March 2022, Vol. 249, No. 3
Government
Pipelines Push Back Against New Reliability Regulatory Agency
By Stephen Barlas, Contributing Editor, Washington, D.C.
A House Democratic subcommittee chairman is teeing up legislation to create a new regulatory agency that would ostensibly safeguard interstate pipeline reliability. The House subcommittee on energy held a hearing on Jan. 19 on the Energy Product Reliability Act (H.R. 6084) sponsored by subcommittee Chairman Rep. Bobby Rush (D-Ill.).
Federal Energy Regulatory Commission (FERC) Chairman Richard Glick testified at the Jan. 19 hearings in support of Rush’s bill. Glick compared the existence of 93 FERC-approved mandatory reliability standards for the bulk-power system, 12 of which address cybersecurity, with the absence of any for gas pipelines. “The lack of mandatory reliability standards, especially for natural gas pipelines, poses a risk to the reliability of the bulk-power system due to the interdependency of our nation’s gas and electric infrastructure,” he said.
Pipeline groups were not called to testify at the hearing. But groups such as the Interstate Natural Gas Association of America (INGAA), the American Petroleum Institute (API) and others sent a letter last December, when the bill was introduced, to Rep. Frank Pallone (D-N.J.), chairman of the full Energy & Commerce Committee, expressing concern “that proposals to create a new, additional pipeline reliability regulator fail to reflect pipelines’ proven reliability record and risk duplicating and conflicting with existing federal and state agency regulatory authorities and programs.:
Others sent a letter last December when the bill was introduced to Rep. Frank Pallone (D-N.J.), chairman of the full Energy & Commerce Committee, expressing concern “that proposals to create a new, additional pipeline reliability regulator fail to reflect pipelines’ proven reliability record and risk duplicating and conflicting with existing federal and state agency regulatory authorities and programs. H.R. 6084 will not enhance pipeline reliability – on the contrary, it risks impairing and complicating ongoing efforts to protect pipelines against cyber-threats.”
Rush is retiring at the end of this congressional session, which, in and of itself, may reduce the bill’s likelihood of passing Congress given his diminishing leverage. The bill has no co-sponsors. The legislation attempts to address concerns about the impact of cold winter weather and cybersecurity attacks on natural gas pipeline deliveries to the bulk electric power grid.
Rush stressed at the hearing that the provisions in his legislation are not final. “It marks the beginning of the legislative process, and certainly not the end,” he stated. “To my Republican friends specifically, I want to emphasize that electricity reliability is an issue we’re all concerned about. And for this reason, my staff and I stand ready to work hand-in-hand with you. We are open to suggestions on the best pathway forward.”
But Rep. Fred Upton (R-MI), the top Republican on the subcommittee, welcomed the legislation with an artic blast of cold air. “The topic of this hearing is totally off base,” he said. “The bill today is a sweeping power grab that would dramatically expand FERC transforming a relatively tiny agency into a behemoth.”
Upton referred to a letter from state energy regulators expressing concerns with Rush’s bill, concerns, Upton added, that are shared by “members of this committee on both sides of the aisle.” Upton argued the committee would be better served by focusing on the Pipeline and LNG Facility Cybersecurity Preparedness Act (H.R. 3078), which he and Rush introduced in May 2021. The bill would strengthen the Department of Energy’s ability to respond to physical and cybersecurity threats to our nation’s pipelines and liquid natural gas (LNG) facilities. No hearings have been held on that bill.
A Rush spokesman said the congressman views H.R. 3078 as a complement to H.R. 6084 and that the bipartisan bill is still a priority that Rush definitely wants to move forward.
The committee background paper on Rush’s new bill, H.R. 6084, cited two recent events as the basis for needing a new natural gas supply reliability agency. The first was the events surrounding the February 2021 Texas winter storm. FERC and North American Electric Reliability Corporation (NERC) joint investigative report regarding that winter storm concluded “[g]enerating unit outages and natural gas fuel supply and delivery were inextricably linked in the event,” with natural gas fuel supply issues causing more than 27 percent of the generating unit outages.
In addition to the potential disruption of gas supplies to electric generators because of weather, the committee Democrats also cited cybersecurity-related disruptions, particularly the May 7, 2021 ransomware attack on the Colonial Pipeline Company. The shutdown of the pipeline, which carries 2.5 million barrels of liquid petroleum products each day from Texas to New Jersey, caused gasoline price spikes and fuel shortages.
The Colonial Pipeline cybersecurity incident prompted the Transportation Security Administration (TSA) to propose its first mandatory cybersecurity standards after relying exclusively on unenforceable guidelines.
Rush’s legislation calls for the creation and certification of an Energy Product Reliability Organization (EPRO), which would develop mandatory standards to ensure the reliable delivery of energy products. EPRO would submit the draft standards to FERC for review and approval. Finally, the legislation would provide the Commission with authority to review EPRO enforcement actions and to independently investigate and penalize violations of any reliability standard.
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