Curious about how to avoid fines for lack of compliance with 49 CFR §192, Transportation of Natural and Other Gas by Pipeline, and 49 CFR §195, Transportation of Hazardous Liquids by Pipeline? In this series of posts, we explain how to avoid some of the most common mistakes companies make when operating their oil and gas pipelines.
The “We’ve Got Time” Problem: You Don’t Understand When a Pipeline Is First Considered Regulated
Are you ready for compliance myth #4?
“We just bought (or constructed) this asset. We have some time to get our SOPs in place.”
No PHMSA regulator will ever tell you that's an acceptable way to operate. Just like you have to have a driver’s license before you drive, you must have standard operating procedures (SOPs) in place (and have trained your people on those SOPs) before you operate any oil or gas asset.
49 CFR §192.605(a) specifies that the procedural manual for gas pipeline operations, maintenance, and emergencies “must be prepared before operations of a pipeline system commence.” 49 CFR §195.402(a) specifies the same thing for oil pipelines: “This manual shall be prepared before initial operations of a pipeline system commence.”
The Definition of Operations: A Pop Quiz
But “operations” can be a little ambiguous, right? Answer the quiz question below to help you better understand the definition. (Side note: The false answers are mistakes we’ve seen operators make.)
New Construction
At what point in time must your procedures be in place for a newly constructed oil or gas pipeline?
A) By the time the pipeline is filled
B) When the pipeline is flowing with product (i.e., normal operations)
C) Before you start to fill the pipeline
D) Before the last day of construction
You are responsible for complying with the Code of Federal Regulations when a pipeline has product in it—any amount of product at any time. The correct answer is C. You’re out of compliance with PHMSA regulations if your standard operating procedures (SOPs) aren’t in place BEFORE you start to fill the newly constructed pipeline.
Purchased Assets
What about when you buy an asset? Don’t you have more time? How about another quiz question?
At what point in time must your procedures be in place for a newly purchased oil or gas pipeline?
A) By the time the pipeline is filled
B) The day the sale is finalized (i.e., the official transfer date from the old operator to the new operator)
C) Before you start to fill it
D) A reasonable amount of time after the new operator has commenced normal operations
This one is a bit of a trick question. If the pipeline is completely empty when you buy it, you must have your SOPs in place BEFORE your first day of operations—in this case, line fill. The correct answer is C, before you start to fill it. However, if the pipeline has any product in it when you buy it, the correct answer is B, the day the sale is finalized.
The common thread here is that you must have your SOPs in place (and have trained your people on them) right before you use them. That way, if you need to perform a task, you have a procedure to do so -- for emergencies, abnormal operations, etc.
How to Avoid the “We’ve Got Time” Compliance Mistake
You may be wondering how to avoid getting caught in this compliance trap. Here are three things you need to keep in mind:
Write complete SOPs that reflect your operations.
Have your procedures in place before starting operations.
Train your personnel on those procedures before operations start.
Which Operational Tasks You Have to Write SOPs For
Here’s a good rule of thumb for when you need to write an SOP.
If there is a task you must complete in order to:
Safely store or transport a product, or
Ensure physical assets are in good working order, or
Ensure the safety of people or the environment, then
Consider it “operations” and write an SOP for it.
PRO TIP: If you have been involved with starting up newly constructed or newly purchased assets, you know that from a practical standpoint, there is rarely enough time to write or review ALL of your SOPs before you have to use them. To get a handle on it, list all of your tasks you will need for normal operations, abnormal operations, and emergency events (including start up and shut down). Next, write down the very first time you will have to do perform each task (or the first time you could possibly face the abnormal or emergency condition).
Legally, you don’t need to have all of your procedures in place to begin operations. Should you have them in place? Yes. Technically, if you haven't performed a task yet, you don't need a procedure for it. However, you have to write the SOP before you complete the task.
Creating this map may sound like a lot of additional work compared to just putting your head down and plowing through procedures one by one, but it really isn’t that bad—it takes four or five of your most experienced staff around a half day to complete. Once you’re done, you’ll have a prioritized list of all the SOPs you need to write, the order in which you need to write them, and the associated deadlines.
Using the Previous Operator’s SOPs or Off-the-shelf SOPs
If the previous operator had incomplete or inaccurate procedures and you simply rebrand those procedures as yours, you are liable for them. If you conduct operations differently than the previous operator, you must have YOUR written procedures in place on day one of operations.
The same is true for off-the-shelf SOPs. In fact, the PHMSA Operations and Maintenance Enforcement Guidance Part 195 specifically requires the auditor to review generic, off-the-shelf O&M procedures to ensure they have been customized by that operator. This may seem like a minor point to you, but it’s a big deal to PHMSA. 195.605(a) and 192.402(a) both state that you must have written procedures that cover every task required to run the pipeline and keep people and the environment safe.
If your procedures mention assets you don’t actually have, or the procedures omit assets you do have, the auditor assumes that no one from your company reviewed said procedures and customized them to your operations. It stands to reason that your employees aren’t using them, either.
Is that true in your case? Maybe not, but to a well-informed auditor, it’s a giant red flag. If you find yourself in that situation, you should plan to be VERY uncomfortable for the remainder of the audit and prepare to pay one or more fines.
Now you know when a pipeline is first considered regulated by PHMSA and how to avoid fines for not having your procedures in place at the right time for a newly purchased or newly constructed asset. Read our other compliance myth posts for more tips on keeping your operations safe and yourself out of trouble with PHMSA:
Questions? Concerns?
Schedule a free, 30-minute pipeline safety and compliance consultation.
Dan Prascher, Principal
(307) 488-0110 (O) | (303) 941-3773 (M)