APGA Weekly Update May 26, 2016

05-26-2016 13:35

FERC Extends Jurisdiction to Municipal Gas System

The Federal Energy Regulatory Commission (FERC) has denied a rehearing request by the City of
Clarksville, Tenn., of a 2014 order in which FERC ruled that the city would be subject to Natural Gas Act
(NGA) jurisdiction for a sale of gas to another local distribution company (LDC) that took place entirely in
Tennessee. The sale was to the city of Guthrie, Ky., in Tennessee. Guthrie then transported the gas
across the Tennessee-Kentucky border for use in Guthrie’s distribution system.

Clarksville argued that the ruling of the prior order was inconsistent with numerous FERC precedents
over the years in which FERC ruled that a municipality that sold or transported gas entirely within its
state of origin was not subject to NGA jurisdiction. FERC did not dispute its numerous precedents but
found them “overly expansive” if it would allow a municipality to “avoid NGA jurisdiction over the
transportation and sale of gas for consumption in other states, because such an interpretation would
create a regulatory gap.” FERC essentially ruled that it needed to extend its jurisdiction over the sale to
fill a regulatory gap because the state of Tennessee could not regulate the transportation and sale of
any gas that eventually crossed state lines. FERC sought to bolster its case by citation to court decisions
which, according to FERC, allowed it to regulate municipal transactions that are part of an interstate
flow of gas. It also told its staff to investigate whether Guthrie required a certificate.

This order is another step in FERC’s efforts to regulate municipal transactions which, in FERC’s judgment,
are in interstate commerce. In Order No. 636, FERC asserted jurisdiction over the release of pipeline
capacity controlled by a municipality. In a 2002 order, FERC ruled that it had NGA jurisdiction over a
municipality where it transported gas outside its state of origin. The recent FERC ruling over Clarksville
raises the specter that the agency will seek to extend its regulation to other municipal transactions
whenever it determines that it is part of the flow of gas in interstate commerce.

The APGA Regulatory Subcommittee discussed this issue on its May 23 conference call and it was agreed
that the next step would be to survey APGA members to determine the member-wide impact of this
FERC action. For questions on this article, please contact Dave Schryver of APGA staff by phone at 202-
464-2742 or by email at dschryver@apga.org.

House Names Energy Legislation Conferees

On May 26, the House of Representatives named conferees for the House-Senate Conference
Committee to resolve differences between the House and Senate-passed versions of comprehensive
energy legislation. House Republicans named 24 conferees and Democrats named 16 conferees. The
list is below.

The Senate has yet to name its conferees. Congress will be out for a Memorial Day recess, it remains
unclear and perhaps unlikely that the House and Senate will be able to complete the conference
committee prior to the summer recess beginning July 16. APGA will be following up with its members
located in the congressional districts of the conferees in terms of communicating APGA’s priority energy
bill issues for conference committee.

Republican Conferees
Energy and Commerce Committee:
 Chairman Fred Upton (MI)
 Rep. Joe Barton (TX)
 Rep. Ed Whitfield (KY)
 Rep. John Shimkus (IL)
 Rep. Robert Latta (OH)
 Rep. Cathy McMorris Rodgers (WA)
 Rep. Pete Olson (TX)
 Rep. David McKinley (WV)
 Rep. Mike Pompeo (KS)
 Rep. Morgan Griffith (VA)
 Rep. Bill Johnson (OH)
 Rep. Bill Flores (TX)
 Rep. Markwayne Mullin (OK)
Natural Resources Committee:
 Chairman Rob Bishop (UT)
 Rep. Don Young (AK)
 Rep. Cynthia Lummis (WY)
 Rep. Jeff Denham (CA)
 Rep. Bruce Westerman (AR)
Science, Space, and Technology Committee:
 Chairman Lamar Smith (TX)
 Rep. Randy Weber (TX)
 Agriculture Committee
 Chairman Mike Conaway (TX)
 Rep. Glenn Thompson (PA)
Transportation and Infrastructure Committee:
 Rep. Cresent Hardy (NV)
 Rep. Lee Zeldin (NY)
Democrat Conferees
Energy and Commerce Committee:
 Frank Pallone (N.J.)
 Bobby Rush (Ill.)
 Lois Capps (Calif.)
 Doris Matsui (Calif.),
 Kathy Castor (Fla.)
 John Sarbanes (Md.)
 Peter Welch (Vt.)
 Ben Ray Luján (N.M.)
 Paul Tonko (N.Y.)
 Dave Loebsack (Iowa)
Natural Resources Committee:
 Raúl Grijalva (Ariz.)
 Jared Huffman (Calif.)
 Debbie Dingell (Mich.)
Agriculture Committee:
 Collin Peterson (Minn.)
Science, Space, and Technology Committee:
 Eddie Bernice Johnson (Texas)
Transportation and Infrastructure Committee:
 Peter DeFazio (Ore.)

