This week’s Pipeliners Podcast episode features Keith Coyle and Brianne Kurdock of Babst Calland discussing the PHMSA enforcement process and enforcement actions with host Russel Treat.
In this episode, you will learn about the legal aspects of PHMSA enforcement and what to expect from an inspection, a violation, and Congress’ newest emergency order tool. Brianne and Keith also discuss common violations they’re tracking and what to look out for regarding your own operation’s compliance with PHMSA regulations.
PHMSA Enforcement Process: Show Notes, Links, and Insider Terms
- Keith Coyle is a Shareholder with the law firm of Babst Calland. Mr. Coyle is a member of the firm’s Washington, D.C. office and a Shareholder in the Pipeline and HazMat Safety practice. Connect with Keith Coyle on LinkedIn.
- Brianne Kurdock is a member of the Babst Calland Washington, D.C. office and a shareholder in the Pipeline and HazMat Safety practice. Connect with Brianne on LinkedIn.
- Babst Calland is the current underwriting sponsor of the Pipeliners Podcast.
- Access the latest Babst Calland Alerts & Reports under regulatory updates in the Pipeliners Podcast Resources library.
- Listen to Keith’s previous podcast appearances discussing key pipeline regulations topics.
- PHMSA (Pipeline and Hazardous Materials Safety Administration) is the federal agency within USDOT responsible for providing pipeline safety oversight through regulatory rulemaking, NTSB recommendations, and other important functions to protect people and the environment through the safe transportation of energy and other hazardous materials.
- The Natural Gas Pipeline Safety Act of 1968 was the first federal law authorized by the U.S. Congress to prescribe safety standards for the transportation of natural and other gas by pipeline, and for other purposes.
- NOPV (Notice of Probable Violation) informs an operator that PHMSA is charging the operator with probable violations of pipeline safety statutes or regulations. These findings are accompanied by either a proposed Compliance Order identifying actions the operator is required to take, proposed civil penalties for these alleged violations, or both.
- Civil Penalties are penalties following an inspection or investigation of a pipeline facility that reveals a probable 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 C.F.R. § 190.225. More information can be found in PHMSA’s Civil Penalty Summary.
- Notice of Amendment is a notice that specifies the alleged inadequacies and the proposed revisions of the plans or procedures and provides an opportunity to respond. The notice will allow the operator 30 days following receipt of the notice to submit written comments, revised procedures, or a request for a hearing under § 190.211.
- Emergency Order is a significant new tool in PHMSA’s pipeline safety enforcement toolbox that can be issued to the entire industry or portion of the industry. Emergency orders can be issued to address an unsafe condition or practice, or a combination of unsafe conditions or practices, that constitute or cause an imminent hazard to public health and safety or the environment. The regulations describe the duration and scope of such orders and provide a mechanism by which pipeline owners and operators subject to, and aggrieved by, emergency orders can seek administrative or judicial review.
- Integrity Management (Pipeline Integrity Management) is a systematic approach to operate and manage pipelines in a safe manner that complies with PHMSA regulations.
- LNG (Liquified Natural Gas) is defined by PHMSA as processed natural gas that has been condensed into a liquid form by reducing its temperature to approximately minus 260°F (minus 162°C) at ambient pressure.
- 49 CFR 192.605 requires each operator to prepare and follow a manual of written procedures for conducting operations and maintenance activities and for emergency response. These plans are often referred to as Operations and Maintenance Plans or O&M Plans.
- CRM (Control Room Management) or CRM Rule (Control Room Management Rule as defined by 49 CFR Parts 192 for natural gas and 195 for liquids) was introduced by PHMSA to provide regulations and guidelines for control room managers to safely operate a pipeline. PHMSA’s pipeline safety regulations prescribe safety requirements for controllers, control rooms, and SCADA systems used to remotely monitor and control pipeline operations.
- Annular Flow Pattern refers to the fluid patterns made in a well or pipeline during a multi-phase flow regime. It occurs for wells that have high gas and low liquid velocities with a central core of gas and a liquid film.
- Corrosion is the deterioration of a steel pipeline that results from an electrochemical reaction with its immediate surroundings.
- 49 CFR 195.238 requires that no pipeline system component may be buried or submerged unless that component has an external protective coating.
- 49 CFR 195.242 requires a cathodic protection must be installed for all buried or submerged facilities to mitigate corrosion.
PHMSA Enforcement Process: Full Episode Transcript
Russel Treat: Welcome to the Pipeliners Podcast, episode 202, sponsored by EnerSys Corporation, providers of POEMS, the Pipeline Operations Excellence Management System, compliance and operations software for the pipeline control center to address control room management SCADA and audit readiness. Find out more about POEMS at EnerSysCorp.com.
