Playing on the atomic weight of hydrogen (1.008), the United States Congress designated October 8th as “National Hydrogen and Fuel Cell Day.” This designation acknowledges the growing interest in, and enthusiasm for, hydrogen as a carrier and source of energy. As the energy industry continues to develop projects for the production of hydrogen, as a low-carbon alternative to fossil fuels such as natural gas, legislators and regulators are considering how to promote the development of hydrogen infrastructure and address the substantial transportation needs that growth in the hydrogen industry would require.

The Infrastructure Investment and Jobs Act (the “Act”) includes many incentives for the development of low-carbon hydrogen infrastructure, including provisions directing the Department of Energy to establish clean hydrogen hubs, which the Act defines as “networks of clean hydrogen producers, potential clean hydrogen consumers, and connective infrastructure in close proximity.”¹ The Act’s promotion of the expansion of “connective infrastructure” for the transportation of hydrogen recognizes that a growing hydrogen industry will require additional transportation infrastructure. This is particularly important since the existing hydrogen pipeline network – a mere 1,608 miles – is located predominantly along the Gulf Coast in Texas, Louisiana, and Alabama.²

However, some observers are concerned that more is necessary to clarify and enhance the regulation of hydrogen transportation by pipeline. Although some federal oversight of hydrogen pipelines exists, hydrogen pipelines do not share the same regulatory framework as natural gas pipelines. For example, the federal government does not directly regulate the siting of hydrogen pipelines. The Federal Energy Regulatory Commission (“FERC”), which approves the siting of interstate natural gas pipelines, does not have siting authority over interstate hydrogen pipelines. The Pipeline and Hazardous Materials Safety Administration (“PHMSA”) promulgates safety regulations that apply to hydrogen pipelines. The Surface Transportation Board (“STB”) engages in limited economic regulation over the rates and terms of service of interstate hydrogen pipelines, and provides a forum to resolve disputes related to pipelines within its jurisdiction. Parties who wish to challenge whether a rate or another aspect of a pipeline’s common carrier service is “just and reasonable” may petition the STB for a hearing.

Lawmakers and regulators are considering how the regulatory landscape might be modified to accommodate the transportation of greater volumes of hydrogen. In the past several weeks, steps have been taken in the legislative and regulatory arenas to address various issues surrounding the interstate transportation of hydrogen.

On September 28th, Senator Martin Heinrich (D-NM), sent a letter to FERC Chairman Richard Glick inquiring about the Commissioner’s role in the regulation interstate hydrogen transportation and storage. In his letter, the Senator encouraged FERC to begin consideration of regulatory matters associated with the interstate transportation of hydrogen, including the siting of hydrogen pipelines and the transportation of hydrogen-methane blends in natural gas pipelines. The letter further noted that, while other federal agencies have roles in the regulation of hydrogen pipelines, the Senator wanted a better understanding of FERC’s view of its regulatory role. Senator Heinrich sought responses to the following questions:

• Does FERC have the jurisdiction and the regulatory authority it needs to incorporate hydrogen blending into its natural gas pipeline tariffs?  If not, where are the gaps in jurisdiction and/or regulatory authority?

• Specifically, does the Commission have authority under the Natural Gas Act over hydrogen blending with natural gas, and has the Commission examined at what percentage blend additional authority might be required?

• What is FERC’s consultation role within the research and development on hydrogen being done by [the Department of Energy], especially as it pertains to pipeline and storage infrastructure?

• Does FERC’s experience regulation natural gas pipelines provide analogous expertise for regulation new hydrogen pipelines?

• To what extent has technical analysis been done to determine which existing natural gas pipelines could be retrofitted to transport hydrogen at different blends?

• To what extent would future transportation of hydrogen be a factor in the environmental review of an interstate natural gas pipeline permit application?

• What steps does FERC need to take to determine the potential capacity of existing pipeline customers to handle different blends of hydrogen?

Commissioner Glick has not yet responded to these questions. However, FERC is already actively considering its regulatory oversight in respect of pipeline infrastructure, particularly in the context of siting authority.

PHMSA is also considering its oversight role in the context of increased transportation of hydrogen by pipeline. On October 21st, PHMSA issued a notice of a virtual public meeting, to be held on November 30th, to discuss “research gaps and challenges in pipeline safety and emerging fuels, including hydrogen transportation.”³ The meeting will include “panel discussions in a general session between government, industry, research consortiums, and environmental advocacy stakeholders on emerging fuels and pipeline safety R&D.”⁴ This action by the PHMSA is one more example of a regulatory action preparing for the possibility of the transportation of greater volumes of hydrogen.

Expect further examinations of the statutory and regulatory framework for the production and transportation of hydrogen as the industry continues to develop. FERC’s responses to Senator Heinrich’s inquiry and the results of PHMSA’s public meeting could elicit additional legislative and regulatory action to help foster the development of a safe, efficient low-carbon hydrogen industry.

                                                                                                                                               
<sup>1. Infrastructure Investment and Jobs Act,  H.R. 3684, 117th Cong. § 813.
2. Pipeline Transportation of Hydrogen: Regulation, Research, and Policy, Congressional Research Service, March 12, 2021 at p.5T
3. https://www.federalregister.gov/documents/2021/10/21/2021-22913/pipeline-safety-pipeline-transportation-hydrogen-and-emerging-fuels-research-and-development-randd.
4. Id.</sup>

ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm whose lawyers practice throughout a network of offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.