
it is available to a pipeline operator.
    PHMSA invites further comments on the adjudication process for
excavators. In particular, is the process too formal in the sense that
excavators contesting a citation would have to prepare a written
response for the record and potentially appear before an administrative
hearing officer? Is the process not formal enough in the sense that it
does not provide for formal rules of evidence, transcriptions, or
discovery? Or does this process strike the right balance by being
informal enough to be efficient and at the same time providing enough
formality that excavators feel the process is fair and their ``due
process are maintained''?

E. State Base Grant

    PHMSA already conducts annual program evaluations and certification
reviews of state pipeline safety programs. PHMSA would also conduct
annual reviews of state excavation damage prevention law enforcement
programs. A state that fails to establish an adequate enforcement
program in accordance with 49 CFR 198.55 within five years of the
finding of inadequacy may be subject to reduced grant funding
established under 49 U.S.C. 60107. PHMSA would factor the findings from
the annual review of the excavation damage prevention enforcement
program into the 49 U.S.C. 60107 grant funding distribution to state
pipeline safety programs. The amount of the reduction in 49 U.S.C.
60107 grant funding would not exceed 10 percent of prior year funding.
If a state fails to implement an adequate enforcement program within
five years of a finding of inadequacy, the Governor of that state may
petition the Administrator of PHMSA, in writing, for a temporary waiver
of the penalty, provided the petition includes a clear plan of action
and timeline for achieving program adequacy. PHMSA would use the
proposed 49 CFR 198.55 criteria to evaluate the effectiveness of a
state's excavation damage prevention enforcement program.

IV. Analysis of Public Comments on the ANPRM

    PHMSA received comments from 39 organizations and 152 individuals,
including:
     Associations representing pipeline operators (trade
associations)
    [cir] The American Gas Association (AGA)
    [cir] The American Petroleum Institute (API)
    [cir] The American Public Gas Association (APGA)
    [cir] The Association of Oil Pipelines (AOPL)
    [cir] The Interstate Natural Gas Association of America (INGAA)
    [cir] The Texas Pipeline Association (TPA)
    [cir] The Texas Pipeline Safety Coalition (TPSC)
    [cir] The Texas Oil and Gas Association (TxOGA)
     Transmission and distribution pipeline companies
    [cir] Atlanta Gas Light Resources (AGL)
    [cir] Baltimore Gas and Electric Company (BGE)
    [cir] CenterPoint Energy
    [cir] El Paso Pipeline Group (EPPG)
    [cir] LDH Energy Pipeline, L.P.
    [cir] Marathon Pipeline
    [cir] Michigan Consolidated Gas Company
    [cir] MidAmerican Energy Company
    [cir] Nicor Gas
    [cir] Northern Natural Gas Company
    [cir] Paiute Pipeline
    [cir] Panhandle Energy
    [cir] San Diego Gas & Electric
    [cir] Southern California Gas Company
    [cir] Spectra Energy Transmission
     The National Association of Pipeline Safety
Representatives (NAPSR)
     Individual state pipeline regulatory authorities
    [cir] The Florida Public Service Commission
    [cir] The Minnesota Office of Pipeline Safety
    [cir] The Missouri Public Service Commission (PSC)
    [cir] The Public Utilities Commission of Ohio (PUCO)
    [cir] The Tennessee Regulatory Authority (TRA) excavator contractor
associations
    [cir] The Associated General Contractors of America (AGC)
    [cir] The Associated General Contractors of Texas (AGC of Texas)
    [cir] The National Utility Contractor Association (NUCA)
    [cir] The Wisconsin Underground Contractors Association (WUCA)
     One-call organizations
    [cir] Joint Utility Locating Information for Excavators, Inc.
(JULIE)
    [cir] GulfSafe
     A utilities locating service
    [cir] The United States Infrastructure Corporation (USIC)
     A local/regional damage prevention council
    [cir] The Greater Chicago Damage Prevention Council
     A citizens' interest group
    [cir] The Pipeline Safety Trust (PST)
     The Association of American Railroads
     An excavation equipment manufacturer
     154 individuals, 145 of whom submitted substantially
similar to comments submitted by excavation contractors.

    To a substantial extent, the comments supported the need for this
rulemaking. When a pipeline is struck during an excavation project, not
only is the public put at risk and energy supplies potentially
disrupted, but the excavator personnel are also at risk of serious
injury or even death. In the ANPRM, PHMSA posed some specific questions
related to state excavation damage prevention programs. Many comments
received were general to the entire ANPRM and others addressed specific
sections and content of the ANPRM. The general comments and comments
related to specific sections of the ANPRM are addressed individually
below.
    Many commenters addressed the concept of the questions, as was
intended. Others addressed the questions as they were deemed to apply
currently to specific state damage prevention (SDP) programs.
Additionally, many comments received are outside the scope of the
proposed regulatory changes. Many of the comments were to the effect
that PHMSA enforcement should be applied to all underground utilities.
For example, NAPSR, the Missouri Public Service Commission, AGA, and
several pipeline operators commented that any rulemaking language
should clearly specify the scope to which it applies and that if PHMSA
seeks to expand its enforcement authority outside of pipeline matters,
its legal authority to do so should be explained. While commenters
believe that many states will benefit from broadening their damage
prevention programs beyond pipelines to include other underground
utilities, PHMSA's authority does not extend beyond pipeline facilities
and, as defined in the PIPES Act, excavators under certain specified
conditions.
    Federal pipeline safety regulations require gas and hazardous
liquid pipeline operators to have excavation damage prevention programs
in place to protect their pipelines. These regulations require pipeline
operators to participate in state one-call systems and enable PHMSA
enforcement against regulated pipeline operators who fail to comply
with applicable locating and marking requirements, including situations
where their pipelines are damaged by improper excavation activities of
the pipeline operator or its contractors (either excavating or locating
contractors).

General Comments

Involve All Stakeholders in This Rulemaking Process

    A number of comments supported PHMSA's approach of involving all
stakeholders in this rulemaking process. Several commenters, including
NAPSR, Missouri Public Service Commission, INGAA, and EPPG commented
that beyond reviewing the written comments, PHMSA should conduct public
meetings on this topic, and should lead open and on-going discussions
of the issues as they arise, through the most appropriate venues. They
noted that public meetings would allow all stakeholder groups to
present their viewpoints and hear similar presentations from others,
thus providing an effective means of gathering additional information
that would assist PHMSA in developing standards for auditing the
adequacy of states' excavation damage prevention enforcement programs
and in issuing an effective and practicable rulemaking. NAPSR
especially wants to be involved in the rulemaking process.

Response

    PHMSA recognizes the value of open and ongoing discussions related
to this rulemaking, and, therefore, took the optional step of
publishing an ANPRM in October 2009 to provide information to and
solicit feedback from stakeholders. PHMSA also conducted a meeting with
NAPSR to discuss NAPSR's position and concerns on the issues identified
in the ANPRM. The minutes from the meeting are available on the ANPRM
docket (http://www.regulations.gov, Docket ID PHMSA-2009-0192). PHMSA
does not intend to hold public meetings related to this rulemaking
after the NPRM is published. As an alternative, PHMSA will post a
recorded presentation pertaining to the NPRM on the PHMSA Web site. The
recorded presentation will provide an overview of the proposed rule and
encourage viewers to read and comment on the NPRM.

Federal Administrative Enforcement

    USIC Locating Services, API, AOPL, INGAA, and several pipeline
operators commented that PHMSA should develop the necessary processes
and procedures and should not hesitate to use the Federal
administrative enforcement authority granted by Congress to enforce
excavation damage prevention laws where state enforcement programs are
determined to be inadequate. They consider it to be in the public's
best interest and that a key element of an effective excavation damage
prevention program is enforcement action against excavators that do not
follow the one-call laws, and that without enforcement, there is little
incentive for excavators to comply with one-call laws. However, AGC,
API and AOPL commented that Federal administrative enforcement should
not be permanent. It should only last as long as necessary to ensure
the state achieves a successful enforcement program. They noted that
PHMSA should reserve enforcement to only those specific circumstances
permitted by law when a state fails to meet the test for adequate
enforcement of its excavation damage prevention laws. They contended
that where strong and effective state excavation damage prevention laws
and enforcement programs exist, PHMSA need not and should not exert its
Federal authority lest a costly, potentially inefficient layer of
Federal oversight result.
    Conversely, WUCA commented that all enforcement of state excavation
damage prevention laws should be at a state or local level and that the
Federal Government should not be involved at all in enforcement. WUCA
commented that excavators who damage underground facilities already pay
for ``at fault'' damages and can be removed from bid lists for specific
utilities. They consider free enterprise to the best ``enforcement''
available and want no Federal Government involvement, and prefer, at
most, state enforcement.
    JULIE, commented that it would seem contradictory that a particular
state's excavation damage prevention enforcement program could be
``taken over'' by an agency (i.e., PHMSA) whose jurisdiction is limited
solely to pipelines. JULIE suggested that PHMSA limit itself to
providing assistance to state excavation damage prevention systems to
help them improve enforcement of state excavation damage prevention
laws.

