A Republican-led House Energy and Commerce subcommittee last Wednesday voted out by voice vote legislation that is favorable to existing natural gas pipelines, distribution lines and offshore gathering facilities. Meanwhile, the fallout from last September’s San Bruno, CA, gas pipeline explosion continued to roil stakeholders in California.

The Subcommittee on Energy and Power adopted an amendment in the nature of a substitute, offered by Reps. Fred Upton (R-MI) and John Dingell (D-MI), which for the most part tracked the draft bill. As of Friday, a spokeswoman said the House Energy and Commerce Committee had not yet decided when it will mark up the bill, which would reauthorize pipeline safety programs through 2014.

The House’s Pipeline Infrastructure and Community Protection Act of 2011 would require natural gas and hazardous liquids pipelines to use automatic or remote-controlled shut-off valves, or equivalent technology, but it would apply only to pipeline facilities that are newly constructed or “entirely replaced” after the date on which the Department of Transportation (DOT) issues a final rule to implement the law.

In short, the bill would grandfather vintage pipelines — many of which were built in the 1970s or earlier — from having to use the new safety technology, which could either help avert pipeline incidents or quickly bring them under control once they have occurred. Critics contend that this is a major shortcoming of the measure (see NGI, July 18).

The House measure also calls on the DOT to require only “new or entirely replaced” distribution facilities to use excess flow valves, or equivalent technology, following the enactment of the bill. Thus existing distribution facilities are grandfathered from the these requirements.

The natural gas industry caught a break on gathering lines as well. While the bill would subject offshore hazardous liquid gathering lines and hazardous liquid lines located within the inlets of the Gulf of Mexico to the same standards and regulations as other hazardous liquid pipelines, it does not mention anything about regulating offshore natural gas gathering lines.

The House legislation requires the DOT to study whether pipeline integrity management programs should be expanded beyond high consequence areas (areas that are densely populated), and whether expanding integrity management program requirements beyond these areas would eliminate the need for class location requirements — which safety advocates say are necessary to protect densely populated areas along pipeline routes.

And no later than two years after completing its integrity management evaluation, the DOT should issue regulations to expand the integrity management system requirements beyond high consequence areas, and remove redundant class location requirements for gas transmission pipeline facilities, according to the subcommittee bill.

The legislation establishes civil penalties for “major consequence” violations, which are pipeline violations that result in one of more deaths; one or more injuries or illnesses requiring in-patient hospitalization; or environmental damage exceeding $250,000 .The civil penalty for each violation would not exceed $250,000, and $2.5 million for a related series of major consequence violations.

Trade groups representing interstate natural gas pipelines and distribution lines immediately came out in favor of the House bill. “We applaud the [subcommittee] for voting to report the Pipeline Infrastructure and Community Protection Act of 2011, and we look forward to prompt action by the full committee, and separately by the [House] Transportation and Infrastructure Committee. In addition, we continue to advocate immediate passage of the companion bill in the Senate,” said Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America.

“The passage of this bill by the Energy and Power Subcommittee represents a constructive first step towards getting a reauthorization of the pipeline safety program completed this year, and we are eager to continue working with the committee to improve the bill,” said Dave McCurdy, president of the American Gas Association.

In early May the Senate Commerce Committee voted out its pipeline safety bill (S. 275), which also would levy stiffer penalties following the spate of explosions in recent months (see NGI, May 9). The House and Senate’s efforts to reauthorize pipeline safety legislation come in the wake of the Sept. 9, 2010 Pacific Gas and Electric pipeline explosion, as wells as a rash of other pipeline incidents. In February a pipeline explosion in Allentown, PA, killed five people, including a four-month-old child (see NGI, Feb. 21). The blast, which was apparently triggered by a “break” in UGI Corp.’s underground natural gas pipeline, affected a total of 47 properties, including 10 businesses, and forced more than 750 people to evacuate over a three-block area.

Meanwhile, Fitch Ratings downgraded San Francisco-based Pacific Gas and Electric Co. and its parent organization PG&E Corp. last week as fallout from the San Bruno pipeline explosion continued. In addition, California regulators are looking for a new head of the state’s reorganized Consumer Protection and Safety Division (CPSD) in response to recommendations from an independent review panel that called for the California Public Utilities Commission (CPUC) to change the way it oversees natural gas pipeline safety. The CPUC is looking nationwide for a new CPSD director.

Fitch cited “challenges and uncertainties” for PG&E in the aftermath of the pipeline explosion and fire last year that killed eight people in the San Francisco suburb. Fitch revised its outlook to “negative” from “stable” citing a “loss of confidence” of key constituents; uncertain future costs and fines facing PG&E regarding the explosion; and uncertainty regarding pending rulemakings from the CPUC. Fitch affirmed the parent and utility companies’ current mostly “A” and “A-” ratings, which affect about $12 billion in consolidated debt outstanding.

Noting that PG&E earlier this year agreed to pay a $26 million fine in a stipulation (see NGI, June 27) with the CPUC, pending regulators’ approval, in the 2008 Rancho Cordova distribution pipeline explosion, Fitch said “a greater fine related to the San Bruno accident cannot be ruled out.” The utility has estimated that third-party liability tied to San Bruno could be approximately $220-400 million. Last year the parent company booked a charge to earnings reflecting the lower end of the estimated range of total exposure, Fitch noted.

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