The White House announced that it has nominated Marie Therese Dominguez as the next PHMSA Administrator, the top position at the Agency. PHMSA has been under the interim leadership of Acting Administrator Timothy Butters since October of last year, when former PHMSA Administrator Cynthia Quarterman stepped down. The announcement of a nomination for Quarterman’s permanent replacement comes several weeks after the term of interim Agency leadership allowed under federal law had expired, and on the heels of a plea from several Senators to the Obama administration to nominate Quarterman’s permanent replacement. Dominguez’s nomination must be confirmed by the Senate.
Amid considerable controversy, the U.S. EPA and Army Corps of Engineers (the agencies) issued a Final Rule on May 27, 2015, re-defining and expanding the definition of jurisdictional “waters of the U.S.” under the federal Clean Water Act. That term affects the scope of activities requiring permits under Section 402 (NPDES) and Section 404 (wetland) programs, and it affects what releases or other incidents must be reported to the federal government and states. Although the agencies claim the scope of the new rule is ‘narrower than existing regulations’ and would include ‘fewer waters’ in the jurisdictional reach of the CWA than under existing regulations, those statements are misleading, as illustrated by the maps EPA itself made available to Congress last year (under congressional pressure) to show the scope of the new “waters” definition. Congress is already preparing legislation to send the rule back to the agencies for revision, and although President Obama is expected to veto that, several trade groups from various industries are also planning to challenge the new rule in court. If the rule goes into effect, the oil and gas pipeline industry will surely be impacted, perhaps most keenly with respect to permitting for construction, maintenance and repair activities in or near “waters of the U.S.”
PHMSA has published a Notice of Proposed Rulemaking (NPRM), proposing various changes to the natural gas pipeline safety regulations (49 C.F.R. Part 192) to address regulatory requirements involving plastic piping systems used in gas services. Comments on the proposal are due July 31, 2015.
PHMSA recently indicated it is contemplating rescinding interstate agency agreements which would reduce state participation in oversight of interstate natural gas and hazardous liquid pipelines. Under the Pipeline Safety Act, states may enter agreements with PHMSA allowing them to take on certain aspects of interstate pipeline transportation oversight, including incident investigations, new construction, and other inspection duties. 49 U.S.C. § 60106. There are currently 8 states with such authority over interstate natural gas pipelines and 5 states with interstate authority over hazardous liquid lines pursuant to interstate agent agreements.
The U.S. Department of Transportation (DOT) Office of Inspector General (OIG) will commence an audit this month of PHMSA’s pipeline and hazardous materials safety programs to assess the Agency’s performance, with particular emphasis on its progress and process for implementing congressional mandates and recommendations from NTSB, GAO, and OIG, dating back to 2005. OIG explained the need and objectives of the audit in a Memorandum to PHMSA Acting Administrator Tim Butters on May 5, 2015, citing concerns raised by Rep. Peter DeFazio (D-OR), Ranking Member of the House Transportation and Infrastructure Committee, about the length of time PHMSA has taken to establish new regulations for tank cars carrying crude oil and to implement mandates from the 2011 Pipeline Safety Act (PSA) reauthorization amendments.
Under pressure from Congress, NTSB, and the public to take regulatory action in light of recent accidents involving oil trains, PHMSA finalized its regulations applicable to “High-Hazard Flammable Trains” in a Final Rule (the Rule) issued a mere nine months after it was proposed in an August 1, 2014 Notice of Proposed Rulemaking (NPRM). The Rule amends PHMSA’s hazardous materials regulations at 49 C.F.R. Parts 171 – 180, incorporating numerous NTSB recommendations on rail safety as well as input from stakeholders. Among the main features of the Rule are enhanced standards for new tank cars and an aggressive retrofitting schedule for older tank cars transporting crude oil and ethanol. It creates operational protocols for trains transporting large amounts of flammable liquids, as well as new sampling and testing requirements intended to improve classification of unrefined petroleum products offered for transportation. The new standards were developed in coordination with Canadian transportation safety officials, in recognition of the fact that oil trains moving product across the international border “are part of a North American fleet and a shared safety challenge.”
In a recent critique, Politico.com offered a harsh evaluation of PHMSA, pointing out (among other things) that the Agency has been lax in enforcing existing rules and slow to promulgate new ones. The article dubs PHMSA the “can’t-do agency,” claiming that it “lacks the manpower to enforce the rules and the willpower to write stronger ones.” One week before the Politico piece was published, the House Subcommittee on Railroads, Pipelines, and Hazardous Materials began hearings on reauthorization of the Pipeline Safety Act (PSA). Several politicians, including Rep. Jeff Denham (R-CA), pointedly questioned PHMSA Acting Administrator Tim Butters on why the Agency has been so slow to issue the crude-by-rail and pipeline safety rules that were pending when the Subcommittee convened hearings on these rulemakings last year. Butters responded by pointing out that PHMSA is in the final stages of developing its high hazard flammable train rule, and that the Agency has completed 22 of the 42 Congressional mandates in the 2012 PSA. He emphasized the demands on the Agency in the wake of the energy production boom, rapid expansion in pipeline construction, and numerous pipeline incidents in recent years (noting that in addition to the aforementioned Congressional mandates, PHMSA has received 49 new NTSB recommendations, 16 OIG recommendations, and 7 GAO recommendations).
