CHAPTER 13 PIPELINE CONSTRUCTION AND OPERATION, AUTHORIZATIONS AND REGULATIONS: NOT JUST A PIPE DREAM

• Jurisdiction: United States

Oil and Natural Gas Pipelines: Wellhead to End User
(Jan 1995)
CHAPTER 13
PIPELINE CONSTRUCTION AND OPERATION, AUTHORIZATIONS AND REGULATIONS: NOT JUST A PIPE DREAM
Mark D. Bingham ¹
Davis, Graham & Stubbs, L.L.C.
Denver, Colorado

TABLE OF CONTENTS

SYNOPSIS Page

I. INTRODUCTION

II. RIGHT OF WAY ACQUISITION

A. Federal Right of Way Grants

1. Application Requirements

2. ROW Limitations

3. ROW Grant

4. Continuing Obligations and ROW Rehabilitation

B. State ROW Grants and Authority for Eminent Domain

C. Private ROW Grants

III. CONSTRUCTION AND OPERATION REGULATIONS

A. Permits and Notice Requirements

1. Local/County Permits and Notices

2. Water Discharge Permits

3. Air Emissions Permits

4. Spill Response Plans

B. Pipeline Construction and Safety Regulations

1. "One-Call": Locating Underground Facilities

2. DOT Construction and Safety Regulations

3. Occupational Safety and Health Administration

4. Preoperative Testing Requirements

5. State Pipeline Safety Acts

6. Local Construction Notices and Permits

C. Operation and Maintenance

1. Damage Prevention, Emergency Plans, Maintenance and Reporting

2. Drug Testing

D. Future Operational Considerations Facing the Oil and Gas Industry

IV. TRANSPORTATION REGULATION

A. Federal Regulation

1. Natural Gas

a. Transportation

b. Gathering

c. Filing Requirements

2. Oil

B. State Regulation

1. Natural Gas

2. Oil

C. Local Regulation

V. FEDERAL ROW ABANDONMENT

VI. CONCLUSION

———————

[Page 13-1]

I. INTRODUCTION

For nearly a century, oil and gas operators have been required to obtain authorizations before commencing pipeline construction and operation activities.² Originally calculated to prevent waste and ensure proper engineering practices, today's regulatory programs can seem imposing in their extent and demanding detail.³ This paper provides an overview of regulatory and permit requirements for construction and operation of oil and gas pipelines, and offers operational suggestions for proceeding through the labyrinth of pipeline authorizations and regulations.

II. RIGHT OF WAY ACQUISITION

Pipeline construction activities are subject to the jurisdiction of numerous governmental agencies. Pipeline right of way ("ROW") on federal lands is subject to regulation by various federal surface management agencies including the Bureau of Land Management ("BLM") and the U.S. Forest Service.⁴ The surface management agency may also have concurrent responsibility for construction activity compliance on state and private lands if the lands are within the scope of a larger project involving federal lands.⁵ Prior to commencing pipeline construction activities, oil and gas operators must have a working understanding of the federal, state, local and private requirements for ROW acquisition discussed below.

[Page 13-2]

A. Federal Right of Way Grants

Statutory authority for granting oil and gas pipeline ROW on federal lands is found in the Mineral Leasing Act of 1920 (the "MLA").⁶ The Federal Land Policy and Management Act of 1976⁷ may also be implicated if there are substantial structures or roads to be constructed outside the pipeline ROW. Pursuant to the MLA, the BLM has jurisdiction over federal lands, except lands included in the National Park System, National Forest System, lands held in trust for Indians, and other nationally designated lands. Although differing regulations for the issuance, modification, or renewal of a federal ROW grant have been established for the various surface management agencies,⁸ the ROW application content and filing requirements are similar. As the majority of federal ROW will be granted under the MLA, further discussion will focus on BLM regulations.

