November 2016, Vol. 243, No. 11



PHMSA Fleshes Out New Emergency Order

The new interim final rule (IFR) from PHMSA gives pipeline safety regulators wide latitude to penalize multiple gas and hazardous liquid pipelines at one time for perceived safety violations. Those violations would have to be serious enough to require the Pipeline and Hazardous Materials Safety Administration (PHMSA) to issue an emergency order which can include restrictions, prohibitions, and safety measures without prior notice or an opportunity for a hearing.

One Washington attorney explains. “This is an extraordinary remedy to be used in extraordinary circumstances. My concern is that its use or misuse depends entirely on the judgment of PHMSA.”

An emergency order could come into play, according to PHMSA, for example: (1) where a natural disaster affects many pipelines in a specific geographic region; (2) where a serious flaw has been discovered in pipe, equipment manufacturing, or supplier materials; and (3) where an accident reveals a specific industry practice that is unsafe and needs immediate or temporary correction.

The IFR was issued in October with a 60-day comment deadline. The agency says it can make changes to the final rule based on public comments. The IFR is required by the Protecting our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016 signed by President Obama on June 22, 2016. It requires PHMSA to publish a final rule on emergency orders within 270 days of the bill’s passage. That date is March 19, 2017.

The emergency order provision in the PIPES Act proved controversial as the bill moved through Congress. It augments PHMSA’s existing authority to issue  corrective action orders (CAOs), notices of proposed safety orders, and advisory bulletins, by allowing PHMSA to act quickly to address imminent safety hazards that exist across a subset or larger group of owners or operators.

The Interstate Natural Gas Association of America (INGAA) was unhappy with early provisions of the amendment as the PIPES Act moved through Congress. A major concern was whether the industry would have access to judicial review of any emergency order. INGAA was more or less satisfied with the final provision.

But the language of the IFR leaves plenty of room for interpretation on that score. “INGAA has previously commented that strong due process considerations should be put in place with respect to the emergency order authority,” says INGAA Vice President Cathy Landry. “INGAA is reviewing the IFR language, and will solicit operators’ input in developing a response during the 60-day comment period.”

“We have concerns with the IFR language that limits the types of challenges to emergency orders that can be brought before a neutral administrative law judge, and whether that limitation is consistent with the statute,” says James Curry, an attorney at Babst Calland and a former PHMSA attorney. “More generally, we are concerned PHMSA may use its new emergency order authority in place of its current practice of issuing non-binding advisory bulletins.”

The PIPES Act authorizes PHMSA to issue an emergency order if it determines that a violation, unsafe condition or practice, or a combination of unsafe conditions and practices, constitutes or is causing an imminent hazard. An “imminent hazard” is defined as “the existence of a condition relating to a gas or hazardous liquid pipeline facility that presents a substantial likelihood that death, serious illness, severe personal injury, or a substantial endangerment to health, property, or the environment may occur before the reasonably foreseeable completion date of a formal proceeding begun to lessen the risk of such death, illness, injury, or endangerment.”

A company can file either a formal or informal petition for review of an emergency order. A formal request would have to state material facts in dispute and would be assigned to the office of hearings, Department of Transportation, and subsequently to an administrative law judge. The ALJ has 25 days to issue a recommendation. If either the pipeline(s) or PHMSA disagrees with the recommendation, they have one day to submit a petition for reconsideration. The other party has one day after that to do the same. Then the associate administrator has three days to issue a final agency decision on the petition for reconsideration.

If the associate administrator does not issue a decision within 30 days, the emergency order is null and void. The same is true for a informal petition, which goes straight to the agency, not an ALJ. In both instances, PHMSA can argue that although the 30-day clock has run out, an “imminent hazard” still exists. Then the emergency order would stay in place until a final PHMSA decision was made, however long that takes. Once that decision is announced, judicial review would be available in an appropriate U.S. district court and afforded expedited consideration.

On its website, Babst Calland’s pipeline safety team noted a number of concerns about the IFR. It points out that the associate administrator can deny a request for a formal hearing and decide the matter without the participation of an ALJ if a petition for review fails to identify “material facts” that are in dispute. The website continues: “What is a material fact in the context of an emergency order? What about purely legal questions? Should a petitioner who seeks a formal hearing be denied that right based solely on a determination by the Associate Administrator?”

Water Pipe Funding Assured by Congress

Congress will approve new funding for “emergency” repair and construction of underground water pipes with unacceptably high lead content when it approves a Water Resources Development Act (WRDA) bill in either November or December.

But numerous questions remain about the new program established in response to such problems in Flint, MI. A House-Senate conference committee will have to reconcile a number of differences between their two WRDA bills (S. 2848/H.R. 5303), including who administers the funds, how much money will be available, the ground rules on access to the new funds and perhaps most importantly how much of the money will go to Flint.

There will be $170 million available at minimum and House sources say they expect at least $100 million of that to go to Flint. Flint isn’t mentioned by name in either the House or Senate bill. But one House staffer in a position to know says the language in the House bill was written to only apply to Flint. The House bill says a city can qualify for the funds if it has been declared an emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act “as a result of the presence of chemical, physical, or biological constituents, including lead or other contaminants in the eligible system, for the repair or replacement of public and private infrastructure.”

Emergencies under the Stafford Act are declared for a wide range of disasters such as disease outbreaks, floods and hurricanes. Stafford Act eligibility requires a presidential emergency declaration, and only Flint has received one for lead contamination of water pipes. The Senate bill also refers to the need for an emergency designation.

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