Recent months have seen the appointment and confirmation of top posts in key pipeline regulatory agencies, the Federal Energy Regulatory Commission (FERC) and the Pipeline and Hazardous Materials Safety Administration (PHMSA). While developments are generally good news for the pipeline industry—in that they are likely to mean expeditious project approvals and a clear chain of command at the agencies—the past few weeks have seen interesting departures from past practices, as discussed in more detail below.
In the aftermath of Hurricane Harvey, the devastating storm that recently swept through central Texas, both the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the U.S. Chemical Safety and Hazard Investigation Board (CSB) are urging special precautions to minimize the impact of the storm on pipeline and other energy infrastructure in the state.
PHMSA is extending the deadline for comments due today (March 21, 2017) on the Advance Notice of Proposed Rulemaking (ANPRM) issued on January 18, 2017. The new deadline for comments is May 19, 2017. The ANPRM was issued in response to a petition for rulemaking filed by state of New York, enquiring about risks posed by transport of petroleum by means other than pipeline, specifically by rail, and whether to establish vapor pressure standards for the transportation of crude oil. The ANPRM requested comments on whether a national standard should be developed for vapor pressure of crude oil, including the potential safety benefits and costs of establishing a standard. The intent of the ANPRM is to evaluate measures to reduce risk of fire and explosion in non-pipeline transport of crude oil such as a national vapor pressure standard and, if so, adopt appropriate threshold recommendations for the standard.
The state of Texas and the Texas Railroad Commission have petitioned the Fifth Circuit Court of Appeals to review PHMSA’s interim final rule regulating underground natural gas storage facilities. As required by the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016, PHMSA published an interim final rule last December establishing minimum federal safety standards for underground natural gas storage facilities, which became effective in January. Such facilities have come under increased scrutiny since the 2015 Aliso Canyon storage field leak that lasted almost four months.
The Department of Commence published a request for comments related to implementation of the January 24, 2017 Executive Memorandum regarding “Construction of American Pipelines.” The short Memorandum directs the Secretary of Commerce to “develop a plan under which all new pipelines, as well as retrofitted, repaired, or expanded pipelines, inside the borders of the United States, including portions of pipelines, use materials and equipment produced in the United States, to the maximum extent possible and to the extent permitted by law.” The Commerce Department is directed to submit its Plan to the President within 180 days, or by July 23, 2017. The Memorandum also notes that “produced in the United States” excludes manufacture of any components or any assembly done abroad, but provides no further clarification on applicability.
A new Advisory on deactivation of threats for gas transmission lines was issued by PHMSA on March 15, 2017 (to be published in the March 16, 2017 Federal Register). Amidst uncertainty about the fate of various proposed and final rules issued by PHMSA and other federal agencies under the new Administration due to the Regulatory Freeze Executive Memorandum of January 20, 2017 and other executive orders, PHMSA’s issuance of this clarifying guidance regarding minimum criteria for deactivation of integrity threats is notable.
During the last week of the Obama Administration, PHMSA released a pre-publication copy of the hazardous liquid pipeline safety final rule, which has been six years in the making. The rulemaking was intended to address issues raised by several sources: high profile pipeline accidents; directives contained in amendments to the Pipeline Safety Act; and recommendations from the NTSB and GAO. The final rule would implement many significant and expansive inspection and reporting requirements, including periodic integrity assessments and leak detection for pipelines outside of high consequence areas (HCAs), inspections of pipelines after extreme weather events, expanded reporting, and more stringent integrity management repair and data collection requirements.
President Trump signed another Executive Order (EO) on January 30, 2017, entitled Reducing Regulation and Controlling Regulatory Costs. The new EO, applicable to the entire Executive Branch, including all federal administrative agencies, makes a straightforward directive: “…for every one new regulation issued, at least two prior regulations be identified for elimination.” The Order goes on to state that the costs associated with any new regulations may not exceed the savings realized by repealing at least two prior regulations (“the total incremental cost of all new regulations…shall be no greater than zero.”).
On the first day of the new Trump Administration, Chief of Staff Reince Priebus issued a Memorandum to the heads of all Executive Departments and Agencies, requesting that all federal agencies suspend transmittal of any new proposed or final rules to the Office of the Federal Register (OFR) until the new Administration’s Agency appointees have an opportunity to review such proposals. The Memo also asks all agencies to “immediately withdraw” any proposed or final regulations that have been sent to the OFR but not yet published in the Federal Register (there is always at least a several day delay between the time that new rules are sent to OFR and then published in the Federal Register). In addition, the Memo requests that Agencies postpone the effective date (by at least 60 days) of any rules that have been published in the Federal Register but have not yet become effective.
Citing concerns that intrastate and small gas transmission pipeline operators may not be accurately identifying high consequence areas (HCAs) as part of their integrity management programs (IMP), PHMSA issued yet another advisory to the industry on December 12, 2016. In its seventh advisory issued this year, PHMSA explains the need for further guidance on the methodology based on recent inspections as well as a Safety Recommendation issued by the National Transportation Safety Board (NTSB) in 2015 (NTSB Recommendation P-15-06, issued in conjunction with the Board’s Safety Study of implementation of gas transmission integrity management rules).