[Federal Register Volume 61, Number 222 (Friday, November 15, 1996)]
[Notices]
[Pages 58605-58611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29367]


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DEPARTMENT OF TRANSPORTATION
Research and Special Programs Administration (RSPA), DOT
[Docket No. PS-142; Notice 3]


Program Framework for Risk Management Demonstrations

AGENCY: Office of Pipeline Safety, DOT.

ACTION: Notice and announcement of public meeting.

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SUMMARY: The Research and Special Programs Administration's (RSPA) 
Office of Pipeline Safety (OPS) is considering a program framework for 
its Pipeline Risk Management Demonstration Program required by the 
Accountable Pipeline Safety and Partnership Act of 1996. The 
Demonstration Program will invite pipeline operators to propose risk 
management projects for one or more parts of their pipeline systems 
that, upon approval by OPS, will substitute for the existing Federal 
safety standards in providing the basis for Federal oversight of 
pipeline safety and environmental protection. This document describes 
the Demonstration Program, the activities already underway to prepare 
for it, and the next steps in the process; describes the objectives to 
be achieved by the demonstration projects; provides needed guidance for 
pipeline operators who may wish to participate; and invites public 
involvement in the process through various opportunities for public 
comment and public meetings. A separate document, the Interim Risk 
Management Program Standard, provides specific direction to interested 
operators on developing risk management programs, including the 
projects in this Demonstration Program.

DATES: Meetings. (1) January 28, 1997, from 8:00 a.m. to 5:00 p.m. in 
New Orleans, Louisiana--public meeting. For more information, contact 
Janice Morgan at (202) 366-2392.
    (2) Through approximately March 31, 1997, at individual pipeline 
operators' sites--informational meetings with OPS. For more 
information, contact Bruce Hansen at (202) 366-8053.
    Written comments. (3) Written comments on this notice should be 
submitted on or before (Insert 60 days from publication date).
    (4) Written comments on the Interim Risk Management Program 
Standard

[[Page 58606]]

(available on the World Wide Web at http://ops.dot.gov, by contacting 
Doug Read at (202) 682-8588, or through the DOT docket associated with 
this notice) should be submitted to Mr. Read at the American Petroleum 
Institute (API) on or before (Insert 30 days from publication date). 
For more information, contact Mr. Read at (202) 682-8588.

ADDRESSES: Meetings. (1) The public meeting will be held at the New 
Orleans Hilton Riverside Hotel, Poydras at the Mississippi River, New 
Orleans, Louisiana, 70140.
    (2) Informational meetings between OPS and operators are typically 
held at each company's office.
    Written Comments. (3) Send comments on this notice in duplicate to 
the Dockets Unit, Room 8421, Research and Special Programs 
Administration, U.S. Department of Transportation, 400 Seventh Street, 
SW, Washington, DC 20590-0001. Identify the docket and notice number 
stated in the heading of this notice. Persons wishing to receive 
confirmation of receipt of their comments should include a self-
addressed, stamped postcard. All comments and docketed material will be 
available for inspection and copying in room 8421 between 8:30 a.m. and 
5 p.m. each business day. Contact the Dockets Unit, (202) 366-5046, for 
docket material.
    (4) Send comments on the Interim Risk Management Program Standard 
to Doug Read, American Petroleum Institute, 1220 L Street, NW, 
Washington, DC, 20005. Comments sent to Mr. Read will be available for 
inspection and copying through the DOT docket associated with this 
notice.

FOR FURTHER INFORMATION CONTACT: Elizabeth M. Callsen, Office of 
Pipeline Safety, Research and Special Programs Administration, U.S. 
Department of Transportation, 400 Seventh Street, S.W., Washington D.C. 
20590-0001, telephone 202-366-4572.

