Oil, gas pipelines are different animals
You don’t need to do a lengthy search to find a dozen media stories about a proposed energy pipeline, especially now that pipelines have become a favorite tool for the environmental movement to protest against fossil fuels.
But pipelines offer a degree of safe that generally makes them the preferred way to deliver the energy to market that is produced by oil and gas companies all over the United States. With stringent state, federal and local governmental regulations, the highest design and safety standards and a tsunami of new technologies to prevent and detect leaks or other problems, energy pipelines have a superior success record in keeping the lights on and our smartphones charged. Things would spin down to a crawl without the energy they bring m.
But how hard is it to conceive, route, plan, permit and build a major natural gas or oil pipeline?
To get answers to that question, Oil & Gas 360® spoke to three experienced attorneys who lead the pipeline team at Atlanta-based law firm Troutman Sanders.
Bob Hogfoss, Catherine Little and Annie Cook have recently pooled their years of talent and industry experience at Troutman Sanders. The three experts shared their own personal narratives to enlighten us at to the business end of getting an oil or gas pipeline from an idea on paper to moving energy.
OAG360: What is your team’s main focus, your primary expertise?
Catherine Little: We advise companies on pipeline safety regulations nationally; we provide compliance advice, enforcement defense, and address issues related to the development, operation and safety of oil and gas pipelines in the U.S.
Bob Hogfoss: In addition, we are frequently involved with incident response, including notifications, response, removal, remediation, and accident investigation. There’s always been an environmental aspect to what we do. It’s a broad area because that subsumes lots of new things for new projects, land acquisition, right-of-way and litigation defense. We have different resources for each of those, but that’s what we do.
Annie Cook: It’s a very dynamic industry so when we talk about new projects and development, it’s not just new construction, but also flow reversal, change in products and many other things.
OAG360: What is the chief safety concern a pipeline company will face in constructing a new pipeline?
Catherine Little: The records show clearly that transportation by pipeline is the safest means of transportation of gas and oil around the county. With all new construction, a company must ensure compliance with all applicable law and recognize the unique issues presented for any particular project. As part of that effort, companies are required to meet construction and design standards promulgated by the safety regulator PHMSA [Pipeline and Hazardous Materials Safety Administration]. In addition, companies for large scale projects like we’re talking about here are required to provide notice to PHMSA and regulators can elect to conduct a design review.
OAG360: Which projects that are on the drawing boards do you think have the potential to become another political hot spot the way Keystone and DAPL were?
Bob Hogfoss: Really almost any. Even if it doesn’t make national news, we’re seeing local vandalism that could cause significant harm to either the environment or public health or safety.
Catherine Little: You may have heard about some of the coordinated efforts late last fall that were spurred by DAPL. There are also many instances around the country where there have been protests. Some of the protests and more direct actions have involved trespass and more serious actions as well (such as tampering with equipment, shots at the pipeline etc. Some of these actions have been prosecuted, usually under state statutes for criminal trespass and the like, but the Pipeline Safety Act itself also prohibits tampering with pipelines. It’s probably not possible to avoid these situations entirely, but the best approach is to be as communicative as you can and plan as much as you can.
Bob Hogfoss: We expect to see more criminal enforcement against people vandalizing or tampering with pipelines and equipment. It’s much different than simply protesting a pipeline. If someone interferes with a pipeline, safety and homeland security issues are presented because pipelines are designated as “critical energy infrastructure.” There are significant penalties for that, including felony charges. It should be a concern for everyone involved.
Catherine Little: The way in which these pipeline projects are initiated, whether through FERC for gas or state-by-state for oil, there is a massive effort by the operator or the company constructing the pipeline to be communicative and get feedback and engage with stakeholders along the way. A lot of the issues that arise stem from misunderstandings, although some are objections to the pipelines in and of themselves. Companies typically work to set up processes so that issues can be identified and resolved.
OAG360: Do you think the new administration will change how much effect environmental groups and others can have with respect to delaying pipelines?
Bob Hogfoss: There have been some legislative and executive-level attempts to streamline permitting both generally and specific to pipelines, even under the prior administration. That’s been added to with several pipeline-specific executive orders.
What’s a concern, though, that we’re seeing through the industry is that there is not yet much clarity. For example, one of the executive orders directed that all new or repaired pipelines be made out of steel that is made in the U.S. While that is a laudable goal, it has been many years since the U.S. was able to produce all the steel used in oil and gas pipelines. A lot of it is now manufactured overseas.
And that was made even more complicated a few weeks ago when the Department of Commerce came out with a proposed rule for how to implement that. They, on their own, extended the made in the U.S.A. requirement to all appurtenances to pipes like valves and pumps. A lot of that equipment just isn’t made in America anymore, so there is some efforts by the trade groups to get that clarified. All it would take is just a little clause saying something like “to the full extent possible.” That’s one example.
Catherine Little: We expect citizen and environmental groups to remain if not become more active. You may be aware that within a few weeks of the election in the fall, donations to environmental NGO’s sharply increased. There were some fairly strong statements that NGO’s made after the election. We are certainly anticipating that, if anything, there will be more challenges.
Annie Cook: For both gas interstate pipelines that will go through FERC’s more streamlined process, and oil pipelines with a more state-by-state process, there are permits and NEPA reviews that both types have in common. There are opportunities for challenges along the way for both types of projects.
