As a stark reminder of the availability of criminal sanctions for violations of federal pipeline safety regulations, a pipeline corrosion monitor has pleaded guilty to charges brought under the federal Pipeline Safety Act (49 U.S.C. 60101 et seq.) and faces up to 15 years in prison and $750,000 in fines.
A United States Attorney in the Eastern District of Wisconsin filed a three-count information in November 2014 against Randy Jones, the onshore corrosion coordinator for a major pipeline company. On January 7, 2015, Jones pleaded guilty on all counts, namely that he failed to perform bi-monthly voltage readings and an annual cathodic protection survey, and that he falsified data submitted to PHMSA to reflect that these required readings and survey had taken place.
As recounted in the plea agreement, Jones was apparently aware in January 2011 that one of the rectifiers on the pipeline was not registering voltage, but he never arranged for repairs. He subsequently failed to take required bi-monthly voltage readings or conduct a proper annual cathodic protection survey along the length of the pipeline. After learning of a PHMSA audit of the line scheduled for December 2011, he entered false rectifier readings and 2011 annual survey data into the operator’s corrosion data management system. Shortly after the audit, in January 2012, a large leak was discovered on the line. Approximately 9,000 gallons of jet fuel was released, resulting in cleanup and response costs exceeding $19 million. The case was investigated by the U.S. Department of Transportation Office of Inspector General (DOT OIG), with assistance from PHMSA, as well as EPA, the FBI and the Coast Guard, resulting in the filing of the November 2014 criminal proceeding.
Although the Pipeline Safety Act does not provide for misdemeanor criminal liability (like the federal Clean Water Act), it does establish criminal sanctions for any person who “knowingly and willfully” violates its provisions or implementing regulations. 49 U.S.C. § 60123(a). Although rarely publicized, in recent years, the DOT OIG and Department of Justice have undertaken criminal enforcement investigations with increasing frequency, and they continue to look actively for criminal cases to prosecute, especially where alleged violations of pipeline safety laws result in high-profile incidents. Hunton & Williams’ pipeline practice group has assisted pipeline operators in navigating a number of such investigations.