The Pipeline and Hazardous Materials Safety Administration (“PHMSA” or the “Agency”) published a Notice of Proposed Rulemaking (“NPRM” or the “Proposed Rule”) that provides increased flexibility to gas transmission pipelines that experience a certain change in population surrounding the pipeline (from a Class 1 to Class 3 location). These changes have been the subject of numerous Special Permit approvals for some time, and the industry has long requested that PHMSA codify this process to avoid unnecessary pipe replacements of short segments. If finalized, the Proposed Rule would provide operators an alternative option to implement integrity management (“IM”) requirements to ensure that a pipe segment is subject to appropriate class location safety factors and thereby avoid unnecessary and costly pipe replacements or pressure reductions. Comments are due by December 14, 2020.

Background

Under current regulations, a pipeline operator that experiences a change in class location is required under 49 C.F.R. § 192.611 to confirm design factors and recalculate the maximum allowable operating pressure (“MAOP”) of the pipeline segment. In certain instances, a pipeline operator of a pipeline segment that experiences a class location may be required to (1) lower the pipeline’s MAOP to reduce stress levels in the pipe, (2) replace the existing pipe with pipe that has thicker walls or higher yield strength to yield a lower operating stress at the same MAOP, or (3) pressure test the pipeline at a higher test pressure. If these requirements are impractical, an operator’s only option is to seek a Special Permit. While the Agency has traditionally granted class location special permits and exempted pipeline segments where operators can demonstrate that implementing certain IM measures will ensure that the pipeline is protective of public safety, the process is time consuming.

For some time, industry members have requested that the Agency codify regulations based on previously issued class location Special Permits to provide an alternative to existing class location change requirements. Advancements in technology have eliminated the necessity for the costly pipe replacement that is often required under the existing regulations. That said, the relief anticipated under the Proposed Rule would be limited to pipeline segments that experience a change from a Class 1 to a Class 3 segment after the Proposed Rule is finalized. Pipeline segments that have already experienced a class location change will be unable to utilize the IM alternative described more fully below. While not expressly discussed in the NPRM, it appears that segments subject to existing class location Special Permits would not be eligible under the Proposed Rule as it would apply to class location changes that occur after the effective date of the Proposed Rule.

Applicability Criteria

The Proposed Rule would only apply to pipeline segments (1) that meet specific criteria under a new regulation to be codified at 49 C.F.R. § 192.618, and (2) where class location changes from Class 1 to Class 3. Further, a pipeline segment can only be eligible for the IM alternative under the Proposed Rule if the pipeline segment has a documented successful eight-hour, Part 192, Subpart J, pressure test to a minimum of 1.25 times MAOP. If a pipeline segment cannot satisfy these criteria, the owner or operator of the segment must comply with existing class location change regulations.

As a means of defining eligible pipeline segments, the NPRM sets forth a lengthy list of attributes that would exclude pipeline segments from the IM alternative, as follows:

  • Bare pipe;
  • Pipe with wrinkle bends;
  • Pipe that does not have traceable, verifiable, and complete pipe material property records for diameter, wall thickness, grade, seam type, yield strength, and tensile strength;
  • Pipe that is uprated under Subpart K (unless it has been pressure tested within 24 months of the class location change and prior to uprating or increasing MAOP);
  • Pipe that has not been pressure tested per Subpart J (unless it has been pressure tested within 24 months of the class location change);
  • Pipe that has certain seam types (DC, LF-ERW, EFW, or lap-welded seams, or pipe with a joint factor below 1.0);
  • Evidence of body, seam, or girth-weld cracking in or within five miles of pipe segment at issue (depending on the circumstances);
  • Pipe with “poor” external coating (requiring a minimum negative cathodic protection shift of 100 mv or linear anodes) or with tape wraps or shrink sleeves;
  • A leak or failure within five miles of the pipeline segment;
  • Pipe transporting gas that is not of suitable completion and quality for sale to gas distribution customers (including certain H2S or CO2 pipelines);
  • Certain pipe operated in accordance with § 192.619(c) (the grandfather clause) or (d) (alternative MAOP); and
  • A pipeline segment, ILI segment, or portion of it that has been previously denied by the Special Permit process.

