The 5th Circuit issued a lengthy opinion on August 14, 2017, reversing most of the violations of a PHMSA enforcement action that began in November 2013 in conjunction with investigation of a failure on the Pegasus Pipeline. In that matter, PHMSA alleged that the ExxonMobil Pipeline Company (EMPCo) failed to properly consider the risk of failure on a segment of pre-1970 low frequency electric resistance welded (LF-ERW) pipe. The Agency assessed a penalty of nearly $2.7 million for the various alleged violations. In a rare judicial decision regarding a PHMSA Final Order and Decision on Petition for Reconsideration, the Court reversed all but one of the items on appeal, and vacated the penalty associated with those alleged violations (dismissing over $1.6M of the total penalty). The Court remanded the one remaining item back to PHMSA for recalculation of the associated penalty.
Oil and gas discoveries in various shale plays around the U.S. over the past decade have led to an increased rise in the number of transfers and acquisitions of pipeline assets, including pipelines serving processing plants, producers, storage facilities, and those associated with power plants and other industrial users. Changes in global and domestic energy markets have continued that trend. Prudent operators routinely request and review documentation as part of their due diligence in making acquisitions, but it is becoming increasingly important that certain records be located during due diligence or factored into the transaction if such records are lacking and must be recreated. Decision makers involved in pipeline acquisitions should involve pipeline safety managers or counsel early on in the process to allow sufficient time to include pipeline safety records review as part of the transaction; to do otherwise can be a costly mistake that carries significant liability risk.
For the past three months, the Federal Energy Regulatory Commission (FERC or the Commission) has been without a quorum needed to make any decisions approving pipeline permits or rates. FERC is designed to have 5 Commissioners, but it must have at least 3 to constitute a quorum and make decisions. FERC Chairman Norman Bay resigned on February 3, 2017, leaving the Agency with only 2 Commissioners; less than a decision making quorum. To make matters worse, Commissioner Colleen Honorable announced this week that she intends to resign in the coming months.
Just last summer, EPA released its final version of the Technical Guidance for Assessing Environmental Justice in Regulatory Analysis (EJ Technical Guidance), defining “environmental justice” as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” Now, not quite a year later, EPA is facing a proposed $2.6M budget decrease which will reportedly cripple the EJ program. Continue Reading Fate of Environmental Justice Considerations