U.S. DOT/PHMSA - Preliminary Environmental Assessment

Page 1Pipeline and Hazardous Materials Safety Administration U.S. Department of Transportation Preliminary Environmental Assessment Underground Natural Gas Storage Interim Final Rule Interim Final Rule#

Page 2Preliminary Environmental Assessment: Underground Natural Gas Storage Executive Summary Executive Summary The Pipeline and Hazardous Materials Safety Administration (PHMSA) is promulgating an interim final rule (IFR) that revises the Pipeline Safety Regulations applicable to underground natural gas storage facilities. The IFR incorporates by reference American Petroleum Institute (API) Recommended Practices (RP): API RP 1170, “Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage” (July 2015); and API RP 1171, “Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs” (September 2015) (API, 2015a; API, 2015b). The RPs provide consensus safety measures for the construction, maintenance, risk-management, and integrity-management procedures for natural gas storage. By adopting the API RPs by reference, the IFR takes an urgent first step to establishing uniform safety standards across the United States. This report details PHMSA’s preliminary assessment of the environmental effects of the final rule, as required by 40 CFR Part 1502, Environmental Impact Statement (EIS). 1 As described in Section 3, the IFR rule will require facility operators to implement various measures to ensure the containment integrity of underground natural gas storage facilities. In particular, the IFR will require that operators conduct mechanical integrity tests on wells to detect conditions that could result in a leak. Although many operators voluntarily implement the RPs, the IFR will make the measures mandatory for all operators. Information obtained through the mechanical integrity tests will enable operators to make necessary repairs to prevent leaks. These repairs may include replacing a well liner or casing, or plugging the well. Measures required by the IFR are currently conducted by operators, or are similar in the required equipment and disturbance (e.g., workover) to activities conducted by operators as part of current operations, and therefore PHMSA does not expect that they will result in novel or additional environmental impacts. Several very serious natural gas incidents have occurred at underground natural gas storage facilities. These incidents have resulted in fatalities, injuries, extensive physical damage, adverse human health impacts, and environmental harm. In October 2015, the release of natural gas from the Aliso Canyon facility ultimately took 112 days to stop, required the evacuation of over 5,000 residents, and cost the operator an estimated $763 million (Sempra Energy, 2016).2, 3 Luckily, this incident did not result in 1 In accordance with 40 CFR Part 1508, the environmental assessment (a) means a concise public document for which a federal agency is responsible that serves to (1) briefly provide sufficient evidence and analysis for determining whether to prepare an EIS or a Finding of No Significant Impact (FONSI), (2) aid an agency's compliance with the Act when no EIS is necessary, and (3) facilitate preparation of a statement when one is necessary; (b) shall include brief discussions of the need for the proposal, of alternatives as required by Section 102(2)(E), of the environmental impacts of the proposed action and alternatives, and a listing of agencies and persons consulted. 2 Of the $763 million, Sempra Energy notes “approximately 70% is for the temporary relocation program (including cleaning costs and certain labor costs) and approximately 20% is for efforts to control the well, stop the leak, stop or reduce emissions, and the estimated cost of the root cause investigation. The remaining amount includes legal costs incurred to defend litigation, the value of lost gas, the costs to mitigate the actual natural gas released and other costs. Cost estimate excludes any potential damage awards, restitution and any civil, administrative or criminal fines and other penalties that may be imposed, as well as any additional costs to clean homes and future legal costs necessary to defend litigation, among other potential costs, as we cannot estimate what amounts, if any, will be incurred for such matter.” (Sempra Energy, 2016) 3 Private financial costs include a mix of remediation, repair, ex gratia payments to persons and public agencies affected by the incident, anticipated or actual penalties, as well as litigation costs and settlements. Firms vary in the extent of their public i Interim Final Rule#

Page 3Preliminary Environmental Assessment: Underground Natural Gas Storage Executive Summary fatalities. As discussed in the Regulatory Impact Analysis and in this report, the final rule will provide benefits through avoiding damages from natural gas releases that may be prevented through earlier detection of conditions that could lead to a loss of containment integrity, and through enhancing the ability of PHMSA and facility operators to evaluate risks. To the extent that the measures taken to comply with the IFR do not involve additional environmental impacts and instead will serve to reduce the risk of natural gas incidents, PHMSA expects this rule to have positive environmental impacts. The information in this Environmental Assessment report supports a Finding of No Significant Impact (FONSI) for this action. disclosure of the details of costs incurred. In this case, it is unclear from Sempra’s disclosure whether the reported costs include estimates of business losses from the unavailability of the Aliso Canyon facility. ii Interim Final Rule#

Page 4Preliminary Environmental Assessment: Underground Natural Gas Storage Table of Contents Table of Contents Executive Summary ................................................................................................................. i Table of Contents ................................................................................................................... iii List of Exhibits ....................................................................................................................... iv 1 Introduction .................................................................................................................... 1-1 2 Purpose and Need for Action ........................................................................................ 2-2 2.1 Purpose ................................................................................................................................ 2-2 2.2 Need for Action ................................................................................................................... 2-2 2.2.1 Underground Natural Gas Storage ........................................................................... 2-3 2.2.2 Accident History ...................................................................................................... 2-3 2.2.3 Aging Infrastructure................................................................................................. 2-5 2.2.4 Gaps in the Regulation of Underground Natural Gas Storage Facilities ................. 2-5 2.2.5 New Industry Standards ........................................................................................... 2-6 2.3 PHMSA Strategic Objectives .............................................................................................. 2-7 3 Interim Final Action and Alternatives Considered .................................................... 3-1 3.1 API Recommended Practices .............................................................................................. 3-1 3.2 Regulatory Alternatives Considered by PHMSA ................................................................ 3-3 4 Affected Environment and Environmental Consequences ........................................ 4-1 4.1 Physical Environment and Populations ............................................................................... 4-2 4.2 Public Health and Safety ..................................................................................................... 4-5 4.3 Climate Change ................................................................................................................... 4-5 4.4 Environmental Justice ......................................................................................................... 4-6 4.5 Socioeconomic Issues ......................................................................................................... 4-1 5 Determination of the Degree of Environmental Impact ............................................. 5-1 6 Persons Consulted .......................................................................................................... 6-1 7 List of Preparers and Reviewers .................................................................................. 7-1 8 References ....................................................................................................................... 8-1 iii Interim Final Rule#

Page 5Preliminary Environmental Assessment: Underground Natural Gas Storage List of Exhibits List of Exhibits Exhibit 4-1: Geographical distribution of active underground natural gas storage facilities. .................... 4-3 Exhibit 4-2: Surroundings of the Aliso Canyon storage facility administrative boundary (black line) and injection wells (blue dots). ................................................................................... 4-4 iv Interim Final Rule#

Page 6Preliminary Environmental Assessment: Underground Natural Gas Storage 1. Introduction 1 Introduction The Pipeline and Hazardous Materials Safety Administration (PHMSA) is promulgating an interim final rule (IFR) that revises the Pipeline Safety Regulations applicable to underground natural gas storage facilities. The IFR incorporates by reference American Petroleum Institute (API) Recommended Practices (RP): API RP 1170, “Design and Operation of Solution-mined Salt Caverns used for Natural Gas Storage” (July 2015); and API RP 1171, “Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs” (September 2015). The RPs provide consensus safety measures for the construction, maintenance, risk-management, and integrity-management procedures for natural gas storage. By adopting the API RPs by reference, the IFR takes an urgent first step to establishing uniform safety standards across the United States and addressing the Congressional mandate contained in the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (or PIPES Act of 2016) for PHMSA to promulgate minimum safety standards for underground natural gas storage facilities. This report describes PHMSA’s preliminary assessment of the environmental effects of IFR, as required by 40 CFR Part 1502, Environmental Impact Statement (EIS). This report is organized as follows: Section 2 provides the purpose and need for the action while Section 3 summarizes the final rule and alternatives PHMSA considered. The affected environment and environmental effects are discussed in Section 4, concluding in Section 4.5 with a determination that the information supports a Finding of No Significant Impact (FONSI) for this action. Finally, Sections 6 through 8 provide additional information about the public’s involvement in the development of the action, preparers and reviewers of this preliminary Environmental Assessment (EA), and cited text references, respectively. 1-1 Interim Final Rule#

