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 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.
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.
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.
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. While operators frequently refer to idled, decommissioned, mothballed and/or inactive pipe, PHMSA does not recognize those terms. In its advisory, the Agency explains that it considers pipelines to be either active and subject to all relevant safety regulations or abandoned (i.e. permanently removed from service). With respect to a pipeline that is “purged” of all combustibles but not yet formally abandoned, PHMSA confirms its current practice of accepting deferral of certain activities, including inline inspection, as long as deferred activities are completed prior to or as part of returning a pipeline to service. This is consistent with prior PHMSA guidance.
A recent PHMSA Advisory Bulletin warns the pipeline industry about Corrosion Under Insulation (CUI), which is frequently used on pipe transporting heavy crude oil. Such products are often heated for more efficient transport, thus the pipe is wrapped with foam insulation over the coating, and then further covered with a tape wrap over the insulation. The crude oil release from a Plains All American pipeline near Santa Barbara in May of 2015 used such thermal insulation, and the government’s investigation following that release prompted this Advisory from PHMSA.
PHMSA announced that it will extend the comment period on its proposed gas rule by only 30 days, with comments due on or before July 7, 2016. Due to the scope and complexity of the proposal, numerous parties requested a 60 day extension of the comment period. In granting the 30 day extension, PHMSA noted that the proposal was made available to the public 3 weeks before its publication. That said, the Agency has still not posted information necessary to fully respond to the proposed rules in the rulemaking docket, such as the Agency’s class location report which is still under internal review within the Department of Transportation.
In addition to granting an extension for comments, the Agency committed to holding public webinars and briefings on the rule at two upcoming advisory committee meetings. The Spring 2016 Technical Advisory Committee meetings have not yet been officially scheduled, but they are anticipated to occur in May or June. Advance notice of the meeting date and additional specifics will be published in the Federal Register 15 days prior to the meeting.
The proposed rule would significantly expand regulations regarding transmission and gathering pipelines under 49 C.F.R. Parts 191 and 192. These proposals include: reporting requirements for all gathering pipelines regardless of whether they are regulated, routine testing and repair requirements outside of high consequence areas, material documentation and MAOP verification requirements, among others.
The extension of the comment will be formalized in a forthcoming Federal Register notice.
During a busy time for the federal Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency), and while Congress considers reauthorization legislation, there have been several significant personnel changes at the Agency. In early April, Department of Transportation (DOT) Secretary Foxx appointed Teresa Gonsalves as new chief counsel for PHMSA, who comes from the Office of Personnel Management and U.S. Postal Service. In addition, longtime PHMSA Associate Administrator Jeff Wiese departed last week after more than 17 years with the Agency that included oversight of major initiatives such as integrity management and public awareness programs. PHMSA Administrator Marie Therese Dominguez, new to the Agency herself as of last August, is expected to name an Interim Associate Administrator for Pipeline Safety, while the Agency searches for a permanent replacement. PHMSA Deputy Associate Administrators, Alan Mayberry and Linda Daugherty, are expected to share that role in the interim. Other changes include a new Director of Training at the Agency’s Training and Qualifications Center and establishment of an Accident Investigations Division (expected to start up later this year).