FERC To Review Recent Rule Requiring Permitting Of Auxiliary Facilities

March 2014, Vol. 241 No. 3

The Federal Energy Regulatory Commission (FERC) will look again at a new rule requiring certificates to be filed for right-of-way auxiliary construction and for landowners to be given a five-day heads-up before construction and maintenance work starts. That rule was published in November and went into effect Feb. 3.

The Interstate Natural Gas Association of America (INGAA) and National Fuel Gas Supply Corp. both asked for a rehearing, and FERC granted that wish on Jan. 29. The rule was issued as the result of a petition submitted in 2012 by INGAA whose requests were essentially squashed by FERC when it issued a final rule in November.

Joan Dreskin, general counsel, INGAA, says, “FERC issued a standard ‘tolling order’ in this case which allows them to act when they wish on the rehearing/clarification.”

In part, the debate revolves around the difference between replacement and auxiliary facilities. FERC wants them treated similarly as “jurisdictional,” meaning they would have similar requirements with regard to pipeline companies filing certificates which the commission would have to approve before the companies could start construction. INGAA says auxiliary facilities shouldn’t be permitted.

INGAA had started the ball rolling in 2012 because of Commission staff discussions with pipeline representatives where FERC staffers stated that companies undertaking section 2.55(a) auxiliary installations to augment existing facilities must stay within the right-of-way or facility site for the existing facilities and restrict construction activities to previously used work spaces. Industry officials thought this was a change in policy which would force them to obtain certificates when auxiliary facilities were installed outside rights-of-way. The kinds of auxiliary facilities at issue include: valves; drips; pig launchers/receivers; yard and station piping; cathodic protection equipment; gas cleaning, cooling and dehydration equipment; residual refining equipment; and water-pumping equipment.

Given that ostensible change in policy made outside any rulemaking, INGAA filed its petition in 2012. FERC issued a proposed rule in December 2012 which simply codified the position its staff had laid out. INGAA protested. FERC argued the proposed rule was only a “clarification” which “articulated existing, long-standing constraints and obligations with respect to auxiliary installations.” It then took more comments before ignoring INGAA’s protests again when issuing the final rule last November.

The final rule also codified for the first time the common industry practice of notifying landowners prior to coming onto their property to install, replace or maintain auxiliary or replacement facilities.

In its request for rehearing, INGAA says that in the Final Rule, the Commission “persists as well in a fiction that its new ruling does not change what had been the plain and universal understanding of that provision for approximately 60 years until the December 2012 NOPR.”

In addition to unlawfully converting an entire class of exempt, non-jurisdictional auxiliary installations into jurisdictional NGA facilities, the Commission, without referencing a record of abuse, without identifying any material threat to its statutory obligations, and without providing any premise based on relevant facts, extends regulatory limitations to these installations that in the past have applied only to separate and distinct replacement activities. The Commission’s Final Rule is arbitrary and capricious. It is not the product of reasoned decision making.

Besides absolving auxiliary activities from permitting, INGAA also wants FERC to clarify that the five-day prior notification requirement would not apply to activities done for safety, DOT compliance, in response to “one-call obligations,” or environmental or unplanned maintenance reasons that are not foreseen and that require immediate attention by the company and for activities that result in ground disturbance where such disturbance would be located entirely within the fence line of an existing, aboveground facility site.

David W. Reitz, Deputy General Counsel, National Fuel Gas Supply Corp. and attorney for Empire Pipeline, points out that PHMSA’s regulations require a company discovering a pipeline anomaly requiring immediate remediation to excavate and inspect the pipeline within five days of discovery. “Because of the time required to verify or determine the names and addresses of the property owners and to deliver the notices, five-day advance landowner notification would be impractical in these circumstances,” he explains. “In addition, a pipeline receiving a one-call notification often has a maximum of 48 hours to determine and mark the precise location of its facilities, which may require some excavation.”

OSHA Sandblasting Protection Proposal Could Require Respirator Replacement

The new OSHA proposed rule requiring greater protection for workers engaged in sandblasting may require interstate and intrastate companies and their contractors doing digging to probably replace the respirators they now use. That is because the Occupational and Safety Administration wants to reduce its permissible exposure limit (PEL) for crystalline silica from 100 to 50 micrograms per cubic meter of air and add a new action level of only 25 micrograms. Pipeline companies generally cannot control dust to the current level via engineering controls, so they give employees personal protective equipment (PPE), which is a legal option.

“With regard to PPE, it is unknown what the effect will be on the perceived adequacy of the current respirators given that the protection factor for each type of respirator is based on established exposure limits,” says Lisa Beal, vice-president, environment and construction policy for INGAA. “Therefore, lowering the PEL may require replacement of the respirators that are currently in use. The replacement costs will be substantial, but an even bigger concern is that this is a cost associated with replacing equipment that is adequately mitigating the hazard. In other words, this is a real cost without a tangible benefit.”

Report Cites Added Incidents Rail May Cause If Keystone Is Denied

Replacing the Keystone XL pipeline with oil-laden freight trains from Canada may result in an average of six additional rail-related deaths per year, according to a State Department report that is adding to pressure for President Obama to approve the line.
The long-awaited study, released Jan. 31, focused on the environmental impact of TransCanada’s $5.4 billion pipeline, but also spent several pages analyzing the potential human impact of various ways to transport oil, using historical injury and fatality statistics for railways and oil pipelines.

Though it excluded the runaway oil train derailment that killed 47 people in Lac Megantic, Quebec last summer, the findings highlight the risks or railway transport versus pipes. Shipping another 830,000 bpd of crude “would result in an estimated 49 additional injuries and six additional fatalities for the No Action rail scenarios compared to one additional injury and no fatalities” per year if Keystone XL is built, according to the report.

Keystone has been awaiting a presidential permit for more than five years. The “No Action” options refer to the likely alternative outcomes if Obama rejects the permit or the project is not built for some other reason. The report also showed that carrying crude by rail, instead of by pipeline, was likely to result in a higher number of oil spills and a larger amount of leakage over time.

If Keystone is built as planned, according to the study, it would likely spill an average of about 500 barrels per year, with a leak occurring once every two years. Under the most optimistic scenario involving rail, however, nearly 300 spills would occur per year, with over 1,200 barrels released in total, according to estimates provided in the report.