Rule Changes, Proposals Could Prove Significant For 2012 Underground Market

The One-Call and excavation damage provisions included in the new pipeline safety bill passed by Congress in December will trigger a number of state and federal responses in 2012. However, a rule allowing the Pipeline and Hazardous Materials Safety Administration (PHMSA) to impose civil penalties on excavators — ordered by the 2006 pipeline safety bill but never finalized — would be even more significant. A proposed rule moving that requirement forward is expected this year, finally, perhaps as early as this winter.

Companies doing underground construction would also be affected by a proposed rule from the Occupational Safety and Health Administration (OSHA) on silica. The agency sent a draft rule to the White House Office of Management and Budget (OMB) in February 2011. A proposed rule tightening the construction worker exposure standard is expected at any time.

Longer-term regulatory actions will also get prep time in 2012. The Environmental Protection Agency is gathering data and comments for a proposed rule it plans to issue in 2014 requiring shale gas producers to pretreat wastewater that is trucked to public sewage plants from well sites.

CWA/DW funding at risk
Moving to the congressional arena, 2012 will see a tightening of budgets for programs such as the EPA’s wastewater and drinking water construction grants.

Congressional efforts to reduce the yawning federal deficit will affect the EPA’s Clean Water and Safe Drinking Water State Revolving Funds more than many other federal grant programs. Those two programs were a little lucky when Congress only reduced them from $1.52 billion (CW) and $963 million (DW) in fiscal 2011 to $1.46 billion and $919 million in fiscal 2012. They were combined with all federal programs in a continuing resolution where appropriations in 2012 for all programs were cut an equal amount. Adam Krantz, managing director of government and public affairs, National Association of Clean Water Agencies, says that won’t be the case when Congress approves SRF budgets for fiscal 2013 later this year. “There won’t be the same series of continuing resolutions we had last year, and Congress will have time to focus on the SRFs,” he explains. “The funding for 2013 will be of great concern.”

No more city/state One Call exemptions

The new pipeline safety bill passed by Congress in December and signed by President Obama will drive both state and federal activities in 2012. That bill is called the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011. Section 3 of the bill requires states who want to receive PHMSA One Call or State Damage Prevention grants to provide for “appropriate” participation by all underground facility operators and excavators, including all government operators. Exemptions for municipal and state agencies and their contractors are banned.

About 35 states receive One-Call grants annually. Those grants can go as high as $45,000, but are sometimes lower. It is not clear how many of those states exempt local and state governments (and their contractors) from One Call programs. Texas, for example, which receives One Call grants, exempts surface mining activities and specific activities when performed by an employee of the Texas Department of Transportation (TxDOT) within a TxDOT right-of-way.

Moreover, the Pipeline Safety, Regulatory Certainty and Job Creation Act leaves in place other kinds of One Call program exemptions. “While it’s true that other exemptions of note do remain, this is a good step in the right direction,” says Scott Berry, director, Municipal & Utilities Construction Division, Associated General Contractors of America. “AGC is a supporter of this legislation.”

The pipeline bill does require PHMSA to do a report on the remaining exemptions to One Call systems and their impact, and send that report to Congress within two years. Andy Black, president and CEO of the Association of Oil Pipelines, says, “Exemptions from One-Call requirements generally threaten pipelines, the public and the environment with excavation damage, and should be eliminated. AOPL hopes the report will motivate Congress and PHMSA to disallow remaining One-Call exemptions in the future.”

Stepping up excavation enforcement
While the pipeline bill’s provisions are significant, what will cause even more impact is a PHMSA proposed rule laying out the conditions states must meet if they want to prevent federal enforcement of state excavation damage laws, which would result in civil penalties against excavators. State enforcement is notably lax. The federal government was empowered to bring civil penalties in the states by the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 (PIPES Act). However, the PHMSA has been slow to conduct the necessary rulemaking, issuing an advanced notice of proposed rulemaking in 2009 and nothing thereafter.

After dragging its feet, sources say PHMSA will issue a proposed rule this winter. The PIPES Act allows PHMSA to legally pursue excavators who “damage a pipeline” when they:

• Fail to use a One-Call system before excavating;
• Fail to regard the location information or markings established by a pipeline facility operator; and/or
• Cause damage to a pipeline facility that may endanger life or cause serious bodily harm or damage to property; and fail to promptly report the damage and fail to call 911 if the damage results in a release of pipeline products.

The AGC’s Berry says: “We believe the threat of federal takeover of the enforcement programs may be sufficient incentive for many states to re-examine their One-Call laws and begin the process to update them.”

Shale wastewater disposal
States are moving more quickly to update laws surrounding shale gas exploration than they are on excavation damage, given the elevated profile of that issue. The big issue now is the trucking of shale wastewater to publicly-owned treatment works (POTWs). Shale wastewater from wells in Oklahoma and Texas has been either reinjected or recycled for the past 30 years without much of a problem; that recycling and reinjection is regulated federally by the Safe Drinking Water Act.

The potential problem is Marcellus wastewater in Pennsylvania and elsewhere, where there are few reinjection wells. That wastewater is trucked to POTWs for disposal. That wastewater contains benzene, radium and other contaminants which can be harmful when discharged into surface waters such as lakes and rivers. Surface water discharges are regulated by the Clean Water Act (CWA). The POTWs, for the most part, do not have the technology now to remove those contaminants before sending the wastewater to local rivers and streams.

That is the background to the EPA’s release of an advanced notice of proposed rulemaking on Oct. 16, 2011, which could end up requiring POTWs to adopt pre-treatment technologies under the CWA when receiving shale gas wastewater. Some states such as Pennsylvania have closed loopholes which had allowed their POTWs to pass shale wastewater to POTWs without pre-treating those waste waters. But environmentalists are pushing for a national CWA POTW pre-treatment standard which some in industry (and especially Congressional Republicans) believes will stymie natural gas production in shale areas. In any case, the EPA doesn’t plan to issue a proposed rule until 2014.

Silica standard imminent
A new construction workplace standard on silica is, on the other hand, probably imminent. With regard to silica action from the OSHA, one always has to hedge, because the agency has been considering improving the 1972 standard since 1997, with no action ever taken. The Obama administration designated silica reform a regulatory priority in 2010; but a proposed rule has been sitting at the White House OMB for nearly one year waiting for approval prior to OSHA being able to publish it. One construction industry lobbyist in Washington says no one has seen the OSHA proposed rule; but he believes that the agency will propose reducing workplace exposure by 50 percent. Construction groups are lobbying OMB to disapprove the OSHA proposed rule, in part because they believe the agency is not enforcing the current standard.

Part of the reason OSHA does not enforce the current silica standard is that it lacks the resources, i.e. budget, to do so. That situation is apt to get worse, and diminishing federal funds for many federal programs is a fact of life going forward.

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