In yet another development relating to Clean Water Act (CWA) Section 401 water quality certifications, a recent policy directive from the Department of the Army could impose tighter timeframes for a state to review whether projects comply with state water quality standards. The U.S. Department of the Army has issued a policy directive memorandum requiring the U.S. Army Corps of Engineers (USACE) to adhere to a “default time period” of 60 days for states to act on a request for water quality certification under CWA Section 401 in conjunction with USACE’s issuance of dredge and fill permits under CWA Section 404. The directive also requires USACE to “immediately draft guidance” to establish criteria for USACE District Engineers to identify circumstances that may warrant additional time for states to decide on an application for water quality certification. Continue Reading USACE to Impose 60 Day Period on State Water Quality Certification Review

The federal Pipeline Safety Act (PSA or the Act) mandates minimum safety standards for pipelines and certain associated storage and facilities (including LNG and other terminals). Congress should take up legislation to reauthorize the Act this year. Since the last reauthorization in 2016, there have been several noteworthy developments that have affected the industry, the relevant politics and the public. These include a new Administration, new leadership in relevant administrative agencies (e.g., DOT, PHMSA, FERC), policy changes, continued opposition to new pipeline construction, a high-profile distribution incident in Merrimack Valley, Massachusetts, and, most recently, Democratic control of the House of Representatives. It remains to be seen whether Congress will impose new substantive amendments to the PSA, but it is likely that some significant changes will be proposed. While the reauthorization proposals could vary, we expect to see discussion related to distribution pipelines (aging infrastructure, replacement projects, overpressure protection); construction issues; valves, emergency response and pressure protection; outstanding rulemakings; and updates to PHMSA procedural rules. Other issues that could be part of the discussion include cybersecurity, state oversight of pipeline safety, and older proposals from prior reauthorizations.

Status of Outstanding Mandates

The 116th Congress, which convened in January, will be responsible for reauthorizing the PSA and PHMSA, the agency responsible for oversight of pipeline safety. The current reauthorization expires on September 30, 2019. Historically, pipeline safety has largely been a bipartisan issue.  The most recent substantive changes to the PSA occurred in the 2012 reauthorization in response to the San Bruno, California and Marshall, Michigan incidents. Following that, PHMSA initiated the process for several expansive rulemakings, some of which still remain incomplete. In the 2016 reauthorization, Congress mandated updates for the Agency’s outstanding rulemakings and made other changes to require minimum federal standards for underground natural gas storage (in response to the Aliso Canyon incident). Sixty-one (61) legislative mandates were issued in the 2012 and 2016 reauthorizations, including rulemaking changes, studies, or other regulatory reviews. As of this summer, PHMSA had implemented only forty-seven (47) of these to date. Of the roughly fourteen (14) mandates that remain to be addressed, the issues include rules intended to address records and inspections issues highlighted by both the San Bruno and Marshall, Michigan incidents.

Political Backdrop   

There are three committees that oversee PSA reauthorization and will be influential in drafting and finalizing reauthorization. These include: (1) House Transportation and Infrastructure (T&I) Committee; (2) House Energy and Commerce Committee; and (3) Senate Committee on Commerce, Science and Transportation. Of these three committees, thirteen (13) members have either retired or lost their primaries, thus the industry will be dealing with many new lawmakers and their unique perspectives. While the exact composition of the House committees is not yet known, Representative DeFazio (D-OR) has been elected as chairman of the T&I Committee and Senators Ed Markey (D-MA) and Jon Tester (D-MT) are members of the Senate Commerce, Science and Transportation Committee; all three have in the past been critical of PHMSA and existing pipeline safety protections. Meanwhile, Senator Manchin (D-WV), who has been sympathetic to pipeline infrastructure and industry issues in the past, is the ranking member of the Senate Energy and Natural Resources Committee, which has some oversight of pipelines and pipeline issues. In addition, Senators Warren (D-MA) and Booker (D-NJ), both of whom are expected to be candidates for President in 2020, have been active of late in demanding increased government control of pipeline safety issues.

In recent years, Congress has been critical of PHMSA in oversight hearings due to its delayed response to statutory mandates from prior reauthorizations, and delayed response to NTSB, GAO and DOT OIG recommendations. This year’s reauthorization will be no different, as evidenced by a June, 2018 hearing convened by the House T&I Committee, where representatives from both parties expressed sharp concern over PHMSA’s delay in addressing past legislative mandates. The House will certainly also raise the other as yet unaddressed mandates and recommendations from the NTSB and GAO.  More recently, there was a November 2018 field hearing on the Merrimack Valley incident, that signaled open season on PSA reauthorization.

