February 2025 Vol. 80 No. 2
Features
Washington watch: Last-minute Biden pipeline actions in the balance
STEPHEN BARLAS, Washington D.C. editor
The Biden administration’s attempts in its last month to make significant changes to pipeline regulation may be early targets for reversal for the incoming Trump administration. The Pipeline and Hazardous Materials Safety Administration (PHMSA) was particularly active as the clock ran out, finalizing one pipeline leak detection rule and issuing its intent to define “categorical exclusions” which are proposed pipeline operational changes that would not need environmental review.
Pipeline leaks, in the form of methane, were also an issue in the EPA final rule on the new WEC (waste emission charge) fee under the Methane Emissions Reduction Program (MERP). The first fee is due in March 2025 for 2024 emissions, unless Congress voids the program by passing a Congressional Review Act resolution. The EPA attempted to deflate pipeline opposition by including in the final rule published in mid-November a provision that makes it easier for interstate pipelines to reduce any fee by “netting” methane emissions – “allowing owners and operators with a common parent to transfer negative emissions amongst each other.” That would not have been allowed under the proposed rule.
It was not methane emissions, but rather emissions of nitrogen dioxide and particulate matter that caused the Federal Energy Regulatory Commission (FERC) to announce in late November it would pull its previous authorization of the Venture Global’s Calcasieu Pass 2 LNG project and undertake a rare supplemental environmental impact statement (EIS) at the start of 2025.
FERC said it was forced to take that unusual step, after approving construction of CP2 in June 2024, because of a federal appeals court ruling in the summer of 2024, in Healthy Gulf et al. v. FERC. The ruling obligated FERC to review an earlier approval of the Commonwealth LNG project that environmental groups have contested. That court decision involved FERC 2022 approval of Commonwealth LNG.
In Healthy Gulf, the U.S. Court of Appeals for the District of Columbia found FERC’s cumulative effects determination for air quality to be deficient, as related to that underlying project’s NO2and PM2.5 impacts. Because FERC’s initial approval for the CP2 Project (prior to the Healthy Gulf ruling) had used a similar air quality analysis, FERC deemed its approval of CP2 to be vulnerable to legal challenges. Hence, the November 2024 notice of the supplemental EIS. The CP2 project includes an 85.4-mile-long mainline pipeline.
“Venture Global is particularly noteworthy because it may be the first time FERC has proactively stalled construction of a major infrastructure project and initiated an SEIS on its own accord, without being ordered to do so by a federal court,” lawyers from Akin Gump Strauss Hauser & Feld wrote in a blog post. “It is also at odds with FERC’s order of Oct. 1, 2024, denying a stay of construction sought by CP2 Project opponents, and other infrastructure projects that continue to move forward with construction or operation while FERC runs a subsequent SEIS process.”
Calcasieu Pass 2 was also in the news in December when the Department of Energy released its report on the need for liquified natural gas (LNG) exports. The DOE had been holding up approval of export licenses since January 2024 under a directive from President Biden. The LNG report sought to make the case that exports of LNG to countries that do not have a free trade agreement with the U.S. should be curtailed because of their negative impact on energy supplies in the U.S. and their ostensible, negative environmental effects.
Counter to facts
“As we continue to examine the report, we have found that much of the narrative from the administration on the need for a pause in LNG export authorizations and their framing of the study results runs counter to the actual findings of the report,” said Charlie Riedl, executive director of the Center for LNG.
While environmental groups, like the Natural Resources Defense Council, highlighted the report’s underlining of the risks of escalating methane emissions from new LNG exports, environmentalists have been pushing even harder to put new regulatory limits on methane, such as the new emissions fee. It is not clear how dramatic the effect of the new MERP will be on interstate pipelines.
Only facilities emitting more than 25,000 metric tons of CO2 a year are required to pay the methane fee, which starts at $900 a metric ton for emissions occurring in 2024. It increases to $1,200 per metric ton of methane in 2025, and to $1,500 per metric ton of methane in 2026 and subsequent years. The EPA has said that the size of fees per facility will “ultimately depend on decisions that are within the control of owners and operators, among other factors….” and that “only a relatively small proportion of owner-operators of oil and gas facilities will owe WEC obligations.” That will amount to less than 15 percent of national methane emissions.
