Regulation of America's oil pipelines falls into two basic categories - regulations that help the industry ensure the safety of communities and the environment, and regulation of transportation charges. In addition, the industry has established or participates in a number of engineering and scientific committees that help set widely accepted technical standards for construction and operation of pipelines.
Safety and the Environment
The safe operation of oil pipelines is assured by extensive federal and state regulation. The primary jurisdiction is that of the U.S. Department of Transportation's Office of Pipeline Safety. Offshore pipelines are subject to regulation by the U.S. Department of Interior's Minerals Management Service. Pipeline operations are also subject to regulations of the Environmental Protection Agency; the Occupation Safety and Health Administration; the U.S. Coast Guard; the U.S. Army Corps of Engineers; and various state public service or public utility commissions and other state agencies. The National Transportation Safety Board investigates pipeline accidents and makes recommendations for improvements in operations
Technical Standards
The first technical standards applied to the pipeline industry were the pressure piping building codes that were established in the early part of the 20th Century and were well in place by the Twenties.
By 1955, building on the earlier codes, the first edition of technical standard B31.4, Pipeline Transportation Systems for Hydrocarbons, was published. The code sets requirements for safe design, construction, inspection, testing, operation and maintenance of liquid pipeline systems. It has been evolved and upgraded constantly since it was first published and today is maintained by a committee of engineers and other technical experts who are overseen by the American National Standards Institute. The Office of Pipeline Safety and the National Transportation Safety Board serve as members of the B31.4 committee.
In addition to this core technical document, the industry adheres to a number of other standards that apply to all phases of pipeline safety.
- Tank operation and construction (15 standards maintained by a committee operated by API, the American Petroleum Institute)
- Underground storage caverns (2 API standards)
- Manufacture of line pipe (4 API standards)
- Cathodic protection against corrosion (8 NACE standards and guides)
- Welding (15 AWS and 1 API standards)
- Pipeline awareness (2 API standards)
- Pipeline integrity (API Recommended Practice 1129, Assurance of Hazardous Liquid Pipeline System Integrity)
- Pipeline Wall Thickness (API Standard B31.G)
National Association of Corrosion Engineers (NACE)
American Society of Mechanical Engineers (ASME)
National Fire Protection Association (NFPA)
The industry also maintains an extremely aggressive One Call program to prevent damage to pipelines by digging or excavation, the most common cause of pipeline leaks. Tell me more about One Call.
Pricing
In addition to safety and environmental protection regulations and standards, there is a regulatory structure for pricing of pipeline rates. The Federal Energy Regulatory Commission regulates tariffs on interstate pipelines that are subject to its jurisdiction.
Most oil pipelines are designated as "common carriers" by federal law under the Hepburn Act of 1906. They are thus regulated by the federal government in ways that resemble regulations for other utilities and public interest infrastructure such as electrical utilities, telephone companies or radio stations.
Unlike natural gas pipelines, liquid oil pipelines do not have protected market areas and do not have protected rates of return. In other words, oil pipelines operate in a competitive environment. They compete among one another and they compete with other modes of transportation such as barges, ocean-going tankers and tanker trucks. The fact that oil pipelines carry nearly two-thirds of all the nation's petroleum (based on volume carried over distance) is a testament to how inexpensive and reliable pipelines are compared to other modes of transportation.
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