SUPPLEMENTARY INFORMATION:

I. Overview

    Section 5 of the Accountable Pipeline Safety and Partnership Act of 
1996 (Pub. L. 104-304, Oct. 12, 1996) requires OPS to establish the 
Pipeline Risk Management Demonstration Program and sets forth 
requirements for carrying out risk management projects. In a memorandum 
issued when the statute was enacted, the President directed the 
Secretary of Transportation to use his discretion to administer the 
Demonstration Program with certain safeguards in place. The safeguards 
identified in the President's memorandum to the Secretary include 
making provisions for:
     Accepting projects that can achieve superior public safety 
and environmental protection.
     Enabling full and meaningful participation by affected 
communities and constituencies in risk management project approval.
     Using orders ensuring that the requirements of risk 
management projects are subject to full enforcement authority.
     Limiting the number of demonstration projects to ten (10).
     Limiting participation to operators with clear and 
established records of compliance with respect to safety and 
environmental protection.
    The statutory requirements, the President's memorandum to the 
Secretary, comments on previous framework concepts (published in 60 FR 
49040, September 21, 1995, and 60 FR 65725, December 20, 1995), and 
other stakeholder input were used to develop the present framework, 
which provides guidance to operators who may decide to participate in 
the demonstration projects that are expected to begin in 1997.
    Risk management can provide pipeline owners and operators greater 
flexibility in their choice of safety-related activities than is 
possible within OPS's present universally applicable regulatory 
program. Risk management enables a company to customize its safety 
program to address its pipeline's particular risks. Furthermore, risk 
management is a dynamic process, with built-in features for evaluating 
and improving safety activities as experience is gained.
    The demonstration projects will test whether allowing operators the 
flexibility to allocate safety resources through risk management is an 
effective way to improve safety, environmental protection, and 
reliability. They will also provide data on how to administer risk 
management as a permanent feature of the Federal pipeline safety 
program, should risk management prove to be a viable regulatory 
alternative. The new standards, technologies, and communication 
processes developed by operators and OPS for the risk management 
demonstration projects will be adapted to support the range of risk-
based regulatory, compliance, and research and development activities 
OPS presently has under development.
    OPS expects that risk management methods and the formalized process 
of interactions and negotiation between regulators and company 
personnel will result in superior public safety and environmental 
protection than could otherwise be attained through existing regulatory 
requirements. Risk management is, by OPS definition, a more systematic 
and thorough assessment of risk and risk control options, with the 
intended result of superior decision making. As a result of improved 
assessment, OPS believes there is a potential to identify more risk 
than may have been found using existing practices.
    OPS plans to select companies for demonstration projects with a 
demonstrated commitment (1) to work in partnership to evaluate merits 
of risk management processes and technologies and (2) to develop risk 
management as an integral part of company day-to-day business 
practices, at least related to the demonstration project. The selection 
criteria favors projects showing potential for more comprehensive risk 
management applications. All participants will be focused on improving 
safety and environmental results, prioritizing resources more 
effectively, and enhancing the ability of government and industry to 
effect positive outcomes. OPS will have clear profiles of its 
assessment of pipeline integrity before and after the demonstration 
program. At the program conclusion, OPS fully expects to have a better 
understanding of individual pipeline risks and to be in a better 
position to evaluate risk control options.
    Finally, OPS expects risk management to be able to provide better 
accountability for safety and environmental protection, and a better 
basis to communicate with the public. To assure that safety and 
environmental protection improve, OPS will measure local, project-
specific data such as current physical data, new test data, comparison 
with similar segments, outcomes from risk control actions, precursor or 
``anticipative`` event measures, level of risk awareness, history of 
service interruptions and incident data. OPS also expects to measure 
improvements in communications, understanding, and resulting increased 
ability of government and industry to effect desired safety and 
environmental project outcomes. OPS and operators participating in the 
Demonstration Program will report to the public periodically during the 
four year period.
    OPS will be accepting into the Demonstration Program those 
projects, as proposed or ultimately negotiated, that are expected to 
achieve superior public safety and environmental protection than is 
currently being achieved through regulatory compliance. Because of the 
nature of the risk management process, OPS believes

[[Page 58607]]

that operators choosing to participate will be able to propose projects 
demonstrating such protection.
    Each demonstration project is expected to have a four-year 
duration. Participation in risk management demonstrations will be 
voluntary and subject to OPS approval based on criteria set forth later 
in this notice. Eligibility for the demonstration projects beginning in 
1997 is limited to interstate natural gas transmission and hazardous 
liquid pipeline companies. RSPA may later broaden eligibility to 
include distribution and other intrastate operators.

