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.

 

 

Building off of President Trump’s “Made in America” campaign commitment, the Trump Administration issued a tariff on steel imports on March 8, 2018. The proclamation finds that the imposition of duties on steel articles is necessary to ensure that steel imports will not threaten national security and, effective March 23, 2018, steel imports will be subject to a twenty-five (25) percent ad valorem tariff, except for imports from Canada and Mexico. The proclamation also authorizes the Commerce Department to grant exclusions from the tariffs of affected parties (1) if the steel at issue is determined not to be produced in the U.S. in a sufficient and reasonably available amount or of a satisfactory quality; or (2) based upon specific national security considerations. The President directed the Commerce Department to promulgate regulations as necessary to set forth the procedures for an exclusion process.

Prior to the effective date of the tariff, the Department of Commerce issued an interim final rule (IFR) to outline exclusions and the exclusion application process (set forth as a supplement to 15 C.F.R. Part 705). The IFR was issued without notice and comment and became immediately effective when published on March 19, 2018. While the IFR tracks the limited exclusions in the proclamation, much remains unclear with regard to the process and the likelihood of success for industry applicants. An exclusion will only be granted on a case by case basis where an article is not produced in the U.S. in a “sufficient and reasonably available amount,” is not produced in the U.S. in a “satisfactory quality,” or for a “specific national security consideration.”  The IFR does not clarify the meaning of these terms or provide the industry with illustrative examples.  The form for filing an exclusion request requires information such as the average annual consumption of the product at issue for the past two years, time involved in delivery, manufacture, and shipment of the product from a foreign suppliers, specifics about the physical properties of the product, and detailed U.S. product availability information (including attempts to qualify a US steel manufacturer or procure the steel from a US manufacturer).

The rule also establishes limits on who can request an exclusion and the scope of any exclusion. Exclusions are limited to individuals or organizations using steel articles in business activities (e.g., construction, manufacturing, or supplying steel to users). Approvals of exclusions will be specific to the individual or entity who submitted the request, unless Commerce approves a broader application of the exclusion to apply to other importers. Objections may be filed by any individual or organization, but Commerce will only consider information directly related to the submitted exclusion request.

The IFR states that “follow-on” requesters to exclusions that are approved will be taken into consideration, but signals that approval will depend on the strength of a requester’s application which may potentially set the stage for inconsistent results. Exclusion requests, objections and comments on the IFR will be public and located in the federal register docket. The rule establishes a 30 day period for individuals or organizations to file objections (from posting of the exclusion request) and a 90 day period for the Department to review and adjudicate any objections to an exclusion request. Responses approving exclusion requests will be effective within 5 days and will generally be approved for one year. Commerce estimates that it will receive tariff exclusion requests from 4,500 applicants. To date, no requests have been posted to the federal docket associated with steel import exclusions.

The Administration’s January 2017 Executive Memorandum requiring that all new and repaired pipe be made in the U.S. and the issue of steel tariffs have been the subject of much comment by the pipeline industry. Industry operators and trade groups have argued that such requirements will result in construction delays, project cancellations, higher costs and consumer impacts if they are implemented. There are major constraints on the procurement of adequate quantities of line pipe materials and equipment in the U.S., due to the unavailability of U.S. made pipe at necessary technical specifications and in time to meet market demands and/or regulatory requirements.  It remains uncertain whether the Commerce Department’s IFR will resolve any of these concerns, if it will be subject to judicial challenge or whether the exclusion process will prove to be workable for industry.

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.

Continue Reading PHMSA Opens Enforcement Hearing to the Public

In the past few weeks, the Trump Administration’s Department of Interior (DOI) has taken significant steps to roll back several environmental policies and/or rules affecting the energy industry.  On December 22, DOI issued a memorandum interpreting the scope of the criminal liability under the Migratory Bird Treaty Act (MBTA) not to extend to incidental takes of migratory birds associated with development, construction or operation of energy and infrastructure projects.  The following week, DOI formally rescinded a 2015 final rule issued by the Bureau of Land Management (BLM) for oil and gas operators engaged in hydraulic fracking on Federal and Indian public lands because it “imposes administrative burdens and compliance costs that are not justified.”  That same day, DOI’s Bureau of Safety and Environmental Enforcement (BSEE) issued a proposed rule to revise or eliminate regulations on offshore drilling safety equipment, including the production systems safety rule which was prompted by the 2010 Deepwater Horizon spill in the Gulf of Mexico.  More recently, DOI has announced a draft proposed plan to reopen nearly all offshore waters to oil and gas drilling.     Continue Reading Regulatory Rollbacks Continue for Energy Industry

Last week, PHMSA’s oil and gas pipeline technical advisory committees convened to review and discuss significant pending rulemakings and regulatory reform initiatives, among other topics.  At the same time, the White House touted its deregulation efforts, including the purported elimination of 22 regulations in the past year for each new rule passed.  For an agency that is facing outstanding statutory mandates to enact certain regulations, with reauthorization looming in 2018, it is expected that PHMSA will promulgate some new rules in the New Year.  It is not yet known, however, what the content of those rules will be and whether the expansive gas ‘mega rule’ will be among those finalized in 2018.  Given the overall regulatory climate to reduce regulation and burden, a little certainty might be appreciated in the New Year. Continue Reading All I want for Christmas is … regulatory certainty?

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 response to questions from lawmakers on whether federal law adequately provides for the prosecution of “criminal activity against infrastructure,” the Department of Justice (DOJ) recently committed to “vigorously” prosecute those who damage “critical energy infrastructure in violation of federal law.”  Historically, vandalism on oil or gas pipelines has been relatively uncommon, largely because most of the infrastructure is buried underground.  Since 9/11 and in response to increased high profile pipeline construction projects, however, acts of vandalism—and more intentional attacks—have increased.

Continue Reading Congress and DOJ Consider Existing Protections as Pipeline Sabotage Increases

On October 19, 2017, the Pipeline and Hazardous Materials Safety Administration (PHMSA) announced an additional comment period on its December 19, 2016 interim final rule (IFR) which established minimum federal safety standards for underground natural gas storage facilities.  PHMSA will accept comments until November 20, 2017.  This notice comes amidst the current administration’s executive orders on deregulation and a recent DOT request for comment on regulatory reform.

Continue Reading Underground Natural Gas Storage IFR Comment Period Reopened

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).

Continue Reading NAS Recognizes Utility of Performance Based Rules

The Department of Transportation formally requested public comment on existing rules and “other agency actions,” including but not limited to guidance documents and policy statements, that are good candidates for repeal, replacement, suspension, or modification without compromising safety.  This request covers all DOT modal agencies, including PHMSA, the FAA, the FRA, NHTSA, among others.   In addition to requesting comments, DOT indicated that it may hold a public meeting on these issues. Comments are due November 1, 2017.

Continue Reading DOT Requests Comments on Regulatory Review