S 1767 Introduced – Pipeline Repair

As I mentioned earlier Sen. Markey (D,MA) introduced S 1767, the Pipeline Modernization and Consumer Protection Act. This bill would encourage gas pipeline companies to accelerate the replacement of aging or leaking gas pipelines.

Provisions of the Bill

Section 2(a) of the bill identifies a number of Congressional Findings about the current state of repair of gas pipelines in the United States. Among those findings is the observation that there is no federal regulation of minor gas leaks that might indicate the poor state of repair of an aging piping infrastructure and that ignoring these minor leaks is actually encouraged by the rate structure of the distributed gas.

Section 2(b) of the bill adds §60112A to 49 USC Chapter 601. Paragraph (a) of that new section defines ‘gas pipeline facility’ as either a distribution facility or a gas utility. Paragraph (b) provides that each such facility will ‘accelerate’ the repair or replacement of pipeline equipment that is leaking or presents a high-risk of leaking. Paragraph (c) describes potential policy options for State agencies or unregulated facilities to ‘consider’. Those options include:

• Developing timelines to repair/replace ‘all leaking equipment’ including non-hazardous leaks {§60112A(c)(1)(A)};

• Adopting a cost recovery plan for such repairs/replacements that takes into account economic, safety and environmental benefits of the resulting leak reduction{§60112A(c)(1)(B)};

• Adopting a standard definition and methodology for calculating and reporting unaccounted-for gas {§60112A(c)(1)(C)};

• Adopting limits on cost recovery for lost and unaccounted-for gas {§60112A(c)(1)(D)}; and

• Require the use of best available technology to detect gas leaks {§60112A(c)(1)(E)}.

Section 2(c) of the bill addresses the establishment of “non-binding guidelines identifying best practices under” the new §60112A established by this bill. The guidelines will be established by PHMSA in consultation with “State regulatory authorities, the Secretary of Energy, the Administrator of the Environmental Protection Agency, the Federal Energy Regulatory Commission, and other appropriate Federal agencies”.

Section 3 of the bill requires PHMSA to “establish and publish forms that adopt a standard definition and methodology for calculating and reporting unaccounted-for gas, including, when possible, information on the causes of unaccounted-for gas and the quantities associated with each cause, for use by applicable Federal agencies to standardize the data collected on unaccounted-for gas”.

Commentary

While this bill clearly identifies a possible reason for gas pipeline failures (minor leaks due to age or inadequate pipeline construction) it does not actually provide any authority for PHMSA to do something about the problem. The bill provides ideas for the 27 State agencies that regulate gas pipelines, but does not actually require them, or give them incentives, to take the suggested actions. And it does nothing to address the problem in the other 23 States that lack such regulatory agencies.

Since this bill does not actually require anyone to do anything, it is unlikely that there will be any significant opposition from the regulated community. As such this bill, if it makes it through the Senate Commerce, Science and Transportation Committee, would probably be approved by the Senate in one of the end-of-day unanimous consent approvals. Similar approval in the House would probably take place in an under-suspension-of-the-rules vote.

S 1768 Introduced – Pipeline Repair Funding

As I noted earlier, Sen, Markey (D,MA) introduce S 1768, thePipeline Revolving Fund and Job Creation Act. The bill would provide the Pipeline and Hazardous Material Safety Administration the authority to provide grant monies to States to establish revolving loan funds for the repair and replacement of the aging natural gas pipeline network.

The Revolving Loan Program

Each State would be required to establish a revolving loan/loan guarantee program where the grant money from PHMSA (along with a 20% matching state grant) would be loaned out, or used to guarantee loans, to natural gas pipeline operators to repair or replace existing gas lines. Repayment of those loans (along

There are a number of pretty standard stipulations:

• It includes “Buy American” language {§3(b)(2)(B)};

• Each state will establish (through a publish and comment process) a plan that outlines what types of projects will be funded, how the projects will be selected, and how the projects will be funded {§3(c)};

• Once obligated the funds will remain in program for the authorized life of the program (NOTE: there is nothing about what happens to the monies once the federal program is terminated) {§3(d)};

• Up to 4% of the federal grant funding may be used to pay program administrative costs {§3(f)(1)};

• The PHMSA Administrator will issue such guidance and regulations to govern these programs as necessary {§3(f)(2)};

• The State programs will provide a report to the Administrator every two years {§3(f)(3)} and the Administrator will audit those programs ‘periodically’ {§3(f)(4)}; and

• Various federal labor standards will apply to projects funded under this program {§3(g)}.

The bill does note that the repair and replacement of lines “that have been identified as leak-prone” (§3(b)(2)(A) is a priority, but leaves wide latitude to the determination of the PHMSA Administrator {§3(b)(2)(A)(i)} and the plans established by the State.

The bill does not provide any specific authorization level for the grant program (that normally has to be provided by a House bill), but §4 provides program authorization through 2024. It does restrict PHMSA spending on these grants to the amount specifically authorized for the program.

Moving Forward

Bills like this with creative funding for infrastructure repair/replacement are going to become more common. This use of a revolving loan fund will probably attract some favorable attention, as Congress moves into an election year. I would be very surprised if it gets any attention in the limited time left this year.

Next year I expect that this will move through the Senate Transportation Committee rather quickly. Then it will just be a case of whether this moves directly to the floor as one of those unanimous consent bills or whether it gets rolled up in the transportation authorization bill.