As of October 6, 2022, operators of gas and hazardous liquid pipelines must comply with the Pipeline and Hazardous Materials Safety Administration’s (“PHMSA”) Final Rule on “Valve Installation and Minimum Rupture Detection Standards.”[1] The Rule codifies several related design and performance standards across 49 C.F.R. Parts 192 and 195. Those standards largely apply to new or replacement onshore gas transmission pipelines.[2] Now, however, the Rule impacts gas distribution pipeline operators in two significant ways. First, the Rule requires operators to implement and maintain certain emergency notification requirements.[3] Second, the Rule obligates operators to develop, implement, and incorporate “lessons learned” from a post-failure or incident review into their written procedures.[4] Unfortunately for operators, the second requirement illustrates the growing challenge operators face in ensuring that internal investigations remain protected by the work-product privilege.
The Rule is the culmination of a decade-long PHMSA rulemaking effort. Congressional mandates, as well as National Transportation Safety Board (“NTSB”) and Government Accountability Office recommendations to revise the Federal Pipeline Safety Regulations, prompted that effort. Indeed, several ruptures of large-diameter hazardous liquid and natural gas pipelines in the early 2010s resulted in significant loss of life, property damage, and environmental damage.[5]
As a result of the Rule, 49 C.F.R. § 192.617 now requires operators to conduct post-rupture investigations and reviews. Operators must also incorporate “lessons learned” from such investigations and reviews into their training regimes and written procedures. Specifically, 49 C.F.R. § 192.617(b) mandates the inclusion of such information in “personnel training and qualification programs, and design, construction, testing, maintenance, operations, and emergency procedure manuals and specifications.”[6]
Though PHMSA’s goal of eliminating pipeline ruptures and incidents is laudable, operators should be aware that blind adherence to the revised regulations could result in the loss of legally protected documents and information. If companies do not exercise caution as to the manner and medium in which they publish “lessons learned,” they could unintentionally distribute sensitive investigation results. They could similarly waive work-product protections. Therefore, pipeline operators must carefully consider the possibility of waiving, or at least compromising, work-product protection when implementing or revising any training regime or written procedures.
To start, most litigators are familiar with the precept that the work-product doctrine protects parties from divulging information used to prepare for litigation. As Federal Rule of Civil Procedure 26(b)(3)(A) describes: “Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party’s attorney, consultant, surety, indemnitor, insurer, or agent).” The Rule goes on to explain that a court may order disclosure if the requesting party can show a “substantial need” for the material, as well as an inability to procure equivalent information “without undue hardship.” Id.
Though seemingly straightforward, Rule 26(b)(3) and its state counterparts leave the door open as to how concrete the prospect of litigation must be before a document (or information) is protected under the privilege. This issue is further complicated because the doctrine normally does not protect documents created to comply with some external requirement. This includes documents created pursuant to a statutory scheme.[7] For that reason, operators should never assume that documents created to satisfy PHMSA’s new safety requirements will ever receive work-product protection.
Faced with an uncertain work-product landscape and new PHMSA safety requirements, operators must be vigilant to ensure work-product protection during internal investigations and when making required disclosures. But this is not to say that operators may turn a blind eye to PHMSA’s new standards. They may not. Instead, operators must be aware that adherence to such standards will almost certainly be a critical component of multiple investigations following a pipeline rupture or accident, including private lawsuits. For that reason and others, operators should consider creating dual investigations for those incidents where the compromising of work product would be critical. In these instances, for example, the company can allow the normal government-induced investigation to focus entirely on the factual development(s) of the incident (and compliance with the federal regulations), while an attorney-led investigation can focus on the conclusions and litigation strategy. Achieving zero pipeline safety incidents is always the goal, but this can happen without compromising the protections afforded by the work-product doctrine and exposing pipeline operators to liability.
[1] See 87 Fed. Reg. 20,940 (Apr. 8, 2022) (now codified at 49 C.F.R. pt. 192 and 195).
[2] More specifically, they apply to “newly constructed and entirely replaced onshore gas transmission, Type A gas gathering, and hazardous liquid pipelines with diameters of 6 inches or greater.” Id.
[3] 49 C.F.R. § 192.615.
[4] Id. §§ 192.617, 195.402.
[5] See, e.g., NTSB, Pipeline Accident Report No. PAR-11/01 (Aug. 30, 2011) (concerning a pipeline rupture and fire in San Bruno, CA); NTSB, Pipeline Accident Report No. NTSB/PAR-12/01, PB2012-916501, 124 (July 10, 2012) (concerning a pipeline rupture in Marshall, MI).
[6] 49 C.F.R. § 192.617(b); see also id. § 195.402(5)(i).
[7] The Advisory Committee’s notes to Rule 26 explain that “[m]aterials assembled in the ordinary course of business, or pursuant to public requirements unrelated to litigation, or for other nonlitigation purposes are not under the qualified immunity provided by the subdivision.” Fed. R. Civ. P. 26 advisory committee’s note to 1970 amendment (emphasis added); see also United States v. Rosenthal, 142 F.R.D. 389, 393-94 (S.D.N.Y. 1992) (refusing to provide work-product protection to documents required by the SEC).