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Natural Gas Pipeline Safety Bills Driven by Marcellus Shale Development In PA Move Forward

There are two natural gas pipeline safety bills pending before the Pennsylvania General Assembly: House Bill 344 and Senate Bill 325.  Each was met with overwhelming approval in the chamber in which it was proposed, and the passage of either would result in additional safety regulation of the natural gas industry in Pennsylvania by the Pennsylvania Public Utility Commission.

As the law currently stands, the United States Department of Transportation’s Pipeline and Hazardous Material Safety Administration may inspect natural gas pipelines or systems unless they are pipeline public utilities or local distribution public utilities in Pennsylvania that are inspected or regulated by the PUC.  The implication of the two bills is that the Federal government cannot keep pace with such non-public utility pipelines or systems particularly due to the need for public utility and non-public utility transport of gas to market in the Pennsylvania Marcellus Shale play.  Of the 31 states producing natural gas, Pennsylvania is one of only two that have not charged a state agency with regulatory and safety oversight of natural gas pipelines.  The Bills would relieve some of the Federal government’s burden by conferring upon the PUC jurisdiction over intrastate gas transmission, distribution and regulated on-shore pipelines or operations if such pipelines are not public utility pipelines.

After unanimous approval in the House of Representatives, House Bill 344, the natural gas pipeline safety bill sponsored by Rep. Matt Baker and supported by Rep. Tina Pickett, was passed through to the Senate.  Similarly, Senate Bill 325, proposed by Sen. Lisa Baker, was passed along to the House of Representatives after nearly unanimous approval by the Senate (but for Senator John Eichelberger).

The passage of either Bill will not change the PUC’s existing jurisdiction over public utility pipelines or local distribution utilities, but will authorize the PUC to inspect and regulate for safety purposes additional non-public utility intrastate natural gas pipelines or systems under the requirements of federal natural gas regulations.  Non-compliant companies or system operators would be subject to fines payable into the Commonwealth’s General Fund.  Both Bills require all natural gas and hazardous liquid pipeline operators to register with the Commission and require the Commission to investigate pipeline operators, pipeline systems, and reports of unsafe conditions involving pipeline facilities.  Under the House Bill, these new responsibilities would be financed by companies’ registration fees and substantial increases in fines for non-compliance; companies could face liabilities up to $100,000 per day and up to $1 million total – more than enough to recover the expected $1.3 million increase in the PUC’s annual costs.  The Senate Bill would recover the PUC’s new inspection and regulation costs in the form of an annual per-pipeline-mile assessment.

Both Bills were referred late last week to committees of the General Assembly, and the current versions under consideration may be found by following the links below:

House Bill 344:

Senate Bill 325:

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