Obama increases pipeline safety oversight

Yesterday, President Obama signed into law important new legislation affecting the US pipeline transportation industry.  The new law is entitled “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016” (“PIPES Act”).  The PIPES Act reauthorizes the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) through 2019, and facilitates greater pipeline safety by providing PHMSA with emergency order authority, requiring a review of both natural gas and hazardous liquid integrity management programs, and mandating the creation of a working group to consider the development of an information-sharing system related to integrity risk analyses.   

PHMSA already has certain tools at its disposal, including a Corrective Action Order, to suspend or restrict use of a pipeline facility when a facility is “hazardous to life, property, or the environment.”  However, the new emergency order authority provides PHMSA with a more far-reaching ability to impose emergency restrictions when “an unsafe condition or practice, or a combination of unsafe conditions and practices, constitutes or is causing an imminent hazard.” The major distinction between this expanded authority and a Corrective Action Order is that while a Corrective Action Order could only be applied to a particular pipeline facility, the new authority could affect multiple operators or the entire industry if PHMSA discovers an unsafe condition that is widespread, i.e. a type of seam-weld or new technology being used that PHMSA believes could create an imminent hazard.  In order to temper this authority, lawmakers put a procedural safeguard in place in the event an operator files a petition for review of an emergency order.  In those circumstances, “if an agency decision … is not issued on or before the last day of the 30-day period beginning on the date on which the petition is filed, the order shall cease to be effective on such day” unless the Secretary makes a written determination before the end of such period that an imminent hazard still exists. Given the significant ramifications of this emergency order authority, industry stakeholders  need to be alert to circumstances in which PHMSA could call upon this additional enforcement tool.

The PIPES Act also requires that PHMSA publish periodic updates on the status of those mandates outstanding from the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (“2011 Act”), of which approximately half remain to be completed. The mandates yet to be acted upon include requiring certain shut-off valves on transmission lines,  mapping all high consequence areas, and shortening the deadline for accident and incident notifications. Additionally, the PIPES Act mandates that PHMSA issue, within two years, minimum safety standards for underground natural gas storage facilities, and that PHMSA conduct post-inspection briefings with owners or operators of a gas or hazardous liquid facility within 30 days of an inspection and provide written preliminary findings within 90 days.

Notably, the PIPES Act requires the Secretary of Transportation to review and update minimum safety standards for “small scale liquefied natural gas pipeline facilities.”  This creates a new and distinct category of facility in PHMSA’s LNG regulatory scheme.  The PIPES Act creates this distinction without identifying the features that would require a facility to be classified as “small scale.”  It will be important for industry stakeholders to weigh in on the proper definition of “small scale liquefied natural gas pipeline facilities” and the safety standards that PHMSA should impose on this emerging class of LNG facilities.  

The legislation is an important move forward in pipeline safety that accomplishes several goals.  The PIPES Act will force PHMSA to finalize the remainder of the 2011 Act mandates, provide operators with faster feedback from inspections so they can address issues more quickly, and create federal safety standards for underground storage facilities.