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Like many other regulators, on March 20, 2020 the Pipeline and Hazardous Materials Safety Administration (PHMSA) released guidance on enforcement activity during the novel coronavirus (COVID-19) outbreak. The guidance states that “PHMSA does not intend to take any enforcement action with regard to [operator qualification] and [control room management] requirements, and will consider exercising its enforcement discretion with regard to Part 199 drug testing requirements.” PHMSA is “taking into consideration the exigent circumstances” that may cause regulated operators difficulty in compliance with:

  • 49 C.F.R. §§ 192.801-.809, 193.2707-.2709, 193.2713-.2717, and 195.501-.509 (operator requirements); and
  • 49 C.F.R. §§ 192.631(d)(4) and 195.446(d)(4) and (h) (control room requirements).

PHMSA’s guidance provides that operators unable to maintain compliance with the regulations should communicate with their regulator and maintain documentation explaining:

  • what specific requirements are not being met;
  • how the noncompliance is related to COVID-19; and
  • what alternative measures are being taken to ensure safety.

Continue Reading PHMSA Issues Guidance on Enforcement During COVID-19 Outbreak

On July 19, 2017, Republicans in the U.S. House of Representatives passed legislation that grants the Federal Energy Regulatory Commission (“FERC”) increased autonomy over pipeline approvals.  The bill, Promoting Interagency Coordination for Review of Natural Gas Pipelines Act (H.R. 2910), is aimed at streamlining the federal permitting process for pipeline approvals.

H.R. 2901 would specify timeframes and procedures for FERC and other affected agencies to follow in conducting environmental reviews related to natural gas pipelines.  The bill would give FERC the authority to designate which other agencies will participate in the permitting and environmental review process, and FERC would hold primary authority by setting the terms of environmental reviews, requiring other federal agencies to defer to FERC.  In addition, all National Gas Act reviews would be required to proceed concurrently and finish within 90 days of the environmental review, unless otherwise mandated by law.Continue Reading Federal Bill Proposes Streamlined Pipeline Permitting, Vesting Authority in FERC

On October 3, 2016, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), within the U.S. Department of Transportation, released a new rule on its authority to issue emergency orders for pipeline safety.  The Interim Final Rule, titled “Pipeline Safety: Enhanced Emergency Order Procedures,” comes as a result of the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (“PIPES”).  PIPES was signed into law by President Obama in June 2016 and allows the PHMSA to impose emergency restrictions, prohibitions, and safety measures on gas or hazardous liquid pipeline facilities to address safety concerns.
Continue Reading Pipeline Operators Take Note: PHMSA Issues Interim Emergency Pipeline Safety Rules – Should You Be Concerned?

In one of the most sweeping proposals since the creation of the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), the agency has announced proposed regulations to update requirements relating to gas gathering and transmission lines.  We find that there are four main areas our readers definitely should be aware of.

First, the proposed regulations would add new assessment and repair criteria for gas pipelines.  Most notably, the proposal will subject thousands of miles of pipelines built before 1970 to verification and testing requirements. These older pipelines had previously been exempt from such requirements.  This new requirement would mean that operators of older pipelines will need to make safety assessments on pipelines which were largely unregulated.  This may be challenging and costly for operators given the lack of records and age of many of these pipelines.

Second, the proposal also expands the agency’s definition of a “gathering line” that is subject to the new safety standards, potentially embracing pipelines previously classified as unregulated production lines. This is an expansive extension of federal authority into oil and gas production areas that have previously been regulated by individual state agencies and state law.
Continue Reading Proposed Rules Coming Down the Pipeline for Gas Gathering and Transmission Lines

On October 8, the National Wildlife Federation (“NWF”) fulfilled its promise to sue the U.S. Department of Transportation (“DOT”). The lawsuit alleges that for 20 years the DOT has allowed pipelines to operate illegally by failing to issue regulations under section 311(j) of the Clean Water Act (“CWA”), which requires pipeline operators to submit plans…

On July 28, 2015, the National Wildlife Federation (“NWF”) filed an intent to sue notice against the Department of Transportation (“DOT”), arguing the DOT has not properly approved pipeline projects for more than 20 years.

The legal action carries nationwide implications: Every U.S. oil pipeline that intersects a navigable water may soon be subject to additional regulations.

Specifically, NWF contends that DOT has failed to issue regulations under section 311(j) of the Clean Water Act (“CWA”), requiring an owner or operator of a pipeline to prepare and submit a facility response plan (“FRP”) detailing response actions to be taken in the event of a worst-case discharge of oil or hazardous substances into waters of the United States.
Continue Reading Pipeline Operators Take Heed – Threatened Enviro Lawsuit May Lead to Greater Regulatory Requirements

On Tuesday, May 5, 2015, the Internal Revenue Service (“IRS”) released proposed regulations defining qualifying income for Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships that are taxed as a partnership rather than a corporation.

Being taxed as a MLP has many advantages. While shareholders in a corporation face double taxation  ̶  paying taxes first at the corporate level, and then at the personal level when those earnings are received as dividends  ̶  owners of a partnership are taxed only once, when they receive distributions. The absence of taxes at the company level gives MLPs a lower cost of capital than is typically available to corporations, allowing the MLPs to pursue projects that might not be feasible for corporations.

To qualify as a MLP, at least 90% of the entity’s gross income must be “qualifying income.” Previously, there had been no detailed list of what constitutes qualifying income.

These proposed regulations use the term “qualifying activities” to describe activities relating to minerals or natural resources that generate qualifying income. The IRS has now provided an exclusive list of operations that constitute qualifying activities. The activities addressed include exploration, development, mining or production, processing, refining, transportation, and marketing of any natural resource.
Continue Reading New Rules on MLPs & Qualifying Income: What Oil Services and Exploration Companies Need to Know

On Tuesday, April 21 the Obama Administration released the first Quadrennial Energy Review (“QER”) as a component of President Obama’s Climate Action Plan.  The extensive report analyzes energy infrastructure in the United States, and “identifies the threats, risks, and opportunities for U.S. energy and climate security, enabling the federal government to translate policy goals into a set of integrated actions.”  The primary purpose of the QER is to “modernize” the U.S. energy sector by replacing crumbling infrastructure, by increasing reliance on domestic energy sources, and by implementing a “clean energy economy built to last.”

The report highlights the United States’ complex and advanced energy production system, and includes descriptions and analysis of the different energy sectors.  For example, the report notes that the U.S. is the world’s leading producer of oil and natural gas, and the country is less dependent on foreign oil than it has been in over 40 years.Continue Reading Department of Energy Report Calls for U.S. to Modernize Energy Infrastructure, Invest in Natural Gas Pipelines

In late-January, the North Dakota Petroleum Council’s task force on natural gas flaring released its much-anticipated recommendations to the North Dakota Industrial Commission, the administrative body that regulates oil and gas wells in the state.  The task force made several proposals with the aim to increase the amount of natural gas captured at wellheads…

Following the derailment and explosion of a train carrying crude oil near Casselton, North Dakota, and a federal Department of Transportation safety alert that Bakken crude may be more prone to ignite at lower temperatures than other crudes, there’s renewed interest in finding secure transportation alternatives for those natural resources.  Pipelines are one alternative gaining…

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Here Stoel Rives shares insight and analysis about key mineral law developments. Drawing on a very active natural resources practice, we aim to keep readers informed about the legal aspects of news that impacts exploration and development of all things mineral.