Response

    Congress provided that PHMSA undertake this rulemaking action in
Section 2 of the PIPES Act. The PIPES Act requires that PHMSA must
determine that a state's excavation damage prevention law enforcement
program is inadequate before PHMSA may take enforcement action for a
violation by an excavator occurring in that state. Thus, PHMSA cannot
take enforcement actions against excavators in states determined by
PHMSA to have adequate enforcement programs. PHMSA's goal is to
encourage states to implement adequate enforcement programs. Federal
administrative enforcement is not intended to be the

primary means of pipeline damage prevention enforcement and is instead
intended to provide incentives for states to develop and implement
adequate programs and serve as a backstop in states with inadequate
programs.

State Program Evaluation Should Include an Appeals Process

    Several commenters noted that the process for determining whether a
state's enforcement of its excavation damage prevention law is
``inadequate'' should contain an appeals process and timeframe by which
PHMSA needs to respond to appeals. Northern Natural Gas commented that
the rulemaking should provide for an arbitration element when there is
a dispute over a state's enforcement program, and that the state should
be allowed an opportunity to improve its excavation damage prevention
program if PHMSA determines that the program does not meet the minimum
Federal requirements.

Response

    This NPRM proposes the administrative process by which a state may
contest a notice of inadequacy from PHMSA. Additionally, states deemed
to have inadequate excavation damage prevention law enforcement
programs will have the opportunity to enhance their programs and to
demonstrate their adequacy through periodic reviews. Programs PHMSA
previously determined to be inadequate may later be found adequate if a
state takes steps to implement an effective enforcement program (see
proposed Subpart D of Part 198).

Minimum Damage Prevention Program Requirements

    API, INGAA, several pipeline operators, and three Texas pipeline
associations commented that PHMSA should establish clear, well-defined,
and consistent minimum criteria for determining the adequacy of
acceptable state excavation damage prevention laws and programs. API,
AOPL and Nicor commented that the fundamental minimum requirements that
should apply in evaluating state programs are that all excavators,
including state agencies and municipalities: (1) Use state one-call
systems prior to excavation, (2) follow location information or
markings established by pipeline operators, (3) report all excavation
damage to pipeline operators, and (4) immediately notify emergency
responders by calling 911 when excavation damage results in a release
of pipeline products.
    AGA and several pipeline operators commented that PHMSA should keep
the overall review process and the criteria for determining the
adequacy of state programs as simple as possible. They noted that
PHMSA's evaluation of the adequacy of states' excavation damage
prevention programs should be based upon a relatively short list of
elements. They also noted that PHMSA will likely discover that few
states have an excavation damage prevention program that would clearly
meet all or even most of the criteria listed in the ANPRM.

Response

    PHMSA agrees that the criteria for evaluating the adequacy of state
excavation damage prevention law enforcement programs should be clear,
well-defined, consistent, and as simple as possible. These criteria
helped guide development of the criteria proposed in this NPRM. PHMSA
seeks comments on these criteria.

PHMSA Should Encourage States To Implement and Enforce Effective Damage
Prevention Laws

    Many commenters, including the AGC, API, AOPL, INGAA, state
regulatory agencies and many individual pipeline operators, agree with
PHMSA's goal of encouraging states to implement, maintain and enforce
effective excavation damage prevention laws. They encouraged PHMSA to
move forward promptly to issue a final rule to accomplish the objective
set forth in the ANPRM of promoting better, more effective enforcement
of state excavation damage prevention laws. The NUCA and several
pipeline trade associations recognized that PHMSA's jurisdiction is
limited to gas and hazardous liquid pipelines. They commented, however,
that this regulation's influence on how state authorities adjust their
programs and enforcement practices to protect all underground
facilities will be significant, and that addressing enforcement in a
balanced and comprehensive manner in the proposed rule will facilitate
the entire process.
    Three Texas pipeline associations suggested that standards
consistent with key aspects of the Common Ground Alliance Best
Practices should be adopted by states to ensure the scope of their
enforcement programs are adequate. They noted those key provisions
include tolerance zone, positive response, due care in excavating, and
reporting damages.

Response

    As noted, PHMSA supports effective state excavation damage
prevention law enforcement to protect pipelines. PHMSA strongly
believes that individual states should retain the primary
responsibility to enforce their excavation damage prevention laws
effectively. The proposed regulations do not conflict with the best
practices established by the Common Ground Alliance.

Apply Enforcement to All Excavators--No Exemptions

    Several respondents, including NUCA and EPPG, commented that state
excavation damage prevention laws and enforcement processes should
apply to pipeline operator ``in-house'' and contractor excavators. They
noted that ``first-party'' (facility operators) and ``second-party''
(operator contractor) damages, although often unreported, carry the
same consequences as pipeline damages caused by landscapers, home
owners, and other ``third-party'' excavators.
    AGA and several pipeline operators noted that the term
``excavator'' is used throughout the ANPRM but that it was not clear
what constitutes an excavator or excavation, thus clarification is
needed.
    NUCA, API, AOPL, and several pipeline operators commented that the
scope of enforcement for all programs, Federal and state, should
encompass all excavators, including state agencies, municipalities,
counties, parishes, agricultural entities, and railroads. They believe
that state law should require all excavators to call the one-call
center and request facilities to be located and marked before digging,
and that the exclusion of a category of excavator should be considered
a basis for PHMSA regulation and direct enforcement.

Response

    PHMSA agrees that state excavation damage prevention laws and
enforcement should apply to all excavators, including pipeline
operators and their contract excavators and locators. Current Federal
pipeline safety regulations at 49 CFR 192.614 and 195.442, require gas
and hazardous liquid pipeline operators, respectively, to comply with
specific excavation damage prevention requirements. PHMSA and its state
partners have authority to enforce these regulations against pipeline
operators and can pursue enforcement action against pipeline operators
when an operator's employees or its contractors, including

excavators and locators, violate the regulations.
    PHMSA also agrees that, in general, exemptions of categories of
excavators from state excavation damage prevention laws can be
problematic because exempt excavators can damage underground utilities.
However, some exemptions may be justifiable in some states, especially
where substantiated by data (e.g., Virginia's exemptions for VDOT).
States are ultimately responsible for establishing their own excavation
damage prevention laws.
    Under this proposed rule, only homeowners using hand tools, as
opposed to than mechanized excavating equipment, on their own property
are exempt from Federal administrative enforcement action. All other
excavators would be subject to Federal enforcement in a state PHMSA
deems to have an inadequate enforcement program, regardless of an
excavator's exemption status under that state's law.

Fines and Penalties

    Many commenters acknowledged that the use and application of civil
penalties is necessary as an effective tool to deter violations of
state excavation damage prevention laws that could lead to pipeline
damage. Comments also indicated that civil penalties should be applied
at an appropriate level to achieve such deterrence, including the
escalation of fines and penalties for repeat offenders. Northern
Natural Gas and others agreed that a responsible state agency should
have the ability to levy fines and civil penalties similar to the
Federal maximums. However, several commenters, including PUCO, noted
that PHMSA could clarify the maximum civil penalties PHMSA will require
for a state program to be determined ``adequate.'' Additionally, some
commented that education and training should be considered in lieu of
fines and penalties for minor violations.

Response

    PHMSA is not proposing a specific penalty amount or schedule as a
criterion in determining the adequacy of state excavation damage
prevention law enforcement programs. However, state penalty levels
should be sufficient to deter violations. PHMSA will review state
enforcement records on a state-by-state basis.

