Integrity Management Expansion Stirs Controversy In Congress

Two House committees are attempting to combine slightly different pipeline safety bills while Sen. Rand Paul (R-KY) is preventing a Senate vote on a bill passed by the Commerce Committee last May. All three bills are moderate, and make changes around the edges of current law, both with regard to natural gas and oil pipelines.

“Congress is not overreaching or posturing,” says Robert Hogfoss, a partner at Hunton & Williams LLP, a firm with a large natural gas legal practice.

The most controversial issue is a provision in one of the House bills and the Senate bill which would allow the Pipeline and Hazardous Materials Safety Administration (PHMSA) to expand integrity management requirements outside high consequence areas (HCAs), without congressional approval. Sen. Paul is holding up consideration of the bill on the Senate side because of this perceived potential expansion of federal regulatory authority. His press secretary did not return a phone call.

Rep. Bill Shuster (R-PA), chairman of the House Railroads, Pipelines and Hazardous Materials Subcommittee in the Transportation & Infrastructure Committee, feels the same way. The bill passed by that committee is called the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 (H.R. 2845). It requires congressional approval of PHMSA expansion of integrity management requirements to new areas.

The House Energy & Commerce Committee passed the Pipeline Infrastructure and Community Protection Act (H.R. 2937). It allows PHMSA to act without congressional approval, after considering a number of factors enumerated in that bill, such as: “the continuing priority to enhance protections for public safety” and “the continuing importance of reducing risk in high consequence areas . . .”

Martin Edwards, vice president at INGAA, says the group supports expansion of IM programs beyond HCAs and that in fact the industry, on its own, voluntarily, is already doing so.

Because pipeline safety is mostly a Department of Transportation issue, the T&I Committee will have its bill voted on in the House, which may happen before the end of 2011. The House Rules Committee may add some of the E&C language to the bill before the House votes. The big issue will be the differences in language in the two bills on expansion of integrity management. “We have 80 conservative Republicans in the House who want smaller government and want to reduce regulation,” says one House staffer.

In the Senate, Sen. Harry Reid (D-NV), the Senate Majority Leader, wants to bring S. 275 up under what is called the suspension calendar, which requires a bill to be passed by unanimous consent. There is no debate. Paul wants the Senate pipeline safety bill to be the subject of floor debate.

In addition to the expansion of integrity management requirements, the two House bills differ on the issue of maximum allowable operating pressure (MAOP). The E&C bill contains provisions on MAOP which was an issue in the San Bruno, CA, accident. The bill requires PHMSA within six months to require pipelines to verify MAOP for pipelines running through HCAs. Any pressures exceeding the build-up allowed for operation of pressure-limiting or control devices would have to be reported to PHMSA within five working days of the incident. There would be other MAOP requirements as well. The T&I bill includes no provisions on MAOP. INGAA’s Edwards states INGAA is supportive, too, of the MAOP provision “with some tiny modifications.” S. 275 also includes MAOP provisions similar to those in the E&C bill.

All three bills also contain a provision which, for the first time, gives PHMSA new authority to conduct “facility design safety reviews” of new gas and hazardous liquid pipelines, and charge a fee for doing so. PHMSA typically already reviews natural gas pipelines during the FERC construction approval process. But it does not charge the pipeline companies a fee. Unlike natural gas pipelines, oil pipelines can be built without any prior federal approval. As a matter of course, oil pipeline companies may have preliminary informal discussions with PHMSA before starting to build. The three bills establish thresholds — for new projects either over $1 billion or $3.4 billion, depending on the bill — over which PHMSA can assert authority and charge the pipeline a fee for “looking over the company’s shoulder,” in Hogfoss’ words. None of the bills specify how the fee would be figured.

Green Completions For Shale Gas
“Green completions” — that appears to be a new watchword growing out of the shale gas explosion. The issue of green completions came up on Oct. 4 when members of President Obama’s shale gas subcommittee went before the Senate Energy Committee.

Kathleen McGinty, a member of the DOE shale gas subcommittee, brought up the issue of green completions as an example of a possible solution to objectionable methane emissions. McGinty is senior vice president of Weston Solutions and chaired the White House Council on Environmental Quality under President Clinton.

In green completions, gas and hydrocarbon liquids are physically separated from other fluids and delivered directly into equipment that holds or transports the hydrocarbons for productive use. There is no venting or flaring. This practice then links upstream activities with mid- and downstream- efforts. But McGinty added a more aggressive move to green completions “will require acceleration of effort in other areas to permit and build the needed gathering and distribution infrastructure.”

In late August the EPA, as part of a larger oil and gas industry rulemaking, proposed operational standards for completions of hydraulically fractured gas wells. Non-exploratory and non-delineation wells would require reduced emission completion (REC) — another term for “green completion” — in combination with pit-flaring of gas not suitable for entering the gathering line.

Exemption From OSHA Injury Recordkeeping Possible For Pipelines

A new proposal by a federal regulatory agency wants to exempt the pipeline industry from injury and illness recordkeeping requirements it has had to comply with for 30 years. Believe it or not, that’s exactly what the Occupational Safety and Health Administration (OSHA) is proposing. Companies which transport both crude oil and natural gas would be among those in sectors who would no longer have to fill out OSHA Forms 300 and 300A. The first is used to note when an employee is injured on the job and why. The second is a compilation of all injuries during the year. Form 300A is posted in the workplace. Oil and natural gas pipeline companies have had to complete those forms since 1982.

But that requirement was based on illness and injury rates in each industry as of 1999. OSHA has now computed more recent statistics, based on the years 2007-2009, and also changed the way it evaluates each sector. Formerly, OSHA used Standard Industrial Classification (SIC) codes to compare companies to others in similar industries. It is now switching to the North American Industry Classification System (NAICS) codes.

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