Under certain circumstances, it is unclear where exactly PHMSA expects to draw the line with respect to the above exclusionary attributes, whether they are all appropriate limitations on this allowance, or whether PHMSA has consistently applied them under the Special Permit precedent that informs this rulemaking. As such, it is likely that certain of these attributes will be the subject of industry comment.

Additionally, PHMSA clarifies that it is “not proposing any revisions to the clustering methodology” under 49 C.F.R. § 192.5(c), which was not clear based on the Agency’s advanced notice of proposed rulemaking.

Requirements

If a pipeline segment is eligible, the Proposed Rule would allow an operator of a segment to forgo the existing regulations and implement the IM requirements in Part 192, Subpart O and additional requirements to provide a “consistent-or-higher level of safety for the life of the pipeline.”

In order to maintain MAOP with a Class 1 location safety factor under the Proposed Rule, these additional requirements for applicable segments include requiring in-line inspections (ILI), external pipeline coating surveys, cathodic protection surveys, certain pipeline repair criteria, and remote-controlled or automatic shutoff valves. The Proposed Rule would also require implementation of certain preventive and mitigative measures. These measures include performing additional coating, interference, and corrosion surveys; remediating defined anomalies; installing line-of-sight markers; performing depth of cover surveys and remediation; clearing shorted casings; performing additional right-of-way patrols and leakage surveys; and using a supervisory control and data acquisition (SCADA) system. These requirements would apply to the entire pipeline segment. An operator that elects to utilize the IM alternative would be required to notify the Agency 60 days prior to implementing the IM measures.

Similar to the exclusionary attributes listed by PHMSA in the Proposed Rule, PHMSA’s anticipated application of the additional IM requirements in practice and under certain circumstances is not clear under the NPRM. Operators should consider commenting and requesting clarifications and revisions to requirements that may not be justified under the circumstances or which are not supported by prior Special Permit precedent. According to the NPRM, PHMSA is particularly interested in comments that address whether there are additional, feasible measures that should be implemented to ensure that pipeline segments are protective of public safety.

The Pipeline and Hazardous Materials Safety Administration (PHMSA) has issued two Advisory Bulletins directed to natural gas distribution pipeline owners and operators. PHMSA released the advisories in response to the National Transportation Safety Board (NTSB) recommendations arising out of two high-profile distribution pipeline incidents in Silver Spring, Maryland and Merrimack Valley, Massachusetts. The first advisory focuses on indoor meters and regulators to remind operators of the relevant regulatory requirements and risks. The second advisory covers low-pressure distribution systems, emphasizing the possibility of failures due to overpressurization.

Continue Reading PHMSA Advisories Target Distribution Pipeline Meters and Overpressure Protection

On September 15, 2020, the United States Army Corps of Engineers (Corps) issued its “Proposal to Reissue and Modify Nationwide Permits” (Proposed Rule). Under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act of 1899, the Corps issues nationwide permits (NWPs) that authorize activities that will result in no more than minimal individual and cumulative adverse environmental effects. These permits are designed to streamline the permitting process for certain activities, while also ensuring that jurisdictional waters are protected. Most significant to the oil and gas industry, the Corps proposes to (1) modify NWP 12 to be limited to the authorization of oil and natural gas pipeline activities, and (2) streamline and reduce pre-construction notice requirements for pipelines subject to NWP 12. The comment period under the proposed rule closes on November 16, 2020.

Continue Reading Corps Proposes to Modify Nationwide Permit 12 to Simplify Pre-Construction Notification for Pipelines

The Government Accountability Office (GAO), an agency that conducts audits, evaluations, and investigations for the United States Congress, issued a report titled “Natural Gas Exports: Updated Guidance and Regulations Could Improve Facility Permitting Processes.” The report examines several aspects of federal agencies’ regulation of liquefied natural gas (LNG) facilities, but of most relevance to LNG operators is the finding that the technical standards that the primary regulators of LNG facilities incorporate into their rules are out of date.

