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 The following week, DOI formally rescinded a 2015 final rule issued by the Bureau of Land Management (BLM) for oil and gas operators engaged in hydraulic fracking on Federal and Indian public lands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.
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.
Donald Trump formally announced Friday that he will nominate Skip Elliott as PHMSA Administrator. Once confirmed by the Senate, Elliott will serve as PHMSA’s chief executive charged with administering federal regulation of natural gas, oil, and other hazardous materials transportation by pipeline and the regulation of multimodal (truck, rail, etc.) transportation of hazardous materials. As PHMSA Administrator, Elliott will have oversight of over 600 employees within the Agency’s headquarters in Washington, DC and five regional offices across the U.S.
As the waters begin to recede from our nation’s energy capital following Hurricane Harvey’s unprecedented rainfall in the state of Texas, the full impacts of Hurricane Harvey are beginning to become more apparent. Beyond the incredible toll on the residents of the state, the daily damage estimates continue to rise. Significantly, nearly one-third of the U.S. refining capacity in the U.S. has been affected. The nation’s two largest refineries have closed, and many others are shut down or operating on a limited basis. One chemical plant suffered from several explosions, while another reported a release from a pipeline, and at least one of the country’s largest liquid transmission pipelines is shut down. While the full extent of damage to the energy industry is not yet known, the importance of good planning, preparedness and response is central to minimizing damage. These efforts, by both emergency responders and the private sector, can substantially limit the amount of damage to both the public and the environment.
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.
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.”