Pipeline violation penalties break record in 2013

By Patrick Ambrosio
Bloomberg BNA

The Pipeline and Hazardous Materials Safety Administration proposed $9.78 million in civil penalties against pipeline operators for alleged violations of federal law in 2013, the agency announced this week.

PHMSA said in a statement that 2013 saw the highest yearly amount of proposed penalties in the agency’s history. The agency has proposed more than $33 million in penalties in pipeline enforcement cases since 2009, while seeing the number of serious pipeline incidents resulting in fatalities or major injuries decline each year during that time period, according to PHMSA.

The record amount of fines proposed by PHMSA in 2013 includes a proposed $2.66 million penalty against the Exxon Mobil Pipeline Co. for alleged violations of federal pipeline regulations related to a March 2013 rupture of the Pegasus pipeline near the town of Mayflower, Ark. PHMSA proposed the civil penalty after determining that the company committed probable violations of federal regulations related to integrity management requirements in densely populated areas.

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Of the $9.78 million in proposed civil penalties for 2013, 22 cases representing $1,532,300 have been resolved, with $1,308,000, or 85 percent of the proposed penalties, ultimately assessed and collected. There are still 41 pending cases from 2013.

The 85 percent assessment rate for 2013 cases resolved so far is lower than the rate in recent years—92 percent in 2012 and 95 percent in 2011—but higher than the annual rate in all years from 2004-2010.

Transportation Secretary Anthony Foxx said in an April 7 statement that the Transportation Department will use its recently increased maximum civil penalty authority “whenever necessary.”

The Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 authorized PHMSA to double its maximum civil penalty amount for violations of federal pipeline law. PHMSA issued a final rule in 2013 raising the maximum civil penalty amount it is authorized to impose against pipeline operators from $100,000 to $200,000 for a single violation and from $1 million to $2 million for a series of related violations.