Continue Reading GAO Calls on PHMSA to Update LNG Regulations

On July 16, 2020, the Council on Environmental Quality (CEQ) published its long-awaited final rule to amend its regulations implementing the National Environmental Policy Act of 1969 (NEPA), introducing important changes to the 40-year-old review process. The statute requires federal agencies to take a “hard look” at the environmental impacts of certain proposed projects, but does not mandate any particular outcome. The final rule follows CEQ’s June 2018 Advanced Notice of Proposed Rulemaking (ANOPR) and the January 2020 Notice of Proposed Rulemaking (NOPR), which we previously discussed here.

Continue Reading CEQ Final Rule Overhauls NEPA Regulations

On July 6, 2020, the Supreme Court partially and temporarily overturned a nationwide injunction that prevented the U.S. Army Corps of Engineers (“Corps”) from using Nationwide Permit 12 (“NWP 12”) for construction of new oil and gas pipelines. NWP 12 authorizes “utility line activities” that have minimal impacts on jurisdictional waters under the Clean Water Act. In April 2020, a federal judge in the District of Montana, while considering challenges to the construction of the Keystone XL pipeline, completely vacated the Corps’ use of NWP 12 for all activities (including pipelines, broadband, electric, water, and sewer) until the Corps consulted with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service pursuant to the Endangered Species Act. Nearly a month later, following a motion from the Corps seeking relief from that vacatur, the district court amended its April 2020 ruling to apply only to new oil and gas pipeline construction projects other than “maintenance, inspection, and repair activities” on existing pipelines.

Continue Reading Update: U.S. Supreme Court Allows Use of NWP 12

We are excited to introduce you to Troutman Pepper. Effective today, Troutman Sanders and Pepper Hamilton have merged to form a new law firm, Troutman Pepper (Troutman Pepper Hamilton Sanders LLP), with more than 1,100 attorneys in 23 cities across the country. The combination expands both the capabilities and the presence of the firm in the U.S., and notably brings additional resources to the combined firm’s Pipeline and LNG group in the Northeast, Midwest and West Coast.

Continue Reading Merger Brings Expanded Resources to Leading Pipeline Safety Practice

The U.S. Supreme Court issued its opinion in the consolidated cases U.S. Forest Service v. Cowpasture River Preservation Assn. and Atlantic Coast Pipeline LLC v. Cowpasture River Preservation Assn. addressing the U.S. Forest Service’s authority to issue authorization for the Atlantic Coast Pipeline to cross beneath the Appalachian Trail. Reversing the Fourth Circuit’s December 2018 decision, the Court held that the Forest Service has authority under the Mineral Leasing Act to grant a right-of-way on lands within the George Washington National Forest owned by the Forest Service over which the trail crosses.

Continue Reading U.S. Supreme Court Reverses Fourth Circuit, Holds U.S. Forest Service Has Authority to Grant Right-of-Way Beneath Appalachian Trail

On June 9, 2020, FERC ordered amendments to its regulations to prohibit natural gas projects authorized under Sections 3 and 7 of the Natural Gas Act (“NGA”) from commencing construction activities until after (i) the deadline for filing a request for rehearing has lapsed without a request being filed, or (ii) FERC has acted upon the merits of any timely-filed request for rehearing (“Order No. 871”). The new regulation will become effective, without any opportunity to file comments, 30 days after the Final Rule is published in the Federal Register. Because FERC’s orders on rehearing sometimes take several months, and in some cases more than a year to be issued, both liquefied natural gas (“LNG”) and natural gas pipeline projects approved by FERC could be significantly delayed from commencing construction as a result of Order No. 871. Continue Reading FERC to Block LNG, Pipeline Project Construction Until After Rehearing Process is Complete

Two months ago, we issued a post regarding oral arguments before the U.S. Court of Appeals for the Sixth Circuit in National Wildlife Federation v. Secretary of the Department of Transportation. That case asked whether approval of pipeline spill response plans by the Pipeline and Hazardous Materials Safety Administration (PHMSA) triggered consultation and review processes under the Endangered Species Act (ESA) and the National Environmental Policy Act (NEPA). In an opinion released on Friday, June 5, 2020, the Sixth Circuit answered that question in the negative. The court’s decision avoids adding another substantial burden to the review process for response plans, and, since it reaches the same result as the only other appellate court to consider the question, the decision likely will not attract the attention of the Supreme Court. Continue Reading Sixth Circuit: Spill Response Plans Do Not Trigger Endangered Species Act or NEPA Review