Potential Reauthorization Issues

Industry trade groups have already been preparing for and working on proposals associated with the PSA reauthorization, which are not likely to contain significant changes, but more minor proposed changes such as amendments to PHMSA procedural rules. PHMSA has likely prepared or is in the process of preparing its own list of issues. In light of the above, some issues that we anticipate could to be raised during the PSA reauthorization process include the following:

  1. Distribution Pipelines

If not more generally, we expect Congress to discuss the following issues specific to gas distribution pipelines:

Aging Infrastructure/Pipe Replacement

Aging infrastructure is an issue that has been raised for some time, but the recent Merrimack Valley incident, where the pipeline distribution operator was in the process of upgrading and retiring older infrastructure, has brought it back into focus particularly for distribution pipelines. Relevant proposals, which could apply more broadly, may relate to pipe replacement (which is currently voluntary for cast iron pipe although many states provide incentives), requirements specific to pipeline modernization projects and work packages, records, safety management systems, etc.

Overpressure Protection

The NTSB investigation into the Merrimack Valley incident is ongoing, but among the preliminary issues identified by the NTSB is detection of abnormal system pressure. As a result, we expect discussion and debate regarding the sufficiency of overpressure protection for distribution pipeline systems as well as emergency response and monitoring of overpressure protection.

  1. Construction Issues

While PHMSA does not have express siting authority for the construction of new pipelines, it maintains construction and design regulations that would apply to those pipelines. Further, the industry has recently experienced some challenges associated with pipeline construction or infrastructure updates, and as a result there may be specific proposals along those lines. These may relate to work plans, subsidence, directional drills, oversight of contractors, management of change procedures, etc.

  1. Emergency Shutdown Valves, Communications and Overpressure Protection

PHMSA has been working on proposing an automatic shut-off or remote-controlled valve (ACV/RCV) rule regarding rupture detection since 2013 and expects to issue the proposal in 2019.  If the proposed rule does not issue prior to PSA reauthorization legislation, we expect the topic to be included in legislation drafts. The Merrimack Valley incident also brought to light issues associated with the operator’s incident response and communications, which may be a topic of the discussions. Further, in light of the preliminary findings of the Merrimack Valley NTSB investigation, it is possible that pressure detection, monitoring, and overpressure protection will be discussed as they apply more broadly to pipeline systems.

  1. Outstanding Rules tied to Statutory Mandates

As noted above, numerous key mandates remain unaddressed from prior PSA reauthorizations, a number of which were intended to focus on records and inspection issues arising from high profile incidents. Most notably, these include finalizing the hazardous liquid rule (which was expected before the end of 2018) and the ‘gas mega rule;’ the latter has been split into three rulemakings and is still working its way through the pipeline advisory committee process under the PSA (now on hold because of the government shutdown). Because PHMSA has already failed to meet relevant deadlines, Congress may impose new deadlines with updates to Congress. Further, reauthorization discussion may analyze what some critics have cited as challenges under the PSA to PHMSA rulemaking, including balancing safety risks against the economic benefits.

  1. State Involvement

When certified by PHMSA (and at times even where they are not certified by PHMSA), states are increasingly active in pipeline safety through construction inspections, general oversight and enforcement authority, and incident response. Some states have broadly interpreted their jurisdiction under the PSA and authority under state statutes.  Past reauthorization changes touched upon and expanded in part the ability of a state to participate in pipeline safety.  In addition, a 2018 Government Accountability Office (GAO) report recommended that PHMSA develop an inspection workforce plan to ensure that it maintains an adequate mix of federal and state resources for interstate pipelines.  Legislative proposals may be drafted in light of GAO’s recommendations and to ensure that state pipeline safety programs include adequate training and other measures to ensure consistency in application of PHMSA rules and enforcement.

  1. Cybersecurity

There has been some debate recently regarding whether the pipeline industry has sufficient protections in place to ensure reliability. Targeting of pipeline infrastructure technology and operational monitoring programs (such as SCADA) by foreign nation states and other bad actors is not new, although intrusions continue. In addition, the GAO issued a report that determined that the Transportation Safety Administration charged with pipeline security oversight (in part and in coordination with PHMSA), is not doing enough to face future challenges. House Energy and Commerce Committee members reintroduced legislation intended to increase federal protections protecting pipelines from cyber threats that could disrupt operations and some have called for changes at the Department of Homeland Security (DHS). Ranking Senate Committee members Cantwell (D-WA) and Manchin (D-WV) with oversight of pipelines have called for a response from DHS.  It is also possible that associated changes could be proposed since PHMSA participates in oversight of pipeline security, primarily as it relates to physical security (as opposed to cybersecurity), and since the subject of the cyber intrusions are operational programs required by PHMSA rules.

