In a recent press release, PHMSA announced that it sought $9.7 million in civil penalties against pipeline operators in 2013, the highest annual amount in the Agency’s history. This follows a trend of increasing penalty assessments by the Agency, which has proposed more than $33 million in penalties since 2009. By comparison, PHMSA sought $23 million in proposed penalties during the previous five-year period (2004-2008). PHMSA also reported issuance of 544 enforcement orders over the past five years, with more than half of those – 266 – in 2013 alone. In addition, for enforcement cases involving civil penalties or proposed compliance actions filed over the period of 2009-2013, PHMSA reportedly reduced its average time to initiate and fully close an enforcement case by 65 percent. Since proposing its first penalty in excess of $1 million in 2006, the Agency has proposed 7 additional penalties over $ 1 million, 2 of which were proposed in 2013.
This pattern of increased enforcement activity and higher penalty amounts stems from increased pressure from Congress and other entities in the wake of numerous high-profile pipeline incidents in recent years, despite the fact that “serious” pipeline incidents (those involving a fatality or injury requiring in-patient hospitalization) have actually declined by 45 percent since 2009. PHMSA’s enforcement authority was augmented by the 2011 Amendments to the Pipeline Safety Act, which doubled the amount of statutory maximum penalties the Agency may seek against operators for violations of pipeline safety regulations. The Agency has also expanded the type and scope of corrective measures sought in Corrective Action Orders and other enforcement cases. See prior pipelinelaw practice pointer here.
In juxtaposition with PHMSA’s press release, however, it was recently reported that the Agency is seeking to trim its budget by offering financial incentives to staff for early retirement or resignation. PHMSA could lose as many as 33 employees, including investigators and engineers. Coupled with personnel who accepted similar buyout offers in 2013, this could result in a 9 percent reduction in the Agency’s full-time workforce since the end of last year.