June 2015, Vol. 70, No.6
Washington Watch
House Leaders Sound Alarm Over Slow Pipeline Safety Regs
Key House members berated the federal pipeline safety agency in advance of upcoming efforts by Congress to reauthorize federal pipeline safety laws.
Leaders of the House Subcommittee on Railroads, Pipelines and Hazardous Materials were harshly critical of the Pipeline and Hazardous Materials Safety Administration (PHMSA) for failing to complete numerous rulemakings stemming from the 2012 Pipeline Safety Act. Hearings in the subcommittee took place on April 14. That unhappiness could result in more onerous safety regulations for natural gas transportation companies.
The current version of the Natural Gas Pipeline Safety Act of 1968 expires at the end of September. Expiration dates often serve as a stimulus for Congress to make changes in a law.
Members of the subcommittee listened as a California congresswoman from the San Francisco area, a non-member of the committee who commanded the witness table, said the PHMSA “was not just a toothless tiger, but has overdosed on quaaludes and is passed out on the job.”
Rep. Jackie Speiers (D-CA), the sputtering congresswoman, was livid about the PHMSA’s failure to finalize a rule required by the 2012 Act inaugurating safety and inspection requirements for so-called “grandfathered” pipelines. The 2010 pipeline explosion in San Bruno, CA, in Speiers’ district, which took eight lives, was caused by a pipeline installed in 1956. Pipelines built prior to 1970 are considered “grandfathered” under the law and are allowed to operate at pressures higher than they would be able to had they been built after 1970.
The 2012 law required the PHMSA to finalize a safety rule on grandfathered pipelines within 18 months of passage of the bill. The rule is supposed to require pipeline operators to conduct tests to confirm the material strength of previously untested natural gas transmission pipelines located in high-consequence areas and operating at a pressure greater than 30 percent of specified minimum yield strength. After that, the PHMSA must establish timeframes for the completion of such testing that take into account potential consequences to public safety and the environment and that minimize costs and service disruptions.
PHMSA issued an advance notice of proposed rulemaking which contained numerous thoughts on what the PHMSA might do on any number of pipeline safety issues stemming from the 2012 law, including grandfathered pipelines. Speier argued that the industry “complained that the proposed rule was too expensive and PHMSA consigned it to the bureaucratic dustbin.”
Damon Hill, a spokesman for PHMSA, says the agency has moved forward on that 2011 ANPR and has sent a proposed rule to the White House office of management and budget which contains a number of pipeline safety proposals. That means it could still be years before the agency publishes a final rule, since once OMB clears the proposed rule, which probably won’t be quickly, PHMSA has to go out with another round of public comment, then OMB must approve that final rule.
At the end of the hearing, Rep. Michael Capuono (D-MA), a senior member of the committee, ticked off the list of rules PHMSA has failed to issue on the timetable established by the 2012 Act. Besides grandfathered pipelines, the incomplete rules touch on automatic and remote shut-off valves, pipeline integrity, pressure management and high consequence areas.
Capuono wondered whether PHMSA and the Railroad Safety Administration, which had been dragging its feet on a new railroad car safety rule, had become “captives of industry.”
Martin Edwards, a vice president at INGAA, says that just because someone such as Speier makes an allegation, it doesn’t make it true. He argues that PHMSA has to deal with a regulatory process like any other government agency and that process is difficult and not getting any easier. If Congress is unhappy with how long it is taking PHMSA to get final rules out, maybe Congress needs to change the Administrative Procedures Act, he suggests. Moreover, in some instances, the industry is as anxious for PHMSA to get off the dime as are indignant members of Congress.
New Rail Car Rules, New Accident
The new, upgraded railcar safety standards just published by the Department of Transportation may give oil pipelines an opening to reclaim some of the transportation business that has recently gone to railroads. The Association of American Railroads (AAR) argues that a new braking requirement, one component of the new rule, could throw a monkey wrench into the entire rail transportation network. The final rule requires high-hazard flammable unit trains (HHFUT) with at least one tank car with Packing Group I materials (i.e. crude oil) must be operated with an electronically controlled pneumatic (ECP) braking system by Jan. 1, 2021. All other HHFUTs must have ECP braking systems installed after 2023.
“First and foremost, the DOT has no substantial evidence to support a safety justification for mandating ECP brakes, which will not prevent accidents,” said Edward R. Hamberger, AAR president and CEO. “This decision not only threatens the operational management of the U.S. rail system, but trains moving 30 mph will compromise network capacity by at least 30 percent. The far-reaching effects of this decision will be felt by freight and passenger customers alike. Slow-moving trains will back up the entire rail system.”
But set against the backdrop of the latest tank car oil spill, the concern about ECP braking systems may not move Republicans in Congress who might be expected to push for legislation easing the new DOT requirements. The derailment of a Burlington Northern Santa Fe Railway oil tanker on May 7 forced the evacuation of a rural North Dakota town. The tank cars at issue were of the kind that will be phased out by the new DOT rule.
The AAR apparently has no problem with that phase out, which requires tank cars built after October 1, 2015, and carrying crude oil to meet a new DOT Specification 117 design or performance criteria. Existing tank cars must be retrofitted with the same key components based on a prescriptive, risk-based retrofit schedule. Oil is currently shipped in DOT-111 tank cars which are vulnerable to leaking in accidents.
The Republican chairmen of the Senate and House Transportation Committees released a statement generally praising the final rule but noting, in what appears to be a reference to the braking provision, “While we fully support efforts to strengthen crude oil tank cars and set thoughtful operational requirements, we have some concerns regarding the new rules and how certain requirements could create unintended consequences throughout the rail network.”
FERC Issues Pipeline Friendly Rules
The Federal Energy Regulatory Commission handed interstate transmission companies two wins on two different issues. The commission had published a proposed policy statement last year allowing pipeline companies to charge extra “tracker” fees – i.e. surcharges – to shippers and a proposed rule improving delivery coordination between gas suppliers and electric utility purchasers. A second proposed rule dealt with required timing of natural gas deliveries to electric utilities.
The final policy statement allowing trackers essentially endorses the proposed rule and sets some conditions for the use of trackers by pipelines, none of them considered onerous. The tracker would have to be negotiated with customers and the revenue raised used by the interstate pipeline company to modernize infrastructure, for example.
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