Pipelines Regulations 2017

PIPELINES REGULATIONS 2017

STATEMENT OF REASONS (March 2017)

Purpose

The 2016 Victorian Guide to Regulation: A handbook for policy-makers in Victoria requires the preparation of a statement explaining how the general issues raised in the public comments/submissions have been addressed in the final document. The ‘Statement of Reasons’ is to be published on the same website used to consult on the Regulatory Impact Statement ( will also be available in hard copy on request.

Background

On 3 January 2017an exposure draft of the Pipelines Regulations 2017 and Regulatory Impact Statement were released for public comment. Eight submissions were received during the public consultation period that closed on 10 February 2017.

In general terms, the submissions covered five broad issues:

Customer service standards
Encroachment from changing adjacent land uses
Transitional arrangements
Details discussed at the January 2017 industry round table convened by the Department of Environment, Land, Water and Planning (DELWP) and Energy Safe Victoria (ESV) and
Specific regulations.

Issues

The Pipelines Act 2005 and good regulatory practice determine the way in which these issues are best addressed. The issues of customer service standards and encroachment are best addressed through non-regulatory approaches as outlined below.

Issue 1: Customer service standards were highlighted as an issue, including: consultative processes, regulatory creep, clarity of advice, time taken for decisions to be made and the type of acceptable documents such as allowing common system level documents to be submitted, instead of requiring that only bespoke documents would meet Pipelines Act 2005 requirements. In the Regulatory Impact Statement, the regulators –DELWP and ESV – agreed that service standards were an issue and committed to address it.

Issue 2: Encroachment from the intensification and change in adjacent land uses are increasingly affecting pipeline security. The issues were well documented in the submissions provided to the Advisory Committee, which was established, under the Planning and Environment Act 1987, to inquire into Major Hazard Facilities (

The government’s response to the inquiry final report provides the opportunity to progress this issue ( data/assets/pdf_file/0014/47003/Major-Hazard-Facilities-AC-Final-Report.pdf).

Issue 3:With limited exceptions, there are no material licence documentation changes arising from the Pipelines Regulations 2017 in relation to the previous Pipelines Regulations 2007 and the Australian Standards 2885 (AS 2885) that were given standing by the 2007 regulations. The main exception is the timing of annual reports. The 2017 regulations require all licensees to annually report on a financial year basis, compared with the previous arrangements,whereby licensees reported on the anniversary of the licence. The regulations also require annual reports to be provided within 90 days. No transitional arrangements are proposed, as the period from 28 March to 30 September is considered sufficient for licensees to meet the new reporting requirements.

Issue 4:Some regulations, such as 14 and 43,include the detail discussed during the February 2017 industry round table. Much of this detail was operational in character and therefore the certainty that is sought is most effectively implemented through guidelines. The guidelines provide both the flexibility and certainty in the day-to-day application of the Pipelines Act 2005and its Regulations, without creating further regulatory burden.

Issue 5:Given the importance of operational certainty for the pipeline industry,the table below responds to the issues raisedin the submissions with specific draft regulations.

