U.S. Department of Transportation Proposed Reauthorization of Pipeline Safety Programs Focuses on the Existing Mission of PHMSA
On June 3, 2019, Secretary Elaine Chao of the U.S. Department of Transportation (“DOT”) proposed a reauthorization of the DOT’s pipeline safety programs at the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) for four additional years. Unlike the 2011 and 2016 reauthorizations of PHMSA that collectively imposed 61 new mandates on PHMSA, the 2019 proposal is much more focused on bolstering key aspects of the agency’s current mission.
For example, the reauthorization contains a number of proposals that would:
- clarify PHMSA’s role in assessing location and design standards for proposed liquified natural gas (“LNG”) projects,
- authorize “recognition or other non-financial incentives” for pipeline operators that voluntarily exceed federal requirements and allow “pilot programs” to evaluate “innovative technologies or approaches for the safe operation of” jurisdictional facilities, which programs may include exemption for up to seven years from other regulations so long as an “equivalent level of safety” has been achieved,
- extend “operator qualification” requirements to the construction of pipelines,
- direct the agency to adopt new regulations setting forth the applicability of PHMSA pipeline safety regulations to pipelines that are in varying stages of development, operation or inactivity,
- lessen incident reporting obligations by increasing property damage thresholds triggering pipeline operator incident reporting, and
- provide enhanced criminal penalties to protect pipeline facilities from disrupting, tampering or vandalizing the operation of a pipeline facility or construction of a new pipeline.
The submittal arrives at an opportune time, as the current statutory reauthorization, the Protecting Our Infrastructure of Pipelines and Enhancing Safety(PIPES) Act (“2016 PIPES Act”) is set to expire on September 30, 2019.
I. Gas Distribution Pipelines Must Install Secondary or Back-Up Over Pressure Protection on Certain Facilities.
In response to the explosive events in Merrimack Valley, Massachusetts as a result of excessive pressure in natural gas lines in September 2018, Section 14 of the legislative proposal would require “operators of gas distribution facilities” to install “overpressure protection” within “one year following the date of enactment of” the reauthorization. This over-pressure protection “must provide a secondary or back-up means of over pressure protection for regulator stations serving low pressure distribution systems and that employ the primary and monitory regulation design.” This system must “fully protect the distribution system from over-pressurization events” either by “shutting” the flow or “relieving gas to the atmosphere.”
II. Congress Directs PHMSA to Undertake or Consider Some New or Amended Regulations.
- PHMSA Must Determine which Pipeline Safety Regulations Apply to Pipelines at Each Stage from “Cradle to Grave.”Among the mandates in the proposed reauthorization is the directive for PHMSA to adopt regulations setting forth the application of PHMSA pipeline safety requirements to pipelines during their various stages of use. The four stages of pipeline activity are: (i) pre-commissioned (a pipeline that has been constructed but has not yet commenced normal operations); (ii) active/in service (a pipeline that is engaged in or available for normal operations); (iii) inactive/out-of-service (a pipeline that has ceased normal operations, been purged of combustibles, and maintains a blanket of monitored inert, non-flammable gas at low pressure); and abandoned (a pipeline that has ceased all operations and has been permanently removed from service). In determining the applicability of pipeline safety regulations to these four status categories, the reauthorization directs PHMSA to evaluate the degree of risk that the pipeline status poses to the public, property and the environment and, further, recommends that PHMSA consider industry consensus standards. Those pipeline safety regulations being applied may also include requirements to move from one operational status category to another, if appropriate.
- PHMSA May Obligate Pipeline Owners or Operators to Submit Relevant Information on Pipeline Construction Activities. Section 4 of the legislative proposal authorizes PHMSA to require pipeline owners or operators to provide relevant information to PHMSA on the status of pipeline construction activities including the shut-down of any such construction projects if “it would advance the purposes” of the statute. The introduction to this particular statutory proposal suggests that PHMSA receives a large number of questions from the public about the construction of gas and liquids pipelines and that having this information might help them respond to the public as well as take timely actions on safety matters, as appropriate.
- PHMSA May Extend Operator Qualification Requirements to the Construction of a Pipeline.The proposal would authorize PHMSA to expand, as appropriate, existing PHMSA pipeline safety regulations regarding operator qualification requirements to the construction of “new gas and hazardous liquids pipelines.” Currently, PHMSA’s regulations require each pipeline operator to develop an Operator’s Qualifications Program that, among other things, sets the training and qualification requirements for personnel (including contractors and vendors) performing covered tasks on its pipeline facility during operation and maintenance. Section 16 of the legislative proposal provides PHMSA with flexibility in extending the pipeline operator’s qualifications program to construction activities associated with the new construction of hazardous liquid and gas pipelines by only pursuing such extension, “if appropriate.” Section 16 would also remove the currently required statutory obligation compelling pipeline operators to submit each change in operator qualification procedures to PHMSA, as this reporting obligation has been determined by the DOT to be an unnecessary reporting burden.
- PHMSA Authorized to Impose Management of Change Requirements for Tie-Ins. Section 15 of the legislative proposal specifically tasks PHMSA to require management of change requirements for “pipeline tie-in” operations, but only “if appropriate.” If PHMSA chooses to adopt such regulations, the agency must obtain “a detailed set of energy control procedures” from the pipeline operator that addresses “varying field conditions,” and provides a means to “actively monitor pressures and safely control” gas and liquids “at all times.”
