McNees Client Alert: Pa. Act 127 of 2011 - The Gas and Hazardous Liquids Pipeline Act: Final PUC Implementation Order

McNees Client Alert: Pa. Act 127 of 2011 - The Gas and Hazardous Liquids Pipeline Act: Final PUC Implementation Order

 

By Jim Dougherty

On December 22, 2011, [Pennsylvania] Governor Corbett signed into law the Gas and Hazardous Liquids Pipeline Act ("Act 127") that expands the Pennsylvania Public Utility Commission's ("PUC" or "Commission") authority to enforce federal pipeline safety laws as they relate to non-public utility gas and hazardous materials pipelines and facilities in the Commonwealth.

BACKGROUND
On January 12, 2012, the PUC issued a Tentative Order regarding Act 127. Specifically, the Tentative Order outlined the PUC duties and responsibilities under Act 127, which provides the Commission with authority to enforce Federal pipeline safety laws for non-public utility gas and hazardous liquids pipeline equipment and facilities. Thereafter, the PUC held a Teleconference on January 26, 2012, in which over 100 interested parties participated. On February 1, 2012, ten interested parties submitted Comments on the Tentative Implementation Order that focused primarily, but not exclusively, on PUC jurisdictional issues. The Commission issued a Final Implementation Order ("Order") on February 16, 2012, which is summarized below.

FINAL IMPLEMENTATION ORDER

Registration / Assessment

  • § Registration fee is $250.00; deadline to submit is March 16, 2012;
  • § Assessment invoices for 2011/2012 fiscal year will be mailed by March 30, 2012; payment is due April 30, 2012; and
  • § Assessment invoices for 2012/2013 fiscal year will be mailed by July 2012; payment is due within 30 days.

"Pipeline Operators" / PUC Jurisdiction Under Act 127
If a pipeline is solely within a Class 1 location and has no distribution service, the pipeline is not jurisdictional so the pipeline operator does not have to register. However, if the pipeline is not solely in a Class 1 location, and is subject to Federal pipeline safety laws, the pipeline operator must register or could be liable for failing to register and for other violations under Act 127.

Mixed Gas / Throughput Levels
Regarding mixed gas situations for Class 1 pipelines, the PUC established a threshold of >50% of gas throughput from unconventional wells as the threshold to require reporting.

Farm Taps
The PUC determined that even though an entire pipeline should not be treated as jurisdictional (or subject to assessment) due to the existence of farm taps, farm taps are a type of distribution service regulated under Federal laws, and therefore, operators must report the tap line, pending clarification from the Pipeline and Hazardous Materials Safety Administration ("PHMSA"). Accordingly, pipeline operators in Class 1 locations with farm taps must register.

Tubular Steel Reporting
The PUC determined that steel pipe used on well pads and in downhole operations will not be subject to disclosure reporting. However, the Commission directed all pipeline operators to report the country of manufacture for tubular steel products for Class 1 pipelines not otherwise subject to the Pipeline Act (i.e., Class 1 gas pipelines under the 50% service threshold serving unconventional wells).

Hazardous Liquids
With respect to hazardous liquids, the PUC directed operators of all non-public utility hazardous liquid pipelines within Pennsylvania to register. In addition, for the current fiscal year, the PUC will require operators of interstate and intrastate hazardous liquids pipelines to register, but will not conduct inspections of their pipelines until the Commission and PHMSA address safety jurisdiction.

Landfills
The Commission found that pipelines on a landfill site are not subject to the Pipeline Act, but pipelines outside the landfill site's property boundary, as well as those connected to the landfill, may be subject to Commission jurisdiction.

Miscellaneous
The PUC Final Order is unclear on a number of issues raised throughout the course of the dialogue regarding the PUC's implementation of Act 127. We anticipated that the Final Order would address many other "single issues" that include, among others, the ones listed below:

  • § Intra-plant, customer-owned service pipelines;
  • § Private pipelines crossing public roads or easements
  • § Idle or "capped" pipelines;
  • § Pipelines carrying gases that are not flammable, toxic or corrosive material; and,
  • § Pipelines carrying synthetic gas, or other applicable gases such as chlorine, ethylene or hydrogen-mixture.

We continue to work with PUC representatives to shed light on these, and other, pipeline issues that have not yet been fully fleshed out via the PUC Implementation Order.

Please contact Jim Dougherty at 717.237.5249 or jdougherty@mwn.com if you would like us to assist in determining if Act 127, or the PUC's implementation of Act 127, is applicable to your facilities. We thank you for your interest in these important energy matters.


© 2012 McNees Wallace & Nurick LLC
McNees Client Alert is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.

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