The Ag Committee markup included a number of bills to rationalize the CFTC’s implementation of Dodd-Frank.  The bills had already been approved by the House Financial Services Committee.  Unlike the U.S. Senate, the U.S. House utilizes sequential referrals of pending bills through various committees of jurisdiction.

“[The bills] are intended to restore the balance that I believe can exist between sound regulation and a healthy economy,” Agriculture Chairman Frank Lucas (R-Okla.) said at the markup held last week.

Although the bills voted out of the Ag Committee generally had bipartisan support, Ranking Member Collin Peterson (D-Minn.) expressed reservations about the roll-back of Dodd-Frank.

“The sad part of this exercise is that we may find out later it wasn’t even necessary,” Peterson said. “What is potentially even sadder is that even if we do find that any of these bills are necessary, they have no future. The majority of Senate Republicans and their leadership have dedicated themselves to the repeal of Dodd-Frank.”

“Swaps” are used by energy companies to hedge commodity risk.  Swaps are contracts that are based on prices of commodities, credit and world currencies.  Supporters of the Dodd-Frank roll-back effort argue that swap “end users” such as utilities should not be subject to stringent oversight for trades used to mitigate risk on an energy company’s own account.

The State Department is currently authorized to receive applications for Presidential Permits for all oil infrastructure projects that cross a U.S. Border pursuant to Executive Order 11423.  Executive Order 11423 also indicates that the Secretary of State shall consult with other individuals, including Secretary of the Treasury, the Secretary of Defense, the Attorney General, the Secretary of the Interior, the Secretary of Commerce, the Secretary of Transportation, the Interstate Commerce Commission, and the Director of the Office of Emergency Planning.  Ultimately, however, the Secretary of State will issue or deny the Presidential Permit unless an official required to be consulted with requests the Secretary of State refer the application to the President for consideration and final decision.  President Obama became involved in the Keystone XL Permit decision when Congress enacted the “Temporary Payroll Tax Cut Continuation Act” and required a decision on the Permit within 60 days.

On December 2, 2011, Representative Lee Terry (R-NE) introduced HR 3548, which is now garnering greater attention after the denial of the Presidential Permit for Keystone XL Pipeline.  HR 3548 would require FERC to issue a permit for the “construction, operation and maintenance” of the Keystone XL Pipeline within 30 days of receiving the permit.  If FERC declines to act within 30 days, the permit will be deemed to have been issued.   In addition to issuing a permit, HR 3548 requires FERC to enter into a memorandum of understanding with Nebraska for review of a modification to the pipeline route in Nebraska.

At the hearing before the Subcommittee on Energy and Power on January 25, 2012, Dr. Kerri-Ann Jones, Assistant Secretary of State, Bureau of Oceans and International Environmental and Scientific Affairs from the State Department testified that HR 3548 would not resolve any concerns that the State Department had with the Keystone XL Pipeline prior to recommending denial of the Presidential Permit.  Dr. Jones indicated that the proposed legislation would impose “narrow time constraints and create[s] automatic mandates that prevent an informed decision.”   In addition to Dr. Jones, Jeff C. Wright, Director of the Office of Energy Projects at FERC, testified that while the Commission has no position on HR 3548, it should provide “clear and effective procedures” for conducting a review of the Keystone XL Pipeline project application.  Wright also testified that HR 3548 poses some concerns for the Commission’s ability to exercise reasoned decision making.  He also testified that HR 3548 could “be construed as providing that federal jurisdiction which supplants local authority” as individual states currently have some authority to site oil pipelines within their jurisdiction.

A copy of HR 3548 is available here.

Notably, the Pipeline Safety Act provides enhanced civil penalty authority for violations of the DOT’s regulations regarding compliance and safety.  The Act increases the maximum penalty level for an individual violation from $100,000 to $200,000 and moves the fine for a series of violations from $1,000,000 to $2,000,000.  The Pipeline Safety Act also provides that the maximum amount of civil penalties for administrative enforcement actions will not apply to certain enforcement actions.

The Pipeline Safety Act also requires that the DOT study several areas of safety technology and prepare a report evaluating the state of existing integrity management requirements and leak detection systems for hazardous liquid pipelines.  The report will also make recommendations on whether expanded or enhanced requirements are necessary.  The Secretary of Transportation (“Secretary”) will decide two years after the enactment of the Act if requiring the use of automatic or remote-controlled shut-off valves are necessary.  Additionally, the Act also requires the Secretary to examine the National Transportation Safety Board’s recommendation regarding the use of excess flow valves and determine if it is appropriate to require the use of excess flow valves on new or completely replaced distribution branch services and other specific facilities.  Further, the Act requires that the Secretary evaluate if integrity management system requirements, which currently apply only to high-consequence areas (high density population areas, or other specific facilities identified by statute) should be expanded to other areas.  Finally, the Act charges the Secretary with issuing a report one year after the Act is enacted on pipeline leak detection systems and whether new standards and technology should be employed in this area. 

