April 2020 Vol. 75 No. 4

Washington Watch

House Democrats Consider Anti-Pipeline Reg Changes

Stephen Barlas | Washington Editor


Democrats in the House have introduced two bills that would negatively affect interstate pipelines. The legislative efforts align with a broader push by Democrats, including presidential candidates, to enact “green” energy policies which, if not vilifying natural gas, at least tarnish its reputation as a climate-preferred alternative to coal and oil.

One self-standing, bi-partisan bill includes provisions to force pipelines to pay customers refunds more quickly for past overcharges. The second, Democrat-only bill is the latest incarnation of a “Green New Deal.” It includes provisions forcing the Federal Energy Regulatory Commission (FERC) to consider negative climate change effects when vetting an application for new pipeline construction and giving more credence to landowner complaints about seizure of private property based on eminent domain.

During Feb. 5, 2020 hearings, Democrats on the Energy & Commerce Committee, which has jurisdiction over FERC, showed interest in several other reform proposals. One limits FERC’s ability to greenlight a new project based on the pipeline obtaining a precedent agreement. Such agreements are sometimes signed between buyers and sellers owned by the same corporate parent. There is no bill addressing that issue yet.

Reps. G. K. Butterfield (D-N.C.) and Billy Long (R-Mo.) introduced the Protecting Natural Gas Consumers from Overcharges Act of 2020. The bill amends the National Gas Act (NGA) to give FERC the authority to set a refund effective date and order a refund when an interstate pipeline is found to be overcharging for its services. Currently, refunds dictated by FERC can be delayed for years if pipelines file for a new rate case.

The bill is being supported by energy-user groups, consumer and business, for example, the Natural Gas Supply Association (NGSA). That dual, pro-consumer/pro-business tilt probably improves its chances of passage.

Hinson Peters, strategic communications manager, NGSA, points out that “For the first time in Congress, we have bipartisan legislation to provide FERC with Section 5 refund authority in both the House and Senate.” Sens. Blumenthal (D-Conn.) and Burr (R-N.C.) introduced the legislation in the Senate.

While the Section 5 bill has the support of many, if not all, pipeline customers, the same is not true for the CLEAN Future Act introduced by Reps. Bobby Rush (D-Ill.), chair of the Energy subcommittee, and Frank Pallone (D-N.J.), chair of the Energy & Commerce Committee. One of the bill’s many provisions makes clear that FERC should be considering the climate impacts of pipeline proposals.

In the past few years, FERC has essentially limited the extent to which greenhouse gas emissions should affect its consideration of new pipeline construction. Rep. Fred Upton (R-Mich.), the top GOPer on the Energy Subcommittee, said the NGA “remains sound.” But he added he was “open minded about any changes that may be necessary to improve the act.”

Pallone argues that FERC commissioners “are essentially ignoring” the court’s decision in the Sabal Trail case that specifically told FERC to look at greenhouse gas emissions. “It is alarming that FERC looks at all other environmental impacts of pipeline projects, yet refuses to take climate change seriously,” said Pallone.

The Rush/Pallone bill, a broad “climate change” bill with many provisions, also touches on FERC by updating natural gas eminent domain laws to better protect landowners.

FERC has already shown some sensitivity to the notion it is creating a new division to expedite landowner-related pipeline appeals, known as rehearings. “Now, that sounds good, but we’ll have to see if FERC is really getting the message,” Pallone stated at the hearings.

Michael McMahon, senior vice president, general counsel and secretary, Boardwalk Pipelines, LLP, testified for the Interstate Natural Gas Association of America (INGAA) at the February hearings. He made the point that natural gas has been a plus for reduction of greenhouse gas emissions by allowing the U.S. to transition away from coal.

“Natural gas-fired generation helps to increase the penetration of renewables by serving as a ‘backstop’ source of electric generation that ensures electric reliability during times when wind and solar resources are not available, due to lack of wind or sunshine or other impactful weather conditions,” he explained.

Moving to the Butterfield bill, he argued that allowing a process for obtaining retrospective rebates “would disrupt the rate stability that the Natural Gas Act currently provides to both pipeline investors and consumers.”

He also presented results from an INGAA survey showing that over the last 10 years, eminent domain was initiated in 10 percent of the 15,694 tracts affected by pipeline construction. Five percent of the total tracts involved eminent domain proceedings that remained unsettled long enough to require a hearing for access. Only 1.67 percent of the individual tracts needed to construct the projects covered by the survey were acquired after a judicial determination of just compensation in the eminent domain proceedings.

PHMSA Proposes Mandatory Valve Installation for Some Pipelines

If the Pipeline and Hazardous Materials Safety Administration (PHMSA) finalizes a proposal it issued in February, natural gas and hazardous liquid pipelines will have to install automatic shutoff valves, remote-control valves or equivalent technology on all newly constructed or entirely replaced pipelines with nominal diameters of 6 inches or greater.

PHMSA is acting to fulfill a congressional directive issued in 2011 in the wake of serious pipeline leaks in Michigan and California. In those instances, operators were quickly aware of the leaks but were slow to respond and address the ruptures.

The dictate would be limited to 6-inch-plus-diameter pipelines in high-consequence areas (HCA) for hazardous liquid pipelines, and Class 3 and 4 locations for natural gas transmission pipelines, where a release could have the most-significant, adverse consequences on public safety or the environment.

“Entirely replaced” would be defined to mean when two or more contiguous miles are being replaced with new pipe. Additionally, for gas transmission pipelines, when a class location changes and results in pipe replacement to meet the maximum allowable operating pressure (MAOP) requirements, an operator would be required to install or otherwise modify valves to comply with spacing requirements, and proposed rupture identification and mitigation requirements. There would be an overall exemption allowing manual valves at those locations, provided operators appropriately station personnel to ensure that a manual valve can be closed within the same 40-minute timeframe.

“INGAA is pleased to see that PHMSA has published its automated valve and rupture detection proposed rule,” stated C.J. Osman, vice president, operations, safety & integrity, INGAA. “Automated valve technology can be a valuable incident response tool, when applied appropriately. We are reviewing PHMSA’s proposal and look forward to providing input.”

David Murk, pipeline manager for the American Petroleum Institute, says current regulations already require pipelines to consider installing remote control valves (RCV). “We recognize the value that RCV or ASV can have in enhancing safety in newly constructed or fully replaced pipelines and support the intent of the proposed rule,” he added. “We will continue to work closely with our members and PHMSA to find a solution that will serve the interests of the public and the environment.”

The new rupture standards also aim to prevent the unfortunate ramifications of slow leak responses such as those in Marshall, Mich., and San Bruno, Calif. The latter resulted in eight deaths, 51 injuries requiring hospitalization, the destruction of 38 homes, damage to 70 other homes and the evacuation of approximately 300 houses.

The new rule would define “rupture;” set a requirement to declare a rupture as soon as practicable, but no longer than 10 minutes after initial notification or indication; prescribe public safety notification standards; and establish a requirement to respond to a rupture as soon as practicable by closing rupture-mitigation valves, with complete valve shut-off and segment isolation within
40 minutes after rupture identification.

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