Federal/State Legislation

As the Pipeline Safety Act (PSA) reauthorization deadline approaches, the Democrats on the House Energy and Commerce Committee recently released draft discussion legislation titled, The Safer Pipelines Act of 2019.  The “discussion draft” was released in advance of a Committee hearing held on June 19, 2019.  At the hearing, it became clear that the recent legislation was drafted behind closed doors and that it was not well received by the minority Republicans on the Committee or industry representatives.

With this most recent draft legislation, several noteworthy legislative changes are likely to be considered by the Committee, although two Committee Republicans questioned whether marking up the draft was worth the effort.  Notably, PHMSA declined to participate in the hearing because it did not have sufficient time to review the draft.  Industry trade group representatives provided testimony as well as a representative from the Pipeline Safety Trust.  The more significant proposals are summarized below and relate to:  (1) lowering the criminal liability standard; (2) expanding the definition of regulated gathering pipelines; (3) clarifying and expanding citizen suits; (4) substantially increasing the amount of operator information made available to local responders and to the public; and (5) other integrity management requirements regarding phasing out direct assessment and requiring automatic shut off valves for liquid pipelines. 
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The Department of Transportation (DOT) released a legislative proposal to Congress on June 3, 2019, to reauthorize the federal Pipeline Safety Act (PSA or the Act) and continue funding the federal agency charged with implementing it, the Pipeline and Hazardous Materials Safety Administration (PHMSA).  DOT’s press release states that the proposal, Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2019, will embrace innovation, clarify certain regulatory requirements to prevent incidents, “modernize” certain data collection, and enhance support for new liquefied natural gas (LNG) facilities.  Proposals target a broad array of topics including pipeline construction review, permitting, and reporting, criminal penalties, updating certain reporting thresholds, industry collaboration, and the scope of federal and state pipeline partnerships. 
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The first Congressional Hearing on Pipeline Safety Act Reauthorization for 2019 was held this week before the House Transportation and Infrastructure Committee.  The Hearing did not have as much drama as last summer’s Hearing before the same Committee, where PHMSA Administrator Skip Elliott was asked sharply to explain why the Agency had failed to fulfill so many Congressional mandates and National Transportation Safety Board (NTSB) Recommendations.  In his written testimony at this week’s Hearing, Administrator Elliott stated that “When I spoke [here] last year, I heard clearly from [Committee] members that finalizing outstanding Congressional mandates must be a top priority.”   The Committee staff report issued for the Hearing listed 12 “unmet mandates,” and Administrator Elliott’s written testimony conceded that PHMSA yet to address 8 mandates from the 2011 Pipeline Safety Act (PSA) reauthorization, and another 4 from the 2016 PSA reauthorization.  Of that dozen outstanding mandates, 4 relate to reports and 8 involve rulemaking.  Jennifer Homendy, a member of the NTSB, testified that the NTSB has 24 “open” recommendations to PHMSA, several on the Board’s “most wanted” list for completion.  Homendy previously served as the Democratic Staff Director of the Subcommittee on Railroads, Pipelines, and Hazardous Materials for the House Transportation and Infrastructure Committee.

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The federal Clean Water Act (CWA) requires that states review all federal permits involving water discharges to certify that those permits do not conflict with state water quality standards (WQS). 33 U.S.C. § 1341. The statute further provides that if a State “fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of this subsection shall be waived with respect to such Federal application.” Id. For pipeline projects, this ‘Section 401’ authority was not historically a significant issue, as most federal permits already anticipated and ensured compliance with state WQS. In recent years, however, opponents of new or expanded pipeline projects have sought to use Section 401 as an additional point of challenge, seeking to stop or delay pipeline project permitting. In a decision issued just last week – although not in a pipeline case – the D.C. Circuit provided the most recent clarification on the issue, admonishing states that the one year timeframe is “absolute.” Hoopa Valley Tribe v. FERC, No. 14-1271 (D.C. Cir., Jan. 25, 2019).
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On July 19, 2017, the U.S. House voted to give lead authority for authorizing cross border oil and gas pipelines to FERC, and to the Secretary of Energy for cross border electric transmission lines.  HR 2883, entitled Promoting Cross-Border Energy Infrastructure Act, removes the requirement for such cross border energy infrastructure to obtain Presidential Permits and instead establishes a 120 day review process under the National Environmental Policy Act (NEPA) and the Natural Gas Act to obtain a “Certificate of Crossing.”

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A bill intended to streamline the siting of natural gas pipelines and increase transparency is advancing through the U.S. House.  As approved by voice vote, H.R. 2910 , would facilitate concurrent federal and state agency reviews to help streamline the siting review process under the Natural Gas Act (NGA) which is led by the Federal Energy Regulatory Commission (FERC).  This bill comes at a time when the permitting process for natural gas pipelines has become protracted, cumbersome, and subject to third party challenges and delays at the federal, state and local levels.

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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.

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