FERC and PHMSA announcing new MOU

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The Federal Energy Regulatory Commission (hereafter ‘FERC’) and the Pipeline and Hazardous Material Safety Administration (hereafter ‘PHMSA’) have released a Memorandum of Understanding (hereafter ‘MOU’) outlining new efforts at coordination and collaboration in addressing liquid natural gas (hereafter ‘LNG’) facility proposals. The goal of this MOU is to improve coordination between the agencies to provide an overall increase in the efficiency and effectiveness of the LNG application review process. In order to accomplish this, the agencies have proposed a new method that would help avoid duplication efforts and maximize the exchange of relevant information in order to ensure that safety and security issues are addressed in a comprehensive manner.

Under the new MOU, FERC, upon receiving an application for an LNG facility, will notify PHMSA of the application and request a review of the proposed facility’s ability to comply with safety standards in 49 CFR 193, Subpart B. Additionally, FERC will notify PHMSA of the anticipated issuance date of its final NEPA document and of any withdrawal or rejection of the application.

PHMSA, for its part, will review the application for compliance with the referenced safety standards and then issue to FERC a letter of determination with its findings. This letter is to be issued within 30 days, otherwise PHMSA is required to notify FERC of an anticipated or experienced delay. FERC has agreed to treat PHMSA’s letter of determination as conclusive on the issue of compliance with the reviewed safety standards.

In order to expedite this process, the agencies have also agreed to some inspection, enforcement and document sharing rights. First, they have generally agreed to share information and inspection findings pertaining to the review of LNG operations. Next, the agencies agreed to share and/or provide access (as applicable) to all requested information and data submitted by the LNG applicants or operators to the extent permitted by law.

As document sharing among regulatory agencies can create thorny issues related to the dissemination of confidential information, the MOU includes a carve-out to provide protection. In it the agencies agree to mutually “share and protect” critical energy infrastructure information (CEII), sensitive security information (SSI) and privileged information, disclosing these types of information only when required by federal law or court order. As with all documents containing CEII, SSI or privileged information, proper labeling and redaction of information is essential prior to submittal to attempt any protection from disclosure.

For more detail on this MOU, follow this link: link

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EPA has issued a NPRM

EPA has issued a NPRM, "Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Reconsideration" for publication in the federal register. Comments will be due 60 days after publication date. EPA intends to hold at least one public meeting on this rule making.

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New EPA Tool Available

U.S. Environmental Protection Agency (EPA) released a new interactive, web- based tool that provides information about the environmental and economic performance of industry sectors. Developed by EPA’s Smart Sectors Program, the sector snapshots application shows comprehensive, historical environmental and economic performance on a sector basis and allows users to visualize the data over the last 20 years. The first modules to be released showcase three sectors: iron and steel, chemical manufacturing, and utilities and power generation. The Utilities sector snapshot can be found here.

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U.S. Court of Appeals for the District of Columbia Ruling

On August 17, 2018, the U.S. Court of Appeals for the District of Columbia Circuit overturned the Environmental Protection Agency’s decision to delay the Chemical Disaster Rule (the rule). EPA promulgated the Accidental Release Prevention Requirements: Risk Management Programs under the Clean Air Act (“Chemical Disaster Rule”) on Jan. 13, 2017. The final rule revised dozens of Clean Air Act requirements in three major areas: (1) accident prevention, including expanded post- accident investigations, more rigorous safety audits, safety training, and safer technology requirements; (2) emergency response, including more frequent coordination with local first responders and emergency response committees, and more intensive incident-response exercises; and (3) public information disclosure, including public disclosure of safety information and public-meeting requirements. The final rule set an overall effective date of March 14, 2017, sixty days after promulgation. Some provisions related to clarifying regulatory definitions went into effect on that date. Others, including most local emergency-response coordination requirements, became effective in one year, on March 14,

  1. The requirements for emergency response exercises, public information-sharing and post-accident public meetings, third- party audits, more rigorous post-incident analyses, and safer technology requirements became effective three years later, on March 15, 2021. The compliance deadline for covered facilities to submit an updated risk management plan (RMP) was March 14, 2022.

Following a change in presidential administration, EPA delayed the effective date of the final Chemical Disaster Rule three times. The Court held that “EPA has not engaged in reasoned decision making” and was therefore “arbitrary and capricious.” The court ordered the EPA to allow the rule to remain until the agency amends its requirements by standard regulatory action.

Trump’s deregulatory agenda has pushed at least 26 environmental regulations issued during the Obama administration out of the queue. Some have been revoked completely, while others are in the process of being replaced by far less stringent rules.