II. Activities Presently Underway and Next Steps

    The December 20, 1995, Federal Register notice gave the background 
for OPS's consideration of company-specific risk management projects as 
an alternative to the existing regulations. The notice described many 
of the safety, environmental, legislative, technical, public 
perception, and economic factors driving government, corporate, and 
public interest in risk management.
    Since December 1995, OPS has been working with ``joint risk 
management quality teams'' (JRAQT) composed of representatives of state 
pipeline regulatory agencies, the oil and gas industries, and local 
public safety and environmental representatives to develop the five 
primary components of the Pipeline Risk Management Demonstration 
Program. These components include the Interim Risk Management Program 
Standard, the guidance for assessing risk management as a regulatory 
alternative using general industry data, the training protocols for 
instructing government and corporate participants about their new roles 
under risk management, a plan for productive communication between all 
participants and the public, and the regulatory framework presented in 
this notice. The standard and the regulatory framework are now ready 
for public comment. The guidance for assessing risk management as a 
regulatory alternative will be ready for public comment in November.
    The Interim Risk Management Program Standard will serve as a common 
ground upon which the pipeline industry can develop and refine 
effective risk management demonstration projects that regulators can 
approve and monitor. It defines certain elements that all programs 
should contain, but allows flexibility to each company to customize its 
project to fit its particular needs and corporate practices, and allows 
projects to evolve as experience is gained. The standard will also 
provide companies guidance for selecting performance measures to ensure 
that safety and environmental protection are safeguarded in 
demonstration projects. Directions for obtaining and commenting on the 
standard are at the front of this notice.
    The regulatory framework component presented in this notice guides 
pipeline companies in how they can gain OPS approval of their risk 
management projects and describes how OPS would monitor the plans. The 
framework presented here will guide the demonstration projects that 
begin in 1997. The experience gained from the demonstration projects 
will help OPS to later develop a permanent procedure for approving risk 
management projects, if risk management proves to be a viable 
regulatory alternative. Directions for public comment on the regulatory 
framework are also at the front of this notice.
    To help ensure that the Demonstration Program components provide 
the flexibility to fairly and consistently evaluate and support actual 
risk management projects, OPS has been conducting a series of meetings 
with individual operators since August 1996. The topics of discussion 
include risk management projects the operator has in place or under 
consideration and criteria OPS might use to evaluate them. During the 
meetings, operators also learn about and comment on the Demonstration 
Program components under development. Companies interested in such a 
meeting should see the front of this notice for contact information.
    OPS has held two public meetings on risk management demonstration 
projects and will hold a third on Tuesday, January 28, 1997, in New 
Orleans, Louisiana (see the front of this notice for scheduling and 
lodging information). At that meeting, OPS and the JRAQT will present 
the Interim Risk Management Program Standard that operators will use 
during the demonstration projects. OPS will also present prototype risk 
management projects to illustrate the documentation needed and the 
types of issues to be addressed during project review, approval and 
monitoring. After the meeting, OPS will publish a Federal Register 
notice to begin the project approval process described in Section IV of 
this notice. Between now and the January meeting, OPS will continue to 
refine the Demonstration Program components based on public comment on 
this notice, meetings with individual operators, national public, 
environmental and other interested organizations, and continued 
interaction with industry and the States through the JRAQT teams.

III. Risk Management Demonstration Project Objectives and Policies

    The objectives of the Pipeline Risk Management Demonstration 
Program, which stem from the statutory requirements and the 
Presidential directive, are to accomplish the following:
     To show that more effective allocation of resources can 
result in improved safety and environmental protection over what is 
presently achieved through regulatory compliance.
     To address risks not addressed by regulations by 
capitalizing on features inherent to the risk management process, such 
as improved quality and integration of safety data and, as a result, 
more comprehensive assessment of threats.
     To systematically test risk management as a regulatory 
alternative through objective evaluation under a broad range of 
conditions.
     To establish a common framework for productive 
communication with public safety officials and the public, and for 
getting meaningful public input into the risk management process.
     To develop and apply new risk assessment models, processes 
and technologies.
    OPS believes that the following elements need to be structured into 
the Demonstration Program:

(1) Operators participating in the Pipeline Risk Management 
Demonstration Program will need to provide sufficient data and 
background information to enable OPS to determine whether risk 
management is an effective regulatory alternative that provides 
superior safety and environmental protection.

