Environmental Groups Petition For Sweeping New Pipeline Rules For Diluted Bitumen

On March 26, 2013, a coalition of environmental groups petitioned the Pipeline Hazardous Materials Safety Administration (PHMSA) and the U.S. Environmental Protection Agency (EPA) to initiate rulemaking to address pipeline safety and spill response risks related to the transportation of diluted bitumen (also known as "dilbit"), a substance derived from oil sands that is upgraded to form synthetic crude oil. The environmental groups' petition argued dilbit and conventional crude should be regulated differently and proposed a number of new and costly requirements for pipeline owners and operators. The proposal would create significant economic and operational burdens on new and existing pipeline companies because dilbit derived synthetic crude oil constitutes a large share of the petroleum market and production is only increasing. Further, the proposal to shut down pipelines carrying dilbit if a safety defect is discovered, even if repairs are not immediately necessary,