1. Statutory authority: Public Service Law (PSL) §§ 4, 5, 65, and 66 and 49 USC 60101 et. seq. authorizes the proposed rule amendments. The Public Service Commission (PSC or Commission) has general supervision of all gas companies operating anywhere in the State and of all property owned, leased or operated by a gas company in connection with or to facilitate the conveying, transportation, distribution, or furnishing of gas for light, heat or power. See PSL §§ 4(1), 5(1)(b), 65(1) and 66(1).

2. Legislative objectives: The new rules achieve the statutory goal of PSL § 65 by ensuring the continued safety of gas service and gas delivery in New York State. The purpose of the proposed regulations is to make State gas safety regulations as stringent as the corollary federal regulations by, for instance, requiring leakage surveys and atmospheric corrosion inspections of inside gas piping upstream from the meter in addition to gas piping over which the PSC currently asserts jurisdiction.

3. Needs and benefits: Safety measures that are at least as stringent as the federal rules further protect the overall safety of gas delivery and service in New York State. Moreover, the proposed regulatory changes are necessary to align the Commission’s gas safety regulations with the federal regulations to ensure that the Commission may continue to make its annual § 60105 certification to the U.S. Department of Transportation that the Commission has adopted all applicable federal gas safety standards and thereby remains eligible for federal funding to continue to implement New York’s gas safety program.

4. Costs: Regulated gas utilities or local distribution companies (LDCs), including municipally-owned gas companies, would see an increase in their operation and maintenance costs because they would need to perform leakage surveys and corrosion inspections on inside gas piping that is upstream from a gas meter. Increased costs would impact professionals who currently make alterations and repairs on inside piping because such professionals would need to be Operator Qualified and drug and alcohol tested in accordance with the Commission’s proposed gas safety rule amendments. Gas utilities would also be responsible for at least a portion of the new Operator Qualified training and testing costs, which could be recoverable in PSC utility rate proceedings where appropriate. Building owners who would be required to hire only Operator Qualified professionals to alter or repair inside gas piping upstream from the gas meter would see a slight increase in costs because newly Operator Qualified and alcohol and drug tested individuals who perform alterations and repairs likely would spread the cost of training and testing among all building owners. Some costs associated with the proposed changes could be mitigated with the opportunity for waivers from the PSC, which, if allowed, could extend the time intervals during which leakage and corrosion inspections would need to occur. Localities that now use building inspectors to approve alterations and repairs made to inside gas piping would reduce their costs because utilities would be responsible for such inspections. Eliminating the five-year cycling option to maintain an LDC’s Maximum Allowable Operating Pressure (MAOP) would reduce costs for LDCs. Prohibiting soap testing of new inside services would slightly increase costs because in-service pressure testing prior to placing pipe into service takes more time than soap testing and storage costs may increase for pre-pressure-tested pipe that has not yet been placed into service.

The Commission is unable to estimate actual costs associated with this rulemaking and therefore seeks comments on the estimated costs associated with training, testing, inspections, or other operational changes that would from these proposed rule amendments.

5. Costs to local government: Inspections, training, and testing of inside gas piping upstream of the meter would fall under the jurisdiction of the state and federal regulators; therefore, LDCs would be required to carry out such actions. As such, local governments would likely see a decrease in costs associated with building inspections of inside gas services.

For municipalities that own and operate gas companies, costs that are associated with additional testing and training, the storage of pre-tested pipes, and the added time required for pressure (as opposed to soap) testing would increase slightly.

6. Costs to the Public Service Commission or the Department of Public Service: Since amendment of the regulations as proposed would result in continued federal funding to administer the State’s Gas Safety program, no additional costs to the Department of Public Service are expected.

7. Local government mandates: If applicable, local governments would need to amend building or other codes that may be in conflict with the State’s amended gas safety regulations. Such conflicts would occur if a local code, for instance, authorized professionals who are not Operator Qualified or drug and alcohol tested to alter or repair inside gas piping upstream from the meter.

6. Paperwork: Gas companies would need to maintain additional Operator Qualification certificates for the additional professionals who would be performing alterations or repairs on inside gas piping. Professionals who now perform alterations or repairs on inside gas piping upstream of the meter would need to retain documentation that they are Operator Qualified.