    Implicit in a company's participation in the Demonstration Program 
should be the commitment to work in partnership with OPS to determine 
whether and how risk management might become a permanent feature of the 
Federal pipeline safety program. OPS will ask for evidence that risk 
management, as it relates to the proposed demonstration project, is or 
will be developed and implemented as an integral part of the day-to-day 
business practices of the company. OPS will also periodically ask 
companies for suggested refinements to the primary program components.
    In keeping with the Interim Risk Management Program Standard, the 
operator must identify project-specific performance measures that 
demonstrate the effectiveness of the risk-control decisions being made. 
During the project approval process, OPS will

[[Page 58608]]

determine whether these local project-specific performance measures 
appear appropriate and adequate. Throughout a demonstration project, 
the operator will evaluate local and broader program measures and 
ensure that the performance measures are appropriate and adequate. The 
operator would periodically report on these project-specific 
performance measurements to OPS.
    OPS is developing guidance for additional more general measures 
operators would report during the four-year demonstration period to 
enable OPS to determine the effectiveness of risk management as a 
regulatory alternative. These measures will help OPS answer the 
following questions:
     Does risk management result in a greater safety, 
environmental protection, and service reliability than would otherwise 
be achieved through compliance with the safety regulations?
     Are resources being better prioritized and more 
effectively applied under risk management?
     Has agency and industry involvement in the discussion of 
risks and risk control options, and the agency and industry's ability 
to impact desired outcomes, increased under risk management?

(2) Operators will be allowed to reallocate resources geographically, 
as long as safety is adequately safeguarded at each location along a 
demonstration site.

    OPS will allow operators the flexibility in a risk management 
demonstration project to reallocate safety resources across several 
pipeline segments. An operator may substitute one or more activities 
for others, or do away with redundant activities altogether, as long as 
the basic safety and environmental protection along the pipeline is 
safeguarded at each point. However, it is still expected that the 
overall demonstration project performance will result in superior 
safety and environmental protection.

(3) OPS will consider approving demonstration projects of various 
scopes and complexities.

    The scope of a risk management demonstration project may be an 
entire pipeline system and all safety activities, or may be focused on 
parts of a system and specific activities.
    Since operators have different levels of experience with, and 
confidence in, risk management, OPS expects some proposals to begin 
with approaches that are limited in scope. Therefore, an operator may 
propose a phased entry into a demonstration project, broadening the 
scope of the project as experience is gained. During the project 
approval process, OPS will favor projects showing a potential for 
expansion and more comprehensive application of risk management. OPS 
expects to work with companies to develop a profile which compares the 
demonstration site to the rest of the pipeline.
    OPS recognizes that significant benefits can accrue from even the 
less sophisticated applications of risk management. Because no single 
risk management approach will be universally appropriate for every 
situation, OPS is looking for those that match the level of risk 
management with the complexity of the risks being managed. However, any 
operator who participates in the Demonstration Program must have in 
place the program elements defined in the Interim Risk Management 
Program Standard. The program elements provide the structure for the 
limited scope proposal.
    When an operator proposes risk control alternatives to implement 
during a demonstration project, the operator should demonstrate a 
knowledge and understanding of the range of risks along the 
demonstration site and show that it has considered significant failure 
modes. An operator may draw on corporate experience, skills, and 
available documentation to support the proposed alternatives.

(4) OPS considers an operator's compliance with the provisions of an 
OPS-approved risk management project to be an equivalent and acceptable 
alternative to compliance with the regulations.

    OPS considers the provisions of an approved risk management project 
to be a regulatory commitment. The terms and conditions of the project 
will be incorporated into an order that is subject to enforcement 
authority. By this order, an operator conducting risk management 
activities in an approved project will be exempt from regulations 
corresponding to the stated scope of the project, but will be required 
to comply with the provisions of the project. An operator not complying 
with the provisions of its OPS-approved project will be subject to the 
same civil penalties administered under existing regulations.
    OPS has the authority to exempt, by order, an owner or operator 
participating in a risk management demonstration project from all or a 
portion of the regulatory requirements, and from any new regulations, 
applying to the covered pipeline facility. OPS could issue orders 
exempting participating operators from any but the reporting 
requirements in 49 CFR Parts 192 or 195, but expects that the projects 
approved in 1997 will require exemptions from only one or a portion of 
the regulations.
    When the project concludes at the end of four years, or if it is 
terminated earlier, consideration will be given to installations or 
facility modifications made during the demonstration project that 
conflict with existing or future regulatory actions. Actions taken by 
the operator in good faith in an approved risk management project could 
be ``grandfathered`` and exempt from future regulatory compliance, 
provided safety and environmental protection are not compromised.

