In an effort to advance White House climate change targets, EPA recently finalized methane rules for new, heavily modified or reconstructed oil and natural gas facilities. The Clean Air Act New Source Performance Standards (NSPS) new rules, among other things, will require monitoring to detect and repair methane and volatile organic compound (VOC) leaks at new oil and gas wells, production, gathering and boosting stations, gas processing plants, and gas pipeline compressor stations. In addition, the Agency moved toward regulation of existing onshore facilities by issuing a draft information collection request for information on how equipment and emissions controls are, and can be, configured and the associated costs, natural gas venting in conjunction with maintenance activities, equipment malfunctions and flashing emissions from storage tanks.
PHMSA announced that it will extend the comment period on its proposed gas rule by only 30 days, with comments due on or before July 7, 2016. Due to the scope and complexity of the proposal, numerous parties requested a 60 day extension of the comment period. In granting the 30 day extension, PHMSA noted that the proposal was made available to the public 3 weeks before its publication. That said, the Agency has still not posted information necessary to fully respond to the proposed rules in the rulemaking docket, such as the Agency’s class location report which is still under internal review within the Department of Transportation.
In addition to granting an extension for comments, the Agency committed to holding public webinars and briefings on the rule at two upcoming advisory committee meetings. The Spring 2016 Technical Advisory Committee meetings have not yet been officially scheduled, but they are anticipated to occur in May or June. Advance notice of the meeting date and additional specifics will be published in the Federal Register 15 days prior to the meeting.
The proposed rule would significantly expand regulations regarding transmission and gathering pipelines under 49 C.F.R. Parts 191 and 192. These proposals include: reporting requirements for all gathering pipelines regardless of whether they are regulated, routine testing and repair requirements outside of high consequence areas, material documentation and MAOP verification requirements, among others.
The extension of the comment will be formalized in a forthcoming Federal Register notice.
During a busy time for the federal Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency), and while Congress considers reauthorization legislation, there have been several significant personnel changes at the Agency. In early April, Department of Transportation (DOT) Secretary Foxx appointed Teresa Gonsalves as new chief counsel for PHMSA, who comes from the Office of Personnel Management and U.S. Postal Service. In addition, longtime PHMSA Associate Administrator Jeff Wiese departed last week after more than 17 years with the Agency that included oversight of major initiatives such as integrity management and public awareness programs. PHMSA Administrator Marie Therese Dominguez, new to the Agency herself as of last August, is expected to name an Interim Associate Administrator for Pipeline Safety, while the Agency searches for a permanent replacement. PHMSA Deputy Associate Administrators, Alan Mayberry and Linda Daugherty, are expected to share that role in the interim. Other changes include a new Director of Training at the Agency’s Training and Qualifications Center and establishment of an Accident Investigations Division (expected to start up later this year).
Several legislative developments of significance to the pipeline and energy transportation industries are in progress, with the introduction of a bipartisan pipeline safety reauthorization bill in the House, the passage of a bipartisan energy bill in the Senate, and the passage of a bill in the Senate that provides for the use of drones to monitor pipelines and other energy infrastructure.
PHMSA’s expansive Natural Gas Notice of Proposed Rulemaking will be published in the Federal Register tomorrow, April 8, 2016. The Agency released a pre-publication version of its proposed rulemaking several weeks ago, but note that the Federal Register pre-publication version of what will be officially published tomorrow contains slight non-substantive differences from the Agency’s prior released version (e.g., capitalizations, movement of certain proposed revisions among subsections, etc.). The proposal significantly expands numerous requirements for gas transmission and gathering pipelines. Publication in the Federal Register triggers the start of the comment period, with comments due on or before June 7, 2016, unless an extension is granted. Due to the complexity and volume of the proposed changes, several industry trade groups already have requests pending for a 60 day extension of the comment deadline.
The legacy of Keystone XL lives on, as fallout from that politically influenced debate has created a stigma for many new pipeline construction projects. The Sierra Club and other opposition groups openly admitted that their challenge to the Keystone XL pipeline was really a stalking horse to bring more attention to climate change generally. While that opposition was not intended as a more specific objection to pipelines, regional and local citizen groups are now opposing almost any form of new pipeline construction, on a more confrontational basis, using Keystone XL climate change type arguments even where they are not relevant.
Secretary of Transportation Anthony Foxx and the Pipeline and Hazardous Materials Safety Administration (PHMSA) Administrator Marie Therese Dominguez have appointed a new Chief Counsel for PHMSA, Teresa A. Gonsalves. Ms. Gonsalves’ immediately prior experience is with the Office of Personnel Management and the U.S. Postal Service. Administrator Dominguez, who has been in her current position for less than a year, also came from prior experience with the U.S. Postal Service.
