PHMSA Issues Advance Notice of Proposed Rulemaking Seeking Stakeholder Comments Related to LNG Regulation Amendments

Details

On April 29, U.S. Secretary of Transportation Sean P. Duffy announced that the Pipeline and Hazardous Materials Safety Administration (PHMSA) has submitted an Advance Notice of Proposed Rulemaking (ANPRM) to the Office of the Federal Register (publisher of the Federal Register) seeking comments relating to amendments aimed at enhancing safety regulations for liquefied natural gas (LNG) facilities across the United States. The PHMSA seeks to solicit stakeholder feedback on potential opportunities for amendment of its regulations at 49 CFR Part 193 governing the siting, design, installation, construction, inspection, testing, operation, and maintenance of LNG facilities. The last significant changes to Part 193 regulations occurred in 2004, and current regulations rely heavily on the 2001 edition of National Fire Protection Association 59A, which is the “Standard for the Production, Storage, and Handling of Liquefied Natural Gas” and has itself been updated multiple times since its 2004 adoption by the PHMSA.

Since then, the U.S. LNG and energy industry have experienced a renaissance thanks to the growth and development of shale plays around the country. The increased availability of American natural gas has transformed the U.S. LNG industry from a collection of small facilities focused on the domestic energy market into a reorientation of LNG facilities toward international markets, where the demand for U.S. energy is increasing. This economic behemoth has transformed the United States into the world’s largest international exporter of LNG, supplying roughly 22% of the global LNG supply, and a critical supplier for both Europe and Asia.

As a result, U.S. LNG facilities are becoming increasingly sophisticated in their design, construction, and operations, yet PHMSA regulations have not kept pace. To address this gap, Congress included Section 27 of the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016, directing the PHMSA to update its minimum safety standards for “permanent, small scale” LNG facilities, and Section 110 of the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020, which directed the PHMSA to update the minimum safety standards by December 27, 2023, to impose a risk-based regulatory approach for large-scale LNG facilities other than peak-shaving facilities. Additionally, President Donald Trump issued Executive Order (EO) 13868, “Promoting Energy Infrastructure and Economic Growth,” which directed the PHMSA to issue a final rule updating Part 193 regulations no later than May 2020. Additionally, he issued his most recent EO, 14192, “Unleashing Prosperity Through Deregulation,” as well as EO 14154, “Unleashing American Energy” and EO 14156, “Declaring a National Energy Emergency,” which seek to alleviate regulatory burdens and promote the expansion of energy infrastructure.

For those interested in filing comments, the PHMSA is soliciting stakeholder feedback on the following:

1. The topics listed in Section III of the ANPRM;
2. Potential amendments to its Part 193 LNG facility requirements, including any amendments identified by stakeholders;
3. The appropriateness of those amendments for different types of LNG facilities, including export terminals and peak-shaving facilities;
4. The incremental compliance costs and benefits, including benefits pertaining to avoided compliance costs, safety harms, and environmental harms, anticipated from those amendments; and
5. The technical feasibility, reasonableness, cost-effectiveness, and practicability of those potential amendments.

The PHMSA plans to hold a public meeting in the near future to supplement or clarify the materials received in response to the ANPRM.

In a portion of Section III of the ANPRM, the PHMSA is seeking data from U.S. LNG operators relating to the incremental cost and benefit of per-unit, aggregate, and programmatic — both one-time implementation and recurring — bases. The ANPRM is also requesting data sources, assumptions, calculations, and other pertinent information to aid in supporting estimates in the proposed rule. This opportunity allows the U.S. LNG industry to provide the PHMSA with a road map of meaningful regulation that complements the growing industry.

The ANPRM will be available in the Federal Register on publication and the unofficial version has been posted on the PHMSA website under Docket No. PHMSA-2019-0091. Stakeholders will have 60 days from the date of publication in the Federal Register to file their comments.

Steptoe & Johnson’s energy attorneys can help you navigate the complex world of PHMSA regulations and are available to provide you and your team with counsel on topics such as pipeline safety, emergency response, the Occupational Safety and Health Act, and energy infrastructure. Please contact the authors of this alert as you prepare your comments for this ANPRM or with regard to any other energy infrastructure matters.