Originally published by S&P Global Market Intelligence
Pipeline industry expert witnesses argued against an array of proposals in upcoming pipeline safety legislation at a June 19 hearing, contending that a draft bill would raise costs and hamper the regulatory process. But the witnesses and bipartisan legislators alike said they both want to prioritize getting critical safety rules on the books more quickly.
A pipeline-safety-focused discussion draft up for consideration at the U.S. House of Representatives subcommittee hearing would push a number of changes at the U.S. Pipeline and Hazardous Materials Safety Administration, or PHMSA, including one provision that would remove the requirement that PHMSA rules have to undergo an agency-specific cost-benefit analysis.
“In May, we heard that the biggest cause for [regulatory] delay is the prescriptive cost-benefit analysis required,” Rep. Frank Pallone, D-N.J., said at the hearing. Pallone chairs the House Energy and Commerce Committee. “The discussion draft removes this duplicative requirement, while still ensuring PHMSA rules are subject to the same economic analysis that every other major rule receives.”
PHMSA has a number of outstanding congressional mandates requiring the agency to write certain safety rules. Some of these incomplete mandates stem from a 2011 law. PHMSA has pointed to the cost-benefit analysis as one of the culprits for the drawn-out the rulemaking process.
Industry witnesses testifying at the hearing argued that the cost-benefit analysis requirement should not be eliminated.
“The cost-benefit analysis was mandated to ensure that regulations do not put an undue burden on customers without a measurable improvement to the safe delivery of natural gas,” Christina Sames, the American Gas Association’s vice president of operations and engineering, said during the hearing. “That’s logical and should continue to be the criteria for developing regulations.”
The discussion draft at issue during the hearing is part of a periodic congressional reauthorization process that PHMSA undergoes to retain its authority to conduct pipeline safety oversight. The Safer Pipelines Act of 2019, discussed at the June 19 hearing, would reauthorize the agency to continue performing its oversight duties.
Changing criteria
The bill would broaden the criteria for criminally prosecuting a pipeline operator for violating safety laws. In order for a pipeline operator to be successfully charged for such a violation under current legislation, the prosecution must prove that the operator violated the regulation both willingly and knowingly. The new legislation would require the prosecution only to prove that the operator violated the regulation willingly, knowingly or recklessly, matching the legislation on hazardous materials transportation violations.
Industry witnesses, including C.J. Osman, director of operations, safety and integrity for Interstate Natural Gas Association of America, argued against the provision. Adding the criminal recklessness standard would “chill a core component of pipeline safety requirements and programs” and “lead to second-guessing technical risk assessment decisions with the use of 20/20 hindsight to make a case that an operator should have known that a risk would cause an incident,” Osman said in testimony to the Energy Subcommittee.
This issue was one that came up during the 2016 criminal prosecution of PG&E Corp. subsidiary Pacific Gas and Electric Co. for the company’s rule violations leading up to a fatal 2010 pipeline explosion in San Bruno, Calif.
Under the draft legislation, individuals would be allowed to bring civil suits against PHMSA to compel the agency to fulfill its statutory obligations. The industry witnesses objected to this provision, contending that individuals’ ability to bring civil action against PHMSA would slow the agency’s rulemaking process even further by drawing resources away from the rule-writing.
The bill would also require PHMSA to develop a plan to phase out direct assessment as a method of risk analysis. Direct assessment involves excavating pipeline infrastructure to physically examine and nondestructively test the pipe’s surface to determine whether the pipe has or may in the future have corroded regions.
Removing direct assessment as a risk analysis method could contradict pending gas transmission safety regulations that PHMSA has been working on for years with a group of advisers known as the Gas Pipeline Advisory Committee, Osman testified.
“Direct assessment is an important pipeline safety tool and should be retained,” Osman said in prepared testimony. “PHMSA and the [Gas Pipeline Advisory Committee, or GPAC] considered restrictions on direct assessment as part of the pending gas transmission integrity rule. After deliberation, PHMSA and the GPAC agreed to retain direct assessment as an assessment method for threats to which it is suitable. Congress should also retain the ability to use direct assessment in the Pipeline Safety Act.”
Tinkering with elements of the long-awaited rule at this stage could create further delays, he said.
Beyond the discussion draft
Also at issue during the hearing were what the bill does not include. The industry witnesses and a number of Republican lawmakers recommended that future iterations of the bill allow for more technological innovation in safety regulations and a voluntary information sharing system, noting that both are included a the PHMSA-drafted reauthorization proposal. The House discussion draft also does not include cybersecurity measures.
Separate legislation, the Leonel Rondon Pipeline Safety Act, has been proposed in response to a series of gas fires and blasts in Massachusetts’ Merrimack Valley in September 2018. The fires and explosions were tied to an overpressurization of a low-pressure system.
Rep. Lori Trahan, D-Mass., Rep. Joseph Kennedy, D-Mass., and Rep. Seth Moulton, D-Mass., proposed the House version of the bill, which would raise civil penalties from $200,000 to $2 million per violation for certain infractions and set a $200 million cap on penalties and require that changes to the pipeline system be approved by a professional engineer. Sen. Edward Markey, D-Mass., introduced the Senate version of the legislation.
Republican representatives objected to the process through which the Safer Pipelines Act draft came together and said the bill had not been derived from the same bipartisan process that pipeline safety legislation has historically gone through. Rep. Fred Upton, R-Mich., encouraged the committee to “reset” and have representatives of PHMSA testify before the committee.
“I know we can do better than this discussion draft before us,” Upton said. “Up until now, we on this side of the aisle have been left out of that drafting process.”
Rep. Bobby Rush, D-Ill., the Energy Subcommittee chairman, said bipartisanship is a priority in crafting the final piece of legislation.
“As we have said on numerous occasions, both Chairman Pallone and I would like for this process to be transparent and open, and we look forward to working with members of the minority, PHMSA and other important stakeholders to ultimately draft legislation that will receive wide, bipartisan support,” Rush said.
Madeline Charbonneau 