Republicans Ready Regulatory Relief for Pipelines

It looks like, based on two recent hearings, that GOP members of the House are focused on providing the pipeline industry with regulatory relief as part of any infrastructure bill which comes before Congress. One House committee held hearings in May on a discussion draft of legislation containing changes, discussed in previous Congresses but never enacted, to the Federal Energy Regulatory Commission’s (FERC) Section 7 pipeline approval process. The other committee heard testimony from industry leaders about needed changes to the pipeline safety laws administered by the Pipeline and Hazardous Materials Safety Administration (PHMSA).

Don Santa, the president and CEO of the Interstate Natural Gas Association of America (INGAA), testified at both hearings, one held by the Energy and Commerce Committee, the other by the Transportation and Infrastructure Committee in late April. At the latter’s subcommittee on railroads, pipelines and hazardous materials, Committee Chairman Bill Shuster (R-PA) said billions cannot be spent on pipelines because of regulatory delays at FERC and the Corps of Engineers, which he said cannot agree on two major, proposed Pennsylvania pipeline projects, one worth $3 billion, the other $1 billion. He called the apparent disagreements between the two agencies “ridiculous.” He did not name the projects and his spokesman did not respond to a request to identify the projects. The FERC published an environmental impact statement on the PennEast project on April 7.

The discussion draft, which was the subject of hearings in the Energy and Commerce’s energy subcommittee, essentially contained many of the same provisions introduced in previous Congresses but never passed. Those drafts generally center around allowing FERC to move ahead with an approval if another federal or state agency drags its feet in performing the environmental impact study required by federal or state law. Those requirements often call on agencies such as the Federal Fish and Wildlife Service, National Park Service, National Oceanic and Atmospheric Administration, and state agencies with delegated authority related to the Clean Water Act, to chime in on whether a proposed pipeline would unnecessarily disrupt the environment or pose a danger to animals or aquatic life.

Democrats on the energy subcommittee repeatedly referred to the discussion draft as “a solution in search of a problem.” They wheeled out statistics showing that FERC approves 90 percent of projects within one year. Rep. Frank Pallone (D-NJ) and others said the bigger problem bedeviling pipeline approval was the lack of a quorum at the FERC which has only two of five commissioners in seats. The term of one of the two, Colette Honorable, expires at the end of June. In its current state, the FERC cannot approve any pipelines. However, on May 9, a week after the energy subcommittee hearings, President Trump nominated Neil Chatterjee and Robert Powelson as FERC commissioners.

Terry Turpin, director, office of energy projects, FERC, speaking in a personal capacity, panned the discussion draft. “Some of the proposed NGA modifications would alter the Commission’s role from one of collaboration with its fellow agencies to an oversight role, monitoring other agency execution of their Congressionally mandated duties,” he stated. “I am concerned that this will require the use of Commission resources that could be better spent analyzing the proposed projects and could lead to unproductive tension between the agencies involved in the review process.”

Trying to make the case for inordinate delays at FERC, Santa pointed to one project that has fallen victim to federal agency foot-dragging. Though he did not identify the pipeline, he was probably referring to the Atlantic Coast Pipeline, a gas transmission pipeline that would intersect the Blue Ridge Parkway and Appalachian National Scenic Trail in Virginia.

“The Park Service took 14 months to review the 22-page application to survey the area,” Santa explained. “Once permission was granted, the survey work was completed within a single afternoon. The survey, however, is only an initial step. The Park Service has yet to complete its extensive review of the pipeline operator’s application for a permit to cross the parkway and trail using horizontal directional drilling.”

PHMSA has its own problems, though different than FERC’s, since PHMSA is run by an administrator, not a commission. It has been musical chairs at the top of PHMSA for years. Rep. Peter DeFazio (D-OR), the top Democrat on the committee, described PHMSA as a “pretty much dysfunctional agency.”

Santa was critical of PHMSA and saved his most pointed criticism for the transmission and gathering line proposed rule and the underground storage interim final rule. The proposed rule was issued in July 2016, and covered numerous provisions in the 2011 pipeline reauthorization. Its finalization is long overdue. The underground storage rule implements the 2016 pipeline bill.

Santa explained that the practical consequence of the five-year-and-counting delay in implementation of what is called the transmission “mega rule” is that operators may be reluctant to dedicate the enormous resources needed to implement voluntary pipeline safety commitments.

“This hesitancy is rooted in the risk that the final rules ultimately adopted by PHMSA might compel a repeat of certain steps in an operator’s pipeline safety action plan,” he stated. “This ‘do-over risk’ is not insignificant. For example, testing pipelines for material strength is both costly and disruptive to service because pipelines are removed from operation to complete the testing. Operators would not want to conduct this testing twice.”

The interim final rule on underground gas storage was issued late last year without the agency first soliciting public comment, including industry feedback. INGAA, along with three other trade associations representing pipeline operators, petitioned PHMSA for reconsideration in January. The agency has yet to respond and now is over a month past its own deadline for doing so.

EPA Omits Compressor Stations From TRI Proposed Rule

The Environmental Protection Agency (EPA) leaves pipeline compressor stations off the list of facilities that would have to comply with new chemical release reports which natural gas processing (NGP) facilities would be subject to. The EPA had some latitude deciding which sectors within the oil and gas industry would have to make reports to the EPA’s toxic release inventory (TRI). That choice was pressed upon the agency because of a petition filed by environmental groups in 2012 demanding that the agency add oil and gas sectors to those who have been subject to TRI reporting for years.

Facilities subject to TRI reporting are required to report releases of certain chemicals they use above specific thresholds. These facilities must also report pollution prevention and recycling data for such chemicals. NGP facilities are stationary surface facilities that receive gas from a gathering system that supplies raw natural gas from many nearby wells. These facilities prepare natural gas to industrial or pipeline specifications and extract heavier liquid hydrocarbons from the raw or field natural gas.

The American Petroleum Institute (API), which represents NGP facilities, wants the EPA to withdraw the proposed rule because the agency overestimates its benefits and underestimates the financial burden. Uni Blake, scientific advisor, API, explained, “Due to the varying and overlapping temporal and spatial nature of activities, operations, and businesses in the oil and natural gas exploration and production sector, collecting the economic data for each multi-establishment facility to determine if the primary NAICS/SIC code is covered under TRI, would be costly and impose a significant financial burden.”

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