Page 7Preliminary Environmental Assessment: Underground Natural Gas Storage 2. Purpose and Need for Action 2 Purpose and Need for Action This statement of purpose and need explains the need for PHMSA action and reflects the goals to be achieved through this action. 2.1 Purpose In this IFR, PHMSA is adopting two API RPs:4 API RP 1170, “Design and Operation of Solution- mined Salt Caverns used for Natural Gas Storage” (July 2015); and API RP 1171, “Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs” (September 2015). The RPs describe a range of measures that operators of underground natural gas storage facilities should implement to ensure the safety of their operations, including construction, maintenance, risk-management, and integrity-management procedures. The IFR makes these provisions mandatory unless operators provide justification in their program or procedural manuals as to why compliance with a provision of the RP is not practicable and necessary for the safety of a particular facility. PHMSA is issuing this IFR as an urgent first step5 in preventing incidents such as the 2015 Aliso Canyon natural gas leak in the future. Rapid incorporation of API RPs 1170 and 1171 into PHMSA’s regulations will require operators to assess the operational safety of their underground natural gas storage facilities and document the implementation of identified safety solutions. After this IFR incorporating API RPs 1170 and 1171 becomes effective, PHMSA and its state partners will monitor and enforce operators’ implementation of the requirements. After issuance of this IFR, as a second phase, PHMSA will further investigate the need for more detailed regulatory requirements for underground natural gas storage incidental to transportation. PHMSA intends to hold a public meeting, and may pursue an additional rulemaking to address remaining safety concerns. 2.2 Need for Action The PIPES Act of 2016 (Public Law 114-183)6 requires PHMSA, not later than two years after the date of enactment of the PIPES Act of 2016 (i.e., by June 22, 2018) and in consultation with the heads of other relevant federal agencies, to issue minimum safety standards for underground natural gas storage facilities. In issuing minimum safety standards for underground storage facilities, PHMSA must “(1) consider consensus standards for the operation, environmental protection, and 4 PHMSA participated, along with the Federal Energy Regulatory Commission (FERC), several state regulatory agencies, and numerous industry representatives, in the development of the two API RPs. 5 These measures complement Advisory Bulletin ADB–2016–02 PHMSA issued on February 5, 2016 (81 FR 6334). The advisory bulletin recommended that operators of underground natural gas storage facilities review their operating, maintenance, and emergency response activities to ensure that the integrity of underground natural gas storage facilities is properly maintained. This bulletin informed operators about recommended practices and urged operators to take all necessary actions to prevent and mitigate breach of integrity, leaks, or failures at their underground natural gas storage facilities; to ensure the safety of the public and operating personnel; and to protect the environment. 6 The PIPES Act of 2016 was signed into law on June 22, 2016. 2-2 Interim Final Rule#

Page 8Preliminary Environmental Assessment: Underground Natural Gas Storage 2. Purpose and Need for Action integrity management of underground natural gas storage facilities; (2) consider the economic impacts of the regulations on individual gas customers; (3) ensure that the regulations do not have a significant economic impact on end users; and (4) consider the recommendations of the Aliso Canyon natural gas leak task force established under section 31 of the PIPES Act of 2016.” Several factors discussed in this section highlight the need for action:  Underground natural gas storage facilities are found across the United States;  Past accidental releases of natural gas from these facilities have caused significant harm and environmental damages;  The infrastructure has been aging;  There are gaps in existing safety requirements applicable to these facilities; and  New industry standards contain measures that will help enhance the safety of these facilities. 2.2.1 Underground Natural Gas Storage PHMSA estimates that there were 390 active natural gas storage fields7 in the United States in 2015, distributed across 31 states (EIA, 2016a; FERC, 2016; PHMSA, 2016b). These fields had an aggregate design storage capacity8 of 9,155 billion cubic feet (BCF) and a working capacity9 of 4,756 BCF (EIA, 2016a). PHMSA further estimated that there are a total of 16,991 injection/withdrawal wells and pressure control/observation wells within the 390 active fields. 2.2.2 Accident History On October 23, 2015, SoCalGas’ Aliso Canyon Well SS25 developed a natural gas leak near an area known as Porter Ranch in Los Angeles, California. While investigations have not yet been completed, the leak is believed to have originated from the subsurface (downhole) well casing. Over the 112-day event, the accident released up to 5.7 BCF of natural gas into the atmosphere, containing up to 109,000 metric tons10 of methane, a potent greenhouse gas, as well as panoply of other pollutants (California Air Resources Board (CARB), 2016a; County of Los Angeles Public Health, 2016). Over 5,790 households had to be relocated due to the natural gas odorant (mercaptans), according to the Aliso Canyon Incident Command briefing report issued on February 1, 2016. Additional reports identify other potential health effects that lasted even after the well was sealed. A report by the Los Angeles County of Public Health suggests that the continued health symptoms may be due to contaminants in indoor air and dust (Los Angeles County Public Health, 2016). As of 7 PHMSA used Energy Information Administration’s (EIA’s) EIA-191, Monthly Underground Natural Gas Storage Report for 2015 as primary data to determine the number of active fields. The definition of a field is based on the number of records for which EIA indicates the status as “Active” (EIA, 2016a). Note that other available data (FERC, 2016; PHMSA, 2016b) may subdivide or group fields, resulting in different counts of natural gas storage facilities. 8 Total natural gas storage capacity is the maximum volume of natural gas that can be stored in an underground storage facility in accordance with its design, which comprises the physical characteristics of the reservoir, installed equipment, and operating procedures particular to the site (EIA, 2015). 9 Working gas is the volume of gas in the reservoir above the level of base gas, and is available to the marketplace (EIA, 2015). 10 CARB estimates that the incident resulted in a total emission of 99,650 ± 9,300 metric tons of methane (CARB, 2016a) and seeks mitigation of 109,000 metric tons. 2-3 Interim Final Rule#

