March 2022 Vol. 77 No. 3

Washington Watch

Pipelines Push Back Against New Reliability Regulatory Agency

By Stephen Barlas, Washington D.C. Editor

A House Democratic subcommittee chairman is teeing up legislation creating a new regulatory agency that would ostensibly safeguard interstate pipeline reliability. The House subcommittee on energy held a hearing on Jan. 19 on the Energy Product Reliability Act (H.R. 6084) sponsored by subcommittee Chairman Rep. Bobby Rush (D-Ill.). 

Richard Glick, FERC chair, testified at the hearings in support of Rush’s bill. He compared the existence of 93 FERC-approved mandatory reliability standards for the bulk-power system, 12 of which address cybersecurity, with the absence of any for gas pipelines. 

“The lack of mandatory reliability standards, especially for natural gas pipelines, poses a risk to the reliability of the bulk-power system due to the interdependency of our nation’s gas and electric infrastructure,” Glick said. 

Pipeline groups were not called to testify at the hearing. But groups such as the Interstate Natural Gas Association of America (INGAA), American Petroleum Institute (API) and others expressed concern in a letter, when the bill was introduced last December, to Rep. Frank Pallone (D-NJ), chairman of the full Energy & Commerce Committee: 

“Proposals to create a new, additional pipeline reliability regulator fail to reflect pipelines’ proven reliability record and risk duplicating and conflicting with existing federal and state agency regulatory authorities and programs. H.R. 6084 will not enhance pipeline reliability – on the contrary, it risks impairing and complicating ongoing efforts to protect pipelines against cyber threats.” 

Rush is retiring at the end of this congressional session which, in and of itself, may reduce the bill’s likelihood of passing, given his diminishing leverage. Also, the bill has no co-sponsors. The legislation attempts to address concerns about the impact of cold winter weather and cybersecurity attacks on natural gas pipeline deliveries to the bulk electric power grid. 

Rush stressed at the hearing that the provisions in his legislation are not final. 

“It marks the beginning of the legislative process, and certainly not the end,” he said. “To my Republican friends specifically, I want to emphasize that electricity reliability is an issue we’re all concerned about. And for this reason, my staff and I stand ready to work hand-in-hand with you. We are open to suggestions on the best pathway forward.” 

But Rep. Fred Upton (R-Mich.), top Republican on the subcommittee, welcomed the legislation with an artic blast of cold air. “The topic of this hearing is totally off base,” he said. “The bill today is a sweeping power grab that would dramatically expand FERC, transforming a relatively tiny agency into a behemoth.” 

Upton referred to a letter from state energy regulators expressing concerns with Rush’s bill that are shared by “members of this committee on both sides of the aisle.” He argued the committee would be better served by focusing on the Pipeline and LNG Facility Cybersecurity Preparedness Act (H.R. 3078) which he and Rush introduced in May 2021. 

That bill would strengthen the Department of Energy’s ability to respond to physical and cybersecurity threats to the nation’s pipelines and liquid natural gas (LNG) facilities. No hearings have been held on the May 2021 bill. 

A Rush spokesperson said the congressman views H.R. 3078 as a complement to H.R. 6084 and the bipartisan bill is still a priority he definitely wants to move forward. 

The committee background paper on H.R. 6084 cited two recent events as the basis for needing a new natural gas supply reliability agency. First were the events surrounding the February 2021 Texas winter storm. The FERC and North American Electric Reliability Corporation (NERC) joint investigative report regarding that storm concluded, “generating unit outages and natural gas fuel supply and delivery were inextricably linked,” with natural gas fuel supply issues causing more than 27 percent of the generating unit outages. 

In addition to the potential disruption of gas supplies to electric generators because of weather, committee Democrats also cited cybersecurity-related disruptions, particularly the May 7, 2021, ransomware attack on Colonial Pipeline Company. 

Shutdown of the pipeline, which carries 2.5 million barrels of liquid petroleum products each day from Texas to New Jersey, caused gasoline price spikes and fuel shortages. The incident prompted the Transportation Security Administration (TSA) to propose its first mandatory cybersecurity standards after relying exclusively on unenforceable guidelines. 

Rush’s legislation calls for the creation and certification of an Energy Product Reliability Organization (EPRO), which would develop mandatory standards to ensure the reliable delivery of energy products. EPRO would submit the draft standards to FERC for review and approval. Finally, the legislation would provide FERC with authority to review EPRO enforcement actions, and independently investigate and penalize violations of any reliability standard. 

FERC Turns Back Efforts to Cancel Approved Compressor Station 

The Democratic-majority FERC dealt another blow to environmentalists when it refused entreaties to reconsider the commission’s 2017 approval of the Weymouth compressor station outside Boston. It is part of the Atlantic Bridge Project jointly owned by Algonquin Gas Transmission and Maritimes & Northeast Pipeline. 

Environmental groups twice tried to convince FERC to stop the project while it was under construction. These appeals were denied. But a re-hearing request submitted in October 2020 by opponents, did bear fruit. On Feb. 18, 2021, at the start of the Biden administration, FERC issued an order stating that the concerns expressed in the rehearing request, as well as in other submitted comments, warranted further consideration and ordered a “briefing paper.” 

However, on Jan. 22, 2022, the commission rejected environmentalist and community activist concerns that the compressor, now in operation, was a danger to local minority communities, due to air emissions and two blowdowns occurring soon after the compressor station went into operation, in September 2020. 

In its final order, the commissioners stated: “Parties have not identified – and we have not found – any violations of the Certificate Order. Moreover, neither EPA nor Massachusetts DEP, the latter of which oversees compliance with the Clean Air Act within the state, has found that the Applicants have exceeded the emissions limits specified in their air permit. There is not sufficient record evidence of blowdown-related health effects to reasonably support the remedies Petitioners seek.” 

While pipeline opponents took it on the chin in this proceeding, with the commission calling their objections empty, the final order should give pipelines reason for concern. 

First, Glick noted in his statement that the commission “likely erred” in its original 2017 decision to site the Weymouth compressor “where it did,” because the location is home to two environmental justice communities. 

“I hope that this proceeding will serve as a turning point for the Commission as we work to better consider, address and act on issues of environmental justice,” he added. 

Second, Commissioner James Danly argued that the commission had not provided a clear rationale for issuing the February 2021 briefing paper, writing “…the Commission cannot absolve itself of the fact that the Briefing Order unlawfully reopened a final, non-appealable certificate.” 

He complained that the Democratic majority failed to provide “a clear and thorough explanation of its authority. Instead, the majority sends parties on a scavenger hunt – dispersing snippets here and there: sometimes in the text; sometimes in a footnote; sometimes with citations but most of the times not – never addressing the arguments or precedent that the Commission lacked authority to issue the Briefing Order.” 

Danly’s point, of course, is the Democratic-majority FERC could issue another briefing order, in the future, seeking to unwind an already-approved pipeline project.

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