Pipeline Approval Reform Bill Hits Headwinds

The pipeline approval “speed up” bill hit a couple of speed bumps on July 9. At hearings in a House subcommittee, the unofficial “pipeline” commissioner at the Federal Energy Regulatory Commission (FERC) pointed out some potential unintended consequences that might come about if the Natural Gas Pipeline Permitting Reform Act (H.R. 1900) as initially written becomes law.

The bill was proposed by Rep. Mike Pompeo (R-KS). It essentially requires the FERC to approve or deny a pipeline application 12 months after a certificate has been submitted. Various federal agencies that have jurisdictional concerns, generally environmental worries, would have to either approve or deny a permit within 90 days after the FERC completes its environmental review. If an agency such as the Bureau of Land Management or the Corps of Engineers, for example, fails to make a determination one way or the other, the permit would be considered granted.

But Phillip Moeller, the FERC commissioner, told the House energy and power subcommittee that the 90-day ticking clock could result in agencies either denying certain permits or adding burdensome conditions as a way to protect themselves from accusations of insufficient review. He also suggested that the 12-month clock for a FERC decision should start once the Commission determines that an application is complete.

Later that day, after the hearing, Rep. Ed Whitfield (R-KY), chairman of the subcommittee indicated Pompeo was willing to make changes in his bill.

But Rick Kessler, president of the Pipeline Safety Trust, said, “The Trust fails to see any compelling case for this legislation.” That position, unless softened, will resonate with Democrats and cause problems for the bill in the Senate, where Democrats are in control. The House is likely to pass the bill once Pompeo adjusts its provisions to meet Moeller’s concerns. But Kessler argued that the need for a one-year FERC deadline had not been established. Moreover, he explained that it didn’t make sense to apply the same one-year limit to a 10-mile pipeline across a barren desert and a 1,400-mile pipeline that crosses multiple ecosystems and through dense population areas where it could pose a threat to the life and property of those citizens living nearby.

The pipeline industry supports the bill wholeheartedly. There currently is a 90-day deadline under a 2005 law which requires agencies to complete permits within 90 days. But that 90-day limit is unenforceable. Nothing happens if the Corps or some other agency misses that deadline. A pipeline company can sue the agency, but that is almost always self-defeating. That is why the Interstate Natural Gas Association of American (INGAA) has pushed for the provision in the Pompeo bill establishing a “green light” for a permit if any agency takes no action within 90 days.

“In sum, certainty is needed,” Don Santa, INGAA president and CEO said at the July 9 hearings. “Clear deadlines would bring action and accountability to all permitting agencies, and improve what is already a good process. H.R. 1900 provides that accountability.”

INGAA, AGA dispute valve and leak detection reports

The two natural gas pipeline lobbies are trying to undermine the conclusions of two recent reports sent to Congress which could be read to support mandatory installation of automatic shut-off valves (ASVs) or remotely controlled shut-off valves (RSVs). The Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 (PSA) required two separate reports, one on valves, another on leak detection systems. The law was signed by President Obama on Jan. 3, 2012.

Section four of that law requires the Secretary of Transportation to require the use of ASVs, RSVs or equivalent technology, where economically, technically and operationally feasible on transmission pipeline facilities within two years after the law was signed. Section 8 also requires the DOT secretary to issue final regulations requiring operators of hazardous liquid pipeline facilities to install leak detection systems one year after the GAO submits a report, or two years after the law is signed, whichever is earlier. Leak detection requirements can only be put in place if “practicable” and standards must be “technically, operationally, and economically feasible.”

The Pipeline and Hazardous Materials Safety Administration (PHMSA) will make any decisions to regulate with regard to either valves or leak detection systems based on three reports that have been submitted to Congress. Two of those had to do with valves, one was on leak detection. In the first category are reports from Oak Ridge National Laboratory and the Government Accountability Office (GAO). The section 8 leak detection report was done by Kiefner and Associates.

INGAA and the American Gas Association are trying to knock holes in the Oak Ridge and Kiefner reports. A letter written in May by Terry Boss, senior vice president environment, safety and operations at INGAA and Christina Sames, vice president, operations and engineering at AGA, stated, “The revised Oak Ridge report still employs flawed bases that overstate the benefits of installing valves, leading to false conclusions favoring installation.” The letter was written to Cynthia L. Quarterman, administrator, PHMSA. Boss and Sames argue the second report from a Kiefner contains “incorrect conclusions.”

In contrast, GAO’s incident report, Better Data and Guidance Needed to Improve Pipeline Operator Incident Response, issued on Jan. 23, 2013, provides support for a performance-based approach to incident response.

Obama endorses methane emissions reduction

Any federally-mandated reductions in methane emissions would catch the immediate attention of the natural gas pipeline industry. So executives can be excused for wondering where President Obama’s new methane reduction strategy group will be heading. He announced a joint effort by federal agencies to reduce methane emissions at Georgetown University on June 25 as part of a major climate change speech.

A few days after Obama’s speech, new Department of Energy (DOE) Secretary Ernest Moniz announced his department would be making somewhere in the neighborhood of $8 billion in loan guarantees for pollution reduction technology projects in the natural gas and petroleum industries. He specifically mentioned an upcoming search for methane reduction technologies.

In terms of the broader methane reduction strategy the Obama Administration will develop, that will be produced under the aegis of the Environmental Protection Agency (EPA) working with U.S. Department of Agriculture, DOE, Department of the Interior, Department of Labor and Department of Transportation. “Across the economy, there are multiple sectors in which methane emissions can be reduced, from coal mines and landfills to agriculture and oil and gas development,” the administration climate change plan states, noting that the EPA and USDA have worked with the dairy industry over the past three years to increase the use of methane digesters.

Don Santa, president and CEO of INGAA, says, “We are pleased to see that President Obama’s climate action plan recognizes natural gas as a key component of America’s clean energy future. INGAA recognizes methane as a potent greenhouse gas, and we support efforts to gain greater knowledge on methane emissions. We believe it important to use sound science to detect data gaps and identify technologies, best practices and incentive-based opportunities to reduce emissions.”

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