Clarification of Terminology and Parties Subject to PHMSA Enforcement
Action

    Several comments asked for clarification of some terminology used
in the ANPRM or, in some cases, clarification of the scope of the
rulemaking. For example, WUCA asked for clarification of where
enforcement would start--with gas mains or service lines or both. PUCO
and some gas pipeline operators asked that the term ``incident'' be
clarified. Is it as defined in 49 CFR Sec.  191.3? Does it mean only
incidents reportable under the applicable Federal or state law? Or,
does it mean every event wherein damage occurs, regardless of the
magnitude or consequences? PUCO also commented that the definition and
implications of a state program designation of ``nominally adequate''
need to be clarified.
    NAPSR asked what ``available'' means, regarding the question in the
ANPRM ``Are records of investigations and enforcement available to
PHMSA?'' Additionally, NAPSR asked for clarification on the terms
``reasonable care'' and ``timely.'' Other terms noted for clarification
include: all excavation damage, damage, incident, excavation, and
excavator.

Response

    This rulemaking applies to all excavators and excavation activities
that affect any gas or hazardous liquid pipelines subject to the
pipeline safety laws in 49 U.S.C. 60101 et seq., including gathering,
transmission, and distribution pipelines (including gas mains and
service lines). Those terms are defined in existing laws and
regulations. PHMSA will retain the discretion to determine if
enforcement action is necessary on a case-by-case basis. In response to
commenters' concerns, PHMSA has taken care to clearly define terms in
this regulation.

Complaint-Based Enforcement Process

    Centerpoint Energy suggested a ``complaint-based'' process in which
a pipeline operator or an excavator can file a complaint to petition
for enforcement actions by the state, or to petition PHMSA to review
the adequacy of the state's enforcement process. Centerpoint expressed
the view that PHMSA should only initiate enforcement actions upon
receipt of filed complaints and that one allegation in each complaint
would have to be that the state's enforcement process is not adequate
to prevent repeated violations. Centerpoint would prefer that the state
could intervene as an interested party and dispute the claim and PHMSA
would have to conduct a hearing and require specific findings
concerning what aspects of the state's enforcement efforts were
inadequate. Centerpoint considers that findings of inadequacy would
relieve the complaining parties from the duty to resolve disputes at
the state level until the state resolved those issues of inadequacy.
Centerpoint commented that costs for PHMSA could be assessed to the
losing party or split between the two.
    Centerpoint commented that a complaint-based process would allow
the operator, excavator, the state agency and PHMSA to direct time and
resources where they are most needed. Centerpoint believes that a
pipeline operator is in the best position to determine when an
excavator is willfully ignoring the excavation damage prevention
program and will likely continue to do so in spite of any actions the
operator takes. They also consider that an operator can collect
evidence to show it was unable to change excavator behavior and that
punitive enforcement is needed, and to show that Federal administrative
enforcement is necessary because a state's enforcement efforts were not
adequate to affect the behavior of the excavators. Similarly,
Centerpoint comments that excavators should be able to file complaints
against operators that will not respond to locate requests or that
consistently do a poor job of locating their facilities.

Response

    PHMSA proposes to use the criteria and procedures proposed in this
NPRM to assess the adequacy of state excavation damage prevention law
enforcement programs. Once those evaluations are complete, PHMSA will
determine, on a state-by-state basis, if Federal administrative
enforcement action is necessary in states deemed by PHMSA to have
inadequate enforcement programs. Under Sec.  198.55, PHMSA would
evaluate the state enforcement program in its entirety, but may also
consider individual enforcement actions taken by a state where
warranted. PHMSA may become aware of a potential need for Federal
administrative enforcement through a variety of mechanisms, including
notifications of reportable incidents, instances of a serious and
recurring nature where excavators fail to comply with the Federal
requirements proposed in this NPRM, or by other means, including
complaints. PHMSA requests comments on ways or mechanisms that it can
utilize to become aware of these incidents. PHMSA believes it is
important to retain flexibility in the process used to make decisions
concerning the use of Federal administrative enforcement authority.
PHMSA will only conduct enforcement in states deemed to have inadequate
enforcement programs in accordance with the criteria outlined in this
NPRM.

Evaluate Enforcement Programs, Not Individual Enforcement Actions

    INGAA and others commented that the standards and procedures for
adequacy proceedings should be directed toward evaluating state
enforcement programs, not specific enforcement actions. INGAA holds
that applying adequacy standards and procedures to individual
enforcement actions invites selective PHMSA involvement contrary to
vesting primary enforcement responsibility with the states. Similarly,
and consistent with using adequacy proceedings to examine programs
instead of decisions, INGAA commented that PHMSA should specify that
inadequacy findings are not retroactive--that a finding of inadequacy
should not be used to revisit and alter a state's enforcement findings
and sanctions.

Response

    In determining a state program's adequacy, PHMSA would evaluate a
state's overall damage prevention enforcement program, but may evaluate
past specific state enforcement actions during the evaluation process.
PHMSA did consider a system of addressing the adequacy of state
enforcement programs on an incident-by-incident basis instead of
through an annual review of the state enforcement programs. Under that
scenario, upon determining that enforcement action in a given incident
may deter future incidents, PHMSA would assess the state's ability to
conduct effective enforcement in that particular incident and proceed
with enforcement action if PHMSA found the state program inadequate.
However, PHMSA believes that such a system would be inefficient and
administratively burdensome and that an annual review may be more
appropriate. PHMSA seeks comment on this issue.

Federal Funding

    API, AOPL, TRA and WUCA commented that PHMSA should continue its
assistance to state agencies seeking to develop and enforce effective
excavation damage prevention programs through grants and other support
mechanisms. They noted that this assistance should include providing
quantitative analyses that demonstrate the effectiveness of existing
excavation damage prevention programs and developing incentives to
ensure that agencies and other stakeholders in the states cooperate in
these efforts. TRA went on to comment that a state agency that is
making a concerted effort to make changes to its excavation damage
prevention law to meet the nine elements should not be punished by
having its level of funding decreased.
    PUCO was concerned that changes in how PHMSA evaluates state
excavation damage prevention programs could result in a designation of
a program being ``inadequate'' or ``nominally adequate,'' and that such
a designation may affect funding and ultimately gas pipeline safety.
PUCO commented that despite the stated assurance in the ANPRM that
funding for the development and implementation of excavation damage
prevention programs is ``intended to be in addition to, and independent
of existing Federal funding of the state pipeline safety programs,''
the implications of designation of ``inadequate'' or ``nominally
adequate'' on a state excavation damage prevention program's current
funding is not addressed. PUCO commented that it would be beneficial
for PHMSA to describe whether and how state funding for the gas
pipeline safety program will be affected by a determination of
``inadequate'' or ``nominally adequate.''
    The three Texas pipeline associations noted that PHMSA should
evaluate the adequacy of state programs in a similar fashion to that of
PHMSA's existing state program evaluation. They commented that a
state's annual program performance evaluation could result in a reward
of additional grant monies or a penalty of a reduction in grant moneys
based on PHMSA's excavation damage prevention law enforcement program
assessment, to a greater degree than is currently practiced.

Response

    PHMSA intends to continue its support of states seeking to develop
and enforce effective excavation damage prevention programs through
grants and other means. PHMSA has undertaken a variety of both
qualitative and quantitative initiatives that demonstrate the
effectiveness of existing state excavation damage prevention programs.
These initiatives are described in the ANPRM pertaining to this
rulemaking (http://www.regulations.gov, Docket ID PHMSA-2009-0192).
When evaluating a state's overall pipeline safety program, PHMSA will
continue to consider the extent to which a state has implemented an
effective excavation damage prevention enforcement program. The effect
on base grant funding of a declaration that a state's excavation damage
prevention enforcement program is inadequate is proposed in this NPRM.

State Authority for Interstate Pipeline Operators

    Paiute Pipeline and three Texas pipeline associations submitted
comments regarding how interstate pipeline operators are expected to be
treated under a state's excavation damage prevention program and noted
that PHMSA should provide clarification in this regard. The issue they
noted is whether the operator is treated as an excavator or as an
operator and whether state agencies have the authority to enforce state
excavation damage prevention standards on interstate pipeline operators
or on excavators working near interstate pipelines. They consider this
to be especially the case for states that have not applied for, or been
granted, interstate agent status for natural gas and/or hazardous
liquid lines. Paiute commented that authority for inspection and
enforcement of interstate pipelines pursuant to Federal regulations
should remain with PHMSA, and that in states that don't have interstate
pipeline inspection and enforcement authority, the state should treat
an interstate pipeline as an excavator, not a pipeline operator.
    The three Texas pipeline associations commented that there should
be a process for states to clarify that they have the ability to
enforce state excavation damage prevention standards with regard to
interstate pipelines, through a statutory change or through a
Memorandum of Understanding between PHMSA and the states when certain
program standards are met. Spectra Energy commented that the existing
enforcement process in 49 CFR Part 190 should continue to be applied to
interstate pipeline operators.