For questions on this article, please contact Dan Lapato of APGA staff by phone at 202-464-2742 or by
email at dlapato@apga.org.

Plastic Pipe Database Committee Releases Report on Plastic Pipe Performance

On May 26, the Plastic Pipe Database Committee (PPDC) released the latest update on in-service failures
of plastic pipe and components. The PPDC is composed of representatives from APGA, the American Gas
Association (AGA), Plastics Pipe Institute (PPI), National Association of Regulatory Utility Commissioners
(NARUC), National Association of Pipeline Safety Representatives (NAPSR), National Transportation
Safety Board (NTSB) and U.S. Department of Transportation’s (DOT) Pipeline and Hazardous Materials
Safety Administration (PHMSA). For the past 16 years, the PPDC has been receiving information on inservice
plastic piping system failures and/or leaks with the objective of identifying possible performance
issues. Company participation in this initiative is voluntary. Matt Stennett of Middle Tennessee Natural
Gas and Jon Mason of Chambersburg, Penn., represent APGA on the PPDC. The full report can be found
here.

The purpose of the PPDC data collection and analysis is to identify possible problems with plastic pipe
and components such as the brittle failures that occurred with Century Utility Products polyethylene
(PE) pipe produced from 1970 through 1974, Aldyl A PE pipe manufactured from 1970 through 1972 and
pipe manufactured from PE 3306 resin. No additional problem materials were identified in the latest
report.

The PPDC effort has proven invaluable in maintaining confidence in the continued safe use of plastic
pipe in distribution piping. APGA strongly encourages all members to voluntarily submit data to the
PPDC. Even if a utility has had no plastic pipe failures, that information is crucial to the effort. For
information on the PPDC, go to www.apga.org/programs/plasticpipedata. For questions on this article,
please contact John Erickson of APGA staff by phone at 202-464-0834 or by email at
jerickson@apga.org.

APGA, NGVAmerica, and AGA Kick Off the CNG from Sea to Shining Sea Rally

On May 30, APGA, NGVAmerica, and the American Gas Association’s (AGA) CNG from Sea to Shining Sea
road rally will kick off thanks to the hard work of the participants and the generous support of 44
sponsor organizations.
APGA’s Natural Gas Vehicle (NGV) Committee Chairman Pat Riley, General Manager of Gibson County
Utility District, and Mike Kearns, Energy Services Manager for the City of Richmond’s Department of
Public Utilities, will begin their cross country, CNG-only journey in their respective vehicles with a rally in
Long Beach, Calif. From there, they will make an additional 12 stops for rallies across the country, with
the final one in Washington, D.C. The locations of each stop are:
 Long Beach, CA
 Mesa, AZ
 Albuquerque, NM
 Oklahoma City, OK
 Little Rock, AR
 Memphis, TN
 Trenton, TN
 Dickson, TN
 Sevierville, TN
 Rock Hill, SC
 Greenville, NC
 Richmond, VA
 Washington, DC
The mission of this road rally is to inform and educate the American public on the benefits of NGVs and
natural gas fueling infrastructure through local, state, and national media outlets. This rally will
demonstrate the viability and vibrancy of the domestic NGV market and shows that NGVs can travel
across the nation as there are already adequate refueling stations to make this trip a reality.
You can follow the progress of the rally and view photos from the events on the CNG from Sea to
Shining Sea Facebook page. For questions on this article, please contact Scott Morrison of APGA staff by
phone at 202-464-2742 or by email at smorrison@apga.org.

APGA Files Comments with the IRS on Definition of a Political Subdivision

On May 23, APGA filed comments with the Internal Revenue Service (IRS) in response to proposed
regulations that would establish a new definition of “Political Subdivision.” This regulation is significant
as an entity that is not a political subdivision cannot issue tax-exempt bonds. The proposed regulation
would add two new tests—a governmental or public purpose test and a governmental control test—in
the determination of whether an entity is a political subdivision and all three tests (the two new tests
and the original one) must be met for an entity to qualify as a political subdivision. APGA is concerned
that the proposed rule could terminate the status of scores of public natural gas distribution systems
and their joint action gas supply agencies as political subdivisions for purposes of issuing tax-exempt
bonds.

In its comments, APGA expresses opposition to the proposed rule and urges the IRS to withdraw it. The
comments also communicate that “APGA members depend on access to tax-exempt funding for the
construction of necessary infrastructure to ensure their ability to continue to provide safe and reliable
natural gas service in their communities and to acquire long-term gas supplies at reasonable and
competitive prices for the benefit of the consumers they serve.” The comments further state that while
some APGA members have all three of the sovereign powers (taxation, eminent domain, and police) and
therefore meet the governmental control test, others do not and this proposed rule would deny many
public natural gas systems and joint action agencies the ability to issue tax-exempt bonds despite those
entities meeting “every reasonable standard of providing a public benefit under powers expressly
granted by the people of the states through their elected representatives.”
A copy of the comments filed with the IRS is available on the APGA website at
www.apga.org/comments. APGA also asked its members to submit letters to the IRS communicating
their own individual concerns while expressing support for APGA’s comments and many APGA members
did so. The IRS has scheduled a public hearing on the proposed rule for June 6 and APGA has requested
an opportunity to make a public statement at the hearing. For questions on this article, please contact
Dave Schryver of APGA staff by phone at 202-464-2742 or by email at dschryver@apga.org.

