Approval

Approval is a somewhat fraught topic among regulators and people who write standards, but perhaps hardly on the radar of most practising engineers.  AS 2885.0-2008 has an apparently clear definition.  This is the entirety of Section 3:

The concept of approval is fundamental to the Standard.

Approval by the Licensee demonstrates that the Licensee has accepted responsibility for the safety and integrity of the pipeline.

Items requiring approval are identified in each part of the Standard.

Approval requires a conscious act and is given in writing.

The Licensee’s approval can only be given by the Licensee or under the authorized written delegation of the Licensee; however, the responsibility for approval can not be delegated.

There is a slightly different definition in AS 2885.1-2007:

Approved by the Licensee, and includes obtaining the approval of the relevant regulatory authority where this is legally required. Approval requires a conscious act and is given in writing.

Standards Australia committee ME-038 is currently working on harmonisation of some topics that cut across the various Parts of AS 2885, and one of those topics is approval.  It’s not appropriate for me to preempt the outcome of that harmonisation process, other than to note that it reiterates the fundamental importance of approval, and is likely to go into more detail of what needs approval and how it should be approved.

One of the possibly contentious aspects of approval is the extent to which approval is required by the regulator in addition to the pipeline Licensee.  The Standard has to sidestep that because each State or Territory jurisdiction has its own philosophy of approval, and they vary markedly.

Some jurisdictions have a fairly hands-off approach whereby they put strong reliance on the competence of the pipeline Licensee’s approval and do mostly high-level checks on compliance with AS 2885.  Others get quite involved through participation in technical discussions and safety management study workshops, and still others in effect delegate the technical aspects of approval to a third-party verifier.  There is no right or wrong, best or worst among these diverse regulatory attitudes.  All have advantages and disadvantages for both parties.

I get a strong sense that all regulators feel they have an important duty to protect the public against the potentially catastrophic consequences of pipeline failure, whether caused by accident or incompetence.  Sitting on the outside looking in, I’m guessing that working out how to best identify incompetence might be one of the bigger challenges for the regulators.

In the discussion on a previous post there was concern about approval of departures from the Standard (as permitted by Clause 1.6.2 of AS 2885.0, subject to justification and approval).   I think each jurisdiction needs to determine its own approach to this, and it may be a greater or lesser issue depending on the jurisdiction’s general philosophy of approval.  For approval of departures from the Standard, being able to distinguish competent from half-baked justifications is probably going to be a large part of it.

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15 Responses to Approval

  1. Tom Prezwanski says:

    My experience shows that the Licensees (Owners) are reluctant to take responsibility for the designs prepared by an EPC contractor. There are issues of the liabilities involved. It will become much worse if we (Australia) follow the USA legal practices.

    • petertuft says:

      Interesting, and possibly demonstrating a lack of understanding on the part of those Licensees/Owners. AS 2885 is unequivocal that the Licensee has responsibility. If they have a problem with designs from EPC contractors then that’s something they need to sort out with the contractors. Since they are unlikely to get an indefinite indemnity from design contractors I think there is an obligation on the Licensees to do whatever review and approval is necessary for them to comfortably take responsibility for the design by others.

  2. Adrian Amey says:

    NSW has been one of the “light handed” regulators but saying we

    “put strong reliance on the competence of the pipeline Licensee’s approval and do mostly high-level checks on compliance with AS 2885”

    does not correctly state the basis for our approach.

    We place a strong reliance on AS2885 itself setting the minimum acceptable best practice for the pipelines. Our compliance regime is based on auditing the Licensee to ensure they are complying with these minimum best parctice requirements. The concept that a Licensee can go outside the technical box defined by AS2885 if they “approve” the variation threatens that light handed approach.

    The consequence for NSW is that we may need to increase our regulatory oversight to a significant degree in these cases i.e. variations from the minimum requirements defined in AS2885 may need to be submitted to the NSW regulator for approval.

    Specifically I draw your attention to recent changes in our Gas Supply (Safety and Network Management) Regulation 2008 where refernences to most standards have been replaced with powers by our Director-General to nominate codes, standards and guidelines that will be applied in certain areas. Outside those areas the D-G’s approval is required.

    We would prefer this not be the case for high pressure pipelines.

    • petertuft says:

      I think it’s entirely reasonable that a state regulator should require variations from AS 2885 to be submitted for approval. But I don’t see that it necessarily follows that the overall regulatory approach would need to change – a “light handed” philosophy with auditing sounds as if it should still work, and presumably auditing would pick up any variations that need specific approval if they haven’t already been brought up by the Licensee.