Response

    States that have an annual certification under 49 U.S.C. 60105 have
authority to regulate the intrastate pipelines in that state covered by
the certification. States that have an interstate agent agreement under
49 U.S.C. 60106 may conduct inspections and investigations on
interstate pipelines, but must refer any alleged violations on
interstate pipelines to PHMSA for enforcement action. While states are
generally preempted from establishing or enforcing safety standards for
interstate pipelines, 49 U.S.C. 60104 contains a specific provision
that allows a state's pipeline damage prevention one-call program to
apply to interstate pipelines as well as intrastate pipelines.
    Accordingly, all excavators and pipeline operators in a certified
state are

generally subject to the requirements of that state's excavation damage
prevention laws (except when explicitly exempted by state law). The
applicability of excavation damage prevention requirements within a
state is determined by that state's law. Under the provisions included
in this NPRM, state excavation damage prevention laws will continue to
be enforced as specified by state laws except when PHMSA deems a
state's enforcement program inadequate. In that case, PHMSA proposes to
enforce the Federal requirements established by this rulemaking against
excavators in that state who fail to comply with the Federal
requirements. Regardless of the status of a state's damage prevention
program, PHMSA is proposing to retain its existing enforcement
authority over pipeline operators and will continue to enforce the
requirements related to excavation damage prevention (49 CFR 192.614
and 195.442) for pipeline operators it regulates.

Model Programs

    NAPSR, Missouri PSC, AGA and several pipeline operators noted that
care should be exercised about urging states to adopt concepts of what
a ``model'' excavation damage prevention program should be. They
cautioned that PHMSA should be open-minded in its review of state
programs, allow for alternate approaches for damage investigations, and
not have preconceived ideas on what an effective state excavation
damage prevention program should include. AGA and several operators
noted that PHMSA should avoid taking a prescriptive approach on the
overall review of the state's excavation damage prevention enforcement
process. They suggested that PHMSA should adopt a holistic and data-
driven approach to adequacy assessment. For a state with documented
success at excavation damage prevention, compliance with specific PIPES
Act criteria should be at most a basis for suggested improvement. They
noted that a state program should never be deemed inadequate solely
because it did not meet all of these criteria.
    NAPSR noted that depending on how its proposed provisions are
interpreted, a program such as the one apparently envisioned by PHMSA
in the ANPRM could be burdensome and costly. NAPSR noted that PHMSA
should not presume that states can or will readily change their laws in
response to Federal initiatives, and should be mindful of unintended
consequences that may arise upon re-opening the existing state law to
further amendments. NAPSR stated that it is likely that if onerous
provisions are adopted in the proposed rule, some states will simply
defer to Federal administrative enforcement, in which case NAPSR
expects PHMSA will undertake every action it would otherwise expect a
state to perform.
    API and AOPL commented that state excavation damage prevention
program evaluations should be based primarily on the effectiveness of
the overall programs in place and allow for flexibility in the
statutory or regulatory language. They noted, for example, a state
program may be considered adequate if it has met the fundamental
requirements described in the introduction, but failed to meet other
program elements required by PHMSA, as long as the state can
demonstrate overall program effectiveness. They consider that an
excavation damage prevention program that establishes a generally
acceptable baseline should provide an objective measuring stick.
    Panhandle Energy commented that a template or recommended practice
for enforcement of excavation safety is required, so that both PHMSA
and the states have a clear understanding of the requirements, before
any program evaluation takes place.

Response

    As noted, PHMSA's goal is to provide incentives to states to
develop and implement effective excavation damage prevention and
enforcement programs. PHMSA believes there are some fundamental
components of effective state enforcement programs. For example, an
adequate enforcement program requires, at a minimum, the existence of
statutory enforcement authority that includes civil penalties for
violations and the use of that authority. The criteria for evaluating
state enforcement programs proposed in this NPRM address those
fundamental components (see proposed section 198.55).

Evaluate the Entire State Program

    NUCA commented that PHMSA should evaluate each state's excavation
damage prevention program as a whole. Even if thorough enforcement
exists in a particular state, if the program itself does not adequately
address the nine elements of an effective excavation damage prevention
program, the entire program itself may be inadequate. If a state's
excavation damage prevention program and enforcement practices were to
focus exclusively on excavator responsibilities, that program is not
fully addressing excavation damage prevention. AGA, APGA, and several
pipeline operators commented that for a state to have a documented
excavation damage prevention program alone is not enough; it is
critical for the state agency to have the resources and the incentive
to exercise its authority, when necessary.
    In this regard, NAPSR commented that an important factor to
consider in assessing the overall adequacy of a state excavation damage
prevention program would be the relative weight given to the various
proposed individual assessment factors listed in the ANPRM. NAPSR
noted, for example, that enforcement of excavation damage prevention
laws has been shown to be an essential element of a successful
excavation damage prevention program. The issuance of appropriate civil
penalties has been a demonstrated deterrent to non-compliant behavior.
When assessing the adequacy of excavation damage prevention programs,
this factor could be given a heavier weight than, for example,
exempting certain parties who perform less risky excavations.
Similarly, APGA commented that some of the assessment factors should
receive more weighting than others and that weighting should be
discussed with the affected parties. APGA noted that the ANPRM is a
good start in opening a dialogue with the affected public, industry and
state governments.
    With regard to weighting the assessment factors, AGA commented that
the most important criteria are the ones involving timely reporting of
pipeline damages, a universal requirement for all parties to notify the
one-call center prior to excavation, establishment of a single agency
responsible for oversight of excavation damage prevention laws, and an
effective enforcement process. AGA noted that the list of criteria
listed in the ANPRM appears thorough, but how the criteria are weighted
and actually evaluated is open to several different approaches.
    Michigan Consolidated Gas commented that consideration should be
given to states that are working on revising their state laws.

Response

    Effective excavation damage prevention law enforcement is critical
to an effective excavation damage prevention program, but enforcement
is just one component of an effective program. PHMSA has undertaken
several efforts to document state excavation damage prevention programs
in their entirety. Information regarding those efforts is available at
http:// primis.phmsa.dot.gov/comm./

damagepreventionsummary.htm. However, the PIPES Act states:

    ``(f) LIMITATION.--The Secretary may not conduct an enforcement
proceeding under subsection (d) for a violation within the
boundaries of a state that has the authority to impose penalties
described in section 60134(b)(7) against persons who violate that
state's damage prevention laws, unless the Secretary has determined
that the state's enforcement is inadequate to protect safety,
consistent with this chapter, and until the Secretary issues,
through a rulemaking proceeding, the procedures for determining
inadequate state enforcement of penalties.''

    While evaluating state excavation damage prevention programs in
their entirety is part of the annual review of a state's overall
pipeline safety program performed by PHMSA in connection with the state
grant process, this proposed rulemaking is focused solely on the
enforcement component. In this NPRM, PHMSA has proposed the criteria
for evaluating state excavation damage prevention law enforcement
programs.
    PHMSA does not propose to weight the criteria used in evaluating
state excavation damage prevention law enforcement programs. Weighting
the criteria could create an overly-prescriptive set of criteria. PHMSA
believes the proposed criteria are simple enough to not warrant a
specific scoring or weighting method. PHMSA specifically asks for
comments on whether it should weight the criteria, how the critieria
might be weighted, and the rationale for weighting the criteria in
evaluating state excavation damage prevention law enforcement programs.
    Evaluation of state enforcement programs will pertain to state laws
and regulations in effect at the time of evaluation. PHMSA believes
that states should have the opportunity to demonstrate improvements in
their enforcement programs and petition PHMSA for reevaluation of their
programs as necessary and appropriate.

Damage Reporting

    Many commented that they do not support reporting all pipeline
damages as this will create an unnecessary burden on the operator, the
state, and PHMSA. Conversely, Northern Natural Gas commented that
excavators should be required to report all pipeline damage to the
affected pipeline operator.

