Interim Final Rule allows the Pipeline and Hazardous Materials Safety Administration (PHMSA) to respond immediately to unsafe conditions or practices that pose an imminent hazard to public health and safety or to the environment.
On October 3, the PHMSA of the US Department of Transportation issued an Interim Final Rule to implement newly granted authority enabling PHMSA to issue industry-wide emergency orders without notice and comment in certain circumstances. Established by US Congress, the ability to issue emergency orders is a substantial expansion of PHMSA’s authority.
As permitted by Congress and contemplated in the regulations issued in the October 3 Interim Final Rule, PHMSA is able to respond immediately to violations of pipeline safety laws or unsafe conditions or practices that constitute or cause an imminent hazard to public health and safety or to the environment. PHMSA is now able to impose emergency restrictions, prohibitions, and safety measures on owners and operators of gas or hazardous liquid pipeline facilities to address any violation of pipeline safety law, unsafe condition, or unsafe practice.
The Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act) reauthorized PHMSA’s administrative oversight of the transportation of hazardous materials (including the operation, maintenance, and spill response planning of US natural gas and hazardous liquid transportation pipelines) for four additional years, until 2019. As we explained in our June 29 alert, the PIPES Act was a clear effort by Congress to expand and strengthen PHMSA’s oversight authority and put in place measures that enable PHMSA to provide timely information about the status of its efforts required by federal statute. For example, the PIPES Act’s provisions requiring PHMSA to create minimum standards for underground natural gas storage are particularly instructive because they reflect congressional concern for the number and magnitude of transportation (and storage) incidents that have occurred in recent years.
In addition to the issues identified in our June 2016 LawFlash, the PIPES Act also expanded PHMSA’s existing enforcement authority to include issuing emergency orders to address imminent safety hazards that exist across a subset or larger group of owners or operators. Prior to the PIPES Act, PHMSA did not have the authority to address conditions or practices that affected more than a single pipeline owner or operator and that needed to be addressed immediately to protect life, property, or the environment. Instead, PHMSA could issue a Corrective Action Order to direct an owner or operator to suspend or restrict the use of its pipeline facilities or to perform a physical inspection, testing, repair, replacement, or other appropriate action. Alternatively, PHMSA could issue a Notice of Proposed Safety Order to notify an operator that a particular pipeline facility has a condition that poses pipeline integrity risk to public safety, property, or the environment and to propose specific measures the owner or operator must undertake to address the risk.
With its new authority, PHMSA can issue emergency orders—without prior notice or an opportunity for a hearing—that will affect multiple owners and operators. PHMSA can impose conditions, restrictions, prohibitions, and/or safety measures on a subset or a broader group of owners or operators, facilities, or systems if it determines that a violation, an unsafe condition or practice, or unsafe conditions or practices constitute imminent hazard or are causing imminent hazard.
Emergency orders will enable PHMSA to address time-sensitive safety conditions that pose a threat to life, property, or the environment that may occur before formal proceedings are likely to be completed. PHMSA specifically stated that a variety of circumstances could warrant such an order, and that PHMSA would (1) evaluate the specific facts of each situation to assess whether an imminent hazard exists; and (2) tailor each emergency order to address the specific imminent hazard under each circumstance presented. Notwithstanding, an illustrative list of three circumstances flagged by PHMSA include (1) a natural disaster that affects many pipelines in a specific geographic region; (2) discovery of a serious flaw in pipe, equipment manufacturing, or supplier materials; and (3) an accident that reveals that a specific industry practice is unsafe and needs immediate or temporary correction.
Before issuing an emergency order, PHMSA is required to consider the impact the emergency order will have on public health and safety, national or regional economy, national security, and the ability of owners and operators to maintain reliability and continuity of service. Emergency orders will be published in the Federal Register and posted on the Office of Pipeline Safety’s website.
Entities subject to emergency orders are not without recourse. After PHMSA issues an emergency order, an affected party can file a petition for review. PHMSA is required to issue a decision on a petition for review within 30 days of receipt unless it issues a determination that an imminent hazard continues to exist. In that circumstance, the order would be extended, pending review of the petition. If PHMSA does not act on the petition within 30 days or issue a determination that an imminent hazard continues to exist, the emergency order would expire.
The petitioner can request a formal or informal hearing. If the petitioner requests an informal hearing, within 30 days of receiving the petition, the Associate Administrator for Pipeline Safety must issue an administrative decision, which will constitute PHMSA’s final order.
If the petitioner requests a formal hearing, the Associate Administrator will assign the petition to the Office of Hearings to be assigned to an administrative law judge (ALJ). The ALJ can conduct settlement conferences and hearings, with discovery, and is required to issue a report and recommendation with factual findings and legal conclusions within 25 days of receipt. A party can file a petition for reconsideration of the ALJ’s report and recommendation with the Associate Administrator within one day of the date the decision is issued. The Associate Administrator must issue a final agency decision on the petition for reconsideration within three days of service of the final pleading, but no more than 30 days after receipt of the petition for review. A party can seek judicial review of the final decision in district court.
PHMSA is required by the PIPES Act to issue final regulations on or before March 19, 2017. Although PHMSA has issued an Interim Final Rule at this time, it will consider comments received concerning the Interim Final Rule as it crafts the final regulations. Comments are due within 60 days of the date the Interim Final Rule is published in the Federal Register.
As issued, the Interim Final Rule is expected to raise comments concerning the mechanics and feasibility of complying with a statutorily imposed 30-day time period for addressing challenges to an emergency order. For example, if an affected entity requests a formal hearing, an ALJ is to be assigned, allow parties to engage in discovery, conduct a hearing, and issue a report and recommendation—all within 25 days of the filing of the petition for review. Any petition for reconsideration of the ALJ’s report and recommendation is due to be filed, briefed, and addressed by the Associate Administrator within five days (completing the petition for review process within the statutorily mandated 30-day timeframe).
It is unclear how the regulations in the Interim Final Rule will apply in practice, and commenters are likely to raise questions addressing this and other issues for PHMSA’s consideration.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
 “Imminent hazard” is defined as “the existence of a condition relating to a gas or hazardous liquid pipeline facility that presents a substantial likelihood that death, serious illness, severe personal injury, or a substantial endangerment to health, property, or the environment may occur before the reasonably foreseeable completion date of a formal proceeding begun to lessen the risk of such death, illness, injury, or endangerment.” See 49 C.F.R. § 190.3 (2016).