The recent shut-down of Colonial Pipeline Company’s Line 1 in Alabama should remind the public and the government just how critical oil and gas pipelines are to America’s energy supply needs. As in most of the country, energy and food supplies are generally replaced on a short time frame, with three days being a typical limit on storage. Any disruption in service thus creates a shortage in essential services, in very short order. Gas prices in six Eastern states jumped quickly after the Colonial incident, due to increased costs and limits on product volume shipped by truck. Colonial is working diligently with PHMSA to investigate, repair and remediate the incident site, and, even as that work is ongoing, Colonial is constructing a temporary bypass line to restore service as quickly as possible. But Colonial’s Line 1 supplies upwards of 40% of all refined gasoline needs along the East Coast, and until pipeline service is restored, the effects will be noticed by a large percentage of the U.S. population.
Since the Administration denied a Presidential (border crossing) Permit to the Keystone XL Project in 2015, a number of regional, state or local objections to new pipeline construction projects have emerged around the U.S. Most of the protests have continued themes relied on by opposition to Keystone, including the claim that fossil fuels should remain in the ground in order to limit the impacts of climate change. Groups such as the Sierra Club and Earth Justice have acknowledged that they selected Keystone as a tangible subject to carry their climate change message, which is otherwise rather abstract. Ironically, the Keystone and subsequent protests seem to focus on oil and gas as more emblematic of fossil fuels than coal, and they ignore the significant safety advantages in transporting energy by pipeline as compared to any other method. In addition, they ignore economic and safety factors that counsel in favor of new pipeline construction, and avoid discussion about the realistic availability of alternative energy resources provide a majority of U.S. demand in the near future.
PHMSA issued an advisory to operators regarding the applicability of its safety regulations to idled, inactive and abandoned pipe. Congress directed PHMSA to issue such an advisory in the recent PIPES Act of 2016, in response to several high profile incidents involving idled pipe. While operators frequently refer to idled, decommissioned, mothballed and/or inactive pipe, PHMSA does not recognize those terms. In its advisory, the Agency explains that it considers pipelines to be either active and subject to all relevant safety regulations or abandoned (i.e. permanently removed from service). With respect to a pipeline that is “purged” of all combustibles but not yet formally abandoned, PHMSA confirms its current practice of accepting deferral of certain activities, including inline inspection, as long as deferred activities are completed prior to or as part of returning a pipeline to service. This is consistent with prior PHMSA guidance.
The Third Circuit held in a highly anticipated recent decision that state actions on water quality-related permits for interstate natural gas pipeline projects are reviewable only in the federal Circuit Courts of Appeals, in accordance with the Natural Gas Act (NGA). The case, Delaware Riverkeeper v. Secretary, Pennsylvania Department of Environmental Protection et al., concerned petitions for review filed by environmental and conservation groups in New Jersey and Pennsylvania to challenge state permitting decisions for the Transcontinental Pipeline (Transco) Leidy project. Specifically, the groups challenged the decisions of the Pennsylvania and New Jersey Departments of Environmental Protection (PDEP and NJDEP, respectively) to issue water quality certifications under Section 401 of the Clean Water Act (CWA) and, in the case of the NJDEP, other water quality-related permits required under State law.
Recent developments in cases brought by Constitution Pipeline Company to challenge New York’s denial of certain water quality authorizations highlight tensions between federal and state oversight of interstate natural gas pipeline construction projects, and the accompanying potential for costly and protracted delays. Under the scheme of “cooperative federalism” set up by many environmental statutes—such as the Clean Water Act (CWA), the Clean Air Act, and the Endangered Species Act—even where a natural gas project is under the exclusive federal regulatory jurisdiction of the Federal Energy Regulatory Commission (FERC), it will often require state-issued permits or other authorizations to go forward. The controversy in the pending Constitution Pipeline cases concerns the extent to which a state may assert authority over discrete aspects of a federally-regulated project in a manner that delays or prevents its construction.
Recently proposed legislation in the U.S. House of Representatives would require FERC to revise its review process for proposed natural gas pipeline expansion projects to include additional analysis of cumulative impacts in a single region or State and extended environmental monitoring. While this bill is unlikely to gain traction in the Republican-controlled House, it is indicative of an ongoing debate about the need for and environmental impacts of new pipeline construction, and the role of both federal and state regulators in reviewing and approving such projects—a debate that has attracted national attention in the wake of the Obama administration’s rejection of the Keystone XL project in late 2015.
In response to the Aliso Canyon leak from an underground natural gas storage well that lasted nearly four months, federal agencies with oversight of over such facilities announced workshops to gather information and solicit input on forthcoming minimum safety regulations. There are an estimated 400 interstate and intrastate underground natural gas storage facilities that operate with more than 4 trillion cubic feet of natural gas capacity. Some interstate pipeline operators rely on underground storage to facilitate load balancing and system supply on their transmission lines, while a large portion of this capacity is leased to other industry participants. In addition to serving customers, intrastate pipeline companies use storage capacity and inventories for similar purposes. Underground natural gas storage provides for flexibility in supply to accommodate daily and seasonal demand fluctuations.
A recent PHMSA Advisory Bulletin warns the pipeline industry about Corrosion Under Insulation (CUI), which is frequently used on pipe transporting heavy crude oil. Such products are often heated for more efficient transport, thus the pipe is wrapped with foam insulation over the coating, and then further covered with a tape wrap over the insulation. The crude oil release from a Plains All American pipeline near Santa Barbara in May of 2015 used such thermal insulation, and the government’s investigation following that release prompted this Advisory from PHMSA.
Congress has approved amendments to the Pipeline Safety Act (PSA), reauthorizing PHMSA’s pipeline safety program through 2019. The bill is expected to reach the President’s desk soon to be signed into law. S. 2276 was approved in the House of Representatives by voice vote in the first week of June, representing a compromise between two House committees on several topics. The Senate took up the bill and approved it by unanimous vote on June 13, 2016.
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.