1. Application Requirements

Detailed and technical application and notice requirements for federal land ROW have been established by the BLM.⁹ Additionally, the BLM Authorized Officer has discretion to require detailed construction, operation, rehabilitation and environmental protection plans to be submitted with a ROW application.¹⁰ The plans typically include development, contingency and compliance plans for pipeline construction and operation periods. Notice of the ROW application and a description of the project may be published in the Federal Register and a local, general circulation newspaper.¹¹ Public meetings may also be held if appropriate and sufficient public interest exists. ROW application processing fees vary depending upon the extent and availability of existing environmental data and BLM's involvement in verifying the data and evaluating the proposed project.¹²

Applications for ROW grants must include sufficient detail to enable the agency to evaluate the feasibility of the project and its potential impacts, if any, on the environment. After reviewing the project description, the applicant may be required to fund or to perform additional studies or submit additional environmental data to enable the BLM to prepare an environmental analysis in accordance with the National Environmental Policy Act of 1969 ("NEPA").¹³

[Page 13-3]

NEPA requires federal agencies to evaluate the environmental impacts of any major federal action which significantly affects the quality of the human environment. Depending upon the extent of the environmental impacts, the grant of ROW access by the BLM may qualify as a "major" federal action triggering the need for an Environmental Impact Statement ("EIS").¹⁴ If the BLM makes a Finding of No Significant Impact ("FONSI") after reviewing an Environmental Assessment of the impacts, an EIS will not be required.

NEPA evaluation factors include wilderness areas, site-specific impacts, connected actions and cumulative impacts, reasonable alternatives, and the balance between short-term and long-term impacts. If threatened or endangered species are encountered, consultations with the Fish & Wildlife Service will be required.¹⁵

The operator may also be required to comply with the provisions of the National Historic Preservation Act of 1966,¹⁶ the Archeological and Historic Preservation Act and the Archeological Resources Protection Act of 1979,¹⁷ Executive Order 11593 concerning Protection and Enhancement of the Cultural Environment,¹⁸ Procedures for the Protection of Historic and Cultural Properties,¹⁹ and other laws and regulations as applicable.²⁰

The preparation of an EIS is a substantial undertaking which may involve the retention of third-party consultants, multiple responsible agency coordination,²¹ public "scoping" meetings to determine which items should be considered in the EIS, preparation of a draft EIS, circulation of the draft EIS for

[Page 13-4]

public and agency comment, and preparation of a final EIS.²² The managing surface agency may conduct or contract out the NEPA evaluation based upon existing workload and the extent of analysis required. If the NEPA evaluation is contracted out, the agency will required a Memorandum of Understanding to establish operator payment and contractor evaluation obligations.²³ The operator should take an active role in the oversight and review of the NEPA process to ensure it remains focused and limited to reasonable and necessary evaluations.

If the pipeline is subject to regulation by the Federal Energy Regulatory Commission, the Commission's Office of Pipeline Regulation has a helpful publication which it released in October of 1994. The Handbook for Using Third Party Contractors to Prepare Environmental Assessments and Environmental Impact Statements ²⁴ sets forth the process the Commission will follow when third party contractors are used to assist in analyzing applications and preparing environmental documents. Applicants desiring to use a third party contractor must prepare and file a Draft Request for Proposal prior to the project application. The Commission will screen qualified contractors and supervise the environmental analyses. The Commission will initiate a Memorandum of Agreement among the Commission, the applicant and the contractor, regarding the evaluation.

2. ROW Limitations

ROW grants are subject to numerous limitations including duration, width, corridors, pipeline size and temporary use permits. The duration of a ROW grant will be limited to a term not to exceed 30 years, and typically reflects the life of the project.²⁵ Automatic renewals are available if the pipeline is operated and maintained in accordance with the provisions of the ROW grant and the MLA regulations.²⁶

The MLA regulations provide for a maximum 50-foot wide ROW.²⁷ The agency will consider special requests for greater widths if justified by operations, maintenance, environmental, or safety concerns. The agency can issue temporary use permits if additional work space is required during construction activities.²⁸ The areas temporarily impacted by such activities must be included in the NEPA evaluation.

[Page 13-5]

In an effort to minimize adverse environmental impacts and the proliferation of separate ROWs, the agency may designate and require that pipelines be located in transportation and utility corridors.²⁹ Pipeline routing will likely follow existing utilities, pipelines and roads. Cross-country pipelining will not be permitted unless there are extenuating location, environmental or terrain considerations.

The responsible agency must notify the Committee on Interior and Insular Affairs of the United States House of Representatives and the Committee on Energy and Natural Resources of the United States Senate upon receipt of an application for a ROW for a pipeline which is 24 inches or more in diameter. ROW for such a pipeline will not be granted until a notice of intention to grant the ROW has been submitted to the committees.³⁰

3. ROW Grant

For federal lands under BLM jurisdiction, ROW grants are issued by the state BLM office on Form 2800.14. The ROW grant will have a BLM case file in the state BLM office, but the grant should also be recorded in the...