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South Carolina District Court Invalidates Trump Administration’s Wotus Rule Delay.

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On August 16, 2018, the U.S. District Court for the District of South Carolina issued an opinion finding that the Environmental Protection Agency and Army Corps of Engineers failed to comply with the Administrative Procedure Act when they issued the rule suspending for 2 years, the effective date of the Wotus Rule. The Court enjoined the suspension rule nationwide. This decision effectively reinstates the Wotus rule in 26 states. The other 24 states are subject to two other court decisions staying the Wotus rule. The Court added the following particularly enjoyable footnote to the opinion.

*“Certainly, nationwide injunctions have the potential for abuse. As the Seventh Circuit recently observed in City of Chicago v. Sessions, 888 F.3d 272, 288 (7th Cir. 2018): [U]nder the Obama administration, such injunctions stymied many of the President’s policies, with five nationwide injunctions issued by Texas district courts in just over a year[.] At that time, then- Senator and now- Attorney General Sessions characterized the upholding of one such nationwide preliminary injunction as “a victory for the American people and for the rule of law.” Press Release, Sen. Jeff Sessions III, June 23, 2016. Now, many who advocated for broad injunctions in those Obamaera cases are opposing them.

This court agrees that nationwide injunctions should be utilized “only in rare circumstances.” Id. This is one such set of rare circumstances. Just because the political shoe is on the other foot does not mean that nationwide injunctions are no longer appropriate. What is good for the goose is good for the gander.”*

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PHMSA ANPRM Update

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On July 31, 2018, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published an advance notice of proposed rulemaking (ANPRM) asking for public comment on whether long standing class location requirements should be modified for gas pipelines. The class location concept pre-dates Federal regulation of gas transmission pipelines and was an early method of differentiating areas and risks along natural gas pipelines based on the potential consequences of a hypothetical pipeline failure. The current regulations require operators to reduce pressure, replace pipe, or conduct hydrostatic pressure testing in response to class location changes as population increases or encroaches on areas with existing pipelines. PHMSA is considering whether other alternatives to upgrades and pressure reduction should be available. Comments must be submitted on or before October 1, 2018.

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What does PHMSA really mean by ‘prompt’?

Context: Interacting with clients in the energy industry, it is clear that one issue on the minds of industry professionals is how to set a compliant timeframe for accomplishing regulatory duties where PHMSA uses the ambiguous and oft undefined term ‘prompt’.

There are fourteen instances of the word prompt being used in 49 CFR Part 192.

  1. 192.9(d)(7): Requirements Applied to Gathering Lines

    • Conduct leakage surveys in accordance with 192.706 using leak detection equipment and promptly repair hazardous leaks that are discovered in accordance with 192.703.
  2. 192.465(d): External Corrosion Control

    • “Each operator shall take prompt remedial action to correct any deficiency indicated by the monitoring [of external corrosion factors].
  3. 192.605(b)(11): Procedural Manual for Operations, Maintenance and Emergencies

    • “The manual required by paragraph (a) of this section must include procedures for […] responding promptly to a report of a gas odor inside or near a building, unless the operator’s emergency procedures […] specifically apply to these reports.
  4. 192.612(c)(1): Underwater Inspection an Reburial of Pipelines in the Gulf of Mexico and its Inlets

    • If the operator discovers that its pipeline is an exposed underwater pipeline or poses a hazard to navigation, the operator shall promptly, but not later than 24 hours after discovery, notify the National Response Center.
  5. *192.612(c)(2): Underwater Inspection an Reburial of Pipelines in the Gulf of Mexico and its Inlets

    • If the operator discovers that its pipeline is an exposed underwater pipeline or poses a hazard to navigation Promptly, but not later than 7 days after discovery, mark the location of the pipeline in accordance with 33 CFR part 64
  6. 192.615(a)(3): Emergency Plans

    • Each operator shall establish written procedures to minimize the hazard resulting from a gas pipeline emergency. At a minimum, the procedures must provide for […] prompt and effective response to a notice of each type of emergency.
  7. 192.631(b): Control Room Management, Roles and Responsibilities

    • Each operator must define the roles and responsibilities of a controller during normal, abnormal and emergency operating conditions. To provide for a controller’s prompt and appropriate response to operating conditions, an operator must define each of the following: […]
  8. 192.703(c): Maintenance, General

    • Hazardous leaks must be repaired promptly.
  9. 192.731(b): Compressor Stations: Inspection and Testing of Relief Devices

    • Any defective or inadequate equipment found must be promptly repaired or replaced.
  10. 192.745(b): Valve Maintenance: Transmission Lines