Page 9Preliminary Environmental Assessment: Underground Natural Gas Storage 2. Purpose and Need for Action November 2, 2016, Sempra Energy, the parent company of SoCalGas, reported costs of $763 million to control the release, monitor air emissions, relocate residents, and cover its legal and other expenses (Sempra, 2016).11 These costs are those incurred by Sempra and do not include additional costs to society as a result of the release. The Aliso Canyon incident is the latest of several high-profile underground natural gas storage incidents over the last 15 years (Hopper, 2004; British Geological Survey, 2008; Kansas Geological Survey, 2004):12  On August 19, 2004, the Market Hub Partners Moss Bluff storage facility located in Liberty County, Texas, had a well control incident and natural gas fire at Cavern #1. According to newspaper reports at the time, the incident sent a plume of burning gas “hundreds of feet into the air” (Bardwell and Horswell, 2004) and forced the evacuations of residents within a three-mile radius (OGJ, 2004). Over a period of 6.5 days, the incident released and burned approximately 6 BCF of gas. Estimates of the number of people evacuated vary between dozens and hundreds. Hopper (2004) estimated the value of the product lost at $36 million and property damage at $20 million. Investigators attributed the incident to initial separation and breach of a 8-5/8-inch well string inside the cavern.  A casing failure at the Magnolia Salt Cavern facility in December 2003 caused the release of approximately 0.35 BCF of natural gas, forced the shutdown of the facility and the evacuation of area residents (approximately 30 people). Geologists determined that the eruptions had sprung from an underground gas storage field seven miles away and migrated into injection wells. Investigator attributed the incident to casing failure, specifically to a crack in the casing of a well near the top of a cavern.  On January 17 and 18, 2001, the Yaggy underground natural gas storage field operated by Kansas Gas Service had a wellbore failure, which led to a series of gas explosions in Hutchinson, Kansas. The gas leaked from the storage field well production casing and migrated approximately nine miles underground to the Hutchinson, Kansas area. An explosion in downtown Hutchinson destroyed two businesses, damaged 26 others, and caused two fatalities. Approximately 250 people were evacuated. Approximately 143 million cubic feet of natural gas leaked from the storage field. Flares took over a month to burn off the escaped gas.13 Investigators attributed the incident to a hole in the well casing. Although PHMA could not find response costs for this incident, other costs incurred by the responsible party included payment of $1.7 million to the two businesses destroyed by the explosions, $5 11 Of the $763 million, Sempra Energy notes “approximately 70% is for the temporary relocation program (including cleaning costs and certain labor costs) and approximately 20% is for efforts to control the well, stop the leak, stop or reduce emissions, and the estimated cost of the root cause investigation. The remaining amount includes legal costs incurred to defend litigation, the value of lost gas, the costs to mitigate the actual natural gas released and other costs. Cost estimate excludes any potential damage awards, restitution and any civil, administrative or criminal fines and other penalties that may be imposed, as well as any additional costs to clean homes and future legal costs necessary to defend litigation, among other potential costs, as we cannot estimate what amounts, if any, will be incurred for such matter.” (Sempra Energy, 2016). 12 There have also been additional accidents involving underground storage facilities storing other products such as liquefied petroleum gas. 13 Flares are commonly used as a means of disposing of waste gas, when it is safer to burn the gas than to simply vent it to the atmosphere. 2-4 Interim Final Rule#

Page 10Preliminary Environmental Assessment: Underground Natural Gas Storage 2. Purpose and Need for Action million in court-awarded damages to residential plaintiffs for impacts on housing prices due to “stigma” effects of the release, and a $180,000 fine assessed by the Kansas Department of Health and Environment. These incidents and their aftermath have heightened public awareness about the safety of these facilities and the potential for environmental damage associated with natural gas releases from underground storage facilities across the nation. Although infrequent, catastrophic natural gas release incidents can cause significant damages due to the quantities of natural gas involved, proximity to populations, and other factors. Note that in recent accidents, natural gas migrated underground for miles before erupting in locations distant from the source of the leak. The difficulty of identifying the actual dimensions of elevated risk zones argues in favor of making an additional effort to identify possible sources and prevent leaks in the first place. 2.2.3 Aging Infrastructure Many underground natural gas storage wells are decades old. For example, the well involved in the October 2015 Aliso Canyon accident was drilled in 1953 and was repurposed for natural gas storage in 1972. This age is not exceptional: according to American Gas Association (AGA) data, approximately 60 percent of active wells are located in fields that were activated before 1960 (AGA, 2014). Although AGA does not provide data on the age of individual wells, it is reasonable to expect that many wells are developed by the time a storage facility starts operating. The Interagency Task Force on Natural Gas Storage Safety (2016) highlights growing concerns regarding the age of the natural gas storage infrastructure as it affects risk. Wells reflect material, technology, and design factors applicable at the time they were constructed and many may not meet design criteria for new wells. Over time, corrosion, other environmental processes, and mechanical stresses from injection and withdrawal of natural gas can weaken well integrity. Wells in depleted oil fields may have been designed for lower pressure than the stress they are now subject to. Further many of these wells were not designed with redundant barriers to gas migration and present riskier, single points of failure. 2.2.4 Gaps in the Regulation of Underground Natural Gas Storage Facilities FERC has jurisdiction over storage facilities engaged in interstate commerce of natural gas; these facilities represent approximately 60 percent of the total storage capacity and total working capacity in the United States. With the implementation of FERC Order 636 in 1994, interstate pipeline companies have been required to operate their storage facilities on an open-access basis and to make a major portion of working gas capacity (beyond what may be reserved by the pipeline operator to maintain system integrity and for load balancing) available for lease to third parties on a nondiscriminatory basis (EIA, 2015). FERC reviews rates for storage and storage-related services under the authority of § 4(f) of the Natural Gas Act of 1938, but does not set safety requirements for fields under its jurisdiction. The U.S. Environmental Protection Agency (EPA) oversees Section 112(r) of the Clean Air Act which aims to “prevent the accidental release [of extremely hazardous substances] and to minimize the consequences of any such release” from stationary sources. 42 U.S.C. § 7412(r)(1). Section 112(r)(7) also authorizes EPA to publish regulations that impose accident prevention and emergency response requirements on stationary sources that hold more than a threshold quantity of certain regulated substances in a process. EPA’s “Risk Management Plan” regulations are codified at 40 2-5 Interim Final Rule#

Page 11Preliminary Environmental Assessment: Underground Natural Gas Storage 2. Purpose and Need for Action CFR 68. However, these regulations specifically exempt facilities that are subject to oversight or regulation under 49 CFR parts 192, 193, or 195, or a state natural gas or hazardous liquid program for which the state has in effect a certification to DOT under 49 U.S.C. section 60105. Facilities engaged in intrastate commerce may be regulated by the oil and gas commission, the environmental protection department, or other government agency of the state where they are located. As of May 2016, PHMSA found that of the 16 states with intrastate underground natural gas storage facilities (out of the total of 30 states with storage facilities), ten states had promulgated or proposed regulations requiring operators to implement preventive measures such as mechanical integrity testing to prevent the accidental release of natural gas from storage facilities. Existing or proposed regulations in nine states require well mechanical integrity tests every 10 years or more frequently.14 Not all states have adopted safety standards for underground storage facilities, and while in many cases states that are certified to regulate their intrastate facilities can and have issued state standards for these wells and wellbores, the absence of a minimum federal standard has led to a gap and lack of uniformity for the interstate facilities. Under 49 U.S.C. §§ 60101 and 60102, PHMSA sets minimum safety standards for the transportation of natural gas, which includes underground natural gas storage facilities incidental to transportation. While PHMSA has jurisdiction over interstate and intrastate fields, it currently does not have safety requirements under 49 CFR Part 192 covering the wells and wellbore tubing and casing. The absence of federal safety regulations over interstate facilities and of state regulation over much of the intrastate facilities leaves over three quarters of natural gas storage capacity as currently unregulated, based on working gas capacity. The gap also means that an estimated 13,682 wells out of the total 16,991 active storage wells (81 percent of wells) are currently unregulated. 2.2.5 New Industry Standards PHMSA considered regulating underground storage more than 20 years before the Aliso Canyon incident. In 1994, PHMSA’s precursor agency, the Research and Special Programs Administration (RSPA) held a public meeting (Docket PS-137; 59 FR 30567; June 14, 1994) on underground storage of gas and hazardous liquids. At the meeting, representatives of industry, state governments, and the public presented statements on safety issues, industry practices, the status of state underground storage regulations, and the need for additional federal regulations. While different views were expressed on whether RSPA should begin to regulate downhole pipe and underground storage, not all participants recognized an immediate need for federal regulatory action. At that time, however, no widely accepted industry consensus standards or recommended practices existed for the underground storage of natural gas including the design, completion, and operations and maintenance (O&M) practices for injection, withdrawal, monitoring, or observation wells. API RPs 1170 and 1171 are new industry recommended practices finalized within the past year. The National Technology Transfer and Advancement Act of 1995 directed federal agencies to incorporate voluntary consensus standards by reference instead of writing new regulations unless the consensus standards would not be as effective as the new regulations. The API RPs, developed with substantial 14 The tenth state, Michigan, exempts natural gas storage wells from the periodic testing requirements applicable to other types of injection wells. 2-6 Interim Final Rule#