(5) The Operator Is Responsible for Active Communication With State and 
Local Officials Regarding Risk Management. OPS Will Ensure That Such 
Communication Is Part of the Operator's Demonstration Project Plan and 
That the Communication Is Carried Out.

    OPS sees potential for risk management to provide better 
accountability to the public for safety and environmental programs. OPS 
is beginning to explore appropriate strategies for productive 
communication with public safety officials and the public, and for 
getting meaningful public input into the risk management process. 
Similarly, OPS realizes the importance of training and other 
information exchange in supporting the institutional change that would 
occur under risk management.
    Companies must establish appropriate dialogue with state and local 
public safety and environment officials. At a minimum, these public 
officials should be aware that a risk management demonstration project 
is underway on the pipeline, that OPS is monitoring the project, and 
who functions as a point-of-contact. Such a dialogue would enable local 
officials to reassure the public that an appropriate regulatory 
presence is in place and how the overall safety and environmental 
protection are enhanced by risk management. OPS will discuss external 
communications with the operator during a consultation prior to formal 
application.

IV. Process for Selecting Projects

    OPS is providing the following as guidance for operators to seek 
approval of their risk management demonstration projects. OPS plans to 
formally solicit operators to voluntarily participate in the risk 
management demonstration projects via a Federal Register Notice in 
first quarter 1997. That notice will give

[[Page 58609]]

target dates for the various steps described below.

(1) Letter of Intent

    Operators would notify OPS of interest in participating in a 
demonstration project, and OPS would screen operators to ensure that 
only companies whose demonstration project concepts have a reasonable 
likelihood of being approved expend the resources to develop formal 
applications. OPS will screen Letters of Intent to identify no more 
than ten projects as candidates for selection in the Demonstration 
Program. Ten is the maximum number OPS can reasonably expect to 
evaluate and, if selected, to monitor. OPS would accept Letters of 
Intent during a 60-day window in early 1997. A Letter of Intent is an 
expression of a company's interest, but does not obligate a company to 
participate in a demonstration.
    OPS would require that a demonstration project cover any part or 
all of a pipeline system that is covered by either 49 CFR Part 192 or 
195, is under federal oversight or oversight by a participating 
interstate agent, and is currently in operation or under conversion to 
service. Operators should commit to a project duration of at least four 
years, and provide evidence that they will address all considerations 
raised in the Interim Risk Management Program Standard. This includes 
providing a description of the means by which the company would 
communicate with local officials regarding its demonstration project.
    OPS would like to choose operators who provide evidence of 
consistent corporate commitment to risk management. This could be 
demonstrated by a corporate officer, who controls the resource 
allocation for the demonstration project and competing operations, 
signing the Letter of Intent.
    The Letter of Intent would include a general discussion of risk 
management principles as part of a company's operating philosophy. To 
provide OPS adequate data to choose a diverse set of demonstration 
projects, the Letter would provide a brief system profile of the 
pipeline, including product(s) transported, pipeline age and operating 
history, types of population distributions and geographic conditions in 
proximity of the pipeline, and any other features the operator thinks 
are notable. The Letter would also describe the scope of the project as 
defined per the Interim Risk Management Program Standard and any new 
technologies and processes to be developed or deployed during the 
demonstration phase.
    In making its choice, OPS would consider those operators who have 
clear records of safety and environmental compliance, based on OPS 
records and consultation with other interested agencies. OPS will also 
limit selection to projects which would achieve superior safety and 
environmental protection. Operators should have completed any OPS-
initiated corrective actions.
    OPS will publish for public comment a Federal Register notice 
describing proposals of selected companies and the demonstration sites 
under consideration. OPS will also follow through with national public, 
environmental and other interested organizations about the sites under 
consideration so that local officials can be notified and informed.

