September 2010 Vol. 237 No. 9
Government
Fracing Disclosure Main Concern In Senate Energy Bill; Incentives For NG Vehicles Included
The energy bill the Senate is to finally take up in September is primarily a “BP-response” bill and contains none of the greenhouse gas emission reductions that Democrats had hoped to bring to a vote in a “Climate Change” bill, which is dead for this year.
The Clean Energy Jobs and Oil Company Accountability Act of 2010 focuses mostly on oil spill liability and response issues. Natural gas production offshore doesn’t appear to be a concern, obviously because there is no such thing as a gas “spill.” Moreover, there don’t appear to be any provisions applicable to pipelines, offshore or on. However, Senate Majority Leader Harry Reid (D-NV) slipped in a provision dealing with disclosure of “fracing” chemicals which has drawn the ire of some big natural gas producers.
The fracing disclosure provision in the Senate bill differs from a House bill – which has not been approved by any committee, much less the full House – called the Fracturing Responsibility and Awareness of Chemicals Act (FRAC ACT). The House bill authorizes the EPA to regulating fracing liquids under the Safe Water Drinking Act. That led companies such as ExxonMobil and XTO to oppose the House bill.
The Senate bill says a state “may” require any person using hydraulic fracturing to disclose a list of chemicals used, identified by well location and number, including the chemical constituents of the mixtures, Chemical Abstracts Service registry numbers and material safety data sheets. If a state does not require that disclosure by Dec. 31, 2011, the drilling company would have to disclose the information to the public on its website.
Although the Senate bill appears to give the states the lead on fracing disclosure, Cynthia Bergman White, a spokeswoman for ExxonMobil Corp., says the Senate provision would give the EPA a role in developing reporting thresholds under the Emergency Planning and Community Right to Know Act. So her company opposes the Senate provision as well.
Ken Cohen, vice president of public and government affairs for ExxonMobil, says, “We feel disclosure should be made at the state level without additional and unnecessary regulations from the Environmental Protection Agency and the federal government. States are acting on the fluid disclosure issue, with several important unconventional gas production states recently enacting or proposing new disclosure requirements (such as Colorado, Wyoming, Arkansas, Pennsylvania, and New York). We’ve been following these state guidelines and are working with industry to develop best practices.”
While the fracing disclosure provision may bother shale gas producers, the bill’s provision establishing a Natural Gas Vehicle and Infrastructure Development Program should warm their hearts, and the hearts of other natural gas players, including pipelines. The program would fund consumer rebates for purchase of natural gas vehicles.
The bill also offers grants to refuelers for making NG pumps available at service stations, presumably. The consumer rebates would be worth up to 90% of the incremental cost of a qualified vehicle, but could be no more than $8,000 for a vehicle with a gross weight rating of not more than 8,500 pounds.
The dollar cap would increase as the weight of the vehicle increased. The bill makes $3.8 billion available for those rebates. The refueling grants would be up to $50,000 each for property put in place between 2011 and 2015. $500 million would be available for those grants.
Rep. Sander Levin (D-MI), chairman of the House Ways & Means Committee, has introduced a “discussion draft” – meaning something short of an actual bill – with tax credits for natural gas vehicles over 8500 pounds. So both the House and Senate seem “on board” with NGV incentives.
Pipeline Public Education Programs Questioned
Various members of Congress referenced the “BP” issue when complaining about PHMSA’s dependence on an American Petroleum Institute (API) standard related to pipeline communications with the public.
The public education standard required by the Pipeline Safety Improvement Act of 2002 came up during the latest hearings on pipeline safety by the House Transportation and Infrastructure Committee in July. That standard was implemented by the Pipeline and Hazardous Materials Safety Administration (PHMSA) in a final rule in 2005 referencing RP 1162 which instructs transmission and distribution pipelines on what to include in messages to the public about potential, accidental releases, requisite public safety steps, use of one-call phone numbers prior to evacuation and other things.
Recently, the National Transportation Safety Board cited the failure of pipeline programs based on the standard in the investigation report of a deadly pipeline explosion in Mississippi that killed a girl and her grandmother.
At the hearings in July, Rep. Mark Schauer (D-MI) and others raised the even broader issue of whether PHMSA ought to be depending on API pipeline standards at all, given that they are developed by task forces composed almost exclusively of industry members. Rep. Jerome Nadler (D-NY) was incensed that the public must pay $89 to get a printed copy of RP 1189. It is available for viewing, free of charge, on the API website. Rick Kessler, a vice president at the Pipeline Safety Trust, called RP 1162 “innocuous,” meaning lacking effectiveness.
Bill Bush, a spokesman for the API, says there are 21 API standards referenced in PHMSA regulations. Not all are pipeline-specific; some deal with storage tanks or other aspects of the distribution system. Some API pipeline standards are not referenced by PHMSA. The second edition of RP 1162 is in the process of being vetted by an API committee, the final step before a new or revised standard becomes final. The revision, i.e. the second edition, was prepared by a task force composed predominately of API members.
But Bush says that PHMSA officials were on the task force, as were representatives of the state pipeline regulatory agencies. After the task force drafted the second edition, API invited groups such as the Pipeline Safety Trust, NTSB, emergency responders and excavators to comment. Some of those comments were used to revise the draft, which is now undergoing a final vote by a committee composed solely of API members.
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