APGA Board Recognizes Jeff Weise

At its May 2 meeting, the APGA Board of Directors voted to present Jeff Wiese, the Pipeline and
Hazardous Materials Safety Administration’s (PHMSA) Associate Administrator for Pipeline Safety, with a
Special Recognition Award in honor and recognition of his exceptional contributions and devoted
dedication over a lifetime to advance and improve the level of safety of America’s pipeline industry.
Jeff had been with PHMSA for the past 16 years and in the federal government for 32 years. On May 1,
he left PHMSA to pursue other opportunities. He managed PHMSA's safety program for the nation's 2.6
million miles of natural gas and hazardous liquid pipelines during a period of rapid transformation, and
directed major new policy initiatives, including the design, development, and deployment of integrity
management oversight and public awareness programs. He was also instrumental in building the
framework for the Common Ground Alliance, which works to prevent underground utility damage. Prior
to working for PHMSA Jeff was with the Minerals Management Service.

Jeff has appeared at many APGA events and worked closely with APGA’s leadership. He was also
instrumental in arranging for PHMSA to provide financial support for the APGA Security and Integrity
Foundation (SIF). APGA and the SIF thank Jeff for his support as Associate Administrator and wish him all
the best in his future career.

PHMSA has named Alan Mayberry as Interim Associate Administrator for Pipeline Safety while the
search for a permanent replacement proceeds. For questions on this article, please contact John
Erickson of APGA staff by phone at 202-464-0834 or by email at jerickson@apga.org.

APGA Look Closer Calendars Now Available!

The 2017 Look Closer calendars are now available for ordering. These calendars were developed by
Crabtree Ink and use the themes from the APGA Look Closer marketing campaign. You can order the
calendars by going to www.apgalookcloser.com, and click on the link at the top of the page (calendar).
No login is required.

The 2017 calendar will feature 12 months devoted to promoting the natural gas industry through
marketing messages and professional photography. A custom tab (two inches below the bottom page)
allows for your company information, web address and logo. Order today before pre-sales end on
August 5, and receive them before Public Natural Gas week in October. Every one of your customers
would love to have one!

For questions on the 2017 calendars or on the Look Closer marketing campaign, please contact Audrey
Anderson by phone at 202-464-2742 or by email at aanderson@apga.org.

APGA Sends Out Membership Satisfaction Survey

On May 23, APGA sent out its annual membership satisfaction survey to all of its members. The survey
is done to assess member views of APGA’s performance, value, and the quality of services provided.
The survey also seeks input on additional potential services that APGA may offer that will provide value
to its members. The survey is broken into segments that address membership value, advocacy,
communications, education and more. A survey has been sent to the primary contact of each member
system.

The survey is intended to take no more than 15-20 minutes to complete. The survey will help APGA staff
and the Board of Directors identify the value of the services APGA provides as well as areas where
improvement is needed. APGA has always been, and continues to be, a member-driven organization.
As such, this survey plays a critical role in helping ensure that APGA meets the future needs of its
members. The comments and suggestions APGA receives will also play an important role in helping the
APGA Board of Directors and leadership to strategically plan for the future.

We strongly encourage you to take the time to complete the survey so that we may continue to work to
increase and improve the value of your APGA membership. Your input will help improve APGA and the
overall value of membership. For questions on the survey or additional information, please contact
Dave Schryver of APGA staff by email at dschryver@apga.org or by phone at 202-464-2742.

View Past APGA Educational Webinars

Did you miss an APGA educational webinar? APGA keeps an archive of video recordings of past webinars
as a resource for members at www.apga.org/webinars. Please log in with your APGA member
credentials and the Past Webinars section will be unlocked under the Upcoming APGA Educational
Webinars section.

EIA Reports Storage Increase of 71 Bcf to Put Working Gas Storage at 2,825 Bcf

Here is the weekly EIA Summary Report issued on Thursday, May 26, 2016, which reports the week’s
storage report highlights for Friday, May 20, 2016. A 71 Bcf increase has been reported.
Working gas in storage was 2,825 Bcf as of Friday, May 20, 2016, according to EIA estimates. This
represents a net increase of 71 Bcf from the previous week. Stocks were 756 Bcf higher than last year at
this time and 769 Bcf above the five-year average of 2,056 Bcf. At 2,825 Bcf, total working gas is above
the five-year historical range.

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