(2) Consultation

    OPS would invite each operator submitting a promising Letter of 
Intent to a consultation within 60 days of receipt of the Letter of 
Intent. The purpose of the consultation would be to familiarize OPS and 
affected States with specific aspects of an operator's risk management 
project concept, to provide guidance to the operator on what 
refinements (if any) are needed for OPS to approve the concept as a 
demonstration project, to enable regulators to plan the expected level 
of monitoring based on the company's own audit process, and to enable 
regulators and the operator to agree on the roles and responsibilities 
of each throughout the project duration. OPS intends that the 
consultation begin a negotiation process that results in a 
demonstration project that OPS could approve.
    OPS will provide notification that encourages local officials and 
the public with questions about demonstration projects to raise them 
with state pipeline safety officials who can raise them in the 
consultation process.
    OPS would constitute a Project Review Team (PRT) to consult with 
the operator, keep abreast of any subsequent discussions, and provide 
technical input on whether a demonstration project could be approved. 
OPS would customize the make-up of each PRT to the company and project. 
The PRT members`` roles would be defined in OPS-developed protocols, 
designed to ensure rigorous yet fair and consistent treatment of all 
operators throughout plan negotiation, approval, and monitoring. The 
mix of states and OPS regional personnel on the PRTs, as well as any 
outside technical expertise consulted, would vary from project to 
project depending on the demonstration's technical focus and geographic 
location. Some of the same OPS headquarters staff would be on all PRTs 
to ensure consistent application of policy throughout the project and 
to follow all issues raised during the consultations to their 
resolution.
    The consultation would focus on the design, operations, and 
maintenance practices that would replace practices required by 49 CFR 
Part 192 or 195, and that would achieve superior overall safety and 
environmental protection. The operator would provide the rationale for 
these risk control alternatives by generally describing the specific 
risk management models, processes, and sources of data supporting their 
selection.
    Other consultation discussion topics would include the program 
goals, the project scope defined per the Interim Risk Management 
Program Standard, the project-specific performance measures, the 
operator's auditing plan, a plan for OPS audits, proprietary issues, 
provisions for public communication, and the outline for a work plan 
including benchmarks, risk assessment processes, new technologies 
applied, points-of-disclosure, and mechanisms for monitoring and 
refinement.

(3) Formal Application and Approval

    An operator would submit an application formally indicating its 
intent to enter into a risk management demonstration project. 
Consistent with the program standard's intent for an efficient 
information flow among appropriate stakeholders, a summary of this 
formal application would be published in the Federal Register, and the 
application itself would be made available for review and comment in 
the docket. OPS will again communicate with national public, 
environmental and other interested organizations about the sites in 
which we intend to approve demonstration projects so that local 
officials can be notified and informed.
    The formal application, including a detailed work plan, would 
document operator/PRT resolution of issues raised during the 
consultation and any subsequent discussions. It would also provide 
assurance of a corporate commitment to implement the project in 
accordance with the operator's risk management application. Other 
issues may be included at the operator's discretion, such as how to 
return to compliance with the regulations should a demonstration be 
terminated.
    OPS would review the application and comments, and decide whether 
to approve the project. If OPS decides to approve the project, OPS 
would issue the operator a written order. The order,

[[Page 58610]]

in addition to exempting an operator from the applicability of 
specified pipeline safety regulatory requirements for the period of the 
demonstration, would set forth the terms and conditions for the 
operator's participation in the demonstration project. The order would 
be enforceable.

(4) Implementation

    A risk management project would start as soon as OPS approves the 
formal application and work plan, issues the order, and notifies the 
public through the Federal Register that the order is in effect. 
Regulators and operators would monitor risk management demonstration 
projects for compliance with the order. OPS would provide each 
participating operator with a plan describing the regulators`` expected 
level of effort in monitoring the demonstration, including the type of 
audits, their frequency, the participants, the audit scope, and the 
operator's means of addressing those aspects of the demonstration site 
remaining in compliance with the regulations, but this plan would not 
limit OPS's statutory authority to inspect a pipeline facility during 
the period of the demonstration. Planned OPS audits would coincide with 
the operator's data taking at key decision points, such as when the 
operator evaluates the effectiveness of safety activities or considers 
modifying safety activities.
    An operator would notify OPS of any intent to make substantive 
modifications to the risk management project once a demonstration is 
underway. The PRT may reconvene to renegotiate project approval or to 
resolve other significant issues. Provisions will be made for public 
review and comment on renegotiated projects.
    OPS could, through appropriate administrative action, address any 
unsafe conditions that arise during the demonstration period to ensure 
that such conditions are quickly addressed. OPS would also administer 
civil penalties within the provisions of the existing regulations for 
operators not complying with the order.

