February 2016, Vol. 71 No. 2
Washington Watch
Minor Pipeline Provision In House Energy Bill
Federal agencies will have less of a chance to slow down applications for pipeline construction if the Senate passes the energy bill which cleared the House in December. The North American Energy Security and Infrastructure Act of 2015 (H.R. 8) passed the House by a vote of 249-174, which means it had some Democrat support and leaves some hope the bill could be passed in some form by the Senate.
The bill contains a section which gives agencies with regulatory responsibilities for environmental programs a timetable for acting when the Federal Energy Regulatory Commission (FERC) considers an application for pipeline construction. The bill gives agencies such as the EPA, National Park Service and others 90 days after FERC finishes an environmental review to let the FERC know if they have problems with an application. INGAA has applauded the provision but acknowledged that it improves pipeline permitting around the edges, not in any significant way. That is the only pipeline provision in a very large bill more concerned with the electricity grid, hydropower and energy exports.
The bill also establishes a deadline for approval of liquefied natural gas (LNG) export facilities. The Department of Energy would have to approve those no later than 30 days after the conclusion of the review to site, construct, expand or operate the LNG facilities required by the National Environmental Policy Act of 1969.
Senate Pipeline Safety Bill Contains Few New Safety Mandates
A full Senate vote is the next step for a pipeline safety bill which cleared a Senate committee in December. The Senate Commerce, Science and Transportation Committee approved the Securing America’s Future Energy: Protecting Infrastructure of Pipelines and Enhancing Safety (SAFE PIPES) Act (S. 2276) by a bi-partisan vote on Dec. 9. The bill contains very few new safety mandates, especially compared to the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011. The Pipeline and Hazardous Materials Safety Administration (PHMSA) has been very slow to implement the 2011 bill, to the chagrin of many inside and outside Congress.
Some pipeline industry partisans are very supportive of the Senate bill. “This is a great first step,” says Dave McCurdy, American Gas Association president and CEO. “We applaud this bipartisan action and look forward to working with this committee as well as members the House to get a final bill passed and on the President’s desk as soon as possible.”
The 2011 law required PHMSA to address 42 mandates, some of them requiring final rules. Others required reports and recommendations. An important provision for the interstate pipeline sector was Section 5 which required the PHMSA to evaluate and issue a report on whether gas transmission integrity management program (IMP) requirements should be expanded beyond high consequence areas (HCAs) and whether such expansion would mitigate the need for class location requirements. PHMSA issued a request for comments in 2013 but the agency has not proceeded beyond that. The gas pipeline community has been waiting impatiently for the next step. Even Don Santa, the INGAA president and CEO, expressed some exasperation at hearings last year about how long it is taking for the PHMSA to publish a proposed rule. A final rule would not appear for at least a year after the proposed rule was published.
The new Senate bill again addresses the IMP/class location issue. It brings the Government Accountability Office (GAO) into the reporting writing queue and has it determining whether IMP/class location provisions in the final rule mentioned above – whenever that is finally published – “would prevent inadvertent releases from pipelines and mitigate any adverse consequences” from those releases. Those recommendations could include changes to the current definition of high consequence areas, or expand IM beyond high consequence areas, or review the cost effectiveness of legacy class location regulations and a description of any challenges affecting the natural gas industry in complying with the program, and how the challenges are being addressed.
The newly-passed Senate bill requires the GAO to do the same study of the IM program for liquid pipelines. There, however, the PHMSA published a proposed rule in October 2015 suggesting some major changes.
The Senate bill also creates a new safety program for underground natural gas storage facilities. The major leak from a Southern California Gas Co. underground facility near Los Angeles late last year probably gives momentum to this provision. It requires PHMSA to issue minimum uniform safety standards, “incorporating, to the extent practicable, consensus standards for the operation, environmental protection and integrity management of underground natural gas storage facilities.” Those must be published within two years of passage of the bill. The bill does add a caveat to ensure that the regulations do not have a significant economic impact on end users to the extent practical.
EPA Proposal To Reduce Methane Leaks From Pipeline Equipment Stirs Controversy
Besides lending credence to the provision in the new Senate pipeline safety bill, the Southern California Gas Co. underground gas leak – given its large methane release – may also give some new legitimacy to the Environmental Protection Agency’s (EPA) proposed restrictions on methane emissions from the natural gas industry. The proposal would require controls on emissions of methane from centrifugal compressors, reciprocating compressors and pneumatic controllers.
The requirements are very technical in each case, with opposition from pipeline companies based on such things as the agency mandating: Optical Gas Imaging (OGI) for leak detection and blowdowns conducted to enable leak repairs. The leak detection and repair (LDAR) program the agency wants to implement would, in the minds of many industry executives, divert attention from the INGAA’s Directed Inspection and Maintenance Program (DI&M) which is viewed as more reasonable than LDAR. The LDAR regime involves an initial survey of “fugitive emissions components,” which is an expansively defined category of equipment. After the initial survey, an operator must survey semi-annually. The LDAR regime, however, also has a self-ratcheting dynamic. If a survey detects fugitive emissions from just three percent or more of the fugitive emission components during two consecutive semi-annual surveys, the survey frequency increases to quarterly.
“The INGAA DI&M facilitated through the Methane Challenge Program has the ability to achieve methane reductions more quickly from existing facilities than the proposed NSPS OOOOa Rule which only affects new or modified facilities,” states Gary Buchler, chief operating officer, Natural Gas Pipelines, Kinder Morgan. “The logistics of conducting both a voluntary DI&M program at existing sources and an NSPS OOOOa fugitive emissions monitoring program at new and modified sources, or both at the same source if that source is modified, is daunting and logistically difficult.” NSPS stands for New Source Performance Standards. That is one of the EPA’s high profile air emission regulatory programs. Methane leaks from pipeline equipment have not been covered, but would be by this new proposal, labeled “OOOOa.”.
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