    • Each operator must take prompt remedial action to correct any valve found inoperable, unless the operator designates an alternative valve.
  11. 192.747(b): Valve Maintenance: Distribution Lines

    • Each operator must take prompt remedial action to correct any valve found inoperable, unless the operator designates an alternative valve.
  12. 192.927(c)(4)(ii): Requirements for Using Indirect Corrosion Direct Assessment

    • […]If an operator finds any evidence of corrosion products in the covered segment, the operator must take prompt action in accordance with one of the two following required actions and remediate the conditions the operator finds in accordance with §192.933.
  13. 192.933(a): Actions that Must be Taken to Address Integrity Issues; General Requirements

    • An operator must take prompt action to address all anomalous conditions the operator discovers through the integrity assessment.
  14. 192.933(b): Actions that Must be Taken to Address Integrity Issues; Discovery of Condition

    • An operator must promptly, but no later than 180 days after conducting an integrity assessment, obtain sufficient information about a condition to make [the determination that the condition represents a potential threat to the integrity of the pipeline], unless the operator demonstrates that the 180-day period is unreasonable.

If these examples demonstrate anything, it is the utter lack of consistency in the way PHMSA uses the word prompt. In this Part alone, prompt means ‘not more than 24 hours’, ‘not more than 7 days’ and ‘not more than 180 days, unless the operator demonstrates that 180 days is unreasonable.’ This breadth of deviation creates headaches for operators making good-faith efforts to comply with PHMSA’s rules.

Yet, this apparent inconsistency, viewed through another lens, may be understood as providing flexibility to operators in achieving compliance with these rules. PHMSA appears to take into account the complexity of the task prescribed, risks to human health and the environment and the economic practicalities of compliance in how it defines prompt in each context.

The shortest timeframe, not more than 24 hours, is assigned to the requirement that operators notify the National Response Center if they discover that their pipeline in the Gulf of Mexico has become an exposed underwater pipeline or that it may pose a hazard to navigation. The short time frame is the outcome of PHMSA’s calculus using the three factors discussed above. An exposed underwater pipeline in the Gulf or a pipeline that creates a hazard to navigation poses a significant risk to both human health and the environment. Notifying the National Response Center is neither expensive nor complex. When an operator can perform a simple, inexpensive task that would significantly mitigate risks to human health and the environment, PHMSA’s use of prompt implies a very short time frame (generally a day to a week).

Another example of prompt meaning ‘nearly immediate’ is in the context of responding to an odor call.

When the risks to human health and the environment are less significant, PHMSA will allow operators a longer period of time, while still using the language ‘promptly’ to describe the operator’s required response. The longest timeframe allowed as ‘prompt’ in Part 192, is 180 days, in relation to making a determination of whether a condition identified by an integrity assessment poses a potential threat to the pipeline.

Here, PHMSA’s calculus considers the inverse situation of that presented above. The task itself is highly complex and can require direct assessment, in-line assessment, excavation or other onerous methods of gathering information. Further, this information-gathering task also imposes a significant burden on the operator’s resources. Yet, the risk posed to human health and the environment is not yet determined – the mere presence of a condition, which may pose a threat to integrity on a baseline assessment, is insufficient to conclude there is an imminent threat. Many defects can lie unaddressed for years before causing a failure. When an operator’s compliance with a regulatory rule is expected to be complex and financially onerous, PHMSA provides a longer timeframe for compliance. As a general rule, operators should consider for themselves the risks to human health and the environment in determining their schedules for complying with various regulatory rules. Where damage can be avoided or mitigated by rapid operator response, operators should take it upon themselves to comply with regulatory rules as quickly as possible.

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Illinois Attorney General Wins Lawsuit Over Trump Administration Regarding Smog Regulations

As current administration stymies environmental protections, U.S. states and environmental organizations are increasingly seeking court intervention. We are seeing increasing litigation related to both air and water quality and expect this trend to continue.

When the U.S. Environmental Protection Agency missed an October 1, 2017 air quality designation deadline, fourteen states (including Illinois), the District of Columbia, and several environmental organizations sued. A federal judge has ruled that the Trump administration failed to timely designate the areas of the country that are in “attainment” or “nonattainment” status with the ground-level ozone standards established in 2015.

The court granted the plaintiffs’ motions for summary judgment and ordered the EPA to promulgate by April 30, 2018 designations for all areas, excluding the San Antonio, Texas area. The EPA must promulgate final designations for the San Antonio area no later than 127 days from the date of the order. You can read the court’s opinion here.

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