(5) Termination

    OPS intends that, where a risk management demonstration project is 
determined to have been successful, the operator could, in lieu of 
switching to compliance with the regulations, continue to exercise risk 
management on that part of the system that was covered by the 
demonstration. However, this determination could not be made until the 
end of the demonstration period. Upon conclusion of the project, or if 
it is terminated earlier, consideration would be given to installations 
or facility modifications made during the demonstration project that 
conflict with future regulatory actions.
    OPS may consider terminating a demonstration project if:
    (i) The operator requests termination due to changed circumstances;
    (ii) The operator does not comply with the terms and conditions of 
the approved risk management project;
    (iii) Safety has been compromised; or
    (iv) OPS and the operator fail to agree on a substantive 
modification to a risk management project.

V. Summary of Means of Achieving Meaningful Public and Community 
Involvement

    OPS is providing numerous opportunities for public participation in 
the design and implementation of the Pipeline Risk Management 
Demonstration Program. One of OPS's objectives for the demonstrations 
is to establish a common framework for productive communication with 
public safety officials and the public, and for getting meaningful 
public input into the risk management process. OPS believes meaningful 
public input is essential if the demonstrations are to be successful.
    The public was invited to comment on early regulatory framework 
concepts via Federal Register notices published in 60 FR 49040, 
September 21, 1995, and 60 FR 65725, December 20, 1995. OPS is 
soliciting public comment on the latest framework concepts via this 
notice. In addition to the notices, OPS has held two public meetings in 
preparation for the demonstrations and has scheduled a third for 
January 28, 1997, in New Orleans, LA. The previous public meetings were 
held on November 7, 1995, in McLean, Virginia, and on April 14-15, 
1996, in Houston, TX. At the third meeting, OPS plans to present the 
final framework and supporting documents, and to demonstrate the review 
and approval process using prototype risk management projects.
    This notice directs interested members of the public to the docket, 
to the American Petroleum Institute (API), or to a website to obtain 
and comment on the latest draft of the Interim Risk Management Program 
Standard. The standard describes the elements that OPS, its state 
partners, and industry agree must be common to all demonstration 
projects. One requirement is an external communications element, in 
which regulator and other stakeholder interests and concerns are 
understood, and program goals and results are communicated to and 
discussed with the public, as well as Federal, state, and local 
regulators, and other stakeholders as appropriate. The docket 
associated with this notice will have available for review any comments 
received on the standard and on the regulatory framework.
    This notice also describes the numerous opportunities OPS is 
offering the public for comment during the demonstration review and 
approval process. Before formal applications are due, OPS will publish 
for public comment a Federal Register notice describing the 
demonstration projects under consideration and each company's concept 
for communicating with local safety officials should OPS approve its 
demonstration project. The public will be noticed again once the formal 
application is received and approval is imminent. At this time, a 
summary of the formal application will be published in the Federal 
Register, and the application itself will be made available for review 
and comment through the docket. At each opportunity for notice in the 
Federal Register, OPS will communicate with national public, 
environmental and other interested organizations about the sites under 
consideration so that local officials can be notified and informed 
about planned program activities.
    Affected states will be a part of the Project Review Team (PRT) 
recommending whether or not OPS should approve a demonstration project. 
OPS will provide notification that encourages local officials and the 
public with questions about demonstration projects to raise them with 
state pipeline safety officials who can raise them with the PRT.
    OPS and industry's communications effort focusing on public and 
environmental officials and other interested organization 
representatives is intended to provide these officials with adequate 
information to reassure the public that an appropriate regulatory 
presence is in place during the demonstrations, and to describe how 
safety and environmental protection will be enhanced by risk 
management. OPS would appreciate comments on whether these mechanisms 
are adequate to ensure public and community involvement, and if not, 
what OPS and operators choosing to participate in the demonstration 
projects can do to achieve such involvement.

VI. Report to Congress

    By March 31, 2000, OPS will submit a Report to Congress on the 
results of the demonstration projects, evaluating how effectively 
safety, environmental

[[Page 58611]]

protection, and reliability have been improved by participating 
operators, the feasibility of risk management in general, and 
recommending whether and in what form risk management should be 
incorporated into the Federal pipeline safety program on a permanent 
basis.

    Issued in Washington, DC, on November 8, 1996.
Richard B. Felder,
Associate Administrator for Pipeline Safety.
[FR Doc. 96-29367 Filed 11-14-96; 8:45 am]
BILLING CODE 4910-60-P