Page 12Preliminary Environmental Assessment: Underground Natural Gas Storage 2. Purpose and Need for Action input from PHMSA over a period of more than four years, are suitable for incorporation by reference. This avenue would provide an immediate and reasonable means by which PHMSA may begin to regulate the downhole portions of underground storage of natural gas and respond to help prevent future Aliso Canyon-type incidents in the area of underground storage. A root-cause failure analysis of the Aliso Canyon Well SS25 failure is underway with ongoing investigations and assessments. The California Public Utilities Commission’s initial investigations give PHMSA reason to believe that the risk of potential harm to the public could be addressed, at least in part, through the incorporation by reference of API RPs 1170 and 1171 into the pipeline safety regulations. 2.3 PHMSA Strategic Objectives PHMSA’s mission is “to protect people and the environment from the risks of hazardous materials transportation” (PHMSA, 2012). As described above, releases from natural gas storage facilities can affect surrounding populations, property, and the environment, imposing societal costs in the form of adverse health effects (e.g., dizziness, asphyxiation, irritation), injuries, fatalities, and property and environmental damage. Accidents also place a demand on community resources, including public services from fire departments, police, and public works personnel to manage the emergency, extinguish fires, control traffic, assist in evacuations, and ensure continued utility and infrastructure services. Releases can cause business interruptions and disrupt fuel supplies. Evacuations of nearby residents and the need for permanent or temporary shelter can further strain community resources. Combined effects on businesses, infrastructure, community services, and other economic resources can exacerbate the effects of incident response and recovery. The IFR furthers PHMSA’s ability to meet its goals and legal mandates, including:  Improving public health and safety by reducing transportation-related deaths and injuries;  Advancing environmentally sustainable policies and investments that reduce carbon and other harmful emissions from transportation sources; and  Advancing a transportation system to serve the Nation’s long-term social, economic, security, and environmental needs. Among PHMSA’s strategic plan for 2016 is a commitment to build a stronger safety culture in PHMSA by demonstrating a collective commitment to emphasize safety over competing goals and demands. 2-7 Interim Final Rule#

Page 13Preliminary Environmental Assessment: Underground Natural Gas Storage 3. IFR and Alternatives 3 Interim Final Action and Alternatives Considered The sections below discuss the final rule requirements and alternatives considered by PHMSA. 3.1 API Recommended Practices The API RPs apply to both newly constructed and existing underground natural gas storage facilities. For newly constructed facilities the API RPs have sections that address the storage integrity, design, and construction of “new” underground natural gas storage facilities including the following reservoir or cavern and well aspects: siting, integrity, geological characterization, and containment of the reservoir or cavern; the design, well casing, wellhead, cementing, and environmental, safety, and health aspects of the well; and the testing, commissioning, monitoring, and recordkeeping of the well. Regarding the O&M activities for both new and existing wells, the API RPs have requirements for the following activities: threat identification, risk assessments, preventive and mitigative measures, and periodic review and reassessment; integrity demonstration, verification, monitoring, and gas inventory assessment practices; site security and emergency preparedness and response; and operational procedures, training, and records. Appendix A in the Regulatory Impact Analysis (RIA) for this IFR provides a summary of the recommended practices (PHMSA, 2016b). Notably, RP 1171 provides guidance on well mechanical integrity evaluation of reservoirs and salt caverns. Well mechanical integrity tests, whether by pressure tests or usage of well logs that detect corrosion (similar to a pipeline smart pig), are critical to an operator’s ability to monitor well integrity and to determine whether the maximum well operating pressure can be sustained in light of corrosion or other anomalous defects or non-conservative well casing design. API RP 1170 and 1171 set general performance objectives but do not specify a mechanical integrity test procedure or testing intervals. API RP 1170 and 1171 require operators to evaluate the integrity of each well through the review of well design, completion, wellhead and downhole inspections, well pressure monitoring and testing, and gas sampling. API RP 1171 gives a minimum test pressure of new and modified well casings. API RP 1171 states that an operator should monitor for tubular (casing and tubing) corrosion and evaluate corrosion impact on well integrity and operating pressure, but does not define an inspection interval. API RP 1170 states that an operator shall have an integrity monitoring program that includes identification of components to be monitored, monitoring methods, cavern volume and inventory verification, analysis of data from inspections and reporting, and periodic review of the program for effectiveness with no defined inspection interval. Sections 6 and 9 of API RP 1171 include a method for a mechanical integrity test for a new well or modified casing. In this instance, operators are required to test 1.1 times the maximum allowable operating pressure for 30-minutes and verify that the pressure drop does not exceed 10 percent of initial pressure. By adopting the API RPs, PHMSA is making the practices contained therein (i.e., practices that the RPs say “shall” be implemented or that the operator “may consider”) mandatory for all natural gas operators, unless an operator provides justification in its program or procedural manual as to why compliance with a recommended practice for a particular well or facility is not practicable and not necessary for safety. This would involve a documented, technical review that is signed by technical reviewer and senior company management. PHMSA or its state partner would review such justifications during compliance inspections and utilize our range of enforcement tools as necessary 3-1 Interim Final Rule#

Page 14Preliminary Environmental Assessment: Underground Natural Gas Storage 3. IFR and Alternatives to ensure variances are not utilized inappropriately. In addition, PHMSA is able to issue bulletins or otherwise notify operators advising them of variances that have frequently been deemed objectionable and should be avoided under most circumstances. This approach has worked well in pipeline regulation involving incorporation by reference After the IFR becomes effective, PHMSA and its state partners will monitor and enforce operators’ implementation of the requirements. This will include reviewing the integrity test interval established by the operator and the methodology for establishing the interval for a particular well to ensure that it is supported by sound technical analysis. The IFR also specifies new reporting requirements for underground storage facilities by adding requirements for an annual report under 49 CFR §191.17, incident reports for unintentional releases of natural gas under §191.15, and safety-related conditions reports under §191.23. Additionally, operators not currently registered with PHMSA will need to obtain an operator identification number under §191.22. The IFR specifies timelines for facilities to comply with the API RPs, relative to the effective date of the rule. Thus, the IFR requires that facilities meet “the operations, maintenance, integrity demonstration and verification, monitoring, threat and hazard identification, assessment, remediation, site security, emergency response and preparedness, and recordkeeping requirements and recommendations” of API RPs 1170 and 1171 no later than 12 months from the effective date of the rule. This 12-month deadline includes establishment of a testing program to assess the mechanical integrity of the wells and other components of the storage system. The compliance schedule does not require integrity tests to be completed before the 12-month deadline, however. PHMSA expects that wells will be tested over the next several years (5 to 10 years) according to risk-based priorities. Section 8.5 in API RP 1171 describes the six principal components to the risk assessment process: a) identification of potential threats and hazards to a storage facility; b) evaluation of likelihood of events and consequences related to the events; c) determination of risk ranking to develop preventive and mitigating measures to monitor and/or reduce risk; d) documentation of risk evaluation and decision basis for preventive and mitigative (P&M) measures; e) provision for data feedback and validation; and f) regular, periodic risk assessment reviews to update information and evaluate risk management effectiveness. This environmental assessment considers effects relative to a baseline that includes the practices currently implemented by operators to comply with state regulations where applicable, operator integrity management programs, and industry commitments. Such commitments include, notably, the commitment by Interstate Natural Gas Association of America (INGAA) members to implement API RPs 1170 and 1171 within the next decade.15 INGAA members operate approximately half of active natural gas storage fields. Based on a review of state regulations applicable to certain intrastate facilities and information submitted to PHMSA by an industry trade group (INGAA, 2016c), PHMSA estimated that operators will be testing at least 86 percent and up to 100 percent of active storage wells in the baseline (i.e., in the absence of the IFR). The IFR will require operators to test the remaining 0 to 14 percent of active storage wells. 15 INGAA is an industry trade association representing the majority of interstate natural gas pipeline companies in the United States and a participant in the development of API RPs 1170 and 1171. 3-2 Interim Final Rule#

