August 2015, Vol. 242, No. 8


Government: Pipelines Hope GOP or Courts Fix New Wetlands Rule

Republicans in Congress are working to pass legislation setting aside a new EPA and Army Corps of Engineers joint rule which makes it more expensive to build pipelines in areas containing streams and other small bodies of water. The rule would require pipelines – or anyone wanting to build in these tributaries and ponds – to first do site analysis and then, potentially, obtain a Clean Water Act permit. That is time-consuming and can be expensive. The EPA published the new so-called Waters of the U.S. – (WOTUS) rule in May which goes into effect Aug. 28.

“Landowners or projects disturbing land must perform intensive on-the-ground fact-finding determinations by an expert just to determine if the area that will be disturbed is considered a WOTUS or if the project will not impact a WOTUS.” said Celina Romero’s, attorney for the Texas Pipeline Association. “For pipeline projects covering many miles that will be a lot of case-by-case determinations.”

The rule responds to a Supreme Court decision in Rapanos v. United States, 547 U.S. 715 (2006). This defined which bodies of water were protected under the Clean Water Act, so anyone building near or in those waters would need a section 404 permit. A big issue for the pipeline industry is when a smaller stream, tributary or pond has a “significant nexus” to a second body of water clearly covered under the CWA.

The final rule makes some changes from the proposal on “significant nexus,” what constitutes a tributary and when working in ditches require a permit. A wide range of industry groups are unhappy with the breadth of the final rule and want Congress to force the EPA to make changes.

“The rule is a significant obstacle to the agencies’ implementation of administration policy favoring expedited permitting for energy infrastructure projects,” said Dave McCurdy, president and CEO of the American Gas Association.
The Senate Environment and Public Works (EPW) Committee passed S. 1140, the Federal Water Quality Protection Act, 11-9 on June 16. Sen. Heidi Heitkamp (D-ND) and Indiana Sen. Joe Donnelly (R-IN) are both co-sponsors of the bill, saying the waters rule is a top issue they hear about from their agricultural constituents. The bill would force the EPA to rewrite the rule.

Democratic support in the Senate is crucial. The House has already passed a version of the bill (H.R. 1732). Scott Berry, director, Utility Infrastructure Division, Environment, and Trade, The Associated General Contractors of America, says the groups supporting Republican efforts will need to find more Democratic supporters in the Senate to override an expected President Obama veto if a version of the bill passes Congress. That would require 66 votes.

But if congressional efforts fail several lawsuits filed both by 27 states, separately and in some cases jointly, and by trade associations, could force the EPA to retrace its regulatory steps. Some of those lawsuits were filed within two days of the EPA publishing the final rule.

PHMSA Proposes Broad, Minor Safety Changes

The federal agency proposed regulatory changes including operator qualification, accident notification and charging of fees for pipeline design inspections. Most stem from requirements in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011.
The proposed rule, with its somewhat numerous provisions of fairly minor consequence, seems to be an appetizer of sorts before the agency proposes much more significant safety changes, also required by the 2011 law. Those changes will impact integrity management programs and so-called “grandfathered pipelines,” which are subject to less stringent requirements.

“This is mostly minor stuff,” said Terry Boss, senior vice president of the Interstate Natural Gas Association of America (INGAA). “But we are glad they are moving these things along.”

One significant provision doesn’t affect operators directly. That is a new requirement for pipeline construction companies. PHMSA for the first time is applying operator qualification requirements to those contractors. The proposal doesn’t spell out those requirements but if the existing ones for operators are any guide, they will be significant.

The proposed rule states: “In particular, proposed operator qualification provisions ensure that pipeline construction personnel and operations and maintenance personnel have the appropriate skills for the functions they are performing. This would reduce the likelihood of human error-related incidents. At an annual compliance cost of $3.1 million, the proposed changes would be cost-effective if they prevented a single fatal incident over a three-year period.”

The new safety rule refines some longstanding PHMSA requirements, in some cases transforming standing guidance into legally binding statute as is the case with the accident notification provision. PHMSA published an advisory bulletin in 2002 advising owners and operators of gas and hazardous liquids pipeline systems and LNG facilities that reporting at the earliest practicable opportunity usually means one to two hours after discovery of the incident.

Section 9 of the 2011 Act requires PHMSA to require a specific time limit for telephonic or electronic reporting of pipeline accidents and incidents. The proposed rule mandates reporting “not later than one hour following the time of such confirmed discovery.” A pipeline would have to revise or confirm that initial notification within 48 hours of confirmed discovery of the accident or incident.

INGAA’s boss calls this proposal “very, very useful.”

Another section would allow PHMSA to charge a fee and prescribe an assessment methodology for recovering costs associated with design reviews of new gas and hazardous liquid pipelines with either overall design and construction costs totaling at least $2.5 billion or that contain new and novel technologies. PHMSA now does these reviews, paying for them out of its pipeline safety budget which comes from user fees paid by operators.

“These reviews divert a significant amount of PHMSA’s limited resources from the agency’s pipeline safety enforcement responsibilities,” says the proposed rule. PHMSA apparently needs congressional approval so it can attribute the fees to its discretionary spending. Congress has not provided that authorization despite administration requests.

There is another addition to OQ rules for pipeline operators. PHMSA has required since 1999 that all individuals responsible for operation and maintenance of pipeline facilities be tested for qualifications and certified to perform their functions. Excluded were supervisors or others intervening in control room operations.

At a meeting PHMSA in 2003, there were concerns about the gaps between the OQ rule and actual field operations. The NTSB issued a recommendation to PHMSA in 2012 to extend OQ requirements to all hazardous liquid and gas transmission control center staff involved in pipeline operational decisions. Now PHMSA is proposing explicit control room team training requirement for all individuals who would be reasonably expected to interface with controllers during normal, abnormal or emergency situations.

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