On October 11, 2016, PHMSA released a Policy Statement notifying owners and operators of oil and gas pipelines that it is finally making its civil penalty framework publicly accessible, and that respondents may now request proposed civil penalty calculations in enforcement actions.
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A previously abandoned natural gas pipeline exploded in Seattle, Washington on March 9, 2016, injuring nine firefighters, destroyed two buildings, and damaged multiple nearby structures.  The entity responsible for regulating intrastate and interstate gas pipelines in the state, the Washington Utilities and Transportation Commission, recently released a report from its investigation of the incident, concluding that it was caused by (1) external damage to the above-ground portion of the service line; and (2) improper abandonment of the line, which had not been cut and capped when it was taken out of service in 2004.  The report highlights the importance of adhering to federal regulatory requirements concerning proper pipeline abandonment, which was also the subject of a recent PHMSA Advisory Bulletin issued in response to a Congressional directive in the 2016 PIPES Act.

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Taking the first step to implement its new emergency order authority, PHMSA has issued an interim final rule which will be effective immediately upon publication in the Federal Register. Final rules must be issued by March 19, 2017, but PHMSA will accept and consider comments filed within 60 days of publication.
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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.
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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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As the September 30th deadline for the Pipeline Safety Act reauthorization draws near, the Senate Committee on Commerce, Science, and Transportation convened a pipeline safety field hearing in Billings, Montana and recently scheduled a second hearing for September 29th in Washington, DC.
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