Page 15Preliminary Environmental Assessment: Underground Natural Gas Storage 3. IFR and Alternatives 3.2 Regulatory Alternatives Considered by PHMSA PHMSA considered one primary alternative to adopting the API RPs as described above: promulgating more stringent testing requirements than provided in the API RPs. Because of the Congressional mandate described in Section 2.2, PHMSA cannot consider a “no action alternative” because it would be both inconsistent with Congress’ direction and would not address the current risk to safety, public health or the environment. Therefore, due to PHMSA’s limited discretion due to Congress’ mandate, PHMSA has eliminated the no-action alternative from consideration. As alternative to promulgating the adoption of RPs 1170 and 1171, PHMSA considered promulgating more stringent requirements for underground storage facilities to further enhance operators’ ability to detect and address integrity issues that could cause a release. The API RPs provide general performance goals for ensuring the integrity of the storage infrastructure but leave specific criteria to the discretion of the operator, based on a risk assessment. Based on information regarding Aliso Canyon and other major well incidents, as well as studies by the industry, service providers, federal regulators, state governments, and academia that address the risk and integrity issues of wells, PHMSA considered setting explicit criteria in a rulemaking that would build and further expand on the principles laid out in RPs 1170 and 1171. For example, PHMSA considered setting specific criteria for (1) determining the maximum allowable operating pressure (MAOP) of the reservoir and (2) testing wells. PHMSA also considered requiring safety valves. Going beyond existing consensus standards, however, would require a more extensive development and review process involving technical studies that would take years to complete. The Aliso Canyon incident highlighted the urgency of closing regulatory gaps. Although PHMSA’s statutory authorization extends to the regulation of underground natural gas storage, the lack of applicable federal downhole regulations currently leaves the agency with no effective means of regulating the safety of interstate underground natural gas storage facilities generally. Proposing major infrastructure requirements subject to extensive technical studies and notice and comment proceedings prior to issuing this IFR would leave the public and the industry without any national minimum safety standards for underground natural gas storage incidental to transportation for years. It would also leave PHMSA without any inspection or enforcement authority for underground natural gas storage facilities during the rulemaking process. PHMSA also considered an alternative that would not mandate compliance with nonmandatory RPs (absent an operator making the justification under new § 192.12(a)(6)). However, PHMSA rejected this alternative because it cannot enforce voluntary provisions. Having an unenforceable “regulation” is meaningless and would not be a regulation at all -- it would be no more than guidance and would not satisfy the mandate that Congress gave to PHMSA in section 12 of the PIPES Act. In PHMSA’s experience, one of the key reasons why enforceability is important is that it ensures a level playing field for industry. While many operators are committed to safety and would conscientiously follow voluntary RPs, some other companies may be tempted to cut corners, thereby putting operators who invest in safety at a competitive disadvantage. The absence of mandatory requirements applicable to all industry participants reduces regulatory certainty and can result in a race to the bottom. Clear, enforceable regulatory requirements provide the public and operators confidence that 3-3 Interim Final Rule#

Page 16Preliminary Environmental Assessment: Underground Natural Gas Storage 3. IFR and Alternatives all operators are following the same minimum rules. PHMSA seeks public comments on the advantages and disadvantages of this alternative. Because the existing emergency situation necessitates immediate regulatory action, PHMSA opted against this alternative at this time. As a second phase after issuance of this IFR, PHMSA will further investigate the need for more detailed regulatory requirements for underground natural gas storage incidental to transportation and may pursue an additional rulemaking to address remaining safety concerns. This second phase would also benefit greatly from field observation and experience gained in implementing the IFR. 3-4 Interim Final Rule#

Page 17Preliminary Environmental Assessment: Underground Natural Gas Storage 4. Environmental Consequences 4 Affected Environment and Environmental Consequences PHMSA is responsible for regulating the safety of natural gas pipelines located throughout the United States, including the storage of natural gas ancillary to transportation. This EA focuses only on those resource and environmental effects categories relevant to understanding the potential environmental impacts of the IFR or alternatives, specifically the physical environment, public health and safety, climate change, and socioeconomic issues. For ease of presentation, the EA discusses the environmental consequences to each of the affected environments. Since this action does not involve significant construction activity and is aimed at preventing the adverse consequences of natural gas releases, the discussion focuses on the consequences of releases occurring in the baseline and which could continue under the no action alternative in highlighting the environmental effects of the final rule. As described in Section 3, the IFR will require operators to conduct mechanical integrity tests and other actions to assess and manage the risk, and in cases where they discover safety conditions during these tests, to take appropriate corrective actions. The API RPs describe the types of repairs that operators would need to perform to ensure the continued safe operation of the storage facility, including replacing the tubing, recementing, or plugging the well. These are corrective actions that would need to be performed at some point to continue safe operation, and the knowledge gained through the integrity test merely changes the timing of the repair which may avert more severe and costly repairs that would result from leaks or minor issues that escalated to more costly ones due to a lack of preventative maintenance. Further, the RPs give discretion to the operator on prioritizing repairs based on risk, so that operators are able to plan for, and schedule, those repairs based on the information gained from the inspections and tests rather than do repairs reactively when a leak occurs. However, operators may accelerate repairs of conditions they discover during the inspections as compared to when those repairs would have otherwise occurred. The IFR may prompt operators to conduct more regular tests, however, and the environmental effects of conducting the tests are therefore relevant environmental effects of the IFR. According to SoCalGas (2014), the process for conducting mechanical integrity tests involves the following steps:  Moving in the workover rig and filling the well with brine;  Installing the well blow-out prevention (BOP) equipment;  Removing the tubing and downhole completion equipment;  Scraping and preparing the casing and setting the bridge plug and sand;  Running the casing inspection equipment (ultrasonic, magnetic flux, calipers, cameras, etc.);  Running the test packer and pressure test production casing;  Removing the sand and retrievable bridge plug;  Re-installing the production tubing and completion equipment, then pressure testing;  Rigging down the BOP equipment, reinstalling the production tree, and moving the workover rig off the well; and 4-1 Interim Final Rule#

