The issuance of FERC and PHMSA’s Memorandum of Understanding (MOU) last month potentially signals an improved review and authorization process for Liquefied Natural Gas (LNG) projects, but only time will tell how the MOU will work in practice and if it will achieve its stated goal of increasing efficiency and effectiveness of the application review process in a manner that will “reduce expenses for LNG project applicants . . . and the U.S. taxpayer.” Perhaps as an indication of things to come in the FERC/PHMSA partnership under the MOU, FERC issued environmental schedules for twelve pending LNG projects on the very day that the MOU was issued that, according to the Commission, reflect FERC’s “efforts in recent months to streamline its review process for LNG project applications,” including by entering the MOU with PHMSA. Continue Reading FERC and PHMSA MOU Intended to Increase Efficiency and Efficacy of LNG Reviews
Recent press reports indicate that a cyber-attack disabled the third-party platform used by oil and gas pipeline company Energy Transfer Partners to exchange documents with other customers. Effects from the attack were largely confined because no other systems were impacted, including, most notably, industrial controls for critical infrastructure. However, the attack comes on the heels of a Federal Bureau of Investigation and Department of Homeland Security (“DHS”) alert warning of Russian attempts to use tactics including spearphishing, watering hole attacks, and credential gathering to target industrial control systems throughout critical infrastructure, as well as an indictment against Iranian nationals who used similar tactics to attack private, education, and government intuitions, including the Federal Energy Regulatory Commission (“FERC”). These incidents are raising questions about cybersecurity across the US pipeline network.
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.
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).
PHMSA has issued an interim final rule (IFR) to establish – for the first time ever – minimum federal standards for underground natural gas storage facilities. The IFR imposes significant new requirements in a short timeframe for “downhole facilities,” including wells, wellbore tubing and casings at underground natural gas storage facilities. The IFR addresses construction, maintenance, risk management and integrity management procedures for these facilities and incorporates the requirements of recent API industry Recommended Practices (RPs) 1170 for salt caverns storing natural gas and 1171 for storage in depleted hydrocarbon reservoirs and aquifer reservoirs. In addition, the IFR requires underground gas storage operators to prepare and file annual reports, incident reports, safety-related condition repairs and register their facilities in the PHMSA operator registry.
In coordination with the TSA, PHMSA issued an advisory to remind the industry of the importance of safeguarding pipeline facilities and monitoring SCADA systems for indications of unauthorized access or interference with pipeline operations. This advisory was issued in response to October 11, 2016 attempts by unauthorized individuals to shut down major pipeline facilities in four states across the U.S. Such activities endangered public safety by creating the potential for death, injury, serious infrastructure damage, and significant economic and environmental harm. The individuals were arrested and face serious charges. In the advisory, PHMSA highlights the need for increased awareness and vigilance by the industry and the public.
PHMSA has rescheduled the public meetings of the Gas Pipeline Advisory Committee (GPAC) for January 11-12, 2017. The purpose of these meetings is to discuss PHMSA’s proposed gas mega rule and the underlying regulatory analysis. The meetings were previously scheduled for December 7-8, 2016, but have been rescheduled based on the availability of committee members and resources.