The ongoing leak of methane from Southern California Natural Gas Company’s Aliso Canyon/Porter Ranch underground storage field near Los Angeles has drawn national attention to underground natural gas storage, triggering regulatory and legislative efforts to regulate these facilities at federal and state levels.  On the regulatory front, President Obama recently committed to direct PHMSA to promulgate new storage regulations.  Just this week, PHMSA announced a new Advisory Bulletin on managing the integrity of underground natural gas storage facilities.

PHMSA explained the Advisory is intended “to inform operators about recommended practices” and to “urge operators to take all necessary actions, including but not limited to” twelve stated actions to prevent and mitigate leaks of underground storage facilities. Those actions include:  monitoring (injection pressure, pressure of gas and liquids in annular spaces, etc.), inspection (wellheads, piping, subsurface valves, etc.), risk assessments, threat identification and integrity testing, corrosion testing, and recordkeeping.  While the Notice is drafted in a manner that appears to be based on existing law, it only references a prior generic Advisory Bulletin from 1997 and several industry API Recommended Practice (RPs), none of which are legally enforceable.  Notably, PHMSA’s own fact sheet states that underground storage caverns are not regulated under PHMSA regulations.

In a statement released with the Advisory, PHMSA Administrator Dominguez noted that the agency is working on new proposed regulations, although it is unclear whether the Agency has current legislative authority to pursue this area of regulation.  To that point, the current Senate bill to reauthorize the Pipeline Safety Act (the “SAFE PIPES Act”) that has been approved by committee would direct PHMSA to establish minimum safety standards for underground natural gas storage within 2 years of the bill’s enactment.  Such standards would be based on consensus standards for operation, environmental protection and integrity management of those facilities (and would not include siting or permission for construction).  In addition, California Senators Boxer and Feinstein proposed an amendment to the energy legislation currently under consideration in the Senate, which was modified and approved by voice vote, to require Energy Secretary Moniz to conduct a review of the Aliso Canyon leak, and to make recommendations on how to prevent future leaks (within 6 months of enactment and in conjunction with a taskforce that includes agencies such as PHMSA).

If PHMSA initiates natural gas storage rulemaking before Congress issues new legislation specifically authorizing PHMSA to do so, the rulemaking efforts could potentially be vulnerable to a challenge alleging that the Agency has exceeded its delegated authority.  Further, any new PHMSA regulations would apply to federally regulated storage facilities (i.e., that serve interstate pipelines), would become the nationwide standard that states would have to meet or exceed in their regulation of those storage facilities that serve intrastate pipelines.  Meanwhile, several states have begun their own legislative efforts that could ultimately be preempted by any federal action.