In a surprising turn of events this week, PHMSA approved a request from the media to attend a hearing in the Agency’s Southwest Region offices in Houston yesterday. An environmental reporting service (E&E News) submitted a request to PHMSA last week to attend a hearing requested by Cheniere, in response to an enforcement action related to an incident at that company’s LNG export facility, and threatened legal action after receiving no response to their request. [See E&E News March 16, 2018 article E&E News seeks open PHMSA hearing on Cheniere leaks and E&E News March 21, 2018 article Pipeline regulators open Sabine Pass safety hearing.] In agreeing to the request just days before the Hearing, PHMSA’s Associate Administrator for Pipeline Safety Alan Mayberry was quoted by E&E News as stating that “PHMSA has decided for purposes of this hearing to open the hearing to the press and to members of the public.” Although the hearing yesterday was open to the public at the outset, it was later closed following a break. To date, PHMSA administrative enforcement hearings have been closed to the public. While this does not likely signal an official policy change on behalf of the Agency, it nonetheless suggests that PHMSA could make the decision to open administrative enforcement hearings to the public in the future, on a case by case basis.
Oil and gas pipeline technical advisory committee meetings will be held on December 13-15 in Washington, D.C. The agenda covers updates on PHMSA pipeline safety programs and policy issues. The oil and gas peer review committees, comprised of federal and state agency representatives, industry and the public, will discuss a variety of topics within that agenda, related to inspection and enforcement, updates regarding pending rulemakings and regulatory reform initiatives, underground gas storage, and more. This is one of the first opportunities to hear from the Agency’s new leadership (especially recently appointed PHMSA Administrator Skip Elliott and Deputy Administrator Drue Pearce). The meetings should provide valuable insight to the priorities and policy initiatives under the Trump Administration affecting oil and gas critical energy infrastructure. Continue Reading Advisory Committee Meetings May Add Insight to Policy Priorities
In October 2017, the National Academy of Sciences (NAS) issued a pre-publication report on “Designing Safety Standards for High Hazard Industries.” Sponsored by PHMSA (and many years in the making), the Report focuses on oil and gas pipelines and the regulatory scheme used by the Pipeline and Hazardous Materials Safety Administration (PHMSA). Noting the differences between prescriptive and performance based rulemakings, the Report observes that while most federal agencies use a combination of both, PHMSA is one of the few federal agencies that primarily relies on performance based standards. The rationale used by PHMSA, the Report notes, is that pipeline integrity management is best maintained by placing responsibility on individual operators to identify and manage risks that may not be known to the regulators or common to the industry. (Report, p. viii).
The 5th Circuit U.S. Court of Appeals reversed several key aspects of a PHMSA Final Order in a recent opinion issued on August 14, 2017. That decision is significant for the fact that few final actions by this agency have been presented for judicial review, and, of those, even fewer have been successful. The decision is based on a complex set of facts and legal issues that went through several years of administrative appeals before the agency. As with most complex cases, many of the factual issues were unique, and are not likely to be repeated. There are a few larger, procedural themes to be gleaned from the decision that apply more broadly, however, both to this agency and administrative law generally.
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.
The Pipeline Safety Management System (SMS) industry standard API RP 1173 was published in July 2015 and developed by API with input from NTSB, PHMSA, states, and industry representatives, following the 2010 oil pipeline accident in Marshall, Michigan. The standard’s purpose is to help pipeline operators create a framework for developing a comprehensive, process-oriented approach to safety, emphasizing continual assessment and improvement. As the industry and other stakeholders reflect on the almost 2 years since publication of the standard, there are several important takeaways.
Since the Trump Administration took office, oil and gas industry stakeholders have questioned whether pending PHMSA rulemakings will move forward, whether the rate of PHMSA enforcement will continue, and whether agency priorities will change. The API conference held in San Antonio last week provided a rare opportunity in recent months for the industry to hear from key PHMSA personnel and industry practitioners on the status of agency priorities, rulemakings, enforcement and leadership vacancies. As explained below, while the Agency currently lacks key leadership positions and is analyzing executive directives on rulemaking, it intends to move forward with proposed rules and continue enforcement.