Page 18Preliminary Environmental Assessment: Underground Natural Gas Storage 4. Environmental Consequences  Replacing laterals and instrumentation, unloading the workover brine from the wellbore, and returning the well to service. In accordance with existing regulations, operators must take precautions and implement best management practices to minimize or mitigate the environmental impacts of drilling, workover, and other maintenance activities (which would include mechanical integrity tests and other preventative measures required under the IFR), such as minimizing emissions of natural gas, minimizing erosion and discharges of sediment runoff or oil to waters, or reducing potential impacts to other resources. Further, any impacts of these activities are expected to be temporary and limited to the immediate area of the well (i.e., within the facility or well pad). Overall, the effects of these activities are expected to be small, relative to the much more significant damages resulting from natural gas releases. The following sections provide a qualitative discussion of the environmental effects of the IFR, focusing on the impacts of natural gas releases in the baseline for this action, which are expected to continue absent the IFR. As described in Section 3.2, PHMSA also considered an alternative that would impose more stringent testing requirements. PHMSA notes that the environmental impacts of this alternative would be greater than the preferred approach proposed by PHMSA by potentially delaying the implementation of safety measures and impeding PHMSA’s ability to verify and enforce these measures. Going beyond existing consensus standards would require a more extensive development and review process. Under the Administrative Procedures Act (APA), PHMSA would need to propose the requirements and consider comments before promulgating a final rule, which could delay the implementation of the measures. As discussed in the Federal Register preamble for this action, PHMSA finds good cause that notice and comment rulemaking would be impracticable, unnecessary, or contrary to the public interest. 4.1 Physical Environment and Populations Exhibit 4-1 shows the location of natural gas storage facilities, based on the county indicated in the EIA data (EIA, 2016a). PHMSA did not find more precise data on the location of individual natural gas storage wells or the extent of each storage field that could be involved in a release. 4-2 Interim Final Rule#

Page 19Preliminary Environmental Assessment: Underground Natural Gas Storage 4. Environmental Consequences Exhibit 4-1: Geographical distribution of active underground natural gas storage facilities. Sources: Developed by Abt Associates based on EIA data (EIA, 2016a). The map places the facilities at the centroid of the county in which they are located. Facilities that overlap several counties are placed in the centroid of the first county identified in the EIA data. Releases from underground storage facilities can cause fires and explosions, with resulting physical damage to infrastructure, communities, and the surrounding environment. The accident history summarized in Section 2.2.2 shows that these impacts are not limited to the immediate vicinity of the storage wells, but can extend over several miles. For example, damages from the Hutchison (Kansas) gas release occurred nine miles from the damaged well, the Magnolia storage facility was seven miles from the injection well where the leak was discovered, and elevated methane levels were measured as far as eight miles away from the Aliso Canyon leaking well (McKenna, 2016). The physical environment potentially affected by the final rule includes water resources (e.g., streams, lakes, groundwater), cultural and historical resources (e.g., properties listed on the National Register of Historic Places), biological and ecological resources (e.g., coastal zones, wetlands, plant and animal species and their habitats, forests, grasslands), and special ecological resources (e.g., threatened and endangered plant and animal species and their habitats, national and state parklands, biological reserves, wild and scenic rivers) that are adjacent to the facilities. These 4-3 Interim Final Rule#

Page 20Preliminary Environmental Assessment: Underground Natural Gas Storage 4. Environmental Consequences resources could be affected by a major explosion or fire originating at the natural gas storage facility, similar to the incidents described in Section 2.2.2. API RP 1171 identifies the loss of water sources or wells as a potential consequence of gas containment failure due to inadequately sealed storage wells (API, 2015b; Table 1). Xcel Energy also mentions the potential for natural gas to escape into domestic water, “possibly resulting in injury or damage to persons and/or property.” (Xcel Energy, 2015; p.67) Exhibit 4-2 shows the surroundings of the Aliso Canyon underground storage facility and its 114 injection wells. The facility overlaps with the Santa Clarita Woodlands Park and is within 10 miles of a wilderness area and national forest. The facility boundary is also close to populated areas, including the Porter Ranch neighborhood, which is less one mile away. Exhibit 4-2: Surroundings of the Aliso Canyon storage facility administrative boundary (black line) and injection wells (blue dots). Sources: California Department of Conservation; Division of Oil, Gas, and Geothermal Resources. Reliably quantifying the extent and magnitude of the potential environmental effects of the IFR requires detailed knowledge about the location of the facilities and wells. As described above, PHMSA obtained EIA data that show the counties where the 390 active underground natural gas storage facilities are located. PHMSA did not find data on the exact boundaries of the facilities or 4-4 Interim Final Rule#

Page 21Preliminary Environmental Assessment: Underground Natural Gas Storage 4. Environmental Consequences coordinates of the wells. Without such detailed data, it is not possible to identify the resources within a given distance of the wells that could be involved in a natural gas release. However, the county information in the EIA data suggests that in 2015 approximately 40 million people resided in counties where active underground storage facilities operate. Populations in counties with active underground storage facilities range from approximately 1,000 people (Daggett County, Utah) to over 10 million (Los Angeles County, California). As evident from the Aliso Canyon release (which occurred in Los Angeles County), only a fraction of the population in a county may be directly affected by a release,16 but these estimates nonetheless highlight the potential impacts a release may have on neighboring populations. 4.2 Public Health and Safety The final rule is not expected to adversely affect public health and safety. In fact, by preventing or mitigating natural gas releases such as the prior releases described in Section 2.2.2, the final rule is expected to enhance the safety of populations residing in proximity to the facilities. Evidence of reported impacts to public health and safety of past incidents provide an indication of the potential beneficial effects of the IFR in this area. Explosions associated with the Yaggy natural gas release in 2001 killed 2 people, damaged several businesses, and required the evacuation of 250 residents. As summarized in Section 2.2.2, over 5,000 residents had to be evacuated from their homes in the aftermath of the Aliso Canyon release, with many residents complaining of headaches, nosebleeds, and nausea attributed to sulfur-containing odorants in the natural gas (LA Times, 2016). Conley et al. (2016) reported detecting methane; ethane; propane; and trace amounts of benzene, toluene, ethylbenzene, and xylene isomers in the air surrounding the Aliso Canyon facility. Benzene can have toxic effects on the blood system and is a known human carcinogen. 17 According to California’s Office of Environmental Health Hazard Assessment, peak levels of benzene measured in the community reached about 70 percent of the acute reference exposure levels (RELs), 18 while long- term average levels were below the level of concern for chronic exposure (OEHHA, 2016). The long- term health effects from inhalation of components of natural gas by residents affected by the releases are uncertain, as are the effects from ongoing stress caused by the unknown risk of another incident. 4.3 Climate Change Natural gas is composed primarily of methane (approximately 80 percent), with a smaller proportion of ethane, propane, and other hydrocarbons. Methane is a potent greenhouse gas (GHG) with a climate forcing effect that is 28-36 times greater than that of carbon dioxide over a 100-year period (Intergovernmental Panel on Climate Change (IPCC), 2013). The climate effects resulting from emissions of GHGs include an increase in temperature and sea level rise; changes in weather patterns toward an intensified water cycle with stronger floods and droughts; and stress on ecosystems, 16 According McKenna (2016), up to 1.8 million people were affected by the Aliso Canyon release, out of the 10 million people in Los Angeles County. 17 For example, benzene can affect the tissues that form blood cells, especially the bone marrow, and disrupt normal blood production leading to anemia (ATSDR, 2007, 2015). 18 RELs are the levels that are not anticipated to cause adverse health effects. 4-5 Interim Final Rule#

