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.
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.
FERC recently published a revised draft Guidance Manual for Environmental Report Preparation for review and public comment. The revised Guidance Manual updates FERC’s 2002 guidance manual on environmental report preparation for projects seeking FERC authorization under the Natural Gas Act (NGA), supplementing the previous guidance as well as adding new sections explaining requirements for environmental report preparation. This substantial enhancement of the Commission’s 2002 guidance likely reflects increased scrutiny by environmental groups and others of FERC’s compliance with its NEPA obligations in authorizing natural gas and LNG projects.
PHMSA has issued a pre-publication copy of its much-anticipated Notice of Proposed Rulemaking (NPRM) concerning hazardous liquid pipeline safety issues. These proposed rules were prepared in response to certain Congressional mandates under the 2011 amendments to the Pipeline Safety Act as well as critiques from GAO and NTSB. This appears to be one of PHMSA’s most ambitious rulemakings to date, and is likely to generate significant comment from industry. The Agency issued the proposal after two recent Senate hearings on pipeline safety, and as Congress prepares to consider reauthorization of the Pipeline Safety Act. Comments are due by January 8, 2016.
The Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) will publish a new Notice of Proposed Rulemaking (NPRM or Notice) in tomorrow’s Federal Register. A pre-publication version of the NPRM is available here. Comments on this proposed rulemaking will be due 60 days Federal Register publication, i.e. by September 8, 2015. This Notice responds to directives from Congress in Sections 9 and 13 of the most recent (2011) amendments to the Pipeline Safety Act (PSA), which became effective January 3, 2012. The PSA amendments gave the Agency one year to propose new rules (or by January of 2013). This NPRM is thus more than two years overdue, although both Congress and other entities have been pressing the Agency to address these and other issues more promptly and comprehensively.
Construction of new pipeline (especially gas) or other energy infrastructure often encounters issues arising from the Migratory Bird Treaty Act (MBTA or Act). The U.S. Fish and Wildlife Service (FWS or the Service) recently announced its intent to evaluate the potential environmental impacts of a proposal to authorize incidental takes of birds under the MBTA. Such evaluation is required under the National Environmental Policy Act (NEPA) for any proposed agency action with the potential to significantly affect the environment. The FWS proposes a multi-faceted approach to regulating the incidental take of migratory birds, including:
- Issuance of general incidental take authorizations for certain hazards to birds associated with particular industry sectors;
- Issuance of individual permits authorizing incidental takes in the context of particular projects or activities; and
- Development of memoranda of understanding with federal agencies, authorizing incidental takes from those agencies’ operations and activities.
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.
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.
Continue Reading FERC Implements New Cost Recovery Policy for Gas Facility Modifications
PHMSA issued a Final Rule that amends various Part 195 and 192 regulations relating to post-construction inspections, welding, gas component pressure testing requirements, and calculating pressure reductions for immediate repairs on liquid pipelines, among other changes. The topics addressed in the Final Rule were first raised in a 2011 Notice of Proposed Rulemaking (NPRM) in response to rulemaking petitions and comments filed by industry groups and other pipeline organizations. Of the 16 rule changes proposed by the Agency in 2011, this Final Rule codifies 6 as proposed, modifies 7 in response to industry comments, and withdraws 3 for further consideration.