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

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.

Continue Reading Judicial Review of PHMSA Order: Limitations of Agency Deference

In the wake of Hurricane Irma, PHMSA issued a press release regarding hurricane preparedness and response.  As operators implemented hurricane preparedness plans to minimize the impact of the storm, PHMSA noted several significant allowances for pipeline systems impacted by the hurricane including the following:

  1. Temporarily suspending enforcement for noncompliance with pipeline operator qualification or pre-employment and random drug testing requirements associated with the use of pipeline personnel for response and recovery activities.  The enforcement stay is limited to Florida, Georgia, North Carolina, South Carolina, and Puerto Rico.  It does not relieve operators of their responsibility to use trained, non-impaired workers to perform operations and maintenance tasks.
  2.  Acknowledging that some operators may need to extend the hours of service for pipeline controllers.
  3.  Reminding operators that the Agency is prepared to respond to requests for emergency special permits to assist in disaster relief efforts conducted in response to Hurricane Irma, whether to waive requirements or permit the use of innovative technologies not yet accommodated under the hazardous materials or pipeline safety regulations.
  4.  Delay and rescheduling of planned inspections for interstate operators affected by the storm;

In addition, PHMSA issued 2 emergency waivers of the hazardous materials regulations with respect to persons conducting operations under the direction of the EPA Regions 2 or 4 or the United States Coast Guard (USCG) 7th District within Hurricane Irma emergency and disaster areas of Florida, Puerto Rico, South Carolina, the United States Virgin Islands, and certain counties in Georgia.  The waivers are intended to support EPA and USCG actions to prepare for, respond to, and recover from threats to public health, welfare, and the environment caused by the actual or potential oil and hazardous materials incidents resulting from Hurricane Irma.  In addition, EPA approved emergency fuel waivers under the Clean Air Act for 38 states and Washington, DC due to continued impacts caused by Hurricane Harvey to Gulf Coast refineries and large scale evacuations in response to Hurricane Irma.  Specifically, EPA waived requirements for reformulated gasoline through September 26 and low volatility gasoline through September 15, 2017.

Similar to the precautions operators have taken in advance of other catastrophic events, precautions should be taken before initiating restart of refineries, terminals, offshore and inland pipelines, and other manufacturing facilities.  In its response to Irma, PHMSA highlighted prior advisories it has issued in response to hurricanes, flooding, and other emergency situations.  These advisories include recommendations for (among other things) bringing assets back online, including review for structural damage and aerial inspections to check for leaks.  Operators are required to report incidents and accidents to PHMSA that meet reporting thresholds, and the Agency encourages close communication on other damage caused by hurricanes.  Careful damage assessment and restart of assets is critical.

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.

Continue Reading Trump Nominates CSX Executive to Lead PHMSA

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.

Continue Reading Impacts of Hurricane Harvey: Underscoring the Importance of Planning, Preparedness & Response

On August 15, 2017, President Trump signed an executive order (EO) entitled “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects.”  As part of the Administration’s goal to improve domestic infrastructure, the purpose of the EO is to promote agency coordination, efficiency, and accountability with respect to environmental reviews of infrastructure projects.

Continue Reading Executive Order Aims to Improve Environmental Review of Infrastructure Projects

The Government Accountability Office (GAO) issued a report on August 4, 2017, titled “Pipeline Safety – Additional Actions Could Improve Federal Use of Data on Pipeline Materials and Corrosion.”  The 55 page Report, prepared in response to a Congressional mandate in the 2016 Pipeline Safety Act reauthorization, summarizes pipeline materials, training and corrosion prevention technologies for gas and liquid pipeline facilities and analyzes PHMSA use of corrosion and material data to inform its inspection priorities. The Report recommends that PHMSA review, document and validate the way in which it identifies the highest risk pipelines for inspection, but makes no significant new findings, and the recommendations are largely consistent with initiatives that PHMSA already has begun.

The Report notes initially that pipelines carrying hazardous liquids or gas have the lowest incident rate of other transportation modes.  For oil and gas pipelines from 2010 to 2015, GAO’s assessment of PHMSA incident data attaches the highest single cause as corrosion (22%), followed by “equipment failure” (21%), “natural or outside force” (16%) and “excavation damage” (14%).  PHMSA tracks causal data somewhat differently, however, grouping “equipment failure” and “material/weld failures” together in a single category, which is reported by operators to be the largest cause of significant incidents in the past 5 years.  By comparison, the GAO Report links corrosion (22%) with “material, pipe or weld failure” (12%), although it is a very different failure mechanism from corrosion, to be the estimated cause of nearly one-third of all oil and gas significant incidents.

Continue Reading GAO Report Critical of PHMSA Inspection Priorities