81 FR 71566 - Pipeline Safety: General Policy Statement; Civil Penalties

DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials Safety Administration

Federal Register Volume 81, Issue 200 (October 17, 2016)

The purpose of this policy statement is to advise pipeline owners and operators that the Pipeline and Hazardous Materials Safety Administration (PHMSA) has now made a civil penalty framework accessible on its Web site and, effective October 17, 2016, a respondent in an enforcement case may request a proposed civil penalty calculation related to that case. It further advises pipeline owners and operators that PHMSA will, as appropriate, issue higher penalties in order to apply stronger deterrence and drive down incident risk.

[Federal Register Volume 81, Number 200 (Monday, October 17, 2016)]
[Notices]
[Pages 71566-71569]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-25000]


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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration (PHMSA)

[Docket No. PHMSA-2016-0101]


Pipeline Safety: General Policy Statement; Civil Penalties

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 
DOT.

ACTION: Notice.

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SUMMARY: The purpose of this policy statement is to advise pipeline 
owners and operators that the Pipeline and Hazardous Materials Safety 
Administration (PHMSA) has now made a civil penalty framework 
accessible on its Web site and, effective October 17, 2016, a 
respondent in an enforcement case may request a proposed civil penalty 
calculation related to that case. It further advises pipeline owners 
and operators that PHMSA will, as appropriate, issue higher penalties 
in order to apply stronger deterrence and drive down incident risk.

DATES: A respondent in an enforcement case may request the proposed 
civil penalty calculation associated with its case, effective October 
17, 2016. In addition, the civil penalty summary attached to this 
policy statement is now available on PHMSA's Web site.

FOR FURTHER INFORMATION CONTACT: Rod Dyck, Enforcement Director, 
[email protected], 202-366-3844.

SUPPLEMENTARY INFORMATION: In accordance with chapter 601 of Title 49, 
United States Code, after notice and an opportunity for a hearing, the 
Associate Administrator may assess a civil penalty for a violation of a 
pipeline safety regulation or order (49 U.S.C. 60122). In order to 
provide summary guidance to operators about the penalty ranges for 
proposed penalties, PHMSA currently provides a civil penalty framework 
upon request, as referenced in an earlier notice ``Pipeline Safety: 
Administrative Procedures; Updates and Technical Corrections'' (78 FR 
58897; September 25, 2013). PHMSA will now post the civil penalty 
framework on its Web site in order to provide greater transparency 
regarding administrative civil penalties. This summary will be updated 
periodically and is available at http://www.phmsa.dot.gov. Effective 
October 17, 2016, PHMSA will also provide a more detailed proposed 
civil penalty calculation upon request to a respondent, along with the 
violation report, and any other items in the case file, as defined in 
49 CFR 190.209.
    PHMSA's proposed penalty calculation methodology is based upon 49 
U.S.C. 60122 and 49 CFR 190.225. The Associate Administrator must 
consider:

    (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 
offenses; (4) Any good faith by the respondent in attempting to 
achieve compliance; and (5) The effect on the respondent's ability 
to continue in business. The Associate Administrator may consider: 
(1) The economic benefit gained from violation, if readily 
ascertainable, without any reduction because of subsequent damages; 
and (2) Such other matters as justice may require.

    Consistent with this statutory direction, enforcement personnel use 
a proposed civil penalty calculation to document consideration of these 
factors and how its personnel arrive at a proposed civil penalty.
    The Pipeline Safety Act of 2011 (``the 2011 Act'') increased the 
maximum administrative civil penalties for violation of the pipeline 
safety laws and regulations to $200,000 per violation per day, with a 
maximum of $2,000,000 for a related series of violations. These 
administrative civil penalty maximums apply to violations that occur or 
are discovered after January 3, 2012. In order to apply stronger 
deterrence and drive down incident risk, PHMSA intends to exercise its 
current authority, as appropriate, which will result in higher 
penalties across the board for any violation of Federal pipeline safety 
standards. In addition, 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 offenses'' or 
violations of the same safety standard in the past five years; and (3) 
involve multiple instances of the same violation. Finally, PHMSA 
recently increased its maximum civil penalties to account for changes 
in inflation. (Pipeline Safety: Inflation Adjustment of Maximum Civil 
Penalties, 81 FR 42564, June 30, 2016).
    Administrative civil penalties constitute only one of the 
enforcement tools that PHMSA employs to promote compliance with the 
pipeline safety regulations. While PHMSA is providing greater 
transparency to the regulated community, the agency retains broad 
discretion in its evaluation of the assessment considerations outlined 
in its regulations. The release of these additional materials regarding 
the proposed calculation of civil penalties will not otherwise alter 
the administrative enforcement process.

Civil Penalty Framework

    This summary provides a general overview to assist the public in 
understanding civil penalty calculations. Following an inspection or 
investigation of a pipeline facility that reveals a probable violation, 
the Office of Pipeline Safety prepares a Violation Report to document 
the violation. For any violation that warrants a civil penalty, data 
from the completed Violation Report is used to calculate risk-based 
civil penalties considering the statutory assessment factors in 49 
U.S.C. 60122 and 49 CFR 190.225.
    The assessment factors are listed below in the left side column of 
the table. The middle column explains the range of potential conduct 
that was observed by PHMSA in connection with the violation, generally 
from least to most severe. A Violation Report must make a selection 
within this range for each assessment factor. The right side column 
provides a range for the civil penalty that may be assessed under each 
assessment factor.
    A civil penalty for a single violation is arrived at by combining 
the amounts assigned under each assessment factor. Application of the 
assessment factors in an individual case will depend on the facts 
specific to that case.
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    The total civil penalty per violation is calculated based on these 
assessment considerations and adjusted for the applicable daily and 
series limit. If a calculated penalty exceeds the maximum amount 
permitted by statute, the penalty will be reduced by the amount 
exceeding the cap. An administrative civil penalty under 49 U.S.C. 
60122(a)(1) is capped at $200,000 per day for violations occurring 
after January 3, 2012. The maximum civil penalty for a related series 
of violations is $2,000,000 for violations occurring after January 3, 
2012.
    For an administrative civil penalty that occurs on or after August 
1, 2016, the maximum civil penalty limit was increased to $205,638 per 
day and $2,056,380 for a related series of violations pursuant to the 
requirements of Section 701 of the ``Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015'' (Pub. L. 114-72), which 
amended the ``Federal Civil Penalties Inflation Adjustment Act of 
1990'' (Pub. L. 101-410) (Inflation Adjustment Act).

    Issued in Washington, DC, on October 11, 2016, under authority 
delegated in 49 CFR 1.97.
Linda Daugherty,
Deputy Associate Administrator for Field Operations.
[FR Doc. 2016-25000 Filed 10-14-16; 8:45 am]
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