Catherine Little: Really, if anything, the legacy of Keystone is an increasingly organized and coordinated opposition to pipelines, and that is what we’re seeing.
OAG360: What is still needed to move Keystone XL forward, now that TransCanada has been issued the go-ahead permit?
Bob Hogfoss: Keystone XL is one of the few projects that we have not worked on, but we certainly are aware of it. In short, even though it now has the approval that it needed from the State Department because of the Trump administration’s executive order, it still has several hurdles to deal with.
In Nebraska, there is some ongoing litigation and probably more anticipated. We wouldn’t be surprised if there’s more litigation filed by the environmental groups, they’ve indicated that already in some statements.
Catherine Little: There are definitely more approvals required at the state level and the federal level. As we understand it, they are still seeking route approval from Nebraska for the revised proposed route. I think the application was submitted in February to the Nebraska Public Service Commission. That process will take about a year, maybe less. That revised route was developed to avoid the Sandhills region, which was previously a big controversy.
Like all big projects, right-of-way issues continue as long as the pipeline is being constructed. The project has a few eminent domain cases that are in the state courts now and there may be more to come. I think Keystone, like all projects, has a web page that outlines what is left to do. There still might be some challenges left to come.
In terms of permits and approvals, the NRDC filed a challenge to the Presidential permit on March 30 so that’s in play. In terms of other permits that are needed, there may be more at the state level if they don’t have them already. They may just need general permits for water to test the lines once constructed, and they may still need 401 water quality certifications from the states. They may have had them before but with the revised route they likely need to get them again. That is just an example.
OAG360: From your experience, at what point do companies usually get hung up in the permitting process?
Annie Cook: It’s different on the oil side vs. the gas side. On the gas side, the siting and construction approvals are much more streamlined as they go through FERC as part of the certificate process. On the oil side that is not the case, as they need to get approvals state-by-state, so it’s much more of a patchwork. There are some approvals that are required for both gas and oil pipelines, like some of those referenced by Catherine earlier, such as federal and state permits, like the Clean Water Act permits (Section 404 for wetlands, for example) or Clean Air Act permits. With FERC, that process is much more streamlined.
From a high level, there have been statutes in place to streamline the process for both oil and gas pipelines, such as the EPAct of 2005 and more recently the FAST Act, but those efforts have not been successful in streamlining the process or the challenges that these projects must overcome.
OAG360: Which are more difficult for pipeline development—national regulators, state regulators, or local government agencies when it comes to obtaining pipeline approvals?
Bob Hogfoss: On the natural gas side, the constant challenge is at the federal level, getting the certificate of public necessity to proceed with the pipeline. For oil it is more state-by-state, issue-by-issue. This means it becomes more geographic., The opposition advocates that we should “stop all fossil fuel use now.” That may happen at some point in the future, but America does not currently have the infrastructure. What we’ve seen though in the last five to eight years is the impact of the market as opposed to legislation or regulation. The market has shifted from coal to natural gas, which has much less impact on the environment. In terms of the challenges, though, I think for gas it starts with the feds, with FERC. With oil, opposition is more state-by-state, but with both there are certain parts of the country where pipelines are an issue regardless.
OAG360: What can pipeline companies do far in advance to avoid legal challenges during the phases of the process – routing, planning, permitting, construction, operating?
Bob Hogfoss: We always encourage the importance of planning, especially if it’s a major new pipeline that crosses state boundaries. It takes as much planning ahead of time as it does to construct the line. Most companies have dedicated teams to conduct the extensive planning process but inevitably legal issues arise, and that’s where we can assist. Really, the answer is to stay on top of the changing legal world as much as possible and plan and anticipate accordingly.
OAG360: With FERC short of a quorum, how long do you think it will be till the administration has new commissioners in place?
Catherine Little: That’s really the multi-million dollar question.
Bob Hogfoss: The former FERC chair Norman Bay and I clerked together for the 9th circuit court of appeals and I personally know Norman. He left FERC and created a vacancy that is left to filled. What’s concerning for the industry and us is that there hasn’t been any movement for nominating anyone. Obviously there are a lot of other issues that are taking priority at the moment. FERC tried to delegate more authority to its staff and that’s being challenged, so it’s unfortunate. There are a lot of projects and companies that we work with that are in a holding pattern.
OAG360: What is the most interesting thing that you have come across in working with an energy company on a pipeline project?
Bob Hogfoss: I began working with the pipeline industry in the late 1980’s. One of many examples that come to mind involved attending a community meeting, where at the entry to the subdivision, there were huge signs with skull and crossbones and the company name. I thought to myself, “this will be fun,” And in fact it was: we worked with the community and resolved all the issues satisfactorily. Everything’s interesting, though.
Annie Cook: Every week presents a new and interesting issue. It’s a very dynamic practice and there are always some new issues that clients inquire about.
Catherine Little: I think the variety is impressive, the different types of issues that come up. There is no specialized training for pipeline legal issues, but there is also nothing better than experience. We have been working with this industry on issues across the U.S. for more than 25 years. It’s a fascinating industry with fascinating issues, and we enjoy working on them.
Hogfoss, Little and Cook represent pipeline owners and operators on pipeline development, operation, safety and environmental compliance. Hogfoss received a J.D. from Lewis and Clark Northwestern School of Law. Little obtained her J.D. from Tulane University Law School. Cook has a J.D. from the Emory University of Law. Troutman Sanders LLP has 650 lawyers in 16 offices located throughout North America and Asia.