7. Duplication: The proposed regulations do not duplicate, overlap or conflict with any existing federal or State statutes or regulations.

8. Alternatives: There are no significant alternatives to consider because the proposed regulations are consistent with federal regulations. The possibility of waivers exists, which would allow an LDC to deviate from the rules upon a showing that the application of all of the operation and maintenance requirements, primarily the schedule of leakage surveys and corrosion inspections, would be impractical, costly, inappropriate, or unreasonable, if it could be shown that the alternate operation and maintenance plan would be equal to or safer than the rules being adopted.

9. Federal standards: The proposed rule amendments are intended to conform 16 NYCRR Part 255 and related Parts to 49 USC 60101 et. seq. and 49 CFR Part 192.

10. Compliance schedule: The regulated community would be required to comply with the proposed regulations within 90 days of the adoption of the new rules. Requests for waivers of any rule requirement would be required to be submitted within 30 days of adoption of the new rules. The full text of the Regulatory Impact Statement can be found on the Department’s website at www.dps.ny.gov by searching Case 14-G-0357.

1. Effect of rule: The proposed rule aligns the definition of “service line” with its federal code counterpart (16 NYCRR §§ 255.3 and 255.723), repeals soap pressure testing (§ 255.507), deletes the technical requirement that an operator may throttle pressure in cathodically unprotected steel pipelines to maintain the current maximum allowable operating pressure (§ 255.619) and eliminates an exception that gas in route to storage need not be odorized (§ 255.625).

2. Compliance requirements: The proposed rule would require professionals in the industry who now perform alterations or repairs on inside piping upstream of the meter to become Operator Qualified and submit to drug and alcohol testing in order to perform such work. The LDC employing these professionals will have to train, test, inventory, update, and likely expand existing Operator Qualification programs and records. Likewise, an intrastate pipeline operator affected by the elimination of the storage exception may have to expand existing records to document the addition of odorant to its pipelines. There are no additional burdens on industry to increase reporting requirements resulting from the proposed rule. Since the industry may conduct in-house training and testing of its employees and contractors, there is not anticipated to be any professional assistance required to comply with these Operator Qualification requirements. A small number of towns in New York State operate their own municipal gas corporations and under the proposed rule would be required to expand the retention of their Operator Qualification records to the extent that new employees or contractors will become operator qualified to work on each gas corporation’s inside building piping that is upstream of the meter.

3. Professional services: There are no professional services that a small business or local government is likely to need to comply with the changes associated with this rule.

4. Compliance costs: Costs to industry, municipalities, and unions relative to compliance with the “service line” provisions of the proposed rule are currently unknown and the PSC is seeking public comment for specific estimated costs. Potential offsets to minimize adverse impacts on small businesses could include adding such costs to utility operation and maintenance budgets to socialize them among utility ratepayers. Building owners may also be able to bear the added costs of trained operator qualified workers to work on inside piping upstream of the meter because such costs per building owner will likely be negligible. Some costs associated with the proposed changes could be mitigated with the opportunity for waivers from the PSC, which, if allowed, would extend the time intervals during which leakage and corrosion inspections would need to occur.

5. Economic and technological feasibility: The proposed rule does not require any specialized technology for compliance.

6. Minimizing adverse impact: No adverse impacts exist relative to the requirement that gas in route to storage in transmission lines be odorized because this rule change only affects interstate pipeline operators which are non-jurisdictional in New York State. Staff is unaware of any intrastate pipeline operators subject to New York’s gas safety program in Part 255 who would be impacted by this odorization requirement. No adverse impacts exist relative to the proposed elimination of soap testing and MAOP throttling provisions because existing jobs could be redirected within the industry or could even increase in response to this proposed rule. In order to minimize any adverse impacts associated with compliance, the Commission may issue a waiver, which would allow a LDC to deviate from the proposed rules upon a showing that the application of all of the operation and maintenance requirements, primarily the schedule of leakage surveys and corrosion inspections, would be impractical, costly, inappropriate, or unreasonable. The LDC would have to demonstrate to the Commission that the alternate operation and maintenance plan would be equal to or safer than the rules being adopted.

