Ambitious pipeline safety oversight plans expected to be scaled back under Trump

SNL Energy

The Trump administration is expected to scale back at least one major safety rulemaking for the natural gas transmission and gathering industries, and possibly alter other recent proposals from the U.S. Pipeline and Hazardous Materials Safety Administration.

“Elections have consequences. These guys are going to be more averse to aggressive regulation than the previous [administration],” said Jeff Wiese, former associate administrator of PHMSA.

PHMSA’s 550-page proposed gas gathering and transmission pipeline safety rule is primed for revision under the new administration, Wiese and other pipeline safety experts familiar with the inner workings of PHMSA said in recent interviews. The sprawling regulation, which has been in the works for years, incorporates congressional mandates, National Transportation Safety Board recommendations and other initiatives. The parts that are not statutorily ordered may be the first to go.

“I do believe there will be adjustments made to the gas rule. … A lot of those parts are NTSB items,” said Wiese, who left PHMSA in 2016 and is now consulting group TRC Companies Inc.’s vice president and national practice leader for pipeline integrity services. “I think there are going to be some compromises made on items that are not statutory mandates.”

Keith Coyle, an attorney with Babst Calland, said he expects PHMSA to substantially walk back the gas transmission and gathering rule proposal under the Trump administration. He agreed that fulfilling NTSB recommendations, although they often form the basis for congressional mandates, will likely drop on PHMSA’s priority list. For instance, the proposed rule’s guidance for verifying the maximum allowable operating pressures and materials of pipelines goes beyond what is covered under Congress’ mandate to the agency, Coyle said.

PHMSA’s decision to regulate gathering lines was not also congressionally mandated, and Coyle said the agency may set that aspect of the rulemaking aside entirely for the time being.

Questions also remain about the future of PHMSA’s hazardous liquids pipeline safety rule, which was finalized but did not make it into the Federal Register before President Donald Trump froze pending new regulations, and the agency’s underground gas storage regulation. Coyle said he expects some simplifications to the hazardous liquids regulation, especially if PHMSA finds it subject to the two-for-one executive order, and that the agency may put on hold a planned second phase of underground gas storage rules.

Richard Kuprewicz, Accufacts Inc.’s president and a pipeline safety expert, warned that limiting pipeline safety oversight could backfire for an administration that is looking to expand the nation’s oil and gas infrastructure. Kuprewicz questioned the utility of broad-strokes executive orders.

“If you’re trying to accelerate the siting of new pipelines in the United States, and try to create the argument that more regulation is bad on the safety side, you could generate a tremendous amount of opposition as failures start going up because you’ve gutted certain changes that were important in pipeline safety regulation,” Kuprewicz said. “Are you [fighting] this [new regulation] because you’re in the camp that all regulation is bad, or because there really is an issue here?”

PHMSA declined to comment on the specifics of what changes might be made to regulations or processes under the Trump administration, saying only that the issue was the subject of PHMSA’s ongoing regulatory review and that the agency would issue updates when decisions are made.

Depending on the incoming leadership at PHMSA, Wiese said he expects there also may be a subtle shift toward collaboration between regulators and industry in lieu of prescriptive regulation. He noted that that shift was already in the works to some extent with growing emphasis on pipeline safety management systems, an industry recommended practice for risk management. Some regulators, particularly at the state level, have already begun working aspects of the voluntary recommended practice into enforcement settlements with companies.

When PHMSA does choose to increase regulation, Coyle said he expects Trump’s two-for-one executive order to alter the way PHMSA does rulemaking. It may encourage PHMSA to propose a smattering of less ambitious regulations, rather than focusing on a handful of large rulemakings. While this may seem counter intuitive, the executive order is expected to apply to rules that meet certain industry cost thresholds, said Coyle, who was previously an attorney adviser for PHMSA.

“They can pull out some things that maybe are non-significant so they don’t have to run through the two-for-one. And then the things they know are going to be significant, no matter how they try, … they can come up with the ‘twofers’ that they need to try to zero out some of the costs,” Coyle said.

It may also force the agency to pare down its priorities and “think long and hard” before moving forward on new rules, he added.

In looking for past rules to rescind to balance out the costs for new regulations, Trump’s executive order appears to create an incentive for agencies to exaggerate the costs of existing standards to make it seem as though eliminating them offers a greater cost savings, Coyle added.

“It’s an interesting dynamic. In most rulemaking proceedings, agencies try as best as they can to minimize the cost of new regulations. … I think they might have an incentive to go in the other direction and overstate the savings that would be [generated],” he said.

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