latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/pipeline-industry-takes-dispute-over-us-gathering-line-rule-to-court-70713022 content esgSubNav
In This List

Pipeline industry takes dispute over US gathering line rule to court


Insight Weekly: Sustainable bonds face hurdles; bad loans among landlords; AI investments up


Insight Weekly: Bank oversight steps up; auto insurers’ dismal year; VC investment slumps


Insight Weekly: Renewables lead capacity additions; bank mergers of equals up; nickel IPOs surge


Insight Weekly: Utilities face headwinds; S&P 500 dividend hikes likely; dollar poised for rally

Pipeline industry takes dispute over US gathering line rule to court

SNL Image

The Pipeline and Hazardous Materials Safety Administration's gas gathering rule is one component of a major three-part rulemaking.
Source: photosbyjim/iStock/Getty Images Plus via Getty Images

Having failed to convince U.S. regulators to revise parts of a landmark federal rule governing natural gas gathering lines, a trade group representing pipeline operators has taken the dispute to the courts.

GPA Midstream Association on June 6 asked the U.S. Court of Appeals for the District of Columbia to address whether the U.S. Pipeline and Hazardous Materials Safety Administration, or PHMSA, satisfied requirements under federal law in finalizing the rule. GPA questioned whether PHMSA met requirements regarding the rule's costs and benefits, as well as whether the agency observed proper procedure and prescribed reasonable standards supported by evidence.

The rule in question would impose new minimum safety requirements on certain natural gas gathering lines, which deliver raw gas from production fields to processing facilities. During more than a decade of rulemaking, the industry sought to limit new regulations to gathering lines with a diameter of 12.75 inches or greater, but PHMSA set a lower threshold.

Appeals court petition continues dispute

In December 2021, GPA and the American Petroleum Institute, or API, petitioned PHMSA to roll back some of the requirements, saying the agency failed to meet its statutory obligations in two key areas. PHMSA did not adequately consider the industry's concerns about the rule's costs, and it failed to conduct a compliant and rational risk assessment in its cost-benefit analysis, they said.

In an April 1 decision, PHMSA made only a handful of clarifications to the rule and dismissed API and GPA's core concerns.

Neither the administrative record nor the information that the petitioners submitted about the rule's potential cost supported their assertions about the agency's development process and cost-benefit analyses, PHMSA said. API and GPA's claims of procedural deficiency were also "inconsistent with evidence in the administrative record, inconsistent with longstanding practice, and unsupported by statutory text and legislative history," the agency said.

GPA petitioned the D.C. Appeals Court to review the final rule on May 2. Lawyers for GPA released a fresh batch of documents outlining its position on June 6. The documents included a statement of the issues that GPA wants the court to consider, as well as API's April 30 appeal to PHMSA over its petition decision.

API takes issue with PHMSA's petition denial

In that appeal, API said the agency did not follow procedural requirements because PHMSA Deputy Administrator Tristan Brown decided the petition. The group said Associate Administrator for Pipeline Safety Alan Mayberry is the official authorized to grant or deny petitions. This disrupted "the orderly functioning of the process," API said.

API also said PHMSA's use of data from the Independent Petroleum Association of America to estimate the rule's final cost is unsupported and contrary to law. The association provided the data to PHMSA as part of a 2006 rulemaking. PHMSA never entered the data into the record for the gas gathering rule proceeding and has not furnished it upon request, API said.

API also said PHMSA's rationale for dismissing an economic analysis of the rule prepared by ICF International for API was "unpersuasive." That study found the rule's cost would far exceed PHMSA's estimates. In its petition decision, PHMSA said the ICF study was "riddled with flaws" and "rests on stale information regarding the content of the rulemaking."

Finally, API said PHMSA "continues to make unreasonable assumptions in estimating the costs of the Final Rule," specifically in its estimate of how much pipeline mileage the rule would affect.

The court clerk gave PHMSA and its parent agency, the U.S. Department of Transportation, until June 21 to submit a motion to dismiss the case or for summary judgment. The Environmental Defense Fund on June 1 submitted a motion to intervene in support of PHMSA and DOT.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.