Response

    This proposed rulemaking does not address requirements for damage
reporting by pipeline operators. However, the reporting of damages that
provides enough detail for analysis and resource allocation is critical
in developing effective excavation damage prevention programs because
inadequate reporting will result in a failure to investigate incidents
that should be investigated. Therefore, PHMSA encourages all states to
develop effective excavation damage reporting requirements. The CGA
Damage Information Reporting Tool (DIRT) is an effective means of
collecting data on damages to pipelines and other underground
facilities. This is a voluntary filing requirement that can assist in
the collection of data on damages. The data is made available to the
Federal government, states and the public by the CGA. As provided in
the PIPES Act, this proposed rulemaking requires an excavator who
causes damage to a pipeline facility to report the damage to the owner
or operator of the facility promptly.

Perform Annual Reviews Only for State Enforcement Programs Deemed
Inadequate

    AGA and several pipeline operators commented that annual excavation
damage prevention program reviews are not necessary for those states
with adequate programs. They noted that it would be reasonable for
PHMSA to establish a five-year review cycle for those states. Their
basis is that a state's overall program will change minimally over the
course of a year and that an annual audit of every program seems
unnecessary. From the standpoint of administrative efficiency, it would
be far better for PHMSA to lengthen its review cycle for programs found
adequate after an initial audit, and focus its resources on the
programs it found inadequate or adequate subject to specific corrective
action. PHMSA should only perform annual reviews for states found to
have a ``nominally adequate'' or inadequate program so that these
states have the opportunity to have their status re-evaluated to
identify areas for improvement and additional emphasis.
    JULIE, Inc. commented that there appears to be no probationary
period or other opportunity for states to improve upon PHMSA's
recognized ``deficiencies'' prior to PHMSA undertaking enforcement
actions.

Response

    PHMSA agrees that resources and attention should be focused on
state excavation damage prevention law enforcement programs that are
deemed inadequate. However, PHMSA proposes that all SDP enforcement
programs be evaluated concurrently with PHMSA's annual state pipeline
safety program evaluations, or at the request of states as appropriate.
PHMSA does not believe the addition of these evaluations will be overly
cumbersome. PHMSA also proposes that states be given a five-year grace
period after notification that their enforcement programs have been
deemed inadequate to address deficiencies in their programs before
state pipeline safety base grant funding levels are potentially
affected. However, PHMSA proposes that Federal excavation damage
prevention enforcement may take place at any time after a state's
enforcement program is deemed inadequate. The process for evaluating
state enforcement programs is described in this NPRM.

Comments on Section IV Issues on Which PHMSA Sought Comment

    In Section IV of the ANPRM, pipeline operators, excavators, states
and the public were urged to consider the appropriate procedures for
determining the adequacy of state excavation damage prevention law
enforcement programs, as well as the need for Federal administrative
enforcement in the absence of an adequate state program. PHMSA posed
specific questions to solicit stakeholder input. These included
questions related to:
    A. Criteria for Determining the Adequacy of SDP Enforcement
Programs;
    B. Administrative Process;
    C. Federal Requirements for Excavators;
    D. Adjudication Process; and
    E. Existing Requirements Applicable to Owners and Operators of
Pipeline Facilities.
    Many of the comments received were repetitious of those noted above
under General Comments.

A: Criteria for Determining the Adequacy of SDP Enforcement Programs

    In Section IV.A of the ANPRM, PHMSA noted that ``a threshold
criterion for determining the adequacy of a state's damage prevention
enforcement program will be whether the state has established and
exercised its authority to assess civil penalties for violations of its
one-call laws. PHMSA will likely consider the following issues in
further evaluating the enforcement component of [state damage
prevention] programs.'' The ANPRM then listed 13 items for
consideration and comment. Following are comments received relative to
those items:

Item 1: ``Does state law contain requirements for operators to be
members of and participate in the state's one-call system (similar to

current federal pipeline safety regulations, 49 CFR 192.614 and 49 CFR
195.442)?''

    Several commented that Federal pipeline safety regulations
adequately address this requirement for pipeline operators. Several
commenters also said that each state excavation damage prevention
program should require all underground facilities operators to be
members of the state's one-call system(s).
    NUCA commented that ``participation'' in excavation damage
prevention includes calling the one-call center before excavating.
However, NUCA also commented that underground facility operators being
members of the appropriate one-call center is fundamental to the
excavation damage prevention process and that exemptions only increase
the likelihood of facility damages. NUCA cites the Common Ground Study
of One-Call Systems and Damage Prevention Best Practices, for which
``the underlying premise for prevention of damage to underground
facilities, and the foundation for this study, is that all underground
facility owners/operators are members of one-call centers, and that it
is always best to call before excavation.''
    Michigan Consolidated Gas questioned how the state and/or PHMSA
would take into account operators that do not have the resources,
equipment, funding, etc., to locate their facilities.

Response

    Sections 192.614 and 195.442 of the pipeline safety regulations
require regulated pipeline operators to be members of qualified one-
call systems in the states in which they operate. All states certified
to regulate gas operators will have adopted Sec.  192.614 allowing them
to enforce it against the intrastate gas operators they regulate.

Items 2 and 3: ``Does state law require all excavators to use the
state's one-call system and request that underground utilities in the
area of the planned excavation be located and marked prior to digging?
Has the state avoided giving exemptions to its one-call damage
prevention laws to state agencies, municipalities, agricultural
entities, railroads, and other groups of excavators?''

    NAPSR commented that the standards to which PHMSA would hold a
state in terms of ``excavation'' must be consistent with the terms used
in that state's law. NAPSR noted that there may be very legitimate
reasons for exemptions in a state one-call law. For example,
agricultural exemptions may recognize the total impracticality of
attempting to include normal farm tillage. Others may conclude that the
risk of an activity is so low that regulation is not justified, such as
opening a grave in a cemetery. Still others may be the result of
carefully crafted legislative compromises to achieve passage of one-
call legislation, the reopening of which could have negative
consequences. NAPSR also noted that 49 U.S.C. 60114(d), which lists
demolition, excavation, tunneling, or construction, or excavation as
defined in paragraph 192.614(a), is far from all-inclusive, in that it
seems to exclude farm tillage and gardening, and perhaps activities
such as pipe or cable plowing. NAPSR considers that PHMSA must
determine to what extent certain exemptions in individual states will
be acceptable.
    AGA, along with Nicor, Paiute Pipeline and Southwest Gas
Corporation, agreed that exemptions are a critical consideration in
evaluating the adequacy of state excavation damage prevention law
enforcement programs. They noted that exemptions are inherently counter
to the entire concept of excavation damage prevention being a shared
responsibility. They noted that in several states, exemptions have been
granted, for example, to state DOTs, counties, municipalities,
railroads, and private land owners. The exemptions can take on
different forms; some apply so that the entity does not need to belong
to the one-call center for the purpose of marking its underground
facilities, while others allow an entity to excavate freely without
having to notify the one-call center, and still others allow certain
parties to be free of enforcement penalties. The commenting
organizations hold that exemptions often exist only because of private
interests that enable certain entities to escape responsibility in the
excavation damage prevention process.
    They also commented that exemptions serve as an impediment when
stakeholders attempt to craft new legislation for state excavation
damage prevention laws. They referred to the DIMP Phase 1 Report
(http://primis.phmsa.dot.gov/dimp/docs/IntegrityManagementforGasDistributionPhase1Investigations2005.pdf), in
commenting that all stakeholders must participate in the excavation
damage prevention process for it to be successful.
    Spectra Energy commented that PHMSA's criteria should force states
to eliminate all exemptions from their one-call requirements. Spectra
noted that a number of states continue to exempt from the one-call
requirements certain types of excavators, such as agriculture,
railroads and state/county road commissions. Spectra considers that to
provide exemptions is contrary to the goal of pipeline safety, noting
that the pipeline operator is the most qualified entity to determine if
a pipeline exists within the area of interest, to locate and mark the
facility, and to determine the safety precautions necessary to ensure
the pipeline is not impacted.
    JULIE, Inc. expressed a concern that some states' cultures provide
for the successful existence of more than one excavation damage
prevention system (one-call center) that does not have overlapping
geographic areas. There appears to be no process in the ANPRM to
recognize separate evaluation results in those states, particularly
when possibly one or both of the systems may have unique but strong
enforcement programs in place.