LDCs operating in other northeast states, such as National Grid and Iberdrola USA, must already comply with state gas safety rules similar to this proposed rule and have already instituted internal corporate processes to comply with all aspects of the proposed rule which should aid in the overall mitigation of adverse impacts.

7. Small business and local government participation: The PSC will comply with the New York State Administrative Procedure Act (SAPA) section 202-b (6) by assuring that small businesses and local governments have been given an opportunity to participate in the rule making. This participation will occur through meetings and/or interactions with affected municipalities, such as the City of New York, utilities, such as Consolidated Edison Company of New York and National Grid, labor unions, and other stakeholder groups, such as the NYS Association of Towns, Conference of Mayors, and NYS Association of Counties, during the rulemaking process. An update on stakeholder outreach and interactions will be provided in the revised Regulatory Flexibility Analysis.

Furthermore, PSC will be accepting public comments to the Notice of Proposed Rulemaking and will be summarizing comments and responding to comments that are received. The Secretary of the Public Service Commission will also be issuing a notice to stakeholder groups on a distribution list to apprise members of this rulemaking and to solicit comments.

8. Cure period: No cure period is included in the proposed rule because upon enactment of the rule, any affected utility may apply to the Commission for a waiver from the proposed requirement, to the extent that the utility can demonstrate that inspection, surveys, and testing can be safely conducted on a more infrequent basis or an equivalent technical alternative can be employed. Gas Safety Section Staff at the Department of Public Service typically offers utilities a thirty (30) day cure period to correct deficiencies in biannual audit findings and prior to recommending the pursuit of an enforcement case. Staff will work on formalizing internal guidance to document this existing best practice which involves a right to cure. Additionally, Department Staff anticipates commencing a comprehensive revision to Part 255 in the future, whereupon an express cure period will be considered as part of the rulemaking package.

1. Types and estimated numbers of rural areas: This rule applies to the entire State and impacts all rural areas of the State.

2. Reporting, recordkeeping and other compliance requirements; and professional services: The proposed rule would require professionals in the industry who now perform alterations or repairs on inside piping upstream of the meter to become Operator Qualified and submit to drug and alcohol testing in order to perform such work. The LDC employing these professionals will have to train, test, inventory, update, and likely expand existing Operator Qualification programs and records. Likewise, an intrastate pipeline operator that may be affected by the elimination of the storage exception may have to expand existing records to document the addition of odorant to its pipelines. There are no additional burdens on industry to increase reporting requirements resulting from the proposed rule. Since the industry may conduct in-house training and testing of its employees and contractors, there is not anticipated to be any professional assistance required to comply with these Operator Qualification requirements. A small number of towns in New York State operate their own municipal gas corporations and under the proposed rule would be required to expand the retention of their Operator Qualification records to the extent that new employees or contractors will become operator qualified to work on each gas corporation’s inside building piping that is upstream of the meter. Operators will also have to retain documentation that leakage surveys and atmospheric corrosion inspections were performed on the inside piping.

3. Costs: Costs to industry, municipalities, and unions relative to compliance with the “service line” provisions of the proposed rule are currently unknown and the PSC is seeking public comment for specific estimated costs. Potential offsets to minimize adverse impacts on small businesses could include adding such costs to utility operation and maintenance budgets to socialize them among utility ratepayers. Building owners may also be able to bear the added costs of trained operator qualified workers to work on inside piping upstream of the meter because such costs per building owner will likely be negligible. Some costs associated with the proposed changes could be mitigated with the opportunity for waivers from the PSC, which, if allowed, would extend the time intervals during which leakage and corrosion inspections would need to occur.

4. Minimizing adverse impact: No adverse impacts exist relative to the requirement that gas in route to storage in transmission lines be odorized because this rule change only affects interstate pipeline operators which are non-jurisdictional in New York State. Staff is unaware of any intrastate pipeline operators subject to New York’s gas safety program in Part 255 who would be impacted by this odorization requirement. No adverse impacts exist relative to the proposed elimination of soap testing and MAOP throttling provisions because existing jobs could be redirected within the industry or could even increase in response to this proposed rule. In order to minimize any adverse impacts associated with compliance, the Commission may issue a waiver, which would allow a LDC to deviate from the proposed rules upon a showing that the application of all of the operation and maintenance requirements, primarily the schedule of leakage surveys and corrosion inspections, would be impractical, costly, inappropriate, or unreasonable. The LDC would have to demonstrate to the Commission that the alternate operation and maintenance plan would be equal to or safer than the rules being adopted.