PHMSA’s oil spill response regulations have been subject to increased scrutiny by Congress, the NTSB and citizen groups since the 2010 Deepwater Horizon and Marshall, Michigan incidents. The National Academy of Sciences (NAS) recently published a diluted bitumen study which concludes that while diluted bitumen does not pose an increased risk in transportation, it behaves differently than lighter crude oils following a spill. As a result, NAS made recommendations to various federal agencies with oil spill response oversight and oil pipeline operators to ensure adequate responses to spills of diluted bitumen. In response, PHMSA announced that it will convene a public workshop on April 12, 2016 on these and other oil spill response planning issues covered by its pipeline regulations (Part 194) and rail and motor carrier regulations (Part 130).
PHMSA has released a Notice of Proposed Rulemaking (NPRM or Notice) to substantially revise that Agency’s rules (at 49 CFR Part 192) for construction, operation and maintenance of natural gas pipeline systems. The Notice was made available to the public on March 17, 2016 (accompanied by a press release dated March 15, 2016). Public comments on the NPRM will be accepted for 60 days following publication of the Notice in Federal Register (the Notice has not been published yet).
Congress directed PHMSA to consider numerous new rules for natural gas pipelines in the 2011 reauthorization of the Pipeline Safety Act. That directive was made largely in response to several serious gas pipeline incidents in 2010 and 2011, including the San Bruno, California fatality incident. In addition, in 2011 the NTSB issued various recommendations to PHMSA as a result of its investigation of the San Bruno incident, including elimination of the “grandfather” clause and the requirement of a pressure test and spike test for all pre-1970 transmission lines, amending the integrity management rules so that pipelines with manufacturing and construction defects be subjected to a post-construction pressure test of 1.25 MAOP, and require that all transmission lines be configured to accommodate ILI, among others. The Agency has been criticized for taking nearly five years to fulfill its Congressional obligation and to respond to the NTSB recommendations, but both industry and citizen groups welcome the opportunity to finally be able to evaluate and comment on changes being proposed (as opposed to grappling with vague and uncertain advisory guidance).
Some issues anticipated to be addressed in the gas NPRM have been excluded (e.g., proposed elimination of class locations) or postponed for subsequent rulemakings (e.g., whether to mandate automatic shutoff valves (ASVs) and whether to regulate underground natural gas storage). Other proposals within the Notice are almost anti-climactic, such as phase out of the “grandfather clause” authorizing continued use without internal testing of pipelines constructed prior to 1970 largely because the majority of industry has already been making operational changes in anticipation of this change. In addition, the Notice includes proposals for inspection of pipelines within 72 hours following a weather event (a similar proposal was floated for liquid pipelines) and codifying of the Agency’s prior advisory regarding reporting of MAOP exceedances.
Some of the more significant proposals within the Notice include changes to the integrity management program, such as proposed revisions to: repair criteria for HCA pipeline segments to address crack defects; risk assessment and models; new proposed integrity assessment methods, selection and use of direct assessment methods; additional requirements to address corrosion threats; hydrostatic “spike” test requirements for crack or crack-like defects; and treatment of longitudinal seam weld pipe (would be considered stable threat only if pressure tested to 1.25 MAOP). The NPRM also proposes numerous non-integrity management requirements, including: expanding application of several IM program elements (assessment, periodic reassessment and repair criteria) to “moderate consequence areas” (pipelines near 5 or more buildings or right of way for interstate freeway, etc.) and class 3 and 4 locations; expanding the scope of regulated gathering lines; significantly increasing corrosion control requirements; and requiring material documentation and MAOP verification and testing requirements to class 3 and 4 locations and HCAs. In addition, the proposed rule would also codify the “traceable, verifiable and complete” standard that PHMSA issued in its post-San Bruno records advisory and require that all pipelines maintain a management of change process.
In short, this is an aggressive proposal which industry should carefully consider, and prepare and submit thoughtful comment. Hunton & Williams will continue to monitor and will post updates as appropriate.
As the U.S. House of Representatives considers reauthorization of the Pipeline Safety Act (PSA), a House Transportation & Infrastructure Subcommittee requested input from the Department of Transportation (DOT) Office of Inspector General (OIG) on ways to enhance the enforcement of criminal pipeline safety laws under the PSA. In a letter dated March 8, 2016, DOT Inspector General (IG) Scovel provided two recommendations: (1) that the mental state required for prosecutions under the Pipeline Safety Act be reduced from “knowingly and willfully” to “recklessly;” and (2) that the law provide for greater whistleblower incentives, such as the one recently enacted by the Fixing America’s Surface Transportation Act (FAST Act).