Page 22Preliminary Environmental Assessment: Underground Natural Gas Storage 4. Environmental Consequences especially in the Arctic, mountain, and tropical areas, resulting in the shift of species habitat range. The expected economic losses from climate change include reduced agricultural yields, human health risks, property damages from increased flood frequencies, the loss of ecosystem services, and others. Conley et al. (2016) noted that, at its peak, the Aliso Canyon release was the largest known anthropogenic point source of methane in the United States, effectively doubling the leak rate of all other sources in the Los Angeles Basin combined. As detailed in the RIA, PHMSA estimated the social costs of the climate-related impacts of the Aliso Canyon incident – which released a total of up to 109,000 metric tons of methane – at $122.9 million, based on the average social cost of methane at a 3 percent discount rate (PHMSA, 2016a), with a range of $55.3 to $344.2 million, depending on the discount rate. 19 Mechanical integrity tests and other measures mandated by the IFR are expected to reduce the likelihood of a well failure by detecting conditions that precede such failure. They may also reduce fugitive emissions. PHMSA did not find data to estimate the reduction in risk that will result from conducting mechanical integrity tests on storage wells. However, to the degree that the IFR promotes implementation of safer practices by making them mandatory and enforceable, then the IFR has the potential to avoid methane emissions and associated climate change and other environmental effects. 4.4 Environmental Justice According to Executive Order 12898, environmental justice issues are raised by “disproportionate” and “high and adverse impact” on minority or low-income populations. As noted in Section 4.1, data on the location of underground natural gas storage facilities, which only identify counties where the facilities are located, are not sufficiently detailed to determine whether the geographical distribution of the facilities raises environmental justice concerns. Further, attempts to predict which facilities or wells could have leaks in the future would be highly speculative. This said, PHMSA notes that none of the alternatives analyzed in the EA would result in disproportionate or high and adverse environmental impacts. In fact, if the final rule helps to reduce or mitigate natural gas releases, all populations living in proximity to the facilities will benefit, and to the degree that these areas have relatively greater proportions of minority and low-income populations, the IFR could have a beneficial effect on addressing environmental justice concerns. 19 Based on emissions of 96,500 metric tons of methane and a cost of $1,148 per metric ton (3% discount rate, emissions occurring in 2015). Costs were updated from 2012 to 2015 dollars using the gross domestic product deflator ($1,100 × 1.04335). 4-6 Interim Final Rule#

Page 23Preliminary Environmental Assessment: Underground Natural Gas Storage 4. Environmental Consequences 4.5 Socioeconomic Issues PHMSA does not expect this rulemaking to have adverse effects on communities or economies. PHMSA estimated the incremental compliance costs of the rule requirements at $27.2 to $31.7 million annually (see RIA; PHMSA, 2016a) and concluded that these costs would have a minimal impacts on the supply, distribution, or use of energy. For example, assuming that all costs are passed on to the end-use consumers of natural gas, the incremental costs of the IFR to residential customers would be approximately $0.66 per year, or $0.06 per month, which PHMSA concluded would be unlikely to significantly affect natural gas consumers.20 PHMSA similarly concluded no significant impacts on small businesses or on employment. Instead, to the extent that the final rule will prevent or mitigate the impacts of natural gas releases, socioeconomic effects are expected to be positive. Accidents such as the three releases described in Section 2.2.2 can be highly disruptive to a community. In addition to the health and safety concerns described in the previous section, hazardous liquid releases disrupt resident or business activities (e.g., by relocating affected residents for days, weeks, or even months; closing roads and other services). Some of the economic impacts can persist long after the release has ended, as property prices may be affected by the stigma of the incident and uncertainty regarding ongoing risks. Numerous articles raised concerns about lower property prices following the Aliso Canyon incident. At least one study showed that the proximity to natural gas storage facilities depresses property values (in Indiana). The authors note that the impacts of the facilities include not only the risk of releases, but also noise, visual, and other factors (Jellicoe and Delgado, 2015). Other studies have addressed the property impacts of other types of high-profile environmental releases involving pipelines.21 20 PHMSA notes that these figures may overstate impacts on average consumers, however, since incremental storage costs affect only a fraction of the total gas consumed. 21 The literature shows impacts on the price of houses located in proximity to pipelines involved in high-profile incidents. For example, Simons et al. (2001) and Hansen et al. (Undated) conducted hedonic analyses in communities affected by pipeline releases, and found that the value of homes in close proximity to pipelines involved in a high-profile incident were significantly and adversely affected following the release, at least in the short-term. Simons et al. (2001) found that the release of oil to a river that affected community shorelines for 10 miles reduced the value of properties with ownership rights to the waterfront by over 10 percent in the 6 months after the incident, and reduced the sales volume in the area during the same time period. Hansen et al. (Undated) conducted a hedonic analysis of home sales in Bellingham (Washington), including 5 years of data before and after a high-profile pipeline release in 1999. Before the incident, there was no significant relationship between distance to the pipeline and home price, while after the incident, homes closer to the pipeline had a statistically significant lower value (with the effect diminishing over time). 4-1 Interim Final Rule#

Page 24Preliminary Environmental Assessment: Underground Natural Gas Storage 5. Determination 5 Determination of the Degree of Environmental Impact PHMSA determined that the final rule requirements will not have a significant detrimental impact on the environment. In fact, the final rule is expected to improve environmental conditions by reducing the risk of natural gas releases from underground natural gas storage facilities. The information in this EA report supports a FONSI for this action. 5-1 Interim Final Rule#

Page 25Preliminary Environmental Assessment: Underground Natural Gas Storage 6. Consultations 6 Persons Consulted Public involvement is a critical aspect of the National Environmental Policy Act process. Normal rulemaking procedures would involve publishing a notice of the proposed regulation in the Federal Register, receiving input from the public through a formal comment period, and reviewing those comments to incorporate them into a final rule. This normal notice and comment process is impracticable in urgent or emergency situations where delay could jeopardize the public. Providing notice and comment prior to the incorporation of the API RPs in the proposed IFR would leave the public and the industry without any national minimum safety standards for underground natural gas storage incidental to transportation during the rulemaking process, which could take one to three years or more to complete under APA and executive branch procedures. Accordingly, PHMSA is proposing a final rule without going through a formal public comment period.22 Even without such a formal comment period, however, PHMSA has still sought and received public input in the development of this action. On January 20, 2016, INGAA petitioned PHMSA to incorporate both recommended practices by reference into 49 C.F.R. Part 192 (INGAA, 2016b). In the petition, INGAA emphasized that: “Various federal agencies currently regulate issues involving interstate natural gas storage facilities. However, it is critical that PHMSA regulate interstate natural gas storage pursuant to its jurisdictional authority. Safety jurisdiction over federally certificated natural gas facilities, including underground natural gas storage facilities, rests exclusively at the federal level. PHMSA is the agency best suited for the oversight of these facilities given its experience with risk and integrity management principles for natural gas and hazardous liquid related infrastructure. States with oil, gas and gas storage wells have regulations in place governing well construction, remediation and plugging. These state regulations take into consideration specific geologic conditions that may be unique in each state. In the absence of federal standards, many interstate natural gas storage operators have relied on state regulations to help develop good practices. However, state safety jurisdiction extends only to intrastate natural gas storage facilities. State regulations differ from state to state and do not provide consistency for how integrity management of underground natural gas storage facilities is performed.” That petition, along with a February 11, 2016 letter from INGAA, urged PHMSA to adopt API RPs 1170 and 1171 as quickly as possible in order to put into place a set of recommended practices that will at least ensure all operators of underground natural gas storage facilities assess their 22 Under Title 5, United States Code, §553(b)(3)(B); and Title 49, United States Code, §60102(b)(6)(C); advance notice and public procedure are not required when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. Under 49 C.F.R. § 190.311, PHMSA may issue regulations without first issuing a notice of proposed rulemaking and accepting public comment if it finds, for good cause, that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. After receiving and reviewing public comments, as well as any other relevant documents, PHMSA may revise the IFR and issue a final rule. 6-1 Interim Final Rule#

Page 26Preliminary Environmental Assessment: Underground Natural Gas Storage 6. Consultations facilities and establish basic procedures to ensure safety in accordance with a common framework (INGAA, 2016a). INGAA, API, and AGA have all reached out to PHMSA in the aftermath of the Aliso Canyon incident and informally expressed support from their member companies for the rapid adoption of the API RPs. 6-2 Interim Final Rule#