In addition, the Secretary is charged with developing the minimum safety standards for transportation of gaseous carbon dioxide by pipelines and verifying the records of the owners and operators of intrastate and interstate gas pipelines to make sure that the records reflect the actual characteristics of the pipelines, and confirm the maximum allowable operating pressure of the pipelines.  Pursuant to the Act, the Secretary will also issue regulations no later than 18 months after the Act is enacted in order to conduct tests to confirm the strength of previously untested pipelines in high consequence areas.

A copy of the Pipeline Safety Act is available here.

• Replaces CSAPR with EPA’s Clean Air Interstate Rule (“CAIR”).  CAIR was CSAPR’s predecessor and, like CSAPR, addresses interstate transport of nitrogen oxides and sulfur dioxide emitted by electric generating units (“EGUs”).  CAIR is currently in place but was scheduled to be replaced by CSAPR when the latter rule goes into effect on January 1.  Under the bill, CSAPR would not go into effect and CAIR would remain effective.  The bill would also authorize full interstate trading of emission allowances under CAIR, essentially reversing the North Carolina v. EPA court decision on this point.
• Prevents EPA from issuing a new rule addressing interstate pollution transport for three years after the panel’s report comes out.  Any new transport rule would have to be implemented through a state implementation plan (“SIP”) process, with states given a minimum of three years to develop SIPs. 
• Prevents EPA from issuing a new rule addressing EGU emission of hazardous air pollutants (“HAPs”) for at least one year after the panel report is issued.
• Provides for a minimum five-year period to comply with a new EGU HAPs rule, with EPA retaining the ability to provide for a longer period based on various factors.
• Fixes the so-called “frankenplant” problem in the proposed MATS rule.  Under that rule, EPA required new and existing plants to meet standards based on the best performing units for each individual HAP.  In reality, few if any plants could meet all of these standards at the same time.  Under the bill, standards would be based on the best performing plants for all of the HAPs.
• Defines existing sources to include currently permitted EGUs even if those EGUs are not yet under construction.  Under the proposed MATS rule, units don’t qualify as existing sources unless they are under construction; those units not under construction have to meet the much more stringent new-unit standards.
• Prevents EPA from regulating any individual HAPs unless it finds it “appropriate and necessary” to regulate that HAP.  Under the MATS rule, EPA claims authority to regulate all EGU HAPs even if it only finds that it is “appropriate and necessary” to regulate one.

The bill passed on a vote of 249 to 169.  Nineteen Democrats voted for the bill, and four Republicans voted No.  Although the bill has almost no chance of passing the Senate as a stand-alone bill, speculation has moved towards whether efforts will be made to attach some or all of the bill to the next or subsequent continuing resolution or appropriations bill.

A copy of the bill is available here.

The PHMSA administers a series of statutes known as the Pipeline Safety Laws, which are minimum safety standards for transportation of gas by pipeline.  PHMSA notes that IM requirements have increased the level of safety concerning the transportation of gas in high consequence areas (“HCAs”).   Despite these efforts, incidents continue to occur, including a September 9, 2010 incident in San Bruno, California.  The San Bruno incident and others in Allentown, Pennsylvania and Marshall, Michigan have prompted renewed discussion of how to manage pipeline incidents. 

The ANPR seeks public comment on 14 specific topics within two broad categories: (1) should IM requirements be revised and strengthened to bring more pipeline mileage under IM requirements and to better assure safety of pipeline segments in HCAs; and (2) should non-IM requirements be strengthened or expanded to address other issues associated with pipeline system integrity?  Each broad category includes specific topics such as: modifying the definition of an HCA, modifying repair criteria, revising the requirements for collecting, validating and integrating pipeline data, valve spacing and the need for remotely or automatically controlled valves, corrosion control, and more.

In a related move toward pipeline safety, the House of Representatives Energy and Commerce Committee voted unanimously on Wednesday September 21, 2011 to approve the Pipeline Infrastructure and Community Protection Act.  This bill would require certain safety technology, help ensure pipeline damage prevention, and address penalties for major consequence violations, among a variety of measures. Representatives Fred Upton (R-Mich) and John Dingell (D-Mich.) introduced an amendment to the Bill requiring that the U.S. Department of Transportation examine whether pipelines beneath waterways more than 100 feet wide are buried deep enough to prevent leaks.

A copy of the ANPRM is available here.

A copy of the Pipeline Infrastructure and Community Protection Act of 2011 is available here.