Regulation / Key issue / Response
5 / Definitions to include the suspension, decommissioning and abandonment stages of the pipeline lifecycleand social impacts.
Regulatory prescription may overlap and duplicate AS2885 standards. / No change.The issue arises from a proposal to amend the wording of draft Regulation 11(1) from ‘licensee intends to cease to convey substances through the pipeline’ to ‘if the licensee intends to suspend pipeline operation’. As the draft wording is derived from the Pipelines Act 2005(section 107), it is only appropriately changed if the act were similarly worded. If required, aguideline can outline the alignment of the Act and Regulations with AS2885 terminology.
No change. The definitions refer to AS 2885.1 and AS 2885.3 as published in 2012 and as amended from time to time. This allows the regulations to give standing to any amendments to the standards.
Note that between 2007 and 2017 the standards were substantially amended without affecting the application of the regulations or the standards.
8 / To ensure thatthe requirement matches the location, length of the pipeline and licensing stage, consideration could be given to whether alternative route requirements are best addressed by a guidance note, or reference to AS 2885.1 to consider environmental, social and safety impacts. / Supported. The draft Regulations were amended to provide a specific link to AS 2885.1. Licence applications are infrequent and advice on how this requirement is met is best clarified at the pre-licence stage to ensure the information required is proportionate to the locality-specific issues that may arise.
Note that the regulations cannot fetter the power of the Minister, under the Pipelines Act 2005(section 31), to ask for further information.
11 / Annual report period be changed to a calendar year to align with the licence holders’ operationsand the time to provide annual reports be increased from 28 days after the reporting period to either 60 or 90 days.
Regulationsprescribe the annual report format or establish guidelines for the submission of annual environmental and safety reports.
Amend Regulations to allow for a suspension plan to be incorporated in an Operations Safety Management Plan to manage environmental and safety risk for suspended and decommissioned pipelines. / Supported in part. The Pipelines Regulations 2007 required annual reports on the anniversary of the licence date. Over the last 40 years licences have been issued in every month of the year. Consequently,under the 2007 regulation,it was impossible to provide a consistent state-wide view of the environment and safety performance of the pipeline network. For this reason, a single reporting period has been set.
Under Victoria’s Interpretation of Legislation Act 1984 a financial year is the period of twelve months ending at midnight on 30 June. The period of time for annual report submission has been increased to 90 days, as it does not compromise the aim to provide astate-wide view.
No change. The Act and Regulations provide licence holders with flexibility in the way that annual performance can be reported. Consistency in the structure of annual reports across the networkis desirable, with the level of detail determined by the issues relevant to each pipeline. Aguideline will be developed in consultation with industry to provide the certainty required and to avoid unnecessary regulatory burden that would result from a one-size-fits-all approach.
No change. The draft regulations (R11(1)(d) and in R11(2)) do not specify the form of a ‘suspension plan’ for ‘ceasing to convey substances through pipeline’. Consequently it is matter of choice on whether a ‘suspension plan’ is provided as a stand-alone document or as an incorporated part of an operational plan.
13 / Clarify the information needed to demonstrate that a pipeline will be fit for purpose.
Regulation is not needed and should be covered as part of the ‘Consent to Operate’ process. / No change. The draft regulation provides for licence condition changes. These include changes in the maximum-allowable-operating-pressure (MAOP) or to the substance to be conveyed in the pipeline. The information required to satisfy this regulation is covered by AS2885.3-2012 (Section 10.2) and AS2885.1-2012 (Section 9). Historically, the demonstration of compliance with AS 2885 requirements has been addressed through an administrative request. Given the importance of this compliance, it is formalised through this regulation.
No change. The Pipelines Act 2005(section 107) sets out the requirement of the licensee in seeking the Minister’s consent to commencethe operation of a pipeline that has never been used to convey substances or resume the operation of a pipeline that has completely ceased to convey substances. The regulation must align with the intent of the Act.
14 / Clarify how the fee applies where the alteration will be constructed over stages.
Regulations do not define a ‘minor alteration’ or a ‘significant alteration’ to authorised routes. / No change. The fee applies on an application-by-application basis. If an application for an alteration to the authorised route covers a staged program of related works, only one fee payment is required. If the licence holder chooses to make a separate application for each work stage, then a fee will be payable for each application.
No change. The Pipelines Act 2005(sections 66 and 68)defines whether an alteration is minor or significant.
17 / Regulations include the additional detail discussed during the February 2017 industry round table workshop.
The content of a Decommissioning Plan should be prescribed. / No change.Much of the additional detail is most effectively implemented throughguidelines as this method will provide both the flexibility and certainty in the day to day application of the Act and its Regulations. Much of the detail covered non-regulatory guidance and consequently had no implications for the Regulations.
No change.The requirements of a Decommissioning Plan are the same as those detailed in Pipelines Regulations 2007. Additional detail would lead to the risk of a one-size-fits-all approach and unnecessary regulatory burden. Aguideline would be the most effective means of provided further interpretative information should it be required.
20 / The purpose and practicality of the verbal versus written notification under 2(a) be assessed: if an incident occurs outside business hours notification to occur within one hour on the business opening that day.
For ‘gas pipelines’ subject to the Gas Safety Act1997, the requirements for incident reporting of safety incidents (R19), surveillance reporting (R22) in the Pipelines Regulations 2007 should not apply as these requirements are covered by the Gas Safety Act 1997and its regulations. / No change.Draft Regulation 20(2) requires written notification of only basic incident informationand can be provided by any technological means. It does not require a detail incident report. It is routine for pipelinesto be constructed on 10 to 12 hours, 7 day week basis, and for operations to occur on a 24 hour 7 day week basis.Changing the reporting time to the next business daycreates unacceptable risk, given the frequency of non-business days and given that some consecutive non-business days may be four days in length.
