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House subcommittee advances $2.5B bill to fund expedited gas line replacement

U.S. House Democrats advanced a bill that seeks to expedite the replacement of leak-prone natural gas pipelines in a bid to cut planet-warming methane emissions and reduce the risk of accidents.

The chamber's Energy Subcommittee sent H.R. 5542, the Mitigate Methane Now Act, to the full Energy and Commerce Committee on Jan. 9 over the objection of Republicans. The bill would require the U.S. Department of Energy to create a $2.5 billion, 10-year grant program that would allow states to provide funds to local gas distribution companies to "accelerate, expand, or enhance" pipeline replacement, inspection and maintenance programs.

Distribution line replacement is a major priority for gas utilities, particularly those with aging systems concentrated in the eastern U.S. Replacing cast iron and unprotected steel pipes not only mitigates the risk of gas leaks and catastrophic failure but also helps utilities increase revenue by allowing them to seek higher rates from state regulators.

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While Democrats highlighted the bill's safety benefits, they largely focused on its potential to more quickly cut methane emissions. Democrats included the grant program proposal in the CLEAN Future Act, a national clean energy and climate change mitigation plan revealed Jan. 8 as an alternative to the Green New Deal.

"Methane is an extremely potent greenhouse gas that is fueling climate change. We hear all the time about our carbon footprint, but methane is 80 times more potent than carbon dioxide," said Rep. Lisa Blunt Rochester, D-Del., the bill's co-sponsor, referring to methane's 12-year global warming potential.

Utilities would be able to use funds from the grant program solely to offset the cost of ramping up pipeline replacement programs to low-income ratepayers under the bill introduced by Rep. Mikie Sherrill, D-N.J. Funding would run from fiscal years 2021-2030 at $250 million per year.

The legislation requires the Energy Department to prioritize projects based on several criteria, including their potential to improve public safety and reduce methane emissions. The agency would also develop auditing and reporting requirements to assess project outcomes.

Rep. Fred Upton, R-Mich., led the GOP's objection, saying Democrats did not allow the Energy Department and states to testify before introducing the bill. The legislation appears to provide a new regulatory role for the Energy Department, setting up potential overlap or conflict with the U.S. Pipeline and Hazardous Materials Safety Administration, the representative said. Upton is the subcommittee's ranking member.

Upton also said utility commissioners worry that the proposed grant program could disrupt existing accelerated pipeline replacement programs and warned that the plan may undermine traditional rate setting. U.S. gas utilities invested $31.6 billion in 2019 to improve the safety of gas distribution and transmission systems, according to the American Gas Association.

"We're skeptical because if the states are not asking for this grant program, who is the legislation primarily trying to help? It looks like it may be another case of 'federal government knows best,'" Upton said.

Republicans would be willing to work on a bill that could garner bipartisan support if Democrats slow down and give the Energy Department and states a seat at the table, Upton said. Energy and Commerce Committee Chair Frank Pallone, D-N.J., said the majority is committed to working with Republicans and stakeholders.