August 2019 Vol. 74 No. 8

Washington Watch

Democrats’ Pipeline Safety Bill Elicits Industry Opposition

House Democrats debuted the first, comprehensive pipeline safety reform bill introduced this session of Congress, containing several provisions opposed by both the intrastate and interstate gas transportation industries.

When the Democratic-controlled House Energy & Commerce Committee’s energy subcommittee passed the Safer Pipelines Act of 2019 (H.R. 3432) on June 26 by a voice vote, full committee Chairman Rep. Frank Pallone (D-N.J.) admitted the bill was unlikely to win enough Republican support, despite changes made in the legislation to respond to some GOP and industry objections. The bill would make a number of changes both in terms of safety practices required and the application of criminal statutes. One week earlier at subcommittee hearings, Rep. Fred Upton (R-Mich.), the top GOP member on the energy subcommittee, said that without significant changes the bill has no chance of getting Republican support in the House, meaning it could not pass the Senate.

One week later, Democrats dropped two provisions from the draft bill, but kept several others that were subject to Republican and industry objections. For example, direct assessment is no longer eliminated as a method for assessing pipeline integrity. Christina Sames, vice president, operations & engineering, the American Gas Association, explained at the initial hearings, “AGA is not aware of any pipeline incident due to corrosion after the pipeline was inspected by DA. This indicates that DA is a viable and effective way to find pipeline defects caused by corrosion. AGA recognizes that DA is not effective to identify other threats.”

Instead, the legislation requires the Pipeline and Hazardous Materials Safety Administration (PHMSA) issue a rule to assess technologies such as internal inspection devices, robots and hydrostatic testing, and to prioritize their use over direct assessment on transmission lines if they will provide a greater level of safety. In addition, the bill dropped a provision to require hydrostatic testing to reconfirm MAOP for all pipelines built prior to 1970.

However, the bill as passed by the subcommittee, increases PHMSA’s civil penalty authority, removes the limit on total penalties in current law, and strengthens the criminal penalty standard, changing it to an easier-to-prove “knowingly or recklessly,” from “knowingly and willfully.”

C.J. Osman, director of operations, safety and integrity, Interstate Natural Gas Association of America (INGAA), said, “Expanding criminal liability to include ‘recklessness’ would remove the need to prove intentional wrongdoing and risks criminalizing good-faith, reasonable decisions that pipeline operators make when they identify, assess and manage pipeline risk priorities.”

The Democrats’ bill does not, at the moment, include a provision proposed by PHMSA and sought by the industry to create a program where gas companies could pilot new technologies as a first step to getting them more broadly approved by the agency, a process which now takes a very long time. Rep. Pallone, chairman of the full committee, had appeared open at the initial hearings to adding such a provision.

“There are, however, a number of useful ideas within the Administration’s proposal and I look forward to working with my colleagues and the Department of Transportation to find common ground on these issues,” he said. The DOT is PHMSA’s parent agency. But there is no pilot program in the bill passed by the subcommittee.

Also discussed at that hearing was a second bill focusing more narrowly on distribution lines. The Leonel Rodon Pipeline Safety Act, which was introduced in the House and Senate in April, directs the Secretary of the DOT to promulgate regulations to strengthen requirements for distribution integrity management plans, including by prohibiting companies from assigning a risk rating of “zero” for low-probability events. The bill also directs the Secretary to issue regulations to strengthen emergency response plans and gas distribution operators’ procedural manuals for operations, maintenance and emergencies.

The Safer Pipelines Act of 2019 came on the heels of similar laws passed by Congress in 2011 and 2016, which included dictates to PHMSA, some of which are still awaiting action. Both Republicans and Democrats are dissatisfied with PHMSA’s inability to complete rulemakings. The Democrats’ solution is to eliminate the cost-benefit analysis of potential regulations required by the 1996 pipeline reauthorization. The subcommittee-passed bill removes this requirement, while still ensuring PHMSA rules are subject to the same economic analysis that every other major rule receives.

Representatives of both INGAA and the American Gas Association opposed that change. INGAA’s Osman said, “No PHMSA regulation has ever been overturned on the basis of the cost-benefit analysis, further demonstrating that the Act currently provides a clear, legally defensible standard for cost-benefit analyses. Nor is there any indication that the requirement to complete a cost-benefit analysis is causing the rulemaking delays at PHMSA in recent years.” UC

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