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By Rachel Leven
Oct. 7 — Reporting provisions in a recently released hazardous liquid pipeline proposal may foreshadow expanded regulation of thousands of miles of onshore gathering lines carrying materials such as crude oil.
The move by the Pipeline and Hazardous Materials Safety Administration to compile data from unregulated gathering line operators to determine the need for regulations—that one environmentalist said is too modest—isn’t drawing immediate fire from the oil pipeline industry. However, others tracking the rule said the industry may be concerned that this minimal requirement will lead to more future regulation.
“I don’t think it’s a question of if [these lines will be regulated], but when and by how much,” Brigham McCown, former acting administrator for PHMSA, told Bloomberg BNA. “The ‘how much’ is what has industry concerned.”
Gathering lines are used to move hazardous liquids from a drilling site to a processing facility, refinery or transmission line. Roughly 4,000 miles of the 30,000 to 40,000 miles of hazardous liquid lines are regulated. Twenty-three operators run the other lines, ones that would be affected by the reporting requirement in the proposed rule (RIN 2137-AE66) released Oct. 1 .
Nonrural onshore hazardous liquid gathering lines are regulated similarly to transmissions lines.
However, Congress initially didn’t give pipeline safety regulators the authority to regulate onshore rural gathering lines, lines that are generally smaller than transmission lines and operate at moderately low pressures. In 1992, Congress allowed regulators to regulate certain rural gathering lines.
PHMSA used that authority when it finalized in 2008 a rule (73 Fed. Reg. 31,634) that required operators of certain rural gathering lines near “unusually sensitive areas”—near critical drinking water resources, for example—to file certain reports and set a maximum operating pressure, among other needs.
Now there has been a growth in the number of rural gathering lines. Newer gathering lines tend to be larger and operate at a higher pressure, especially natural gas lines, and more gathering lines in rural areas are closer to people than previously, said McCown, now chief executive officer of consulting group Nouveau Inc.
In the 2012 reauthorization of pipeline safety programs, Congress required PHMSA to examine whether unregulated gathering lines and certain other gathering lines should be newly regulated. The reporting requirement in its proposal is intended to help PHMSA determine whether new regulations are needed.
PHMSA said 23 operators would be affected by the reporting requirement. But the American Petroleum Institute and PHMSA didn't respond to requests by Bloomberg BNA for information on specifically which operators would be affected.
Lois Epstein, engineer and Arctic program director for The Wilderness Society, disputed that PHMSA needed more data to make the case that all gathering lines should be regulated, although she said the data collected under reporting requirements would help with crafting future regulations.
PHMSA should have altered the definition for gathering lines and taken additional steps to prevent releases to the environment and to protect the public, Epstein said. Regulated onshore hazardous liquid gathering lines should have been regulated similarly to transmission lines, she said.
“These gathering lines look like transmission lines. They act like transmission lines,” Epstein told Bloomberg BNA. “Its not a big leap for a federal regulator to regulate them like transmission lines.”
Epstein also noted that Congress should give PHMSA the authority to regulate currently nonregulated lines, the smaller hazardous liquid rural gathering lines not caught under the agency’s 2008 rule. In 2010 comments, Epstein pointed to late 1990s and early 2000s instances in Alaska and elsewhere where unregulated onshore gathering lines have accounted for a large number of the onshore spills.
The industry’s response to PHMSA’s move has been more muted. The American Petroleum Institute said the organization is still reviewing the rule, while John Stoody, spokesman for the Association of Oil Pipe Lines, said his group hasn’t taken a formal position yet.
When asked whether Stoody’s group is concerned about unregulated gathering lines becoming regulated, Stoody responded, “Well, we’ll see.”
“This proposal may confirm our priority that we really should be doing what best protects the public and the environment” by focusing resources on pipelines in environmentally sensitive and urban areas, Stoody told Bloomberg BNA.
Mike Friedberg, recent Republican staff director for the House Transportation and Infrastructure's Subcommittee on Railroads, Pipelines and Hazardous Materials, said industry hasn’t lobbied Congress hard on this rule right now.
“They’re [industry] kind of OK with it,” Friedberg, now a senior policy adviser for Holland & Knight LLP, told Bloomberg BNA. “The concern would be if Congress sees stuff that they deemed didn’t go far enough, then you’re going to see … Congress forcing PHMSA to regulate on stuff.”
Even state regulators who previously initially opposed eliminating the exemption for currently unregulated pipelines are amenable to the proposal of collecting data.
“We believe it’s appropriate to understand what’s out there,” Peter Chace, vice chair of the National Association of Pipeline Safety Representatives, told Bloomberg BNA.
Several individuals tracking the proposal told Bloomberg BNA that industry would most likely be concerned that this reporting requirement would foreshadow future action by PHMSA in regulating these lines.
And McCown said that wasn’t a wrong assumption. The agency may feel it has a grasp on mitigating risk on the larger lines “so, it’s natural to move down to the next item on your shopping list,” he said.
Chace also said it seemed possible that currently unregulated gathering lines would be the subject of more regulation, following in the path of previously unregulated rural hazardous liquid gathering lines that were regulated under the 2008 rule.
Under this latest proposal, those regulated rural lines would see increased assessment, repair and leak detection requirements, on top of the 2008 rule.
The question would be how the federal agency addressed its ramp up of rules on these lines to better ensure safety.
Making all hazardous liquid gathering lines regulated similarly to the 2008 rule would be appropriate, but certain actions such as expanding the current integrity management program to all of these lines would be too much, McCown said.
Sara Peters, senior associate for King & Spalding, told Bloomberg BNA there could be a good argument to challenge the reporting requirement in court.
PHMSA maintained in its proposal that it has the legal authority under 49 U.S.C. Section 60117(b) to require reporting from all onshore, offshore, regulated and unregulated gathering lines.
However, Peters said there could be room to challenge that PHMSA overstepped its jurisdiction under 49 U.S.C. Section 60101 where certain gathering lines are wholly exempt from PHMSA regulation.
Peters pointed to a challenge against the Federal Energy Regulatory Commission by the Texas Pipeline Association, where the U.S. Court of Appeals for the Fifth Circuit ruled that the federal agency couldn’t “require wholly intrastate pipelines to disclose and disseminate capacity and scheduling information” .
“There’s a lot of parallels there in terms of whether PHMSA’s exceeded its authority in this instance,” Peters said.
McCown said PHMSA was within its legal authority to require this reporting.
Peters said that the reporting requirement itself could burden operators, but it was “a fair concern” by PHMSA to want to understand what gathering lines are out there.
Peters recommended that PHMSA instead go the voluntary route of partnering with industry to get the same information.
Chace also emphasized that is appropriate to gain more knowledge about what onshore hazardous liquid gathering line risks are out there.
“Despite the fact that gathering lines have a different function and different regulatory requirements, a release from a gathering line can be every bit as hazardous as a release from a transmission line,” Chace said.
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