Response

    As noted in the response to the General Comments above, some
exemptions may be justifiable in some states, especially where
substantiated by data. If having absolutely no exemptions were a
``pass/fail'' criterion for evaluating state excavation damage
prevention law enforcement programs, PHMSA believes that nearly every
state (if not all states) would be declared inadequate.
    PHMSA does not propose an absolute prohibition on exemptions from
state one-call damage prevention requirements. States are ultimately
responsible for establishing the excavation damage prevention laws that
best suit their own circumstances. PHMSA policy strongly encourages
states to limit exemptions, for both excavators and utility owners/
operators, from excavation damage prevention laws to the extent
practicable. To that end, one of the criteria for determining the
adequacy of state excavation damage prevention law enforcement programs
proposed in this NPRM is ``limited and justified'' exemptions for
excavators from the requirements of state excavation damage prevention
laws.
    In assessing state excavation damage prevention law enforcement
programs, PHMSA will assess all programs if the state under evaluation
has multiple enforcement programs. In that case, PHMSA may declare one
or more of the enforcement programs inadequate, thereby allowing PHMSA
to conduct Federal administrative enforcement actions in geographic
areas covered by the inadequate program.

Item 4: ``Are the state's requirements detailed and specific enough to
allow

excavators to understand their responsibilities before and during
excavating in the vicinity of a pipeline?''

    Paiute Pipeline and Southwest Gas Corporation recommended that
PHMSA extend this objective to include excavating in the vicinity of
any underground facility and supported PHMSA's objective of states
providing clarity to excavators to ensure that detailed and specific
information is available so they understand their responsibilities
before and during excavation within the vicinity of a pipeline.
Similarly, AGL Resources commented that this item is an appropriate
consideration when determining the adequacy of a state's excavation
damage prevention program, and noted that ensuring that excavators
understand expectations and consequences is an important aspect of
promoting compliance.
    NAPSR commented that addressing this criterion could be very
subjective and that specific criteria would be needed for determining
what is ``detailed and specific enough.'' They noted that some states
may have extensive regulations, while others may have successful
excavation damage prevention programs with limited regulatory
intervention.
    MidAmerican Energy Company commented that the detail and
specificity of each state's law need not match the level of detail of
the proposed Federal requirements. They noted that there is value in
allowing states to tailor their statutory and regulatory requirements
to the specific circumstances presented in that state. They further
noted that the level of detail of responsibilities is best determined
by each situation, condition and scheme and operator requirements for
excavations on or near its underground facilities, given that
underground pipelines are constructed and operated in varied geographic
locations such as remote wilderness, prairie, active agricultural
lands, forests, residential, commercial, industrial, and subsea
environments.
    AGA considers that state requirements for most professionals in the
excavation industry adequately convey the responsibilities involved in
proper excavation. However, it noted excavators are often non-
professionals who do not understand safe digging practices or even the
importance of notifying the one-call center. AGA noted that according
to CGA's 2008 DIRT Report, occupants and farmers have been the
excavator in 8 to 10 percent of the damage reports collected over the
three-year period between 2006 and 2008.

Response

    PHMSA encourages states to utilize plain language principles \6\
when drafting their pipeline safety regulations. At the same time,
though, PHMSA does not want to be overly subjective in establishing
criteria for determining adequacy and PHMSA continues to believe that
states can and should develop excavation damage prevention laws that
best suit their particular needs. Therefore, PHMSA is not proposing to
use the detail and specificity of state law as a criterion at this
time. However, PHMSA believes that states should collect and manage
data that is detailed enough to demonstrate that excavators clearly
understand the requirements of state excavation damage prevention laws.

    \6\ Further information on plain language principles can be
found in Federal guidance here: http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-15.pdf.
---------------------------------------------------------------------------

Item 5: ``Are excavators required to report all pipeline damage
incidents to the affected pipeline operators?''

    Many commenters considered this item to be essential in evaluating
the adequacy of state excavation damage prevention law enforcement
programs. The TRA commented that mandatory reporting of damages to
pipeline facilities should be a part of any effective excavation damage
prevention program. AGA views this as one of the most important issues
for evaluation and cited it as being included in the PIPES Act. AGA
noted that the failure of excavators to notify the pipeline operator of
damage promptly has resulted in some significant pipeline ruptures
involving fatalities, injuries, and property loss. AGA cited that past
incidents have been a painful reminder that just nicking the pipe
coating or cutting a cathodic protection wire can affect the long-term
integrity of the pipe and lead to a leak or rupture. Nicor commented
that despite the requirement, excavators have waited up to several
hours before reporting damages, thereby exacerbating circumstances.
Nicor also cited instances where excavators considered damage to be
minor (coating knick or broken tracer wire) and backfilled an
excavation prior to reporting it, requiring the operator to then re-
expose the area of reported damage to make repairs. AGL Resources also
commented that in addition to excavators reporting damages to the
operator, all utility operators should be required to report damages to
provide a more complete picture of damage and prevention needs. To whom
operators should report was not addressed.
    An additional comment received was that PHMSA should clarify how
``damage'' would be applied to the operator as an excavator, or
operator's contract excavator and how this might be enforced.
    NUCA commented that while excavators are subject to extensive
damage reporting requirements in most state laws, the lack of state
requirements to report ``near misses'' obstructs efforts to provide
accurate data trends. NUCA considers that when underground facility
operators fail to locate and mark their lines accurately, that data
should be captured regardless of whether the facility was damaged. Even
if reporting of ``near misses'' is required by state law, NUCA believes
these requirements are rarely enforced.

Response

    Reporting pipeline damages to affected pipeline operators is an
essential component of pipeline safety. To that end, PHMSA believes
that states must require that excavators report to pipeline operators
all incidents that actually result in physical damage to pipelines as a
criterion for evaluating a state's program. As noted above, states
should also consider establishing criteria for operators in turn to
report damage incidents to allow the state to determine whether an
investigation and enforcement should be undertaken. Therefore, PHMSA is
proposing, as part of the criteria for determining the adequacy of a
state's program, that each state has a reliable means for learning
about excavation damages to underground pipelines (see proposed section
198.55).
    PHMSA agrees with the importance of damage reporting by all
underground facility operators. However, PHMSA does not propose to use
damage reporting by operators as a criterion for evaluating state
enforcement programs. PHMSA has the authority to require pipeline
operators to report damages, but does not have the authority to require
other utility operators to report damages. PHMSA is concerned that this
special requirement for pipeline operators would be confusing for
utility operators and cumbersome for the states.
    With regard to the comment about PHMSA's treatment of pipeline
operators as excavators, PHMSA's existing regulations at 49 CFR 192.614
and 195.442 address these issues.
    PHMSA is not proposing to require reporting pipeline excavation
damage near-misses at this time. While data on

near-misses would be valuable in guiding state excavation damage
prevention program improvements, this proposed rule pertains
specifically to excavators who actually damage PHMSA regulated
pipelines. In addition, this requirement could impose a significant
cost on excavators. However, there is nothing stopping a state from
adopting more stringent reporting requirements such as including near-
misses. PHMSA seeks comments on the potential cost impacts of requiring
reporting of pipeline excavation damage near-misses.

Item 6: ``Does state law contain a provision requiring that 911 be
called if a pipeline damage incident causes a release of hazardous
products?''

    AGA and several gas pipeline operators commented that some states
may adopt statutory language that does not exactly match the Federal
legislation. For example, a state may adopt language that affords
pipeline operators some latitude so that they do not need to dial 911
if they damage their own pipeline. Since operating personnel are
already on the jobsite, AGA and the commenting companies agree that
operators should not be required to dial 911 if they cause damage to
their own pipeline that results in a release that the operators can
safely control without the aid of emergency response personnel prior to
making the necessary repair.
    Paiute Pipeline and Southwest Gas Corporation also commented that
this provision should apply only if the damage may endanger life or
cause serious bodily harm or damage to property, and results in the
escape of any flammable, toxic or corrosive gas, and that all releases
of natural gas do not need to be reported by making a 911 phone call.
They noted that PHMSA should distinguish between natural gas and other
gases or liquids instead of trying to include all of these under the
umbrella of ``hazardous products.''
    NAPSR commented that with regard to calling 911, the question
should be whether the excavator by law--or appropriate regulation--is
required to notify local emergency responders and/or law enforcement if
a release of product poses a danger to the public. NAPSR anticipates
that where 911 is available the excavator would most likely use it to
make that notice, but considers that it should not be necessary for
state law to specify that method if the desired end is achieved. NAPSR
noted that state laws may predate the advent of 911 emergency call
systems, and therefore would not specify that 911 must be called. NAPSR
also noted that calling 911 is generally promoted through state one-
call centers and operators' public awareness programs, and the practice
may best be achieved through best practices and not through Federal or
state regulations.