The Agency’s estimate for the one-time capital costs for critical transmission industry emissions control equipment is $2.9 million for centrifugal and reciprocating compressors, and $200,000 for pneumatic controllers. Annualized costs for compressors would be $1.8 million a year. As for the impact, financial or otherwise, of the EPA’s change to the “netting” provision, Jim McCarthy, a consultant who testified last year on behalf of INGAA asking for the change, did not reply to an e-mail asking whether the change goes far enough to suit interstate pipelines.
In an effort to spike the development of new emissions technology and thus soften the fees, the DOE and EPA announced on Dec. 20, $850 million for 43 projects aimed at reducing methane emissions in the energy sector, mostly at oil and gas production sites. In its press release announcing the grants, the DOE said, “Thirty-one projects will accelerate the deployment of early-commercial technology solutions to reduce methane emissions from new and existing equipment.” Only four of the projects explicitly mention “transmission” pipelines and two of those are grants to develop apparently more-accurate methane measurement technology.
The grants go to private companies developing methane removal technology, none of which is deployable at the moment. No funds go to energy companies to defray the costs of purchasing equipment to limit methane emissions from controllers, compressors and other equipment at pipeline facilities.
The MERP is only one of the ways the Biden administration has used regulatory leverage to plug methane leaks in pursuit of its “climate change” agenda. The PHMSA was set to publish in late December or early January a new rule in development for four years on gas pipeline leak detection and repair. There will be a financial hit to transmission lines but gathering lines will take it hard on the chin, to the tune of $196 million in 2025, according to the PHMSA estimate. Transmission pipelines face costs in 2025 of “only” $14 million.
Current PHMSA pipeline leak detection requirements are from the 1970s and lack performance standards leading to a provision in the congressional 2020 Pipeline Safety Act mandating that PHMSA take corrective action, especially given the availability of new control technology. Among many other things, the final rule will include a new “Advanced Leak Detection Program” with requirements on leak grading and repair, qualification of leakage survey, investigation and repair personnel, reporting and National Pipeline Mapping System and mitigating vented and emissions from gas pipeline facilities.
Group meeting
A number of industry groups, such GPA Midstream Association, American Petroleum Institute, Independent Petroleum Association of America and Marcellus Shale Coalition, met with PHMSA officials in November in an effort to head off publication of that final rule. They stated, “We reviewed the Agency’s pre-briefing materials and are concerned by PHMSA’s failure to include any meaningful analysis of the Preliminary Regulatory Impact Analysis (PRIA), including with respect to the comments and information received from the public.”
PHMSA also published a notice in December saying it wants to establish “categorical exclusions” for instances when it does not have to do an environmental impact statement (EIS) or more limited environmental assessment (EA). PHMSA explained the need for those exclusions based on a provision in the Infrastructure Investment and Jobs Act of 2021, which authorized a Natural Gas Distribution Infrastructure Safety and Modernization (NGDISM) Grant Program. The bill authorized PHMSA to award $200 million per year in NGDISM Grant funding, for a total of $1 billion in grant funding over five years. Three years of grants have already been provided, mostly for pipeline replacement.
In deciding which grants to approve, PHMSA might otherwise have to do a labor-intensive, time-consuming EIA prescribed under the National Environmental Policy Act (NEPA). The idea is for PHMSA to fast track a NGEDISM grant bypassing any NEPA slowdown. Here are the categorical exclusions the PHMSA has proposed for the office of pipeline safety:
- policies, directives, regulations, and guidelines that are of an administrative, financial, legal, technical, or procedural nature
- regulations concerning corrosion control; training, testing and qualification of operator personnel; or emergency response
- editorial or technical revisions and clarifications to correct editorial errors and improve clarity
- revisions to civil penalty amounts that may be imposed for violations of certain DOT regulations
- Repair, rehabilitation or replacement of natural gas distribution pipelines and associated equipment within existing rights-of-way or easements.
Any exclusions finally set in law will apply to both intrastate and interstate pipelines. The industry broadly is likely to have some questions about what is “in” the exclusions and what is “out.” That is not withstanding questions raised by the Supreme Court’s recent decision is Marin Audubon which appeared to limit the NEPA’s reach with regard to regulatory decisions, such as those made by the PHMSA.
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