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.
The Gas Pipeline Advisory Committee (GPAC) will meet in Washington, D.C. next month to discuss PHMSA’s proposed gas rules. The meetings are scheduled for Wednesday and Thursday, December 7-8, 2017, from 8:30 a.m. to 5:00 p.m. both days. The meetings will not be webcast, but materials will become available on the www.regulations.gov website within 30 days after the sessions end (search for docket number PHMSA-2016-0136). PHMSA asks anyone planning to attend to register by December 1.
The Department of Transportation’s Office of Inspector General (OIG) released a report criticizing PHMSA’s implementation of Congressional mandates and recommendations from the NTSB, GAO and the OIG itself. The OIG’s findings paint a troubling picture of an unsophisticated agency. OIG highlights in particular the lack of sufficient procedures to track rulemakings and coordinate within various departments within the agency and with other intermodal agencies, resulting in delayed rulemakings and implementation of recommendations. While PHMSA has already been implementing organizational changes, the OIG notes that it is too soon to determine whether they will adequately address the Agency’s ability to meet mandates and recommendations in full and in time.
The Interagency Task force on Natural Gas Storage Safety formed last April in response to the massive prolonged Aliso Canyon gas leak, recently issued its report on the safety and reliability of underground natural gas storage. The report responds to a Congressional mandate in the recent reauthorization of the Pipeline Safety Act. It includes numerous (44) recommendations to industry to reduce the likelihood of leaks at underground natural gas storage facilities and minimize the impacts of leaks when they occur. These recommendations are not binding, but PHMSA is required to consider them in issuing final rules pursuant to 2016 Pipeline Safety Act amendments. The report recommendations primarily address well integrity, risk management, and data gathering and recordkeeping, which are likely to be incorporated in PHMSA’s forthcoming interim final rule to establish minimum federal standards. The Agency plans to issue an interim final rule before the end of this year. As this will be a new area of regulation for the Agency, industry should be mindful of the various legal issues regarding jurisdiction, state regulation and preemption, and dual jurisdiction, among others.
PHMSA recently issued pre-publication copies of several rules and notices, which have now been formally published in the Federal Register, triggering various deadlines. On Friday, October 14, 2015, the Agency published (1) interim final emergency order rules authorizing the issuance of emergency orders to the entire industry in response to imminent hazards under certain conditions (effective immediately) and requesting industry comments within sixty days and (2) a final gas distribution excess flow valve rule, expanding requirements for excess flow valves in distribution service lines effective in six months. On Monday, October 17, 2016, the Agency for the first time published its civil penalty policy, noting that operators in enforcement proceedings may request a proposed civil penalty calculation in PHMSA enforcement actions.
A group referring to itself as “Climate Direct Action” claimed to have shut down five major cross-border oil pipelines in various states on Tuesday October 11, 2016: Minnesota (Enbridge Lines 4 and 67 near Leonard), Montana (Spectra Energy’s Express Pipeline near Coal Banks Landing), North Dakota (TransCanada’s Keystone Pipeline near Walhalla) and Washington State (Kinder Morgan’s Trans Mountain Pipeline near Anacortes). Enbridge confirmed that activists with bolt cutters broke into a valve station in Minnesota prompting them to shut down two pipelines as a precautionary measure. In total, four of the pipelines were temporarily closed and the fifth (Kinder Morgan’s Trans Mountain pipeline) was not in service when activists attempted to turn it off.
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. The Agency is already projected to issue the highest amount of proposed civil penalties in a single year in 2016, and this notice signals that it will “as appropriate, issue higher penalties in order to apply stronger deterrence and drive down incident risk.” PHMSA also confirms the increased penalty amounts as adjusted for inflation for violations occurring on or after August 1, 2016, as a result of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (with maximum civil penalty per day now capped at $205,638 and $2,056,380 for a related series of violations).
PHMSA released a pre-publication copy of its final rule expanding requirements for excess flow valves in natural gas distribution service pipelines. Excess flow valves automatically close and stop the flow of gas when there is a significant increase in gas flow (e.g., due to a damaged pipeline), thereby decreasing the risk of subsequent fire and rupture. These devices are currently required in new and replaced service pipelines that supply single-family residences. The recent rule, which will be effective six months after publication in the Federal Register, expands existing valve requirements to require: (1) installation of excess flow valves in new or replaced service lines to certain multi-family facilities, small commercial facilities, and branch service lines serving single family residences; (2) installation of manually operated curb valves or excess flow valves in new or replaced large capacity service lines; and (3) that operators notify customers of their ability to request installation of excess flow valves on existing service lines to serve multi-family and commercial customers and that operators perform installations as requested.