New Pipeline Safety Act Will Increase Regulatory Workloads
June 24, 2016
On June 22, 2016, President Obama signed into law a new pipeline safety act, The Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (“PIPES Act”). The PIPES Act was enacted with bipartisan support in Congress. This legislation responded to several catastrophic accidents affecting oil and gas storage and transportation, including: the recent major leakage from Southern California Gas Company’s Aliso Canyon storage facility; the explosion in 2010 of the aging Pacific Gas & Electric pipeline in San Bruno, California; and several major oil pipeline leaks.
The PIPES Act will place even more responsibility on the already very full plate of the U.S. Pipeline and Hazardous Safety Administration (“PHMSA”), one of the smaller agencies within the U.S. Department of Transportation which is already very busy. For example, PHMSA issued a proposal in March of 2016 that would remove exemption from verification and testing requirements for many gathering pipelines, as well as for pipelines that were built before 1970. These regulations would add hundreds of thousands of pipeline miles of additional pipelines to PHMSA’s regulatory jurisdiction. Some lawmakers have claimed that PHMSA has already failed to complete one half of the 42 pipeline safety directives that Congress mandated in 2011.
The PIPES Act will, among many other things, require the PHMSA to develop new federal minimum safety rules for underground natural gas storage facilities, which are currently largely under the regulatory jurisdiction of the states. This will require PHMSA to analyze existing state regulations and then develop appropriate minimum safety standards for the entire nation. Section 12 of the PIPES Act requires, in part, that PHMSA “issue minimum safety standards for underground natural gas storage facilities” which, to the extent practicable: (1) “consider consensus standards for the operation, environmental protection, and integrity” of such facilities; (2) consider the economic impacts of the regulations on individual gas customers; and (3) “ensure that the regulations do not have a significant economic impact on end users”; and (4) “consider the recommendations of the Aliso Canyon natural gas leak task force . . .” Furthermore, the PIPES Act requires that PHMSA accomplish all of this within just 2 years. This task along will be a major new PHMSA assignment.
Section 16 of the PIPES Act authorizes the PHMSA to develop new emergency order regulations, which would enable it to impose “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, but only to the extent necessary to abate the imminent hazard.” Although this broad emergency authority may enable PHMSA to prevent some tragedies, this part of the PIPES Act is wrought with the potential for litigation, particularly if the PHMSA unnecessarily uses its new emergency authority.
Pipeline safety is just one example of the national need to seriously address infrastructure affecting transportation and utility projects. For example, the American Society of Civil Engineers (“ASCE”) has developed a comprehensive assessment of the nation’s major infrastructure categories, using a standard school grade point average system. The most recently available ASCE report stated that “America’s cumulative GPA for infrastructure rose slightly to a D+ [since the last report]. The grades in 2013 ranged from a high of B- for solid waste to a low of D- for inland waterways and levees.” The ASCE ranking for the nation’s aging electrical grid and pipeline distribution systems infrastructure was a disappointing D+. There is a clear need for action to repair the nation’s utility infrastructure.
The PIPES Act represents a relatively rare instance where Congress has been able to overcome recent historic partisan division, and pass legislation on an important topic. Now, it will be up to the PHMSA to demonstrate that it has the ability to respond in a timely manner to the increased number of assignments.
This Eckert Seamans Energy and Utilities Blog is intended to keep readers current on matters affecting businesses and is not intended to be legal advice. If you have any questions, please contact Dan Clearfield at (717) 237-7173 – dclearfield@eckertseamans.com.