Question of the week: I’ve looked at some of the pipeline enforcement data online through PHMSA’s website, but don’t really understand it, and don’t see a lot of information available. Can you tell me how pipeline enforcement works, and what is available to the public when there is an enforcement case against a pipeline operator who has some sort of violation of the rules?
This question produced deja vu for us here. It turns out our very first newsletter in 2005 included on article on this topic, so we decided to have a look to see what had changed in the past 10 years. The article was about how the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS) civil fine enforcement works and why OPS should make it more transparent. While OPS has improved some things (like its percentage of assessed penalties that are eventually collected), the substance of the issues has not changed at all, and enforcement procedures still occur largely behind closed doors with only the regulators and industry present, and no public record of proceedings.
How It Works
OPS enforcement procedures are complex. In simple terms, there are three stages:
- Investigating — reaching a preliminary conclusion whether a company violated the law. This can happen as a result of an inspection or an incident.
- Proposing a fine — notifying the company of the allegation and what the fine could be.
- Hearing/Assessing/Collecting — giving the company an opportunity to present its views; deciding what the fine will be; collecting it.
The time from the first to the last step may take more than a decade. Meanwhile, there is no public input and the availability of documents is limited. According to the enforcement statistics, over the past ten years OPS collected about 84 cents for every dollar of fines it proposed (up from less than 50 cents when we published the article nearly 10 years ago). These statistics leave out millions of dollars in fines that were proposed but never or not yet collected because cases either never made it to the final collection phase or still have unresolved compliance issues.
What is most troubling to us is the way in which fines are reduced or unresolved. Without any public access, the pipeline operator goes behind a closed door with government officials and comes out paying less money than originally owed. What goes on behind that door? No one knows. PHMSA has made improvements in providing enforcement information in the last 10 years, and usually provides access to the corrective action order, the operator’s response or request for a hearing and the final order through links on its enforcement web page. However, between the time an operator requests a hearing on a penalty case and PHMSA issues a final order, none of the documents or arguments made in the enforcement hearing process are posted for public review, and PHMSA neither publishes notice of hearings nor allows the public or members of the press to attend if they happen to learn when a hearing is scheduled. Nor is there a requirement for a record of the hearing to be made, let alone made public. This is the stage where most of the reduction in proposed penalties occurs, and the public can only hope to be able to read between the lines of a Final Order to determine why the penalty was reduced and whether the reduction was legitimate.
The Need for Transparency
In this country, after the investigatory stage, law enforcement takes place in public for good reasons. Public scrutiny enhances credibility, accountability and fairness while preventing even the appearance of government corruption in the following ways:
Credibility — seeing OPS expeditiously enforce its regulations would instill confidence that safe operation is a requirement rather than a guideline.
Accountability — if companies successfully challenge fines because regulations are poorly crafted, the public could demand better rules.
Fairness — secret proceedings deny the public an opportunity to question fines and permit operators to make one-sided arguments without fear of rebuttal.
Prevention of corruption — while no one is suggesting that OPS is corrupt, any government agency that permits fines to be whittled down behind closed doors is just asking for trouble from a suspicious public.
How It Should Be
OPS should create an Internet accessible enforcement docket, like the existing DOT rule-making docket, where the public could view enforcement as it progresses. The docket would include the OPS Notice of Probable Violation, Corrective Action Order or other enforcement documentation, the company’s responses, documents exchanged between the parties before and during a hearing, transcripts of hearings and the final decision. OPS should permit intervention by aggrieved parties. The hearing dates should be on the docket, and the hearings themselves should be open to the public and members of the press.
When pipeline operators violate the law, they endanger the public. Therefore, the public has an interest in seeing operators held accountable. Open and transparent enforcement procedures would enhance public confidence and permit the public to work with OPS to make pipelines safer.
 Data extracted from PHMSA-OPS website on March 26, 2015. See http://primis.phmsa.dot.gov/comm/reports/enforce/CivilPenalty_opid_0.html
 Only cases that have been closed by PHMSA with no outstanding compliance issues left unresolved from PHMSA’s Final Report are included in their statistics.