III. Suite of Voluntary Measures Reflect a Different Approach to Regulation.
The reauthorization proposal reflects an effort to go beyond the command and control approach to regulating jurisdictional facilities. For instance, the agency would be authorized by Section 3 of the legislative proposal to pursue programs that provide “recognition or other non-financial incentives for pipeline operations who voluntarily exceed the minimum federal pipeline safety regulations.” It remains to be seen what such “recognition” or “non-financial incentives” means in practical terms but this does signify that the agency is looking for the legal authority to begin pursuing such opportunities.
Likewise, following-up on the 2016 PIPES Act, Section 5 of the DOT’s legislative proposal would authorize the establishment of a voluntary information sharing system. This proposal reflects the progress of a working group established after the 2016 PIPES Act that considered the development of a voluntary information sharing system for the exchange of pipeline integrity risk analysis information and other information from mitigating pipeline accidents and near misses. The proposed system would seek to improve natural gas transmission and hazardous liquid pipeline safety by sharing information about the integrity of pipelines and the detailed information relative to events at particular pipelines. The proposal contains assurances of confidentiality and non-punitive actions to incentivize pipeline operators to voluntarily share the information sought. Notably, there is no absolute exemption from the Freedom of Information Act (“FOIA”) for information shared under this provision; instead, the PHMSA director has the sole discretion to decide whether any information shared with PHMSA will be provided in response to a FOIA request.
Section 6 of the proposal would effectively expand the existing special permit program to authorize activities that “evaluate innovative technologies or approaches” for the safe operation of jurisdictional facilities. As is true with existing special permit programs, the innovative approach must achieve an “equivalent level of safety” as compared to the existing regulation. If that demonstration can be made, then the entity will be excused from complying with the applicable regulation so long as it demonstrates compliance with the requirements of the special permit.
IV. Increasing Property Damage Thresholds that Trigger an Operator’s Reporting Obligation.
Under applicable pipeline safety law, pipeline operator incident reporting is triggered upon, among other things, exceedance of a property damage threshold. This threshold amount is currently $50,000 and has not been updated in many years. Section 8 of the DOT’s legislative proposal would increase by regulation the threshold to $100,000. Moreover, to account for inflation, the legislative proposal would adjust this dollar amount in the future, as necessary, on not later than a biennial basis.
V. Clarifying PHMSA’s Exclusive Authority Regarding Pipeline Safety and Dealings with Other Agencies and States.
Section 11 of the legislative proposal authorizes the involvement of PHMSA in project reviews by federal or state authorities regarding LNG projects. In Section 11, the DOT clarifies that, should FERC or another permitting agency request the DOT’s determination of whether location and design standards would be met by a given LNG project proposal, the DOT is authorized to provide the requested determination. This provision is consistent with Title 49 of the Code of Federal Regulations, Part 193 (relating to LNG Facilities: Federal Safety Standards) and an August 31, 2018 Memorandum of Understanding between the DOT and FERC (regarding coordination of the siting and safety review of FERC-jurisdictional LNG facilities) whereby PHMSA is responsible for standards governing the location and design of LNG facilities. On the other hand, FERC (or other permitting agencies, as applicable) is responsible for formal project approvals and permits. However, the DOT’s determination is conditional and not a final determination (and, thus not final agency actions) as to whether a permit will be issued (potentially with added conditions related to the siting and location of the facility), as FERC (in the context of a Natural Gas Act Section 3 approval) or such other permitting agency, as applicable, maintains the final authority on permit issuance. PHMSA will now be able to recover its fees for smaller LNG projects as Section 12 of the legislative proposal would allow PHMSA to collect fees for review of LNG facilities that exceed $250 million, which is a tenfold reduction from the current $2.5 billion threshold.
Additionally, Section 13 exclusively reserves the authority to “prescribe Federal requirements for safety of pipeline transportation and pipeline facilities” to PHMSA. Other than FERC, no other federal agency may establish “a pipeline safety requirement…that varies from the standards” set by PHMSA.
VI. Enhancing Criminal Penalties for Disrupting, Tampering or Vandalizing the Operation of a Pipeline Facility or Construction of such New Facility.
The rising number of attacks on pipeline infrastructure should be deterred, at least to some extent, if the proposed changes to the criminal sanctions as set forth in Section 18 of legislative proposal are adopted. Under the current version of 49 U.S.C. § 60123(b), a person who knowingly and willfully damages or destroys a regulated pipeline facility is subject to fine and/or imprisonment for up to 20 years. Section 18 would expand the criminal sanctions to any actions that vandalize, tamper with, or impede, disrupt or inhibit the operation of those facilities even when they are under construction. This particular provision has been the subject of debate among opponents and proponents of more stringent criminal standards, with opponents asserting that the revision is intended to stifle legitimate dissent and protest to the construction and operation of pipelines. Representative Frank Pallone, D-NJ, who chairs the House Committee on Energy and Commerce, has indicated his opposition to this particular provision.
The legislative proposal for reauthorization reflects the priorities of the Trump administration as compared to when the 2016 PIPES Act was adopted under the Obama administration. This proposal represents the DOT’s vision for reauthorizing PHMSA’s pipeline safety programs, which are currently due to expire on September 30, 2019, but does not embrace calls to expand that vision into climate controls and other areas. Traditionally, PHMSA reauthorizations have been supported jointly by both parties. Whether that remains true for this reauthorization remains unclear for now. With current pipeline safety programs expected to expire within the next four months, time is running out and movement on a Congressional proposal is expected soon.
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