Page 27Preliminary Environmental Assessment: Underground Natural Gas Storage 7. Preparers and Reviewers 7 List of Preparers and Reviewers This Preliminary EA was prepared with support by Abt Associates, under Delivery Order #DTPH5616F00006. Preparers:  Isabelle Morin, Abt Associates  Lisa Grogan-McCulloch, Abt Associates  Cristina Cornejo, Abt Associates  Olivia Griot, Abt Associates Reviewers:  Eloise Castillo, PHMSA  Robert Jagger, PHMSA 7-1 Interim Final Rule#

Page 28Preliminary Environmental Assessment: Underground Natural Gas Storage 8. References 8 References American Gas Association (AGA). 2014. Survey of Underground Storage of Natural Gas in the United States and Canada: 2013/2014. American Petroleum Institute (API). 201a. API Recommended Practice 1170: Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage. First Edition, July 2015. American Petroleum Institute (API). 201b. API Recommended Practice 1171: Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs. First Edition, September 2015. Agency for Toxic Substances and Disease Registry (ATSDR). 2007. Agency for Toxic Substances and Disease Registry (ATSDR) Toxicological Profile for Benzene. Agency for Toxic Substances and Disease Registry (ATSDR). 2015. Addendum to Toxicological Profile for Benzene. June. Bardwell, S.K. and C. Horswell. 2004. Valve Failure Sends Flames into Sky at Moss Bluff Storage Facility. Houston Chronicle. August 20. British Geological Survey. 2008. An appraisal of underground gas storage technologies and incidents, for the development of risk assessment methodology. Research Report RR605. California Air Resources Board (CARB). 2016a. Determination of Total Methane Emissions from the Aliso Canyon Natural Gas Leak Incident. October 21, 2016.Available at https://www.arb.ca.gov/research/aliso_canyon/aliso_canyon_methane_emissions- arb_final.pdf. California Air Resources Board (CARB). 2016b. Aliso Canyon Methane Leak Climate Impacts Mitigation Program. March 31, 2016. Conley, S., G. Franco, I. Faloona, D.R. Blake, J. Peischl, and T.B. Ryerson. 2016. Methane Emissions from the 2015 Aliso Canyon Blowout in Los Angeles, CA. Science. February 25. Energy Information Administration (EIA). 2015. The Basics of Underground Natural Gas Storage. November 16, 2015. Available: http://www.eia.gov/naturalgas/storage/basics/. Accessed May 18, 2016. Energy Information Administration (EIA). 2016a. Natural Gas Annual Respondent Query System (EIA-191 Data through 2015), Release Date March 2016. Available: http://www.eia.gov/cfapps/ngqs/ngqs.cfm?f_report=RP7. Federal Energy Regulatory Commission (FERC). 2016. Jurisdictional Storage Fields in the United States. Hansen, J., E.D. Benson, and D.A. Hagen. No date. Environmental Hazards and Residential Property Values: Evidence from a Major Pipeline Event. Hopper, J.M. 2004. Gas Storage and Single-point Failure. Natural Gas. Interagency Task Force on Natural Gas Storage Safety. 2016. Ensuring Safe and Reliable Underground Natural Gas Storage. October 2016. Available at http://energy.gov/sites/prod/files/2016/10/f33/Ensuring Safe and Reliable Underground Natural Gas Storage – Final Report.pdf; Accessed November 23, 2016. 8-1 Interim Final Rule#

Page 29Preliminary Environmental Assessment: Underground Natural Gas Storage 8. References Interagency Working Group on the Social Cost of Greenhouse Gases (IWGSCGG). 2016. Addendum to Technical Support Document on Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866: Application of the Methodology to Estimate the Social Cost of Methane and the Cost of Nitrous Oxide. August 2016. Available at https://www.whitehouse.gov/sites/default/files/omb/inforeg/august_2016_sc_ch4_sc_n2o_ad dendum_final_8_26_16.pdf Intergovernmental Panel on Climate Change (IPCC). 2013 Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. [Stocker, T.F., D. Qin, G.-K., Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, 1535 pp. Interstate Natural Gas Association of America (INGAA). 2016a. INGAA Board of Directors Reaffirms Commitment to Underground Gas Storage Integrity, Supports Accelerated Adoption of Industry Standards. Press release. February 11. Interstate Natural Gas Association of America (INGAA). 2016b. Petition for Rulemaking: Standards for Underground Natural Gas Storage. Letter to PHMSA. January 20. Interstate Natural Gas Association of America (INGAA). 2016c. Response to PHMSA Questions. Personal Communication from Terry D. Boss (INGAA) to John Gale (PHMSA). May 9, 2016. Jellicoe, M. and M.S. Delgado. 2015. Quantifying the effects of underground natural gas storage on nearby residents. Agricultural and Resource Economics Review 44(2):59–82. Kansas Geological Survey. 2004. Natural Gas Explosions in Hutchison, Kansas: Geologic Factors. August 20, 2004. Available at http://www.kgs.ku.edu/Hydro/Hutch/GSA_Watney_updated082004.pdf LA Times. 2016. Southern California Gas to Pay $4-million Settlement Over Massive Porter Ranch Gas Leak. September 19, 2016 Los Angeles County Public Health, 2016. Environmental Conditions and Health Concerns in Proximity to Aliso Canyon Following Permanent Closure of Well SS‐25. May 13, 2016. McKenna, P. 2016. Leaking Methane Plume Spreading across L.A.’s San Fernando Valley. InsideClimate News. January 14. Office of Environmental Health Hazard Assessment (OEHHA). 2016. Aliso Canyon Underground Storage Field, Los Angeles County. May 11. Available: http://.ca.gov/air/general-info/aliso- canyon-underground-storage-field-los-angeles-county. OGJ. 2004. Second Moss Bluff Explosion Accesses 6 BCF of Gas in Cavern, Feeds Larger Fire. August 20, 2004. Pipeline and Hazardous Materials Safety Administration (PHMSA). 2012. Strategic Plan (2012– 2016). U.S. Department of Transportation. Available: http://www.phmsa.dot.gov/staticfiles/PHMSA/DownloadableFiles/PHMSA%20Strategic%20 Plan%20Final%208%203%2012.pdf. Accessed March 1, 2016. Pipeline and Hazardous Safety Administration (PHMSA). 2016a. Regulatory Impact Analysis: Underground Natural Gas Storage Interim Final Rule. October 2016 8-2 Interim Final Rule#

Page 30Preliminary Environmental Assessment: Underground Natural Gas Storage 8. References Pipeline and Hazardous Safety Administration (PHMSA). 2016b. Unit Component Gas Storage Fields Report. Updated April 5. Simons, R.A. K. Winson-Geideman, and B.A. Mikelbank. 2001. The Effects of an Oil Pipeline Rupture on Single-Family House Prices. The Appraisal Journal (October 2001): 410 Sempra Energy. 2016. Third Quarter 2016 Earnings Results. Presentation. November 2, 2016. Available at http://files.shareholder.com/downloads/SRE/3288685950x0x915033/F78630C4- 7E59-423E-955D-D21499D8AB52/Q3-16_Presentation.pdf; Accessed November 23, 2016 Southern California Gas Company (SoCalGas). 2014. Direct Testimony of Phillip E. Baker Underground Storage before the Public Utilities Commission of the State of California. November. Southern California Gas Company (SoCalGas). 2016. Supplemental Updated Response. June 15. Xcel Energy Services Inc. (Xcel Energy). 2015. Direct Testimony and Attachments of Kimberly S. Locker on Behalf of Public Service Company of Coloraro. March 3, 2015. 8-3 Interim Final Rule#