S 1208 Introduced – Pipeline Replacement

Earlier this month Sen Markey (D,MA) introduced S 1208, the Pipeline Modernization and Consumer Protection Act. The bill would add a new section to 49 USC Chapter 601 that would attempt to encourage the replacement of aging gas pipelines.

Section 2 of this bill starts out by explicating a list of ‘congressional findings’ outlining the risks of an aging gas pipeline distribution system. Section 2(b) then goes on to add §60112A to the gas pipeline safety section of 49 USC outlining actions to be taken by gas pipeline operators and State regulators to correct the problem.

New USC Section

First it requires that each gas utility or gas distribution facility, in accordance with their pipeline integrity management program under 49 USC 60109, to accelerate the replacement of leaking pipelines or pipelines that are at high risk of leaking due to {new §60112A(b)(2)}:

∙ Inferior materials;

∙ Poor construction practices;

∙ Lack of maintenance; or

∙ Age.

Then the bill addresses a requirement for State regulatory authorities and unregulated gas utilities to “consider [emphasis added] developing prioritized timelines to repair all leaks based on the severity of the leak, including non-hazardous leaks, or replace identified leaking or high-risk piping or equipment, including leaks identified as part of an integrity management plan” {new §60112A(c)(1)(A)}. It goes on to again require those agencies to ‘consider’ adopting a cost-recovery program that includes {new §60112A(c)(1)(B)}:

∙ Replacement plans with targets and benchmarks for leaking or high-risk infrastructure replacement;

∙ Consideration of the economic, safety, and environmental benefits of reduced gas leakage, including consideration of reduced operation and maintenance costs and reduced costs attributable to lost or unaccounted-for natural gas; and

∙ Reporting on the reductions in lost or unaccounted-for gas as a result of pipeline replacements;

To better track the ‘unaccounted-for gas’ that is apparently (according to the findings) the result of minor ‘less hazardous leaks’ the bill again requires State regulators and unregulated gas utilities to ‘consider’ {new §60112A(c)(1)(C)}:

∙ Adopting a standard definition and methodology for calculating and reporting unaccounted-for gas;

∙ Adopting limits on cost recovery for lost and unaccounted-for gas; and

∙ Requiring use of best available technology to detect gas leaks.

Unaccounted-for Gas Guidelines

Section 2(c) of the bill would then require the PHMSA Administrator, within 1 year, to publish a set of non-binding guidelines for implementing the pipeline identification, replacement and cost recovery program described above. The Administrator would consult with State regulators, the Department of Energy, the EPA, FERC and other ‘appropriate Federal agencies’ in developing the guidelines. It also requires the guidelines to be updated every seven years.

Moving Forward

Since this bill does not actually require anyone to do anything (other than PHMSA to develop non-binding guidelines) there will probably not be any major opposition to this bill. The question then becomes whether or not Markey and his two cosponsors have the pull to get this bill considered in the Senate Commerce, Science and Transportation Committee. Markey is a relatively high-ranking Democrat on the Committee and one of the cosponsors {Sen. Schatz, (D,HA)} is also a member of the Committee. There is an outside chance that that might be enough to get the bill considered.

S 1209 Introduced – Pipeline Replacement Fund

Last week Sen. Markey (D,MA) introduced S 1209, the Pipeline Revolving Fund and Job Creation Act. The bill would authorize PHMSA to make grants to State revolving loan funds established for repairing or replacing natural gas distribution lines. This bill is very similar to two bills introduced in the 113^th Congress; S 1768 and HR 4339. I have discussed the details in the post on S 1768. Neither bill was considered in committee in the last session.

Funds like this where the repayment of principle and interest on loans provides funds for subsequent loans are a means of taking a relatively small amount of current capital and leveraging it over a period of time. While the bill does authorize funding through 2026 it does not do so at any specific level. Without knowing how much funding will be available, it is hard to argue about the potential efficacy of the program.

Sen. Markey is a mid-ranking Democrat on the Senate Commerce, Science and Transportation Committee. That is the committee to which this bill was forwarded for consideration, but it is unlikely that he has enough influence to bring the Committee to consider this bill. This is particularly true since he was not able to have the bill considered in the last session when the Democrats were in charge of the Committee.

HR 4338 Introduced – Pipeline Replacement

As I noted earlier Rep. Rangel (D,NY) introduced HR 4338, the Pipeline Modernization and Consumer Protection Act. The bill is intended to address the issue of aging pipeline infrastructure and the hazards associated with leaks and failures associated with the old pipes.

Findings

Section 2(a) of the bill outlines the reasons that the legislation is necessary. It points out that current Federal regulations do not address minor leaks from interstate pipelines unless they present “an existing or probable hazard to persons or property and require immediate repair” {§2(a)(1)}. The author also notes that the cumulative value of these minor leaks is paid for by the pipeline customers.

The findings section of the bill also reports that the aging pipeline infrastructure is more prone to catastrophic failure and points to a number of recent incidents involving old distribution pipeline leaks. It goes on to note that the government regulated rate structures for these pipelines provide disincentives to replacing the failure prone pipelines until they actually fail. Some government mandated and supported pipeline replacement measures are beginning to reverse this trend and are to be encouraged.

New Pipeline Replacement Program

This bill would amend the pipeline safety rules by amending 49 USC Chapter 601 by adding a new section; §60112A, Replacement programs for high-risk natural gas pipelines. It would require gas pipeline operators to, as part of the pipeline integrity management requirements of §60109, to “accelerate the repair, rehabilitation, and replacement of gas piping or equipment” {§60112A(b)} that is leaking or presents a high risk of leaking due to age, poor construction materials, outdated construction practices or lack of maintenance.

The bill would require State regulatory authorities and each unregulated gas utility, as part of this program, to consider {§60112A(c)(1)}:

● Developing prioritized timelines to repair all leaks based on the severity of the leak;

● Adopting a cost-recovery program;

● Adopting a standard definition and methodology for calculating and reporting unaccounted-for gas;

● Adopting limits on cost recovery for lost and unaccounted-for gas; and

● Requiring the use of best available technology to detect gas leaks.

Guidelines for Identifying High-Risk Pipeline Infrastructure

Section 2(c) would require the PHMSA Administrator, within a year of the adoption of the legislation, to issue “non-binding guidelines identifying best practices under section” {§2(c)(1)} described above. The preparation of those guidelines will take into account existing efforts by various State regulatory agencies that have already attempted to address the issue. The guidelines would be required to be updated every 7 years.

Data Standardization

Section 3 of the bill would require the PHMSA Administrator to establish and publish forms that “adopt a standard definition and methodology for calculating and reporting unaccounted-for gas”

{§3(a)}. This would be required to be completed within one year of the adoption of this legislation.

Moving Forward

This looks like a fairly reasonable bill that should not bring widespread opposition. Unfortunately, since it was introduced by Rep. Rangel, it has a poor chance of being actively considered in Committee and even less of making it to the floor of the House. If the New York Democrat can convince Rep. Shuster (R,PA), the Chair of the House Transportation and Infrastructure Committee, to take up the bill, it could probably pass in both the House and Senate.