Articles, Alerts & Perspectives

The PIOGA Press

The following first appeared as a Pipeline Safety Alert issued by law firm Babst Calland.

On October 17, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a General Policy Statement on Civil Penalties in the Federal Register. Representing the most recent step in the evolution of PHMSA’s enforcement process, the policy  statement is significant for several reasons.

First, PHMSA is making a public commitment to release its proposed civil penalty calculation for individual enforcement cases. While standard practice for many other federal agencies, PHMSA has not historically provided the regulated community with its methodology for calculating proposed civil penalty amounts. Second, PHMSA is acknowledging the adoption of a Civil Penalty Framework as the agency’s policy for calculating proposed penalties, and will publish that Civil Penalty Framework on its website. Under PHMSA’s previous policy, operators received that document only upon request. Finally, and perhaps most significantly, the policy statement confirms that PHMSA will be assessing higher civil penalties (within the statutory maximums) in future enforcement cases, and that greater weight will be afforded to certain factors in determining penalty amounts.

The statutory framework

The pipeline safety laws require PHMSA to consider several factors in determining the amount of any civil penalty assessed for a particular violation. Three mandatory factors must be considered in all cases: (1) the nature, circumstances and gravity of the violation, including adverse impact on the environment; (2) the degree of the violator’s culpability, any history of prior violations and any effect on ability to continue doing business; and (3) the violator’s good faith in attempting to comply. Two other factors may be considered as a matter of discretion: (1) the economic benefit gained from the violation without any reduction because of subsequent damages, and (2) any other matters that justice requires. …

Administrative Watch

On November 15, 2016, the Supreme Court of Appeals of West Virginia in Mountain Valley Pipeline, LLC v. McCurdy (W. Va. No. 15-0919, Nov. 15, 2016), held that a private company may not enter private land for the purposes of surveying in preparation for an eminent domain action unless that company establishes that it is entitled to assert eminent domain over the private property.

Mountain Valley Pipeline retained surveyors to survey certain private property in Monroe County, West Virginia, over which it intended to build a natural gas pipeline to transport natural gas from Wetzel County, West Virginia, to Pittsylvania County, Virginia.  Mountain Valley Pipeline intended to condemn the private property pursuant to West Virginia’s eminent domain statute, which allows condemnation by a private company if the land is going to be used for a “public use,” and claimed that the surveying work was necessary to prepare for the construction of the pipeline.  The McCurdys, who owned some of the property, sought an injunction to prevent the surveyors from entering their land, which the Circuit Court of Monroe County, West Virginia, granted.

Writing for the West Virginia Supreme Court, Justice Robin Davis found that an individual may not enter onto private property to survey for the purpose of eminent domain unless the condemned property was going to be put to a “public use” as defined by West Virginia law.  As used in the eminent domain context, West Virginia law requires that the “public use” be “use” by residents and entities inside West Virginia’s boundaries.  As Mountain Valley Pipeline had not presented any evidence indicating that any residents or entities (other than itself and associated affiliates) would benefit from the construction of the pipeline to be constructed, representatives of Mountain Valley Pipeline were not permitted to enter the McCurdys’ land for the purpose of surveying that land in preparation for condemnation. …

Administrative Watch

On October 27, 2016, the United States Environmental Protection Agency (EPA) released the Environmental Justice 2020 Action Agenda (EJ 2020), which outlines the EPA’s environmental justice strategic plan for 2016 to 2020. This most recent publication builds off the EPA’s previous environmental justice strategic plan for 2010 to 2014 (EJ 2014), which developed basic guidance and tools for integrating environmental justice into EPA’s programs and policies. EJ 2020 is the agency’s latest effort to focus on environmental and public health issues confronting the country’s minority, low-income, tribal, and indigenous populations.

EPA defines “environmental justice” as “the fair and meaningful treatment of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The vision of EJ 2020 is to integrate environmental justice into the agency’s actions, cultivate partnerships to improve on-the-ground results, and create a path of achieving better environmental outcomes and reducing disparities in overburdened communities.

EJ 2020 has three primary goals. The first goal of EJ 2020 is to deepen environmental justice practices within EPA programs to improve the health and environment of overburdened communities. This will involve further integrating environmental justice into EPA’s rulemaking, permitting, compliance and enforcement, and scientific efforts. EJ 2020’s second goal is to work with partners to expand its positive impact within overburdened communities. This includes working with state and local governments, collaborating with federal agencies, deploying community-based resources, and partnering with tribes and indigenous peoples. The third goal of EJ 2020 is to demonstrate progress on significant national environmental justice challenges. EPA has identified lead disparities, drinking water, air quality, and hazardous waste sites as the four major national environmental justice challenges to be addressed by EJ 2020. …

Pipeline Safety Alert

On October 17, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a General Policy Statement on Civil Penalties (Policy Statement) in the Federal Register. Representing the most recent step in the evolution of PHMSA’s enforcement process, the Policy Statement is significant for several reasons. First, PHMSA is making a public commitment to release its proposed civil penalty calculation for individual enforcement cases. While standard practice for many other federal agencies, PHMSA has not historically provided the regulated community with its methodology for calculating proposed civil penalty amounts. Second, PHMSA is acknowledging the adoption of a Civil Penalty Framework as the agency’s policy for calculating proposed penalties, and will publish that Civil Penalty Framework on its website. Under PHMSA’s previous policy, operators only received that document upon request. Finally, and perhaps most significantly, the Policy Statement confirms that PHMSA will be assessing higher civil penalties (within the statutory maximums) in future enforcement cases, and that greater weight will be afforded to certain factors in determining penalty amounts.

