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Pipeline Agency Expands Authority Amid Biden’s Methane Crackdown

Nov. 3, 2021, 9:01 AM

More than 400,000 miles of natural gas gathering pipelines will come under the federal authority for the first time, according to a final rule published by the Pipeline and Hazardous Materials Safety Administration.

The move represents a relatively quiet assertion of power by the pipeline agency as President Joe Biden’s administration announced a multi-agency crackdown on methane emissions during the COP26 climate summit in Scotland.

“This is a really significant rulemaking,” said Bryn S. Karaus, an attorney at Van Ness Feldman LLP’s pipeline safety practice in Washington D.C. “Many gathering lines have been exempt from pipeline safety regulation, and this final rule upends that.”

The rule may proceed without a legal challenge because it was largely in line with what the industry expected, Karaus said.

Operators of the gathering pipelines—which are mostly rural and move gas from production sites to interstate pipelines—will be required to submit incident reports and annual data to PHMSA, a unit of the Department of Transportation.

Pipelines that have larger diameters, move gas at a higher pressure and run near populated areas will be subject to stricter safety standards, the agency said.

Second of Three Parts

PHMSA’s action, published Tuesday, is the second prong in a three-part rulemaking process initiated in April 2016 that the agency called the Mega Rule.

The first part, which updated certain requirements for gas transmission lines, was issued in October 2019. The final part, focused on inspection and repair of those transmission lines, is expected early next year.

Tuesday’s rule introduces an entirely new set of requirements for gas industry players, said Keith J. Coyle, a shareholder at Babst, Calland, Clements and Zomnir, P.C. in Washington, D.C.

Unlike transmission lines, which are federally regulated regardless of location, most gathering lines were exempt from federal oversight because they run through sparsely populated areas. PHMSA deemed lines in rural areas as Class 1, which were subject only to a patchwork of state laws. Many lines were totally unregulated.

PHMSA said in its final rule that it was closing “regulatory gaps,” noting the country has more miles of unregulated gathering lines than regulated transmission lines.

The agency pointed out that “some gathering lines share the same physical, functional, and operational characteristics and potential adverse consequences from an incident as transmission lines.”

Gathering lines will now be subject to safety requirements such as corrosion control measures, leakage surveys, and emergency response planning.

“What this rule is designed to do is assert jurisdiction along gathering lines that have been outside of PHSMA’s reach,” Coyle said. “This will be the first comprehensive set of national regulations on gathering lines.”

‘Set the Floor’

The effect of the rule will vary from state to state, Coyle said, but “this will set the floor of what safety standards will apply.” Smaller and older pipelines may find it more difficult to comply with safety standards than modern lines built during the shale gas boom, he said.

Industry groups, largely focused on a proposed methane rule from the Environmental Protection Agency, were still assessing the PHMSA rule Tuesday.

“We are reviewing the final rule and looking forward to continuing to work with PHMSA to advance our shared goal of environmental performance while also maintaining the safety, integrity and of our nation’s pipeline infrastructure,” Robin Rorick, vice president of midstream for the American Petroleum Institute, said in a statement.

The devil will be in the details down the road, as the trends contained in the reports to PHMSA could lead to additional requirements, Van Ness Feldman’s Karaus said. PHMSA’s assessment of the cause of incidents, where they occur and how frequently will guide the agency’s approach, she said.

“It’s a signal that PHMSA’s sending that they’re keeping an eye on this and there could be something in the future,” Karaus said. “It’s going to provide PHMSA the data it needs if it decides more regulation is needed.”

In December 2020, Congress authorized $478 million over three years for PHMSA’s pipeline safety programs. PHMSA oversees a U.S. pipeline network of more than 2.8 million miles that moves more than 16 billion barrels of hazardous liquids and gases, it stated in its budget request.

To contact the reporter on this story: Daniel Moore at dmoore1@bloombergindustry.com

To contact the editor responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com