Authority to Issue Emergency Orders, Regulation of Underground Natural Gas Storage Facilities Among New Directives

HIGHLIGHTS:

  • The U.S. House of Representatives has passed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act of 2016), reauthorizing the Pipeline and Hazardous Materials Safety Administration (PHMSA) from Fiscal Year (FY) 2016 to FY 2019.
  • The bill gives the Secretary of Transportation authority to issue emergency orders and would regulate underground natural gas storage facilities.
  • Completing congressional mandates from the 2011 PHMSA reauthorization bill remains a priority.

The U.S. House of Representatives passed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act of 2016) unanimously on June 8, 2016. The Senate is expected to pass the bill very soon. The bill is a collaboration between the House and Senate, and is an amendment to a bill passed by the Senate in March (see Holland & Knight's alert, "Senate Passes Reauthorization Bill for PHMSA," March 8, 2016).

The PIPES Act of 2016 would reauthorize the Pipeline and Hazardous Materials Safety Administration (PHMSA) from Fiscal Year (FY) 2016 to FY 2019. PHMSA still has not issued 16 of the 42 congressional mandates from the 2011 reauthorization bill (the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011), and stakeholders have advocated for completion of those mandates rather than extensive new requirements. A chart detailing PHMSA's progress in meeting the mandates of the 2011 Act is available from the PHMSA. Many of these rules have been delayed because the costs outweigh the benefits.

Key New Provisions

Several new directives, mandates and studies are required by the PIPES Act.

Emergency Orders: Section 16 of the PIPES Act authorizes the Secretary of Transportation to issue an emergency order imposing emergency restrictions, prohibitions and safety measures on owners and operators of gas or hazardous liquid pipeline facilities without prior notice or an opportunity for a hearing, if necessary to abate an imminent hazard. Aggrieved parties are entitled to an administrative review, which may be appealed in court, but these actions will not stay the emergency order.

Underground Natural Gas Storage Facilities: Section 12 of the PIPES Act requires the PHMSA to issue minimum uniform safety standards for underground natural gas storage facilities. PHMSA is directed to consider, among other things, the recommendations of the Aliso Canyon Task Force, established under Section 31 of the PIPES Act. The task force is in response to a very large gas leak from Aliso Canyon in Southern California which caused thousands to evacuate their homes in October of 2015. User fees are to be assessed on the underground natural gas storage facilities.

Other Provisions: An overview of other changes made in the PIPES Act are included in a fact sheet produced jointly by the House Transportation and Infrastructure Committee and the House Energy and Commerce Committee.

Variations From the Previous Versions of the Bill

The PIPES Act excludes a provision contained in the March Senate bill that would have required industry to make available unredacted emergency response plans. The PIPES Act also omits a "sue and settle" provision, which would have allowed the public to take PHMSA to court over alleged regulatory inaction. A sue and settle provision was not contained in either the floor version of the House bill or the March Senate bill, but an earlier version of the House Energy and Commerce Committee contained such a provision. Most industry groups, including the Association of Oil Pipe Lines, the American Gas Association and the Interstate Natural Gas Association of America, oppose sue and settle provisions.

Key Incomplete 2011 Mandates

A number of important mandates in the 2011 Act are still outstanding.

Automatic and Remote-Controlled Shut-Off Valves for New Transmission Pipelines: Section 4 of the 2011 Act directs the Secretary of Transportation, if appropriate, to require by regulation the use of automatic or remote-controlled shut-off valves, or equivalent technology, where economically, technically and operationally feasible on transmission pipeline facilities constructed or entirely replaced after the date on which the Secretary issues the final rule. This would likely have huge costs with very few safety benefits to the industry.

Maximum Allowable Operating Pressure (MAOP): Section 23 of the 2011 Act directs the Secretary to require each pipeline owner or operator of an interstate and intrastate gas transmission pipeline in high consequence areas (HCAs) to: 1) verify the physical and operational standards of each pipeline segment, 2) identify and submit documentation to the Secretary on the MAOP of each pipeline segment, and 3) report any exceedances of MAOP within five days of when the exceedance occurs. HCAs include areas that have populations of 50,000 or more, that contain environmentally sensitive areas and commercially navigable waterways, or that are within close proximity of homes, buildings or an area that is frequently occupied. The 2011 Act also requires the Secretary to issue regulations for testing the material strength of previously untested gas transmission pipelines in HCAs. PHMSA has issued three advisory bulletins to industry members on the establishing and reporting of MAOP and verification of records. A rulemaking is still under consideration.

Integrity Management: Currently, owners or operators of gas and hazardous liquid pipelines are required to develop and implement written integrity management programs to ensure the integrity of their pipelines in HCAs and to reduce risk of injuries and property damage from pipeline failures. These programs must include procedures and three processes to identify HCAs, determine likely threats to a pipeline within a HCA, evaluate the physical integrity of a pipe within a HCA, and repair or remediate any pipeline defects found.

Section 5 of the 2011 Act requires the Secretary to transmit a report to Congress evaluating: 1) whether gas and hazardous liquid pipeline integrity management programs should be expanded beyond HCAs, and 2) whether applying integrity management program requirements to additional areas would mitigate the need for class location requirements (with respect to gas transmission pipeline facilities). Additionally, the 2011 Act directs the Secretary to issue final regulations, if the Secretary finds, in the report, that integrity management requirements should be expanded beyond HCAs. Though the congressionally mandated deadline for the report was Jan. 3, 2014, the report has not been completed.

Leak Detection: Section 8 of the 2011 Act required the Secretary to study and transmit a report to Congress on leak-detection systems utilized by operators of hazardous liquid pipelines and transportation-related flow lines to detect ruptures and small leaks. In conducting the study, the Secretary must analyze the technical limitations of current leak-detection systems and consider the practicability of requiring technical, operational and economically feasible leak-detection standards for operators.

The Secretary completed the study, submitted the report and found that it was practicable to establish such standards, and therefore the Obama Administration plans to issue final regulations to require operators to use leak-detection systems where practicable and establish standards for the capability of such systems to detect leaks. PHMSA says that a rule is currently under agency review.

Congress has been applying pressure on PHMSA to make progress on these outstanding mandates, including hearings last summer with the agency. It remains to be seen whether the PIPES Act will spur faster action by PHMSA on these uncompleted mandates.