United States: Pipeline Safety: PHMSA Adopts Important But Limited Updates To Its Enforcement And Hearing Procedures

Last Updated: November 6 2013
Article by Kenneth B. Driver, Richard D. Avil, Jr., David A. Kutik, Roy A. Powell, Jeffery D. Ubersax and David J. Grecco
Most Read Contributor in United States, September 2019

Effective October 25, the Pipeline and Hazardous Materials Safety Administration ("PHMSA"), which is part of the U.S. Department of Transportation, implemented new regulations (i) increasing the maximum civil penalty for violations of its substantive pipeline safety regulations, and (ii) making its decision-making process more transparent.1 The new regulations implement several specific requirements of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (the "2011 Pipeline Safety Act" or "Act").2 The Act, which was passed in large part in response to a safety incident in San Bruno, California that occurred on September 9, 2010,3 imposes more rigorous safety requirements on the owners and operators of natural gas pipeline facilities and hazardous material pipelines (including oil pipelines). The Act also required PHMSA to adopt specific changes to its administrative procedures to make them more transparent and even-handed.

In its final rule issuing the administrative procedures regulations, PHMSA adopted the changes mandated by Congress but rejected most requests by commenters to further clarify its procedures.4 The final rule revises many of the regulations included in Title 49, Part 190 of the Code of Federal Regulations effective as of October 25. A redline identifying each change to PHMSA's Part 190 regulations is included as an attachment to this Commentary.

Increase in Maximum Civil Penalty for Pipeline Safety Violations

In the 2011 Pipeline Safety Act, Congress increased PHMSA's authority to impose administrative civil penalties from $100,000 to $200,000 for a single violation of the pipeline safety statutes or regulations and from $1 million to $2 million for a related series of violations.5 PHMSA implemented these amendments and clarified that the new maximum penalties would apply only to violations that occurred after January 3, 2012, the date that the 2011 Pipeline Safety Act was signed into law.6 PHMSA also added a provision stating that a person who obstructs an inspection or investigation by "taking actions that were known or reasonably should have been known to prevent, hinder, or impede an investigation without good cause will be subject to administrative civil penalties[.]"7

Agency Enforcement Options and the Response Options Available to Pipeline Operators

PHMSA is authorized to conduct inspections and investigations to determine whether pipeline operators are in compliance with the federal pipeline safety laws.8 The preexisting regulations gave PHMSA the authority to issue a "Request for Specific Information" only after an inspection. PHMSA revised its regulations so that the agency can issue such a request "at any time, rather than only pursuant to an inspection[.]"9 PHMSA also shortened the deadline for the pipeline operator to respond to a Request for Specific Information from 45 days to 30 days but specified certain limited grounds on which a pipeline operator can request an extension of that deadline.

PHMSA uses "Warnings" to notify a pipeline operator of a probable violation of the federal pipelines safety rules where PHMSA has decided to take no further enforcement action at the time of the Warning. PHMSA clarified that a Warning notifies the pipeline operator that PHMSA has identified "a potential issue, which if found in a future inspection, may subject the operator to future enforcement action."10 PHMSA's new regulations allow a pipeline operator to respond to a Warning, but the final rule states that Warnings are final when issued. Thus, Warnings are not subject to further factual findings as to whether the Warning item was proven by record evidence.11

Another PHMSA enforcement option is to issue a Notice of Proposed Violation ("NOPV"). PHMSA clarified that a pipeline operator may contest an NOPV with or without requesting a hearing. PHMSA rejected a request that the deadline for responding to an NOPV be set at 30 days after the respondent receives "all evidentiary material" that supports the NOPV. However, PHMSA will provide the "violation report" underlying the NOPV but will do so only upon a request from the respondent.12 A respondent may request a copy of the violation report at any time, even in matters where no hearing is requested, and the agency must provide a copy of the report within five days of receiving such a request.13

If PHMSA finds, after reasonable notice and an opportunity for a hearing, that a particular pipeline facility "is or would be hazardous to life, property, or the environment," PHMSA may issue a Corrective Action Order ("CAO") requiring the pipeline operator to take corrective action, which may include "suspended or restricted use of the facility, physical inspection, testing, repair, replacement, or other appropriate action."14 The Associate Administrator is authorized to issue a CAO without providing the respondent advance notice and an opportunity for a hearing if the Associate Administrator determines that such notice and hearing procedures "would result in the likelihood of serious harm to life, property or the environment."15 The final rule defined in greater detail the separate procedures that then apply to the CAO, which allow the agency to take prompt action while giving the respondent the ability subsequently to contest the CAO on an expedited basis.16

The Agency Case File and the Separation of Agency Functions

In response to comments on its proposed rule, PHMSA expanded the concept of its "case file." These are the materials that are to be considered by the Associate Administrator when issuing a final order. Under the preexisting regulations, the case file included the relevant enforcement orders (such as an NOPV), the underlying violation report, any responsive materials submitted by the respondent, and if the matter goes to hearing, any material submitted during or after the hearing.17 The revised rules provide that the Regional Director's "written evaluation of response materials submitted by respondent and recommendation for final action, if one is prepared" will be available to respondents in all cases.18 However, PHMSA refused to include the Presiding Official's recommended decision in the case file. According to the agency, the Presiding Official's decision will not be available to the respondent because it is "an internal and deliberative communication or 'draft decision.'19