Summary

It is likely that some potentially significant changes to the pipeline safety rules could be proposed in the upcoming Pipeline Safety Act reauthorization (or other legislation coming out of the 116th Congress). This is particularly true considering the recent Merrimack Valley distribution pipeline incident, the newly divided Congress, and the country’s increased reliance on natural gas and oil over coal. While the PSA reauthorization proposals could vary, we expect discussion specific to distribution pipelines and issues highlighted by the Merrimack Valley incident, construction issues, valves/overpressure protection, outstanding rulemakings, as well as updates to PHMSA procedural rules. Other issues could include cybersecurity, state oversight of pipeline safety, and older proposals from prior reauthorizations. If not in the PSA reauthorization, some of these more general issues such pipeline construction and cybersecurity may get traction in an energy bill which is likely to include some form of infrastructure package.

Since 9/11, no new rules or regulations have been promulgated to address pipeline or LNG facility security or cybersecurity. Although the Transportation Security Administration (TSA) recently released an updated version of its “Pipeline Security Guidelines” (Guidelines) that were last issued in 2011, those Guidelines remain advisory.  And both the Department of Homeland Security (DHS) and the Federal Bureau of Investigation (FBI) have made only informal outreach to pipeline and LNG industry as issues have arisen.  As the threat of both cyber and physical attacks on critical energy infrastructure continues, however, some question whether minimal standards for prevention of threats should be in place.  In particular, there has been recent attention by the U.S. Government Accountability Office (GAO), members of Congress, and at least one Federal Energy Regulatory Commission (FERC) commissioner. (See E&E News Article of May 29, 2018).  These discussions, along with recent proposed legislation in the House and the fact that the Pipeline Safety Act is up for reauthorization later this year, are likely to bring these issues into sharper focus.

Continue Reading Pipeline Security and Cybersecurity: Are Guidelines Enough to Protect Critical Infrastructure?

The Congressional Review Act (CRA) has been in the news of late, yet few people know its history, purpose or challenges.  Although used only once in its first 20 years, the Act was resurrected at the outset of the Trump Administration.  In the first four months of 2017, the new Administration used the CRA to withdraw 14 rules promulgated late in the Obama Administration.  There is an effort now to try to use the CRA to nullify even older rules, promulgated over the past 20 years, which could threaten to create more uncertainty for the regulated community.

Continue Reading The Congressional Review Act May Be Coming Soon to a Rule Near You

The U.S. DOT and 10 other federal agencies signed a Memorandum of Understanding (MOU) on April 9, 2018, which became effective on April 10, 2018.  The MOU[1] is intended to implement Executive Order 13807 (Aug. 15, 2017), which established a “One Federal Decision” policy for infrastructure projects that require authorizations by multiple federal agencies. Under the MOU, a lead federal agency must be designated to be responsible for addressing compliance with the National Environmental Policy Act (NEPA), and the preparation of a single Environmental Impact Statement (EIS). The lead agency will establish a single Permitting Timetable that all federal agencies must follow. The MOU mandates that all federal authorizations must be resolved within 90 days of issuance of the lead agency’s Record of Decision (ROD) on the EIS, with limited exceptions.

There have been problems on large pipeline construction projects in recent years getting all federal agencies to agree on an approach to permitting review and timetables.  The MOU addresses that by requiring all agencies to work on a single approach and timeline, and to develop the policies necessary to do so.  It also requires all environmental review to be complete no later than two years from issuance of a Notice of Intent (NOI) to prepare an EIS for a new project.  Additionally, the MOU specifies three “concurrence points” at which all involved agencies are requested to reach consensus on NEPA project review and approval: (1) Purpose and Need; (2) identification of Alternatives; and (3) selection of the Preferred Alternative.

For new natural gas pipeline construction projects, FERC will continue to be the lead agency preparing an EIS, but any cooperating agencies must now comply with a uniform schedule for review and input.  Although not required by the MOU, state, local and tribal agencies will be invited to voluntarily participate in the single permitting timetable process.

The MOU was welcomed by many as a means to achieve permit streamlining, a concept that Congress has attempted to address over the years, as noted in our prior posts regarding both House and Senate efforts [see prior pipelaws posts, August 4, 2017, July 5, 2017]. It also harkens to President Trump’s January 2017 Presidential Memorandum addressing permit streamlining for domestic manufacturing.  As a representative of the U.S. Chamber of Commerce said of this new MOU, “It shouldn’t take longer to approve a project than to build it.”  Opponents of new infrastructure projects, including pipelines, note that the courts are still deliberating on whether and to what extent large projects need to consider climate change impacts under NEPA.  Challenges such as that are not addressed directly by the MOU, but in theory the MOU will foster a consolidated position by all federal agencies involved.

While the MOU stands to improve the coordination and timing among federal agencies, it is only aspirational, speaking in terms of “goals” and “milestones” that are ultimately non-binding. It may also place more burdens on project applicants, to ensure that all agencies are, in fact, coordinating and adhering to the timetable, etc., and that any disputes are identified and resolved in a timely manner.

