July 2015, Vol. 70, No. 7

Washington Watch

OSHA Issues Underground Construction Standard

The Occupational Safety and Health Administration (OSHA) issued a new rule in May which, for the first time, sets regulatory standards for employers whose employees work in confined spaces in a construction setting.

The rule applies to utility work, for example, in places such as storm drains, water mains and precast concrete and other pre-formed manhole units. It apparently does not apply to pipeline excavation work.

The OSHA has had a confined spaces rule since 1993, but it only applies to general industry. Construction companies have said over the past decades that they are following that rule. However, the United Steelworkers filed a lawsuit in 1992 demanding the agency establish separate rules for confined spaces in construction, and after issuing a proposed rule in 2007, the agency has finally complied.

The final rule for construction sectors isn’t much different than the one for general industry. The main difference is that the new rule requires communication and coordination among controlling contractors and subcontractors, and between host employers and controlling contractors. The idea behind the new communications mandates is to prevent the actions of one employer from exposing another’s employees to hazards in a permit space.

The National Utility Contractors Association (NUCA) and the American Petroleum Institute (API) had both wanted the OSHA to simply adopt the general industry rule as the rule for construction. NUCA had argued its members have customized their confined space programs and training to comply with the general industry standard.

OSHA estimated the total annualized cost of compliance with the new rule to be between about $59.2 million and $60.3 million. The final rule’s requirements for employers to evaluate, classify and exchange information account for the largest component of the total compliance costs, approximately $12.2 million to $12.4. Other compliance costs associated with the final rule include $11 million related to atmospheric monitoring, training costs of $11.3 million, rescue capability expenses of $7.6 million to $8.2 million, written programs, permits, and review procedures of $4.2 million, attendants $3.6 million, and ventilation and hazard isolation $2.7 million. The estimated costs represent about 0.08 percent (less than 1 percent) of revenues and 1.6 percent of profits, on average, across all entities.

New PHMSA Administrator Nominated

With Congress riled about the PHMSA’s slow implementation of the last pipeline safety law, the Obama administration has nominated a new administrator for the Pipeline and Hazardous Materials Safety Administration (PHMSA) who lacks pipeline and hazardous materials experience. Nor has she ever been a regulator.

She is Marie Therese Dominguez, who started off in the Clinton White House and subsequently worked her way through administrative positions in the Federal Aviation Administration, U.S. Postal Service and the Army, where she spent the last two years as Deputy Assistant Secretary of the Army for Civil Works. If one compares her professional background and its relevance to the PHMSA job with the background of Colette Honorable, the recently appointed FERC chairman, the difference is night and day. Honorable was supremely qualified. The only positive with Dominguez is that she knows her way around the Washington bureaucracy and ostensibly, has sharper political antennae than Timothy Butters, the former assistant chief of operations for a northern Virginia fire department and current PHMSA deputy administrator.

Effort To End Crude Oil Export Ban

Sen. Lisa Murkowski’s bill (S. 1312) to end the U.S. ban on crude oil exports looks to be running into substantial opposition from the Obama administration and Democrats on Capitol Hill. Her Energy Supply and Distribution Act does have one Democratic co-sponsor, Sen. Heidi Heitkamp (ND), but is otherwise a solidly GOP bill. Given the importance of Bakken oil production in North Dakota, Heitkamp’s support is expected.

But Energy Secretary Ernst Moniz appeared to forecast Obama administration opposition when he told an energy conference in Houston in April: “In a situation where we still import 7 million barrels of crude oil per day, I don’t think an overly compelling argument has been made on the basis of pragmatic economics.” The DOE press office did not respond to a query asking Moniz’s position on the Murkowski bill.

Oil producers strongly support an end to the ban. Ryan Lance, chairman and chief executive officer of ConocoPhillips, says there is “a clear and urgent need to remove the ban on crude oil exports.”

“The United States now has the fastest growing oil economy in the world,” says Carlos Pascual, senior vice president, IHS, an international consulting firm. He previously served as the Coordinator for International Energy Affairs and Special Envoy on Energy at the State Department. Since 2008, U.S. crude oil output has increased by 81 percent. “This increase is the fastest in U.S. history and exceeds the combined production gains from the rest of the world,” adds Pascual. “The conditions that justified the crude oil export ban in 1973 no longer apply.”

GOP Targets FERC Pipeline Permitting Reforms

House Republicans have restarted efforts to pass legislation making it more difficult for federal environmental agencies to drag their feet reviewing new pipeline applications. A key House committee reviewed a new draft bill, partially devoted to pipelines, which is a pale alternative to another bill which passed the House in January. That would be the Natural Gas Pipeline Permitting Reform Act (H.R. 161) which passed the House on Jan. 21 by a vote of 253-169.

But H.R. 161, sponsored by Rep. Mike Pompeo (R-KS) cannot pass the Senate because of strong opposition. The new draft bill is an attempt to craft pipeline permitting reform which Democrats can agree to.

The Pompeo bill would give an agency such as the Corps of Engineers or the Fish and Wildlife Service an extra 30 days beyond the current 90 day limit, which starts once the FERC has finalized an environmental impact statement, in which to approve or disapprove a pipeline application. If it failed to act, the FERC could approve the project.

The draft pipeline section unveiled at hearings in May before the House Energy & Commerce Committee’s subcommittee on energy and power is weaker than what is in the Pompeo bill, from a pipeline advocacy standpoint. It does set the 90-day deadline, now an administrative requirement, as a federal statute. But it substitutes “issue resolution meetings” instead of hard and fast deadlines, which the Pompeo bill imposed. If a federal agency doesn’t meet the 90/30 day deadlines, it must notify Congress and “describe in that notification an implementation plan to ensure completion.” Sen. Shelly Moore Capito (R-WV) has already introduced an actual bill encompassing the House draft language (S. 1210). The Capito bill is called the Oil and Gas Production and Distribution Reform Act of 2015.

But this new, draft pipeline approval language, weak as it is, is still unacceptable to Democrats. Both Frank Pallone, Jr. (NJ) and Bobby Rush (IL), the top two Democrats on the full committee and energy and power subcommittee, oppose the draft. Rush called it “a solution in search of a problem.”

Complicating the draft’s future too was opposition from Ann F. Miles, director, Office of Energy Projects, Federal Energy Regulatory Commission (FERC). She said, “I am concerned that codifying the commission’s practices too rigidly might have the unintended consequence of limiting the commission’s ability to respond to the circumstances of specific cases, to changes in the natural gas industry and to the nation’s energy needs.”

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