The new "separation of functions" regulation bars a PHMSA employee who assists in the investigation or prosecution of an enforcement case from participating in "the decision of that case or a factually related case."20 In addition, a party that participates in an enforcement proceeding, including an agency employee who served "in an investigative or prosecutorial capacity in the proceeding," may not "communicate privately" with the Associate Administrator, the Presiding Official, or the attorney drafting the recommended decision "concerning information that is relevant to the questions to be decided in the proceeding."21

The new rules require that the Presiding Official be an attorney on the staff of the Deputy Chief Counsel "who is not engaged in any investigative or prosecutorial function[.]"22 The final rule clarified that, if the dedicated hearing officer was not available, a substitute Presiding Officer also would be one who is not involved in enforcement functions. PHMSA refused to add a formal process by which respondents could request recusal of a particular Presiding Official.23 Finally, PHMSA explained that, under its new separation of function regulations, PHMSA prohibits the Presiding Official's recommended decision from being "viewed by, shared with, or otherwise commented on by Regional Directors, other PHMSA staff attorneys, or other PHMSA employees who are involved in the investigation or prosecution of the case."24

One commenter requested that complex matters with the potential for high civil penalties be set for hearing before an administrative law judge. PHMSA rejected this request on the grounds that its informal hearing process is effective and that a more formal process would delay the resolution of pipeline safety matters.

Hearing Procedures

The revised regulation clarifies that a hearing may be requested in response to civil penalty assessments, compliance orders, orders directing amendment, safety orders, and corrective action orders.25 As part of the hearing process, both the agency and the respondent must submit to the Presiding Official and serve on the other party all material that the party intends to introduce during the hearing, including records, documents, and other exhibits that are not already in the case file.26 That submission must be made 10 days before the date of the hearing, unless the Presiding Official sets a different deadline or waives the deadline for good cause. Respondents may arrange and pay for a transcript to be made of the hearing, but they must notify the Presiding Official of their intent to do so and must submit a complete copy of the transcript for the case file.27

Reconsideration Process

Where no petition for reconsideration is filed, an order directing amendment under Section 190.206, a final order under Section 190.213, a corrective action order under Section 190.233, or a safety order issued under Section 190.239 constitutes the agency's "final administrative action."28 A petition for reconsideration cannot be filed with respect to a corrective action order but may be filed for the other types of orders within 20 days after respondent's receipt of the order. If a petition for reconsideration is filed, the Associate Administrator's order on the reconsideration request is the agency's "final administrative action."29 An application for judicial review must be filed no later than 89 days after issuance of the decision. PHMSA's decisions are subject to the standards of review set forth in 5 U.S.C. § 706.30

Footnotes

  1. Pipeline Safety: Administrative Procedures; Updates and Technical Corrections, Final Rule, 78 Fed. Reg. 58,897 (Sept. 25, 2013).
  2. Pub. L. No. 112-90, 125 Stat. 1904 (Jan. 3, 2012).
  3. National Transportation Safety Board, Pipeline Accident Report, Pacific Gas and Electric Company, Natural Gas Transmission Pipeline Rupture and Fire, San Bruno, California, September 9, 2010 at x (Aug. 30, 2011), http://www.ntsb.gov/doclib/reports/2011/PAR1101.pdf.
  4. PHMSA published a proposed administrative procedures rule on August 13, 2012. Pipeline Safety: Administrative Procedures; Updates and Technical Corrections, Notice of Proposed Rulemaking, 77 Fed. Reg. 48,112 (Aug. 13, 2012). PHMSA published the final rule on September 25, 2013.
  5. Pipeline Safety Act § 2(a)(1) (amending 49 U.S.C. § 60122).
  6. 78 Fed Reg. at 58,904; see also revised 49 C.F.R. § 190.223.
  7. Revised 49 C.F.R. § 190.203(e).
  8. 49 C.F.R. § 190.201 (2012).
  9. 78 Fed. Reg. at 58,899; see also revised 49 C.F.R. § 190.203(c).
  10. 78 Fed. Reg. at 58,900; see also revised 49 C.F.R. § 190.205.
  11. 78 Fed. Reg. at 58,900.
  12. 78 Fed. Reg. at 58,900.
  13. 78 Fed. Reg. at 58,900; see also new 49 C.F.R. § 190.208(c).
  14. Revised 49 C.F.R. § 190.233(a).
  15. Revised 49 C.F.R. § 190.233(b).
  16. Revised 49 C.F.R. § 190.233(b).
  17. 49 C.F.R. § 190.213(b) (2012).
  18. Revised 49 C.F.R. § 190.209(b)(7).
  19. 78 Fed. Reg. at 58,901.
  20. New 49 C.F.R. § 190.210(a).
  21. New 49 C.F.R. § 190.210(b).
  22. New 49 C.F.R. § 190.212(a).
  23. 78 Fed. Reg. at 58,903.
  24. 78 Fed. Reg. at 58,903.
  25. Revised 49 C.F.R. § 190.211(a).
  26. Revised 49 C.F.R. § 190.211(d).
  27. Revised 49 C.F.R. § 190.211(f).
  28. New 49 C.F.R. § 190.241.
  29. New 49 C.F.R. § 190.243.
  30. New 49 C.F.R. § 190.243(h).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions