PHMSA Increases Penalty Limits for Pipeline Safety Violations

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) revised its regulations to increase the maximum civil penalties for violations of Federal pipeline safety laws, as well as any regulations or orders PHMSA issues thereunder, to adjust for inflation.

In a final rule issued on April 27, 2017, which went into immediate effect, PHMSA revised its regulations to increase its maximum civil penalties as follows:

1. The maximum civil penalty for a single pipeline violation under 49 U.S.C. § 60101 et seq. is $209,002 (up from $205,638) for each day that the violation continues with a maximum civil penalty not to exceed $2,090,022 (up from $2,056,380) for a related series of violations;
2. The maximum civil penalty for violations of standards for liquefied natural gas pipeline facilities under 49 U.S.C. § 60103, 60111 is $76,352 (up from $75,123); and
3. The maximum civil penalty for employee protection violations under 49 U.S.C. § 60129 is $1,214 (up from $1,194).

PHSMA increased these penalties pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “2015 Act”), which requires federal agencies to adjust their civil monetary penalties on an annual basis to account for inflation fluctuations.

In the final rule, PHMSA stated that it did not provide notice of the penalty-altering rulemaking or offer the opportunity for public comment because the 2015 Act requires the agency to make these penalty adjustments and, therefore, the agency is not exercising its discretion such that it could be informed by public comment. Time will tell whether the increased penalty limits will translate into increased penalties paid by companies during President Trump’s administration.