The Statutory Framework

The pipeline safety laws require PHMSA to consider several factors in determining the amount of any civil penalty assessed for a particular violation. Three mandatory factors must be considered in all cases, i.e., (1) the nature, circumstances, and gravity of the violation, including adverse impact on the environment; (2) the degree of the violator’s culpability, any history of prior violations, and any effect on ability to continue doing business; and (3) the violator’s good faith in attempting to comply. Two other factors may be considered as a matter of discretion, i.e., (1) the economic benefit gained from the violation without any reduction because of subsequent damages, and (2) any other matters that justice requires. …

On October 14, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published its Interim Final Rule (IFR) entitled “Pipeline Safety: Enhanced Emergency Order Procedures” in the Federal Register.  The agency had previously issued a pre-publication version of this rule on October 4.  See Babst Calland’s Pipeline Safety Alert.  PHMSA will use these new regulations to implement its emergency order authority conferred by Congress in the “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016” (PIPES Act).  PHMSA may issue an emergency order to address an unsafe condition or practice, or a combination of unsafe conditions or practices that pose an imminent hazard to public health and safety or the environment.   The IFR contains administrative procedures that PHMSA must follow in determining if an imminent hazard exists, the factors that must be considered before PHMSA issues an emergency order, and the content of those orders, including a description of the persons subject to the restrictions, prohibitions, or safety measures and the standards and procedures for obtaining relief. The IFR also creates a process for administrative review of an emergency order that is largely patterned on the statutory text in 49 U.S.C. § 60117(o), including the referenced procedural rules for HazMat emergency orders in 49 C.F.R. § 109.19.

PHMSA may use this authority starting today, October 14.  Interested parties may file comments on this final rule until December 13, 2016. …

Administrative Watch

On Saturday October 8, 2016, the Pennsylvania Department of Environmental Protection’s new Chapter 78a regulations associated with unconventional wells went into effect when they were published in the Pennsylvania Bulletin. For unconventional well operators, there are substantial changes from prior law affecting operations over the entire life of the well, from permitting to site construction, waste handling, impoundments, pipelines, site restoration and spill remediation.

Critical New Provisions in Chapter 78a

One major revision to the rules arises in sections 78a.15(f) and (g), which set out the pre-application requirements for a well permit at a location that “may impact a public resource.” This provision requires operators who propose to drill a well in such locations to notify the public resource agency, which now by definition includes schools, municipalities, and owners of playgrounds or water supplies, and provide additional information to DEP. The regulation applies if the limit of disturbance of the well site is located in any of eight specified areas, including “in a location that will impact other critical communities” and “within 200 feet of . . . a playground.” The public resource agency must be notified at least 30 days prior to the submission of the well permit application to DEP to allow the agency to provide written comments to DEP and the applicant. The applicant may provide a response to the comments. DEP will then consider various factors, including the comments submitted by both the public resource agency and the applicant, before setting conditions for the well permit based on impacts to public resources.

Pipeline operators are for the first time within the scope of oil and gas regulations promulgated under Act 13. Under section 78a.68a, pipeline operators conducting horizontal directional drilling (HDD) beneath a body of water or a watercourse are subject to notification requirements. …

Pipeline Safety Alert

On October 7, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a pre-publication version of its Final Rule entitled “Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences” (EFV Final Rule).  In response to statutory changes and a National Transportation Safety Board recommendation, PHMSA is expanding the existing requirement that operators install an excess flow valve (EFV) on certain natural gas distribution pipelines to additional types of new or replaced service lines.  The agency is also requiring curb valves or other manual shut-off valves on new or replaced service lines with meter capacities above 1,000 standard cubic feet per hour (SCFH) and requiring operators to notify customers of their right to request the installation of an EFV on certain types of service lines.  The EFV Final Rule will become effective six months after the date of publication in the Federal Register, which is expected within 7—10 days.

An EFV is a safety device installed inside a distribution service line between the main and the meter which can reduce the risk of an incident in the event of damage to the line by shutting off excessive gas flows.  Since 2010, PHMSA has required operators to install EFVs on new or replaced gas service lines servicing single-family residences (SFRs) unless the service line meets certain exceptions.

EFVs must now be installed on the following service lines: 

• Branched service lines to a SFR installed concurrently with the primary SFR service line (a single EFV may be installed to protect both lines);

• Branched service lines to a SFR installed off a previously installed SFR service line that does not contain an EFV;

…

Pipeline Safety Alert

On October 4, the Pipeline & Hazardous Materials Safety Administration (PHMSA) issued a pre-publication Interim Final Rule (IFR) implementing the new emergency order authority that PHMSA received in the PIPES Act of 2016.  The IFR will become effective on the date of its publication in the Federal Register, which is expected within days.  PHMSA has provided a 60-day public comment period.

Federal agencies may issue IFRs without providing prior notice and comment under the good cause exception in the Administrative Procedure Act. The courts have emphasized that the good cause exception is to be narrowly construed, and that the existence of a statutory deadline does not, in and of itself, constitute good cause unless a delay would threaten real harm.  PHMSA’s justification for issuing the IFR is that the PIPES Act contains a 60-day deadline for establishing temporary emergency order regulations, making compliance with the notice and comment requirements in the APA impracticable and not in the public interest.

As required by the PIPES Act, the IFR contains administrative procedures that PHMSA must follow in determining if an imminent hazard exists, the factors that must be considered by PHMSA before issuing an emergency order, and the content of those orders, including a description of the persons subject to the restrictions, prohibitions, or safety measures and the standards and procedures for obtaining relief. The IFR also creates a process for administrative review of an emergency order that is largely patterned on the statutory text in 49 U.S.C. § 60117(o), including the referenced procedural rules for HazMat emergency orders in 49 C.F.R. § 109.19.

The process allows for the filing of a petition for review seeking a formal hearing before an Administrative Law Judge (ALJ), or an informal hearing before the Associate Administrator. …