Law of the Pipes With Alex Klass – Sept 13, 2015

Today we talk about five things in the news for the week of September 7, 2015:

  1. Iran Can Export Oil and U.S. Producers Want In
  2. Department of Energy Releases Technology Report
  3. Buzz About New York Methane Leaks
  4. House Science Committee Tears Into Clean Power Plan
  5. Carson Tangles with Brown on Climate

Our weekly interview is with law professor Alex Klass, one of the country’s leading experts on energy transmission law.

Listen below or on iTunes or Stitcher.

1.  Iran Can Export Oil and U.S. Producers Want In

Last week, the House Energy and Commerce Subcommittee on Energy and Power passed a bill to lift the crude oil export ban.  The effort is being pushed, in part, by the fact that the U.S. is lifting sanctions on Iran’s crude exports.  Rep. Bill Flores (R-TX) was one of many to tie U.S. crude exports to the Iran deal.  Rep. Joe Barton (R-TX)  is leading the effort, and he is optimistic it will get repealed.  His bill has broad, bipartisan support and passed the Subcommittee on a voice vote, which means most Members are keeping their options open for some kind of an agreement.  The Subcommittee’s top Democrat, Rep. Bobby Rush (D-IL) explicitly said he is open to lifting the ban if some of his concerns are addressed.

On a related note, Hillary Clinton claimed in a speech last week that her efforts to get countries like India and South Korea to stop buying Iranian oil is what brought Iran to the bargaining table.

2.  Department of Energy Releases Technology Report

Last week, the Department of Energy released its second Quadrennial Technology Review, a report that the agency says “examines the current status of clean energy technologies and identifies hundreds of clean energy research opportunities that could support the effort to modernize the power sector as a whole.”  The report sees natural gas fitting in to the future of electricity generation:

Electricity production sector: The current portfolio of electricity production includes a combination of reliable but aging base-load generation, evolving renewable resources, new natural gas plants, and new and pending nuclear and clean coal facilities. As the industry evolves to meet growing electrification and GHG reduction goals, challenges arise in optimizing the system, minimizing risks, and maintaining reasonable cost. Future developments will likely include a mix of three broad categories: 1) fossil-based generation with carbon capture and storage (CCS), 2) nuclear energy, and 3) renewables, such as solar and wind.

And also manufacturing:

The availability of lower-cost natural gas and natural gas liquids has created an advantage for U.S. manufacturers that use these resources for heat, power, or as chemical feedstocks. This has contributed to some expansions and additions to the U.S. petrochemical manufacturing sector.  The industrial sector as a whole can similarly benefit from low-cost natural gas.

3.  Buzz About New York Methane Leaks

Buzzfeed reported on a new study out last week that studied New York City’s natural gas pipeline distribution system, and found it wanting:

Thanks to old and rusty pipelines, Manhattan leaks three to five times more natural gas than cities with newer infrastructure, according to a survey of three U.S. cities published on Wednesday…The new survey found 1,050 methane leaks in Manhattan, or about four leaks per mile. Two cities selected for comparison — Cincinnati, Ohio, and Durham, North Carolina — had about 90% fewer leaks per mile, the study found. Over the last decade, Cincinnati and Durham have replaced most of their old gas mains with new ones.

[Stanford University’s Robert Jackson] and his colleagues drove 247 miles of New York streets in a gas detector-equipped car, as they had done in earlier surveys of Boston and Washington D.C., older cities with leak rates similar to New York’s. The researchers couldn’t take measurements in a large swath of downtown Manhattan, Jackson said, because tall buildings made it impossible for global positioning signals to keep track of the leak detector.

4.  House Science Committee Tears Into Clean Power Plan

On Friday, the House Science Committee became the first to do a hearing on the final Clean Power Plan.  Rep. Jim Bridenstine (R-OK) led the way with a analysis showing that the final rule will result in a handful of coastal states benefiting at the expense of most other states:

Commerce CPP Map

On the Democratic side, Rep. Eddie Bernice Johnson (D-TX) had an interesting back and forth with Dr. Bryan Shaw, the Chairman of the Texas Commission on Environmental Quality, regarding the costs and benefits of the new regulation.

5. Carson Tangles with Brown on Climate

Last week, the current runner-up for the Republican nomination for president made a swing through California, where he ruffled some feathers talking about climate:

…Carson asked to see the science demonstrating climate change was caused by human activity during a visit to California earlier this week.

“I know there a lot of people who say ‘overwhelming science,’ but then when you ask them to show the overwhelming science, they never can show it,” Carson told The San Francisco Chronicle. “There is no overwhelming science that the things that are going on are man-caused and not naturally caused.”

“Gimme a break,” Carson added.

The Governor of Carson’s host State, Jerry Brown, did not take kindly to the remarks:

Interview with Law Professor Alex Klass (Starts at 24:19)

Prof. Klass teaches at the University of Minnesota School of Law, with a focus on energy law, environmental law, natural resources law, tort law, and property law.  This fall, however, she will be teaching energy and tort law at Harvard University.  Prior to her teaching career, Professor Klass was a partner at Dorsey & Whitney law firm in Minneapolis where her practice focused primarily on environmental, land use and natural resources litigation.  In particular, she has produced some very useful work on the law and history of transporting oil and gas.

In mid 1800s, oil began to be transported significant distances by wagons pulled by teams of horses (“Teamsters”).  Horses were gradually replaced by the railroads, until railroads were largely overcome by pipelines in the early 20th Century.  These pipelines were generally built without federal eminent domain authority, which has not been provided for oil pipelines except for a limited period during World War II.  The Keystone XL pipeline, for example, has had to seek eminent domain and siting authority from each state along its route.  The federal government is only involved in approving the connection to a foreign country.

The 1906 Hepburn Act and subsequent statutes provided federal safety and economic regulation.  In general, however, Congress has not felt a need to provide federal siting regulations or eminent domain authority for oil pipelines.  In contrast, Congress did provide both of those powers to the Federal Energy Regulatory Commission in the 1938 Natural Gas Act.

The Natural Gas Act created a federal pipeline siting process.  By the 1930s, cities had become more reliant on natural gas, and some had experienced supply disruptions.  To fix the problem, and perhaps influenced by the big-government attitude of the times, Congress put the federal government in control and then later gave it eminent domain powers to prevent states from getting in the way.  As a result, building a natural gas pipeline is largely controlled by federal law, where states largely control oil pipeline construction.  Prof. Klass says the different treatment does make some sense, as natural gas pipelines are more important because oil is easier to transport by alternative means.

Today, if a company wants to build an interstate natural gas pipeline it needs a certificate of public convenience and necessity issued by FERC.  A company needs to show that there is an economic need for the pipeline and it needs to document the environmental impact.  FERC currently does not consider issues like moral objections or the upstream impacts of drilling, but no statute prevents FERC from moving that direction in the future.   Eminent domain is typically a last resort when voluntary measures fail, though decisions are not entirely “voluntary” when accompanied by the threat of eminent domain.  Overall, Prof. Klass says the process works fairly well, much better than the process for citing transmission lines, for example.

Prof. Klass has published a number of articles regarding energy transmission laws.  She will also be coming out in the next year or so with additional work that will examine what type of infrastructure the country should build in light of the uncertainty over how much renewables will be on the grid.