Response

    The PIPES Act requires excavators to promptly call the 911
emergency telephone number if damage to a pipeline results in the
escape of any flammable, toxic, or corrosive gas or liquid that may
endanger life or cause serious bodily harm or damage to property. PHMSA
understands that excavators are often required to reimburse 911 centers
for the cost of dispatching emergency response personnel to a damage
site. Therefore, PHMSA proposes that states require excavators to call
911 in these instances, but is proposing to permit the excavator to
exercise discretion as to whether to request that the 911 operator
dispatch emergency response personnel to the damage site. However, the
911 operator will always have the discretion to dispatch emergency
response personnel.

Item 7: ``Has the responsible state agency established a reliable
mechanism to ensure that it receives reports of pipeline damage
incidents on a timely basis?''

    Paiute Pipeline and Southwest Gas Corporation commented that states
that do not have interstate pipeline inspection and enforcement
authority should treat an interstate pipeline operator as an excavator,
not a pipeline operator. They consider that authority for inspection
and enforcement of interstate pipelines should remain with PHMSA and no
reporting of pipeline damage to the state is needed.
    Southwest Gas Corporation commented that if PHMSA desires
individual incident report information on non-Federally reported
incidents from the states, PHMSA should recommend establishing a
reporting time period with the state agencies. Southwest Gas
Corporation noted that to eliminate any increased burden on the state
agency, PHMSA should consider specific criteria levels for those state-
only reportable incidents of which they want notification.
    Paiute and Southwest Gas Corporation also commented that
notification requirements are different than reporting requirements.
They noted that state and Federal reporting requirements provide
initial notification to the respective agency within a very short time
(usually one to two hours) after discovery. The extent of product
release, service interruptions, product loss, property damage,
evacuations, injuries, fatalities, or environmental damage, which may
not be known for days, are generally included on a written report form
filed with the appropriate agency, within 30 days or less in accordance
with state or Federal requirements. They noted that for interstate
pipelines not subject to state jurisdiction, PHMSA has requirements for
reporting incidents that meet certain criteria. The requirements
include an initial notification deadline and a documented incident
report deadline.
    NAPSR inquired whether PHMSA is going to require that all reports
be sent to PHMSA, or that specific reports be made available upon
request, and commented that if PHMSA wants reports of all damages, it
should simply require the operators report directly to PHMSA instead of
placing an additional burden on the states.

Response

    For a state to have an effective excavation damage prevention
enforcement program, the enforcement authority must have a reliable
mechanism for learning about excavation damage incidents. The details
of how this mechanism functions, however, may vary considerably from
state-to-state. For example, some state law may require mandatory
reporting of excavation damages, while other states use complaint-based
systems of reporting damages. Because PHMSA must evaluate state
enforcement programs, PHMSA's goal is to assess how states learn of
excavation damages and how this mechanism drives enforcement decisions,
which has an effect on the adequacy of states' enforcement programs.
PHMSA will not be collecting state damage reports, but may review them
during evaluation of the state's program.

Item 8: ``Does the responsible state agency conduct investigations of
all excavation damage to pipeline incidents to determine whether the
excavator appropriately used the one-call system to request a facility
locate, whether a dig ticket was generated, how quickly the pipeline
operator responded, whether the pipeline operator followed all of its
applicable written procedures, whether the excavator waited the
appropriate time for the facilities to be located and marked, whether
the pipeline operator's markings were accurate, and whether the digging
was conducted in a responsible manner?''

    NAPSR commented that the listing of anticipated review items during
an excavation damage incident investigation may be helpful during

investigation of an event reportable as a pipeline incident or
accident. However, it is unrealistic to expect an investigation of this
magnitude into each and every event where a pipeline is damaged. NAPSR
considers that the resources required would exceed those of entire
state pipeline safety programs, and noted that PHMSA is considering
these regulations at a time when many states are suffering financial
hardship and their pipeline safety programs are struggling to remain
afloat. Other commenters repeated this consideration.
    NAPSR commented that the following listed items should be clarified
and that, to the extent that any of them are incorporated into Federal
regulations, PHMSA should clarify its intent and expectation for each
item:
    [cir] ``Whether the excavator appropriately used the one-call
system to request a facility locate''--Does having a ticket number
suffice?
    [cir] ``Whether the excavator appropriately used the one-call
system to request a facility locate''--Does one need to determine if
the site was pre-marked?
    [cir] ``Whether the dig ticket was generated''--Does having the
ticket number suffice? [Or] Does transmission of the ticket to
operators need to be confirmed?
    [cir] ``How quickly the pipeline operator responded''--Is the
question here whether the operator responded within the time frame
allowed by the law or regulation in that state? And, would this
information be relevant if the incident cause is that the facilities
were marked and excavation practices were insufficient?
    [cir] ``Whether the pipeline operator followed all of its
applicable written procedures''--Would this require a field audit and
review of the operator's (employee or contract) locator on the site of
the incident?
    [cir] ``Whether the excavator waited the appropriate time for the
facilities to be located and marked''--Would this require verifying
that all utilities had marked the site prior to the excavator
performing the work? [Or] Would comparing the start date on the ticket
to the incident date suffice?
    [cir] ``Whether the pipeline operator's markings were accurate''--
Would this require field verification of the marks? If yes, how much
delay can be justified in an excavator's downtime while the marks are
being verified? Can the word of the operator and excavator be taken as
fact? Can an emergency locate be performed and excavation activities
resumed before arrival of a government inspector on site?
    [cir] ``Whether the digging was conducted in a responsible
manner''--Would this require a field investigation including interviews
with the foreman, operator and laborers? Can the results of the
investigation by the operator be considered as fact? If it is
ascertained that best practices were not followed, would this
constitute a ``violation''? What are the essential elements of an
``investigation''?
    NAPSR also commented that all DOT-reportable excavation damage
incidents should be investigated. However, it noted that there are many
thousands of DOT non-reportable incidents each year that involve
superficial damage and no escaping gas. NAPSR considers that a one-
size-fits-all investigation approach is not practical, and that the
extent of investigation of non-reportable incidents should be on a
state-by-state basis, left to the discretion of the responsible state
agency. The state should be allowed to adopt a basis for investigation,
such as establishing thresholds, or perform periodic sampling coupled
with enforcement proceedings on the incidents sampled, so a deterrent
effect is achieved.
    NAPSR further commented that it may be possible that the PHMSA
Office of Pipeline Safety Failure Investigation Policy document will
play a role in connection with this aspect of the proposed rulemaking.
NAPSR, therefore, suggested that this policy be considered along with
other factors before formalizing a notice of proposed rulemaking.
    AGA commented that the evaluation process should recognize those
states that have adopted some basis for investigation. The basis could
be event significance or it could investigate some subset of the
damages, such as state reportable incidents. AGA noted that it is not
feasible for a state agency to conduct a formal investigation for every
occurrence of excavation damage to pipelines in a state. AGA also
commented that most importantly, the state should have a mechanism that
enables all stakeholders to express formal concerns and complaints with
non-compliant parties, citing, for instance, that excavators should
have a process to file complaints against utilities that fail to mark
their facilities accurately or on time. Additionally, pipeline
operators should have a process to file complaints or seek injunctions
against excavators who either fail to notify the one-call center, fail
to respect the markings or fail to wait the required time before
beginning excavation activity.
    APGA commented that this consideration should apply only to
reportable incidents as defined in 49 CFR Part 191 because it would not
be reasonable to expect operators and/or state agencies to investigate
and report in this detail on all excavation damage events. APGA noted
that some lesser level of reporting may be considered for events that
do not meet the reportable incident criteria. Nicor suggested that
states should have a process for determining which reported excavation
damages will be investigated. APGA also noted that under the
Distribution Integrity Management Programs (DIMP) rule, operators will
annually report the number of excavation damages to PHMSA, and that
these reports could also be made available to states.
    Southwest Gas Corporation commented that if PHMSA means only
reportable incidents (as defined by each state) that result from
excavation damage, then determining the effectiveness of the state
excavation damage prevention program should include a review of all
excavation damage, not just excavation damage to pipelines, and include
analysis of any trends and areas for improvement.
    NUCA commented that states must ensure that those conducting damage
investigations look at the entire excavation damage prevention process,
from the excavator notifying the one-call center to the facility
operator providing accurate and timely markings, to safe excavation and
backfill practices by the excavator. NUCA believes that the ANPRM
adequately addressed the factors needed to be investigated, but that
several state authorities fail to fulfill their investigative
responsibilities in all areas of excavation damage prevention,
especially with regard to locating and marking of facilities.

