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Posted: 29 Nov, 2016

PHMSA Increases Maximum Civil Penalty for Pipeline Incidents

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) announced the publication of its civil penalty framework.

Effective from 17 October 2016 PHMSA will also allow a respondent in an enforcement proceeding to request a more detailed proposed civil penalty calculation.

Civil Penalty Framework

Following an investigation, PHMSA’s Office of Pipeline Safety prepares a Violation Report to document a probable violation. Data from the completed Violation Report is then used to calculate a civil penalty, if warranted. The civil penalty framework now reveals the range for a civil penalty that may be assessed under each assessment factor provided in 49 U.S.C. § 60122 and 49 C.F.R. § 190.225. The assessment factors include:

1) the nature, circumstances and gravity of the violation, including adverse impact on the environment

2) the degree of the respondent's culpability

3) the respondent's history of prior offences

4) any good faith effort by the respondent to achieve compliance, and

5) the effect on the respondent's ability to continue in business

PHMSA also may consider the economic benefit gained from a violation and such other matters as justice may require.

The civil penalty framework lists the range of conduct under each statutory assessment factor from least to most severe. to determine the magnitude of a civil penalty. PHMSA determines the civil penalty by combining the amounts assigned under each assessment factor. The total civil penalty per violation is calculated based on these assessment considerations and adjusted for the applicable daily and series limit. However, despite PHMSA’s increased transparency into its civil penalty process, PHMSA notes that it retains “broad discretion” in its evaluation of the assessment considerations outlined in its regulations.

For an administrative civil penalty that occurs on or after August 1, 2016, the maximum penalty is 205,638USD per day. The maximum civil penalty for a series of related violations that occur on or after August 1, 2016 is 2,056,380USD.

Higher Penalties Across the Board

PHMSA also intends to impose higher penalties across the board for any violation of Federal pipeline standards. PHMSA will give greater weight to certain factors when assessing civil penalties, specifically for violations that:

1) Are causal to incidents or that increase the severity of incidents, including those involving smaller hazardous liquid spills or resulting in methane releases

2) Are “repeat offences” or violations of the same safety standard in the past five years, and

3) Involve multiple instances of the same violation

 

Source: http://www.bakerbotts.com

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