Regulators and researchers alike have long been trying to accurately estimate leakage rates from natural gas infrastructure, in order to understand the potential effects of such emissions on climate and human health. EPA’s Office of Inspector General reported last year that methane leaks from distribution pipelines accounted for more than 10% of total methane emissions from natural gas systems, and it recommended, among other things, that EPA work with PHMSA to address methane leaks from a combined environmental and safety standpoint. Earlier this year, the Obama administration announced as part of its Climate Action Plan new goals to cut methane emissions from the oil and gas sector 40 to 45% from 2012 levels by 2025, and stated that new PHMSA standards for natural gas pipelines expected in 2015, while focused on safety, “are expected to lower methane emissions as well.”
A new study (led by Brian Lamb at the Laboratory for Atmospheric Research at Washington State University) posits that EPA’s model for estimating the amount of methane leaked from the nation’s gas distribution systems is outdated. Direct Measurements Show Decreasing Methane Emissions from Natural Gas Local Distribution Systems in the United States, Lamb et al., at p. 5161. EPA does not directly measure methane emissions for its yearly estimates. These emissions figures are instead based on a 1992 study in which the Agency, in conjunction with the Gas Research Institute (GRI), compiled “emissions factors” for natural gas industry components, which are multiplied by an estimate of the number of such components across the U.S. to create a national estimate of methane emissions for the industry. Id. EPA annual emissions inventories are based upon the original emissions factors from the EPA/GRI study, which have not been revised in more than 20 years to reflect replacement and/or upgrades of metering and regulating facilities, reduction in miles of older cast iron and unprotected steel pipeline, increases in protected steel and plastic pipeline miles, and improvements in leak survey methods. Id. at 5162.
The study’s authors implemented a national sampling program, directly measuring methane emissions from underground pipeline leaks and metering and regulating facilities of 13 local distribution companies (representing 19% of distribution pipeline mileage) across the country. Id. Sampling results led to the development of emissions factors generally lower than those used in the 1992 EPA/GRI study (particularly for underground pipeline leaks and plastic mains), attributable to improvements in leak detection technology, replacement of older pipes, and better maintenance since the 1990s. Id. at 5163. The study concludes that between 0.10% and 0.22% of total gas delivered via the national’s distribution pipeline network is lost through leaks, an estimate 35% to 70% lower than EPA’s estimate in its 2011 emission inventory. Id. at 5167.
The study comes on the heels of recent efforts in several states (California, Massachusetts, and New York, for example) to require natural gas pipeline operators to monitor and/or address leaks on their systems, both for environmental and public safety reasons. Despite indications in the study that methane emissions from gas distribution systems have decreased in recent years, given the current interest in climate change and safety impacts associated with gas pipeline leaks, EPA and PHMSA regulatory efforts to address pipeline-related emissions are likely in the near future. System operators and the public should be aware of this new information when new rulemaking proposals are made available for comment.
Effective October 1, 2015, the Federal Energy Regulatory Commission (FERC) will allow interstate natural gas pipelines to seek to recover certain capital expenditures involving changes to pipeline system infrastructure that enhance system reliability, safety and regulatory compliance. In a Policy Statement issued on April 16, 2015, FERC provided guidance on how it will evaluate such cost recovery proposals. The intent is to encourage replacement of old and inefficient pipelines or pipeline components, such as compressors, to enhance the safe operation of pipeline systems.
In response to recent crude by rail incidents in the United States and Canada, Congress, PHMSA, NTSB, the Federal Railroad Administration (FRA), and even some railroads have proposed improvements in safety standards for trains transporting crude oil. PHMSA originally planned to issue new tank car safety standards and regulations for the phase-out of older tank cars in March, but has since moved that date back to May. Due to that delay and the continued occurrence of rail incidents, Congress and the NTSB have called for PHMSA to establish improved safety standards, some of which exceed the standards in the Agency’s current proposal (discussed below). In response, DOT (through PHMSA and FRA, the agencies charged with regulating rail safety) announced three Safety Advisories and one Emergency Order on April 17, 2015, all intended to address specific issues identified in recent train accidents involving crude oil and ethanol shipper by rail. The Safety Advisories are directed at both shippers and rail carriers, and cover topics such as emergency response information, accident investigations, and mechanical inspection and detection issues. The Emergency Order requires “affected trains,” defined to include those containing at least one DOT-111 tank car and transporting large amounts of Class 3 flammable liquids in a continuous block, to adhere to a maximum operating speed limit of 40 miles per hour through highly populated areas.