Trade Groups call out Administration for Expensive and Overreaching Rule

Natural gas trade associations recently called out the Biden administration for their overreaching and unrealistic proposed rule on gas pipeline leak detection and repair that would place an undue burden on operators who are already committed to reducing emissions.

Reminder: Following the rules announcement in May, the Pipeline and Hazardous Materials Safety Administration (PHMSA) hosted and subsequently extended an open comment period. This month, a coalition of natural gas trade associations including the American Gas Association (AGA) and the Interstate Natural Gas Pipeline Association (INGAA) submitted a joint comment criticizing the numerous oversights PHMSA had made in the proposed rule. As explained by Karen Harbert, president and CEO of AGA:

“Our industry has made and continues to make a sincere commitment to leak detection and repair. . . However, extensive changes to this proposed rule are necessary to ensure that the final rule is viable and not contradictory to other federal guidance.”

The proposed regulations come from a series of directives mentioned in the 2020 PIPES Act. The PIPES Act was a bipartisan piece of legislation meant to strengthen PHMSA’s ability to monitor the safety of the country’s intricate and far-reaching pipeline system. As part of this legislation, the Secretary of Transportation was instructed to create rules on job creation and pipeline maintenance. Secretary Pete Buttigieg touted the rules saying:

“We are proposing a long-overdue modernization of the way we identify and fix methane leaks, thereby reducing emissions and strengthening protections for the American people.”

Confusing and Contradictory Regulation

The proposed rule, however, falls short of its intended purpose and in their comments, the natural gas associations took the opportunity to speak to a multitude of these weaknesses. Amongst their chief complaints, they note that PHMSA appears to have failed to consider how their own rule is at odds with previously implemented regulations natural gas pipeline operators must adhere to.  As mentioned earlier, the PIPES Act serves a vehicle to address improving pipeline safety infrastructure.

According to section 113 of said act:

“Leak detection and repair programs. . . shall be able to identify, locate, and categorize all leaks that— (i) are hazardous to human safety or the environment; or (ii) have the potential to become explosive or otherwise hazardous to human safety.”

The act continues, saying the operators are responsible for repairing or replacing the leaking pipe except:

“a pipe with a leak so small that it poses no potential hazard.”

PHMSA’s proposal, however, instructs operators to repair all gas leaks; directly contradicting Congress’s directive. The difference between hazardous leaks and all leaks is incredibly important and this disparity must be reconciled.

Inaccurate Calculations and Staggering Costs

The associations have also disputed the expected costs presented by PHMSA. PHMSA claims that the cost for gas transmission operators would fall around $14.9 million annually. However, research from INGAA places the predicted costs at a staggering minimum of $228 million to twice that number at $516 million annually. Beyond this, PHMSA’s calculations of the cost effectiveness of the rule is at odds even within the Biden administration. The association’s comment states:

“PHMSA’s cost effectiveness figure is $23,763 per metric ton of methane. By comparison, in 2022, EPA, the lead federal environmental regulator, used a cost effectiveness calculation of $1,970/ton indicating a significant delta between EPA and PHMSA’s calculations.”

Groundbreaking Industry Efforts

The rules also fail to acknowledge the proactive and voluntary steps the industry is taking to reduce emissions through innovate technologies and procedures. Take the Environmental Partnership, a coalition of oil and gas companies dedicated to improving their environmental impact, for example.  By focusing on leak detection and repairs, participating companies were able to reduce leak occurrence rates to 0.05 percent among the nearly 100,000 sites surveyed, or less than one component leaking for every 2,000 sites.

As the report explains:

“Across every major oil and natural gas basin in the country, the participating companies conducted more leak surveys than ever focused on reducing methane emissions.” (emphasis added)

Similarly, the coalitions’ flaring management program, the group had a 45 percent reduction in flare intensity and a 26 percent reduction in total flare volumes from the previous year.

Source: The Environmental Partnership

These companies are leaders in their fields for a reason and they know how to best tackle the problems they are facing every day. Cutting emissions is shared goal, but cumbersome bureaucracy is not the way to do it.

Bottom Line: Natural gas pipeline operators are not the enemy. These groups want to work with the government to create practical rule making.  However, the Biden administration’s new rules place unfair burdens on operators and rely on false data and calculations. Before any rules go forward, these shortcomings must be addressed.

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