      Certainly agree that we don’t want any dilution of the national principle that AS 2885 is the single and sufficient standard for transmission pipelines.

      • Adrian Amey says:

        The “national principle” as you put it resides in Item 5 of Attachment B to the Council of Australian Governments’ Communiqué dated 25 February 1994. This states that CoAG “agreed to adopt AS 2885 to achieve uniform national pipeline construction standards by the end of 1994 or earlier” and this related only to cross border natural gas transmission pipelines.

        If we extend “construction” to include design and operation, it could be argued that any variation from the AS2885 by a designer, constructor or operator is a breach of the “national principle”.

        My argument is that what NSW thought the ability to approve variations was only within the technical framework set by AS2885 and ensure that an equivalent or safer outcome has been achieved despite that departure.

        I think it is very important that this matter be fully and widely discussed before we end up with a substantive problem. Potentaily the definition of “approval” may need to be modified to clarify the the limitations of approved variations.

    • petertuft says:

      Adrian,

      You say “My argument is that what NSW thought the ability to approve variations was only within the technical framework set by AS2885 and ensure that an equivalent or safer outcome has been achieved despite that departure”, and I don’t think anyone is suggesting anything different.

  3. Mark Coates says:

    The definition of approval would need to line up with the definitions and/or approval requirements of the Licensee as detailed in the relevant Pipeline License?

    (Understanding the statement that each jurisdiction has its own interpretation / version of a Pipeline License.)

    Seeing as though the AS2885 series is mandated by the Pipeline License, the definition of approval in both the standards and the license should agree (yes?).

    Thanks

    Mark C.

    • petertuft says:

      Definitions that agree would be tidy, but I think not essential if AS 2885 and the licence have slightly different purposes. As long each document is clear about what it means it should be workable. It wouldn’t be surprising if regulators want some things “approved” (or or reviewed, or audited, or whatever) by themselves over and above the AS 2885 requirement for approval by the Licensee.

  4. Mike Dunkerton says:

    Two recent oil spills from outside the pipeline sphere demonstrate what happens when the industry gets it wrong. Macondo (US) and Montara (Australia) investigations both implicated a light handed approach as a contributing factor, and in both cases that is being reversed to a heavier regulatory oversight. AS2885 should be sufficiently prescriptive to allow regulators to have faith in it. If it becomes a guideline open to every engineer’s interpretation, we will see parallel requirements from regulators in each state.

    • petertuft says:

      Fair comment about light handed regulation being a factor in both of those incidents. But I hardly think that the current AS 2885 is a guideline open to any interpretation.

      There has to be a balance between strict rules on the one hand, and provision for innovation on the other. I doubt if anyone would like to prohibit all innovation, and people who write standards cannot anticipate and write rules for every innovation that someone might think of in future. I think AS 2885 has the balance about right.

      • Adrian Amey says:

        I agree with the sentiment which is why NSW has adopted a light handed approach in the past. But based on a couple of comments we have heard and a situation we have in NSW. we think some pipeline designers and “licensees” see the current definition and statements in AS2885 as allowing them to do what ever they are happy to “approve” in the absence of a legal requirement to get regulators agreement.

        AS2885 current wording does not contain any statments that approved variations need to provide an equivalent or safer outcome. Similary there are no statements that the standard provides the basis for minimum acceptable industry practices.

        I guess I’m just looking to get some absolute clarity in the standard so there is no question about this area.

    • petertuft says:

      Clause 1.6 of AS 2885.0-2008 applies to departures from the standard and requires that alternatives “… give equivalent or better results …”. Sounds pretty much what you would like to see.

      • Adrian Amey says:

        Equivalent or better results with respect to what – commercial vaibility, ease of construction? It is not specific.

    • petertuft says:

      Perhaps “… equivalent or better …” could be phrased to more explicitly include safety. But regardless of that AS 2885 is very clearly all about safety and not much else. Part 0 Clause 1.3 set out the basis for the Standard and begins with the fundamental principle that the Standard exists for safety, protection of the environment and security of supply. Part 1 Section 4 lists the basis for pipeline design and begins “Safety of pipeline and public is paramount”. Nowhere does AS 2885 talk about commercial viability or ease of construction, so in the context of the Standard I don’t see that “better” could be construed in those terms rather than safety.

      But maybe we should look at that wording the next time there is a revision.

  5. Pingback: Approval revisited | Pipelines OZ

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