Response

    PHMSA's primary interest with regard to pipeline damage
investigations is to ensure that state enforcement is fair and balanced
and is targeted to the at-fault party in an excavation damage incident.
PHMSA recognizes that states have resource issues to contend with and
need the ability to focus investigatory resources on significant
incidents as opposed to minor incidents. PHMSA intends to address this
consideration in determining the adequacy of enforcement programs by
reviewing state enforcement records and the adequacy of the
investigations that preceded enforcement actions. In addition, PHMSA
intends to assess states' incident investigation practices to ensure
their adequacy in determining the at-fault party in an excavation
damage incident involving a pipeline subject to PHMSA pipeline safety

regulations. PHMSA does not intend to use PHMSA's Failure Investigation
Policy as a model for assessing the adequacy of state damage incident
investigation practices.

Item 9: ``Does the state's damage prevention law provide enforcement
authority including the use of civil penalties, and are the maximum
penalties similar to the federal maximums (see 49 U.S.C. 60122(a))?''

    With regard to the amount of the civil penalty, PUCO noted that the
ANPRM does not indicate how large state maximum civil penalties would
have to be in order to be considered ``similar'' to Federal maximums or
the appropriateness of Federal maximum penalties against non-gas
pipeline excavators. NAPSR commented that for pipeline operators some
states' fines are equal to the Federal maximums, but that for
excavators, fines may vary from small amounts per violation and
gradually increase, depending on the circumstances, with no maximum.
NAPSR noted that in practice, some states have found that an
administrative process with modest fines (i.e., large enough to have a
financial impact on the offender) works well. The larger the fine, the
harder it is to collect and the collection process tends to consume a
lot of the state agency's resources. NAPSR also commented that in state
legislatures, the authorized amount of a civil penalty can be a serious
issue. Legislatures may be reluctant to approve penalties so high that
small companies could be put out of business, noting that although the
assessed penalty does not have to be the maximum, the possibility
remains a concern. NAPSR notes that the penalties incorporated in state
laws may be the product of laborious and protracted negotiations--and
the penalties provided for in 49 U.S.C. 60122 are quite high by many
state standards. NAPSR notes that there is no evidence that state
penalties must be comparable to Federal penalties for state enforcement
to be effective, and that if such a comparison must be a consideration
it should be a minor one.
    MidAmerican Energy commented that the amount of the maximum civil
penalty that may be assessed may not be the critical factor in
evaluating a state's enforcement program. Instead, the aggressiveness
and consistency by which a state investigates and enforces the
excavation damage prevention laws may be a more effective gauge.
Michigan Consolidated Gas noted that consideration should be made
regarding a state's funding and resources to administer its enforcement
program, i.e., does the state have the manpower to investigate, hold
hearings, document findings, etc., for every violation found or
complaint filed especially if this includes non-regulated or non-
pipeline entities?
    The PST commented that if PHMSA is going to ascertain whether the
amounts of civil penalties assessed reflect the seriousness of the
incident, then PHMSA must develop a set of guidelines that sets out
each type of offense and the range of penalties that PHMSA deems
appropriate. PST noted that this will also help to provide clarity
regarding the question in the ANPRM about whether a state program's
civil penalties ``are the maximum penalties similar to the Federal
maximums.''
    The several Texas pipeline associations commented that a
substantial portion of state grant monies should be tied to enforcement
and collection of substantial civil penalties for failure to comply
with a state one-call law that is found to be adequate. They also
suggested that penalties related to excavation damage prevention being
collected by states should be dedicated to pipeline safety, and not
just the general revenue fund.
    Spectra Energy Transmission commented that PHMSA's criteria should
consider a state's historical enforcement action against excavators
that fail to place one-call tickets prior to excavating or fail to
adhere to the mandatory waiting period following one-call notification.
Spectra also commented that states should take enforcement action
against intrastate pipeline or distribution system operators that fail
to respond to one-call tickets or fail to properly locate or mark their
facilities. They noted that penalties should escalate for repeated
violations and that the existence of repeat violations may signal a
weakness of deterrents and need for PHMSA action.

Response

    While state civil penalty levels must be high enough to deter
violations, PHMSA recognizes that states will often be conducting
enforcement against smaller entities. Therefore, penalty levels lower
than the Federal levels may be sufficient to achieve deterrence.
Accordingly, PHMSA does not propose to require states to assess civil
penalties at a level equal to Federal civil penalties. PHMSA's primary
interest with regard to state civil penalties is that (1) civil penalty
authority exists within the state, and (2) civil penalty authority is
used by the state consistently enough to deter violation of state
excavation damage prevention laws. PHMSA seeks comments on this issue.
    PHMSA does not intend to address impacts to pipeline safety grant
funding levels for states with excavation damage law enforcement
programs PHMSA deems adequate.

Item 10: ``Has the state designated a state agency with responsibility
for administering the damage prevention laws?''

    Marathon Pipeline commented that a state agency should be
responsible for receiving and investigating reports of pipeline damage
and near miss incidents caused by excavation. Paiute Pipeline agrees
that the agency responsible for administering the excavation damage
prevention laws should be designated in states where excavation damage
prevention laws exist. Echoing this comment, the Texas pipeline
associations commented that the first criterion for a state should be a
single state agency designated to oversee the state's underground
excavation damage prevention program. They noted that a state agency
must not only be designated as the agency responsible for the program,
but must also have the authority to enforce the safety standards to
protect underground facility operators, excavators, and the public.
    Going further, AGA and AGL Resources commented that effective
excavation damage prevention requires more than merely designating a
state agency with responsibility for administering the excavation
damage prevention laws. They noted that although many states have
agencies that have been delegated authority for administering the
excavation damage prevention laws, often the state agency has not been
given either the personnel, financial resources, or the incentives
needed to exercise its authority. The three Texas pipeline associations
commented that the adequacy of funding should be documented and
reported by the states through several basic data elements. Such
elements could include items like ratio of reported damages to calls,
numbers of damages reported per mile and number of enforcement actions
completed. There may be better measures of enforcement effectiveness,
but whatever is used must demonstrate that enforcement is occurring.
    AGL Resources also commented that a state should establish,
designate and utilize an ``advisory type'' committee made up of the
various stakeholders as the responsible state agency.

Response

    PHMSA's primary interest in this area is assessing whether a state
has a

designated excavation damage prevention law enforcement authority to
act as the lead in law enforcement cases. That authority needs to
establish a close working relationship with the state pipeline
investigators and develop a familiarity with the state's pipeline
safety and damage prevention laws and requirements. Once that authority
begins to take enforcement action consistently, PHMSA will be
interested to learn whether the state enforcement authority has
adequate resources to perform its mission. In addition, PHMSA's
periodic review of states' damage prevention enforcement records
performed under the state certification process will provide PHMSA with
information on the adequacy of enforcement resources.
    Committees comprised of representatives of all excavation damage
prevention stakeholders that advise enforcement agencies may help to
ensure fair and balanced excavation damage prevention law enforcement.
However, PHMSA does not believe that advisory committees should have a
``veto'' on enforcement decisions made by responsible officials and
PHMSA also believes that advisory committees are not the only effective
means of ensuring fair and balanced enforcement. PHMSA, therefore, does
not propose to use as a criterion whether states utilize advisory
committees in assessing the adequacy of states' enforcement programs.

Item 11: ``Does the state official responsible for determining whether
or not to proceed with enforcement action document the reasons for the
decision in a transparent and accountable manner? Are the records of
these investigations and enforcement decisions made available to
PHMSA?''

    NAPSR commented that in some jurisdictions this would be privileged
information not subject to disclosure. It also noted that a decision on
whether to take formal enforcement action is a decision on whether to
prosecute; thus, the concept of ``prosecutorial discretion'' may apply.
NAPSR also inquired about what kind of documentation would be expected.
    Paiute Pipeline and Southwest Gas Corporation commented that
transparency and consistency are important to an effective enforcement
program. They consider that states should be responsible for
documenting and recording investigations, decisions, and enforcement
actions taken or not taken to ensure consistency in decisions and
enforcement actions with all excavators. They also commented that PHMSA
should consider if instead of being informed of every investigation and
enforcement decision of every state, it would be more effective for
PHMSA to recommend specific criteria levels for being informed of
investigations and enforcement decisions.

Response

    PHMSA will be reviewing state enforcement records to help assess
whether states that have enforcement authority are actually using their
authority and how they are using their authority. PHMSA believes that
states should be able to explain the reasons behind their decisions as