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April 18, 2014
PHMSA reports record pipeline penalties

Since 2009, there has been an increasingly sharper focus on enforcement of pipeline regulations by the Pipeline and Hazardous Materials Safety Administration (PHMSA).  That trend reached new heights in 2013.  For that year, the PHMSA said it proposed more than $9.7 million in civil penalties against operators who allegedly violated federal pipeline requirements (49 CFR 190-199).  The figure is the highest yearly amount of proposed penalties in the agency’s history.

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"The proposed fines send the powerful message that we are holding noncompliant pipeline operators accountable for their actions and will be using our higher civil penalty authority to the max whenever necessary," said U.S. Transportation Secretary Anthony Foxx.

Pipeline act doubled penalties

A significant reason for the record monetary amount was the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, which doubled the maximum penalty amount from $100,000 to $200,000 for each violation and from $1 million to $2 million for a related series of violations.  The PHMSA adopted the new maximums into official regulations in September 2013. The tougher penalties apply to violations that occur after January 3, 2012, the date the statute was enacted.

In 2013, the PHMSA initiated 266 enforcement cases against pipeline operators for problems involving their integrity management programs, risk assessments, failure prevention and mitigation programs, and several other possible regulatory violations identified during failure investigations and routine inspections.  In addition to proposing penalties for each federal violation, enforcement orders include case-specific safety instructions to ensure all issues have been resolved.

Accidents down

Since 2009, the PHMSA has proposed more than $33 million in civil penalties against pipeline operators, $10 million more than the amount proposed in the previous 5 years combined.  It has also issued 544 enforcement orders over the past 5 years, constituting more than half of all orders issued by the agency since 2002.  In addition, the PHMSA says that serious pipeline incidents(those resulting in fatalities or major injuries) have declined each year since 2009 and 45 percent overall during that period.

The PHMSA says that tougher enforcement is a result of PHMSA's internal improvements to its pipeline inspection and tracking procedures.  “Recognizing that expediting its enforcement process is important to ensure prompt compliance, PHMSA has substantially improved its enforcement efficiency,” says the agency.  “From 2009 to 2013, for those enforcement cases involving civil penalties or proposed compliance actions, PHMSA reduced its average time to initiate and fully close an enforcement case by 65 percent.”

A summary of PHMSA cases involving civil penalties initiated and resolved from 2002 to 2014

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