LDCs operating in other northeast states, such as National Grid and Iberdrola USA, must already comply with state gas safety rules similar to this proposed rule and have already instituted internal corporate processes to comply with all aspects of the proposed rule which should aid in the overall mitigation of adverse impacts.

5. Rural area participation: The PSC will comply with the New York State Administrative Procedure Act (SAPA) section 202-bb (7) by assuring that public and private interests in rural areas have been given an opportunity to participate in the rule making process. This participation will occur through meetings and/or interactions with affected municipalities, utilities, such as Consolidated Edison Company of New York and National Grid, labor unions, and other stakeholder groups, such as the NYS Association of Towns, Conference of Mayors, and NYS Association of Counties, during the rulemaking process. An update on stakeholder outreach and interactions will be provided in the revised Rural Area Flexibility Analysis.

Furthermore, the PSC will be accepting public comments to the Notice of Proposed Rulemaking and will be summarizing and responding to the comments that are received. The Secretary of the Public Service Commission will also be issuing a notice to stakeholder groups on a distribution list to apprise members of this rulemaking and to solicit comments.

1. Nature of impact: Compliance with the requirements associated with the proposed “service line” provisions of the rule will result in additional training, education, and testing requirements for all professionals, in addition to the already qualified utility workers and contractors, who perform work on inside piping upstream of the meter. There may be an initial deficit in the number of operator qualified workers to perform this type of work while persons who currently perform such work absent Operator Qualifications are trained and tested, which may create a backlog. However, it is anticipated that by aligning the state definition of “service line” with its federal code counterpart, a LDC (operator) will likely have to hire additional qualified workers to address the increase in its operation and maintenance requirements which will likely translate into a long-term growth in jobs. It is anticipated that adding the requirement that gas in transmission lines in route to storage be odorized will have a minimal impact on state jobs since no intrastate pipelines are known to be affected by the proposed rule. Likewise, the proposed elimination of the MAOP throttling provision will have a minimal impact on jobs because the operator qualified workers who would otherwise be responsible for performing the five-year cycling could refocus job tasks and perform, for instance, leakage surveys, atmospheric corrosion inspections, or pressure testing instead. Proposed elimination of soap testing could in fact produce the opposite effect of job loss and lead to an increase in jobs because more workers would be needed to perform the more labor intensive pressure testing instead. Overall, negative impacts to income will be minimized and negative impacts on jobs will likewise be minimal.

2. Categories and numbers affected: There are an unknown number of operator qualified utility workers who perform work on inside piping that could be impacted by the proposed rule. Additionally, there are an unknown number of Master Plumbers in the City of New York who currently work on natural gas piping inside of buildings who will be subject to the proposed Operator Qualification and drug and alcohol testing programs in order to continue to perform such work.

3. Regions of adverse impact: Urban areas in the state with older high rise buildings will likely bear the most impact because more inside gas piping will have to be inspected and any operation and maintenance work will have to be performed by an operator qualified professional. There are not entire regions in the State, however, where this rule making will have a disproportionate adverse impact on jobs or employment opportunities.

4. Minimizing adverse impact: Potential offsets to minimize adverse impacts on building owners could include adding such costs to utility operation and maintenance budgets to socialize them among utility ratepayers rather than individual building owners. No adverse impacts exist relative to the requirement that gas in route to storage in transmission lines be odorized because this rule change only affects interstate pipeline operators which are non-jurisdictional in New York State. Staff is unaware of any intrastate pipeline operators subject to New York’s gas safety program in Part 255 who would be impacted by this odorization requirement. No adverse impacts exist relative to the proposed elimination of soap testing and MAOP throttling provisions because existing jobs could be redirected within the industry or could even increase in response to this proposed rule.