No change.Draft Regulation 20 does not apply to reportable safety incidents for pipelines that are also regulated under Gas Safety Act 1997 (refer to R20(6)).
25 / Replace wording ‘as far as reasonably practicable’ with ‘As Low as Reasonably Practicable (ALARP) to be consistent with AS 2885. / No change. The wording of this regulation must be consistent with the Pipelines Act 2005.It is noted that, while the ALARP principle is in wideuse, it is subject to practitioner debate.
30 / Amend the wording to be consistent with the safety case regime requirements under the Gas Safety (Safety Case) Regulations 2008 so that the same document could meet the requirements of both acts. Namely,that the accepted safety case (as per the Gas Safety Act 1997, section 40) is deemed for the purposes of this Act to be a SafetyManagement Plan accepted in respect of a pipeline operation. / No change. The wording does not prevent an accepted Safety Case from satisfying the requirements for a Safety Management Plan for Operations.
Note that the requirement for a Safety Management Plan for construction as set out in Part 6 would continue to remain applicable for all licence holders. If required, aguideline can provide further explanatory advice.
33 / Replace wording ‘as far as reasonably practicable’ with ‘As Low as Reasonably Practicable (ALARP)’ to be consistent with AS 2885. / No change. See regulation 25.
34 / Remove regulation 34(2)(b) as the term ‘significantly amended’ can be ambiguous.
That an exemption to the Safety Management Plan requirements for an Emergency Response Plan in the Pipeline Regulations is given where there is a requirement for a Safety Case under the Gas Safety Act 1997 or Occupational Health and Safety Act 2004.
As the Safety Case Regime sets out when and how often Emergency Response Plan should be tested, based on the level of risksas determined by the licensee,remove the requirement for the testing of the Plan when response arrangements are significantly amended and also the minimum of 12 month testing interval. / No change. It is accepted that plans for each pipeline will be developed and tailored by the licensee to align with their corporate systems. Commensurate with the obligation to manage risks, it is the licensee that is best placed to determine if a change would constitute a significant amendment.
No change. See regulation 30.
No change.Given the potential implications of a significant amendment, the regulation sets a minimum standard. Through the Emergency Response Plan, the licensee may choose a more frequent testing regime that should that align with their corporate management systems.
35to 40 / Safety, policy, systems and procedures (regulations 36), organisational structures and responsibilities (regulation 37), incident recording, investigating and reviewing (regulation 38) and compliance management (regulation 40) are requirements of the Safety Case Regulations under the Gas Safety Act 1997and largely covered as part of AS2885.3.
A company required to have a Safety Case under different legislation should be exempt from these requirements under a Safety Management Plan. / No change. See regulation 30.
46 / Replace wording ‘as far as reasonably practicable’ with ‘As Low as Reasonably Practicable (ALARP) to be consistent with AS 2885. / No change. See regulation 25.
48 / Amend Regulation 34 to include both environmental and safety considerations, given that - for the purposes of establishing an Emergency Response Plan - Regulation 48 appears to duplicate Regulation 34 requirements.
Inclusion of emergency response procedures in an Environment Management Plan is excessive. / No change. The Regulations are structured so that they are consistent with the structure of the Pipelines Act2005that provides separate heads of power for safety and for the environment. Despite this, the choice for licence holders, and the preference of the regulator, is that both requirements continue to be met by the one document.
No change. Fire, for example, may be a material risk affecting the environment, which would be relevant to an emergency response procedure. This regulation provides the licensee with the choice of integrating the procedures within the plan, or providing the procedures as a stand-alone document that meets the requirement for an Emergency Response Plan.
49 / Requirement for the Environment Management Plan to contain arrangements to record and keep information as prescribed is not practical for gas pipelines. Licensees already have extensive emergency management plans that must be approved by various regulators.These should be sufficient to demonstrate a licensee’s emergency management policies/procedures. / No change. This regulation does not require a licence holder to necessarily prepare new and discrete records and information. Records and information produced and retained through emergency management planning processes therefore equally meet this requirement.
Schedule 2 / Address the disparity/anomaly in the fee structure for a significant amendment of an Environment Management Plan for a 0‐10km pipeline as it exceeds the fee for the Environment Management Plan itself.
New fees are proposed for Environmental Management Plans. No differentiation is made between Construction Environmental Management Plans and Operational Environment Management Plans, who reviews the different documents and when the proposed fees would apply. Clarity is required on when fees would be applicable. / Supported. The draft fees for amendments were based on historical analysis and practice. For the following reasons fees for amendments are no longer proposed. Subject to industry’s commitment to a robust risk management strategy as the basis for environmental management, the costs of considering amendments should be marginal. The regulation of environmental matters by one agency (DELWP) rather than two agencies (DELWP and ESV) will also provide efficiency dividends. Similarly, the evaluation and control of environmental risk on whole of a project lifecyclebasis (construct/operate/decommission/abandon) would provide further efficiency gains.
Supported. The Pipelines Act 2005 (section 133) allows an Environment Management Plan to be given and accepted by the Minister in stages. The Act does not distinguish between whether a plan is for construction or operation stages or both. As a result, a fee is only payable once. The regulation of environmental management though one agency, rather than two agencies (namely DELWP and ESV)will provide further efficiency dividends.

1 | Page Pipelines Regulations 2017 – Statement of Reasons (March 2017)Final Version