A recent Report to Congress mandated by the most recent amendments to the Pipeline Safety Act was released by the Government Accountability Office (GAO), reviewing federal and state responsibilities and resources for inspection of pipelines that transport product across state lines. Increases in funding have allowed the federal agency charged with regulating pipeline safety, the Pipeline and Hazardous Material Safety Administration (PHMSA or the Agency), to expand its own inspection workforce and reduce its reliance on state agents. The Report to Congress finds that the Agency has not assessed future workforce needs, however, to determine the appropriate level of state participation.
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.
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.
Opposition to new pipeline construction has grown in recent years, moving from public comment to litigation to physical protest and vandalism. In 2016 alone, several coordinated actions led to trespass and vandalism of pipelines and pipeline facilities in multiple states, some of which were prosecuted as felony criminal acts. The defendants in several of these cases have raised a “necessity defense” to their actions, and two courts have now allowed that defense to proceed.
The Federal Energy Regulatory Commission (FERC) officially announced that it is going to review its policy framework for certification of new interstate natural gas and LNG pipelines in the U.S. and issued a Notice of Inquiry (Notice or NOI). This is the first time in nearly twenty years that FERC will examine its pipeline review and approval policy, last issued in 1999. Kevin McIntyre, the current FERC Chairman, said review of the policy is intended to determine ‘whether, and if so, how’ any changes should be made in the evaluation of new pipeline projects. The NOI establishes a 60-day public comment period, beginning with publication in the Federal Register, thus the deadline for comments is June 25, 2018.
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 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.
 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
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.
In an attempt to bring clarity following the recent Supreme Court decision—which as noted in our prior post will result in expiration of the nationwide stay of the 2015 revised definition of “waters of the U.S.” that was imposed two years ago by the Sixth Circuit Court of Appeals—EPA and the Army Corps of Engineers (Corps) issued a final rule extending the applicability date of the 2015 revised definition to February 6, 2020. With this final rule, the Agencies seek to ensure that the pre-2015 “waters of the U.S.” definition will remain in place consistently throughout the country while the Agencies consider possible revisions. As expected, the final rule has already been subject to judicial challenge, further ensuring that the scope of “waters of the U.S.” will continue to remain uncertain in the near future as these challenges play out. Continue Reading Final Rule Adds 2020 Applicability Date to “Waters of the U.S.” Rule