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.
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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).

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Barring any near catastrophic, unanticipated global event, the U.S. oil and gas industry should see a bottom to the market in 2016, and the beginning of a return to a more balanced and profitable recovery.  But that economic recovery will be set against a new global backdrop.  The well-documented expansion of oil and gas shale resources over the past 5 to 8 years increased U.S. production markedly.  By 2015, the U.S. had become the world’s largest producer of oil and gas.  That occurred as the U.S. was recovering from a severe recession, and while global demand for oil and gas held steady.  OPEC, Russia, Venezuela and other producing countries all chose not to cut back in production, for fear of losing market share to the new U.S. source of supply.  Those facts led to oversupply, and a significant reduction in price for U.S. oil and gas products.  The predicted drop in price of crude to $30/bbl occurred in 2015, then dropped below $30 in early 2016.  And while the global price of oil and gas remained suppressed, the U.S. supply of stored oil and gas inventory hit record highs by the end of 2015.

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The question of whether Presidential Permit authority is constitutional and/or subject to judicial review has been and continues to be an unsettled issue.  A little more than a month after the State Department’s November 2015 denial of TransCanada’s application for a Presidential Permit to construct its Keystone XL pipeline project, the United States District Court for the District of Minnesota ruled in White Earth Nation et al. v. Kerry et al. that State Department Presidential Permitting decisions are Presidential in nature and are therefore not subject to judicial review.  Approximately one month later, in January 2016, TransCanada filed two separate actions to challenge the Obama administration’s rejection of its application for a Presidential Permit for the Keystone XL pipeline.  The first action was filed in federal district court in Texas to challenge the denial of the Keystone Presidential Permit, and the second is a Notice of Intent to submit a claim to arbitration under Chapter 11 of the North American Free Trade Agreement (NAFTA).

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Consistent with President Obama’s “Climate Action Plan,” the Bureau of Land Management (BLM) recently released proposed rules intended to significantly curb emissions from new and existing oil and gas production wells on federal and tribal lands. In total, BLM proposes to cut natural gas emissions (from both intentional and unintentional releases) associated with oil and gas wells on all federal public lands by 50%. This will be accomplished through modernizing the current regulations (which are over 30 years old) by requiring operators to adopt best practices and updated technologies.

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PHMSA has again released an advisory to pipeline operators on the potential for damage to pipeline facilities caused by severe flooding, as well as actions operators should consider taking to ensure the integrity of pipelines in the event of flooding, river scour, and river channel migration.  The advisory is essentially identical to advisories PHMSA has issued on the same topic in July 2013 and April 2015 (see previous posts on these advisories from 2013 and 2015), reflecting a tendency of the Agency to issue such guidance cyclically.

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