Pipeline statutes discussed, determined to be sufficient to address concerns
Worland – At the direction of Management Council, the Interim Joint Agriculture State and Public Lands and Water Resources Committee of the Wyoming Legislature’s second priority was landowner and state land issues related to energy development.
During the group’s late-April meeting in Worland, the Petroleum Association of Wyoming (PAW), several Wyoming agencies and stakeholders testified on the subject.
“We came to a few conclusions after looking through federal and state statutes, rules and regulations, agency responsibilities and policies,” said John Masterson of Lewis Roca Rothgerber Law.
Masterson first emphasized that oil and gas production greatly contributes to Wyoming’s economy, with two-thirds of state revenue resulting from mineral production and nearly 21,000 jobs in the state a result of pipelines.
“If we decide to take steps toward regulating or passing statutes to further regulate pipelines, it needs to be done deliberately and carefully because of the impact it has on a number of levels,” Masterson said.
Additionally, Masterson referred to the state’s current regulations, coupled with federal policies, as “an alphabet soup” of policies.
“Finally, based on our research, we did not find any indication that pipeline spills are a systemic problem in the state of Wyoming,” Masterson commented. “There is not a chronic, ongoing problem with pipeline spills.”
He continued that he believes the regulatory systems currently exist for all types of pipeline spill cleanup – including infield and feeder lines, intrastate pipelines and interstate pipelines.
“There is already a mechanism in place for the smaller, infield and feeder pipelines underneath the jurisdiction of the Wyoming Oil and Gas Conservation Commission (WOGCC),” Masterson explained.
WOGCC holds authorities for oil and gas production regulation, including the ability to require posting of bonds in the event that a spill occurs.
“There are other bonding requirements when we talk about intra- and inter-state pipelines,” he added.
Masterson noted that a wide list of agencies have jurisdiction over pipelines within the state, including the Office of State Lands and Investments, Department of Environmental Quality, Public Service Commission, BLM and others.
Each agency has various authorities within the structure of regulations, as well.
“The WOGCC has the ability to promulgate rules and regulations preventing waste, which I believe covers spills,” he said. “The Wyoming Public Service Commission has jurisdiction and inspections of intrastate lines under grant authority from the U.S. Department of Transportation.”
Further, interstate transmission lines trigger federal regulations and national-level protections.
When looking at the ability of regulating agencies to establish bonds, Senator Larry Hicks asked, “How does bonding work for pipelines that have been in the ground for 50 years? The problems we deal with are not chronic and reoccurring. They are acute and can be catastrophic.”
Bonding mechanisms, added Masterson, allow for the ability to adjust bonding, but he also commented that he was unsure about how that applied to pipelines that existed prior to bonding requirements.
Hicks further asked about the instance of acute failures where bonds were inadequate.
“I did not find any instances of acute failures that were not covered by bonds,” Masterson said. “I’m not saying they don’t exist, but I was unable to find any.”
“I think the concerns of the committee are focused on those areas where there is insolvency,” commented Committee Co-Chair Representative Mark Semlek. “Discussions that oil and gas folks around the state and the Governor’s Office on the orphan well situations with coal bed methane is an illustration as to why there is concern.”
Masterson noted that the legislature has passed statutes to protect innocent landowners, also commenting, “I am not aware of a situation where insolvency has been a problem. We do have mechanisms to pay for remediation.”
“I am not minimizing a potential problem, but there are things in place,” he continued.
Wyoming Stock Growers Association Executive Vice President Jim Magagna commented that landowners do have concerns with potential pipeline problems.
“Large pipelines may be in the ground and in use for 50 years or more,” said Magagna. “Over the generational change in the ownership of the land, if a problem does occur, knowing where to go and who holds the current liability is an overwhelming challenge that is faced.”
Navigating the complexities of regulations is an additional challenge facing landowners.
“As Mr. Masterson pointed out, there could be six or seven agencies involved, and for the average landowner to know where they should go to receive assistance in addressing problems can be a tremendous challenge,” Magagna continued, citing examples of landowners who have 11 or more intra- and interstate pipelines running across their property.
Magagna further requested the committee consider a bill to create a position within state government to serve as a landowner liaison.
Committee Co-Chairman Senator Gerald Geis said, “Could we put this in the consumer advocacy division of the Public Service Commission?”
Geis moved to forward a bill that would create a landowner liaison position to assist landowners in navigating channels for assistance, but the bill failed due to lack of a second.
An additional motion passed asking the Legislative Services Office to look at issues for landowner indemnification and preparing a draft bill for review if there are no measures available.