In addition, challenges to permits and approvals at the local and state level will be unaffected by this MOU. New infrastructure projects continue to face opposition by environmental or citizen groups, and increasingly states too have posed challenges to large scale projects. For example, as noted in our prior post of July 5, 2017, projects such as Millennium Pipeline Company that received prior FERC approval have found themselves in the U.S. Courts of Appeals addressing state challenges. The Second Circuit recently issued a favorable decision in the Mellennium appeal , however, holding firm to the plain language in the Clean Water Act that the timeline for a state’s action in response to a request for a water quality certification is one year from receipt of the request.

[1] The MOU was signed by the heads of the Department of Transportation; the Federal Energy Regulatory Commission; the Environmental Protection Agency; Department of Energy; U.S. Army Corps of Engineers; Department of the Interior; Department of Agriculture; Department of Commerce; Department of Housing and Urban Development; the Advisory Council on Historic Preservation and the Federal Permitting Improvement Steering Council.


The Gas Pipeline Advisory Committee (GPAC) convened in Washington D.C. at the end of March, 2018, to continue discussions from May and December 2017 regarding PHMSA’s proposed gas and gathering pipeline mega rule (“Safety of Gas Transmission and Gathering Pipelines” [PHMSA-1011-0023]. The meetings included discussion and voting on a number of provisions concerning maximum allowable operating pressure (MAOP), integrity management, definitions and repair criteria.  Most notably, PHMSA announced its intention to divide the original Notice of Proposed Rulemaking (NPRM) into three parts and issue three separate final rulemakings in 2019 [PHMAS PowerPoint]. PHMSA is currently projecting that these three rulemakings will be issued over the course of next year, with the first one focusing on outstanding congressional mandates, as follows::

Part I (expected issuance in March 2019) to address the expansion of risk assessment and MAOP requirements, including:

  • 6-month grace period for 7-calendar year reassessment intervals;
  • Consideration of seismicity for integrity management assessments (fort both threats and preventative and maintenance measures)
  • MAOP exceedance reporting
  • Material verification, MAOP reconfirmation (for those with unknown MAOPs or incomplete records)
  • Expansion of the risk assessment obligation to include areas in non-high consequence areas (HCAs) and moderate consequence areas (MCAs)
  • Related records provisions

Part II (expected issuance in June 2019) to focus on the expansion of integrity management program regulations, including:

  • Adjustments to repair criteria for pipelines in HCAs and non-HCAs
  • Inspections following extreme weather and other events
  • Safety features on in-line inspection launchers and receivers
  • Management of change
  • Corrosion control
  • Other integrity management clarifications and increased assessment requirements

Part III (expected issuance in August 2019) to focus on expanding the regulation of gas gathering lines, including:

  • Reporting requirements
  • Safety regulations for gas gathering lines in Class I locations
  • Definitions

The next GPAC meeting is scheduled for June 12-14, 2018, and it is expected to focus on the NPRM provisions concerning gas gathering pipelines.  As noted in our prior post , the advisory committee meetings are particularly informative to industry and other interested parties concerning the direction PHMSA will take with these final rules.

 

 

On January 22, 2018, the Supreme Court in a unanimous decision threw the long contested issue of what constitutes “waters of the U.S.” back to the lower courts.  Somewhat surprisingly, the Supreme Court held that federal district courts have jurisdiction to hear challenges to the rule, reversing a Sixth Circuit decision and suspending that court’s nationwide stay of the rule.  In doing so, the Court guaranteed that a revised definition of “waters of the U.S.” will remain undecided for some time to come. Continue Reading Definition of “Waters of the U.S.” Remains Uncertain

On August 3, 2017, the Senate confirmed both Neil Chatterjee (R) and Robert Powelson (R) as FERC Commissioners, returning FERC to a quorum after six months.  FERC has been unable to issue major decisions without a quorum, although staff work has continued to work on a variety of fronts, including issuing environmental reviews for various pipeline construction and other energy projects.  The Senate confirmations should be a relief for the energy industry, which has been subject to prolonged uncertainty as major project approvals have been at a standstill since February.

The quorum will be restored as soon as Chatterjee and Powelson are sworn in, which historically has taken from one to three weeks.  The confirmation of the nominations of Chatterjee, a former aide to Senate Majority Leader McConnell and Powelson, a Pennsylvania regulator, brings the Commission to 3 members of what is typically a 5 member Commission.  Trump previously announced nominations of Kevin McIntyre (R), an energy lawyer in private practice, and Richard Glick (D), a Senate aide, for the two remaining vacancies weeks ago, but only nominated them formally this week.  The Senate Energy and Natural Resources Committee has scheduled a hearing on those nominations for September 7, 2017.

Continue Reading Senate Confirmations to Restore FERC Quorum; Committee to Review Permit Streamlining Bill