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Statement of Need: This rule is necessary to comply with a Congressional mandate and to enhance safety by managing and reducing risks associated with gas distribution pipeline systems.

Summary of the Legal Basis: The Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 (Public Law No. 109-468), requires PHMSA to prescribe minimum standards for integrity management programs for gas distribution pipelines.

Alternatives: PHMSA considered the following alternatives: --No Action: No new requirements would be levied. --Apply existing gas transmission pipeline IMP regulations to gas distribution pipelines. --Model State legislation by imposing requirements on excavators and others outside the regulatory jurisdiction of pipeline safety authorities. --Develop guidance documents for adoption by states with the intent of states mandating use of the guidance. --Implement prescriptive Federal regulations, specifying in detail, actions that must be taken to assure distribution pipeline integrity. --Implement risk-based, flexible, performance-oriented federal regulations, establishing high-level elements that must be included in integrity management programs--the alternative selected.

Anticipated Costs and Benefits: The monetized benefits resulting from the rulemaking are estimated to be $214 million per year. The costs of the rulemaking are estimated to be $155.1 million in the first year and $104.1 million in each subsequent year.

Risks: These regulations will require operators to analyze their pipelines, including unique situations, identify the factors that affect risk -- both risk to the pipeline and the risks posed by the pipeline -- and manage those factors.