Announcer: The Pipeliners Podcast, where professionals, Bubba geeks, and industry insiders share their knowledge and experience about technology, projects, and pipeline operations. Now, your host, Russel Treat.
Russel: Thanks for listening to the Pipeliners Podcast. I always appreciate your time, and to show that appreciation, we give away a customized YETI tumbler to one listener each episode. This week, our winner is Jim Ponder with LOOP LLC. Congratulations, Jim, your YETI is on its way. To learn how you can win this signature prize, stick around for the end of the episode.
This week, Keith Coyle returns and Brianne Kurdock comes as a first-time guest. Both of these guys are from Babst Calland and they’re going to talk to us about the PHMSA enforcement process. Keith, welcome back to the Pipeliners Podcast, and Brianne, welcome to your first time.
Brianne Kurdock: Glad to be here.
Keith Coyle: Thanks for having us on Russel. We always enjoy doing the show.
Russel: Keith, you’re a perennial guest. I think the listeners know who you are at this point, particularly if they’re regular listeners.
Brianne, can you tell us a little bit about your background and what you do there Babst Calland?
Brianne: Sure. I’m a pipeline safety attorney at Babst Calland. I work with Keith Coyle. I worked at the Pipeline and Hazardous Materials Safety Administration years ago earlier in my career as an attorney with PHMSA and I’ve worked for trade associations. I’ve been at Babst Calland for the last six years or so.
Russel: The reason we asked you on, Brianne, is, as I understand it, you’re Babst Calland’s go-to person for enforcement actions and understanding what PHMSA is up to from an enforcement perspective.
Before we get too deep into this, maybe you guys can just tell us a little bit about the PHMSA enforcement process and how it works.
Keith: Sure. Our focus for today’s conversation is going to be on PHMSA enforcement. PHMSA, as most of you know, is the Pipeline and Hazardous Materials Safety Administration. It’s a federal agency within the Department of Transportation that’s responsible for administering the pipeline safety laws.
One of the things that PHMSA does as part of those duties is it handles enforcement actions that typically come about as a result of audits or inspections that PHMSA conducts of regulated pipeline facilities.
Now, the enforcement process at PHMSA is pretty informal. It’s not like Law & Order. There are no judges, or robes, or anything like that. It’s a very informal process. There are some basic rules that apply in the proceedings. There are some types of enforcement actions that we’d like to go over briefly here at the beginning, just to give everybody a sense of what the ground is.
Russel: Keith, if I could, I want to ask a clarifying question. Personally, I’m more familiar with incidents that result in some kind of action between EPA and DOJ, which is more the justice system kicking in around an event. What you’re saying is that’s very distinct and different from a PHMSA Enforcement Action.
Keith: Yeah. The PHMSA Enforcement Actions are administrative proceedings that PHMSA conducts on its own. Under the Pipeline Safety Act, PHMSA has broad enforcement authority to conduct audits and inspections, to request data from operators, things like that.
When PHMSA goes out and conducts an inspection and if they find something that gives them concern from a compliance perspective, one of the options that they have is to initiate an enforcement case before the agency. There are six basic types of enforcement cases that PHMSA can bring.
The most familiar one to most operators is what’s known as a Notice of Probable Violation or NOPV. An NOPV is basically a document that PHMSA issues to an operator that alleges that the operator has committed one or more violations of the Pipeline Safety Laws and Regulations.
Within the document, it will also propose sanctions or remedies for those violations. The sanctions or remedies can include civil penalties, or it can include a compliance order telling an operator to go out and do something. The NOPV is the stock and trade of what PHMSA initiates as an administrative type enforcement action resulting from an inspection.
Russel: So many of our listeners are engineers and operators. When we start talking about the legal processes or the regulatory processes, it starts becoming a little outside of their expertise. It’s certainly a little outside of mine, particularly when you start talking about enforcement actions.
I’m trying to come up with an analogy that would work. It’s like getting a traffic ticket. Would it be similar to that or is it more like the EPA is getting me for dumping trash where I shouldn’t?
Keith: It’s probably more like that. This is a federal agency that conducts enforcement to ensure that the regulated party comes into compliance with the rules and regulations that the agency issue. It’s not like a parking ticket or a traffic ticket, where you get stopped and somebody cites you for jaywalking and issues a fine. That’s not really what this is.
It’s a little more formal than that. A notice of probable violation is more like a charging document that lays out basic facts, makes allegations about a non-compliance with a rule or regulation, and then proposes some sanction for that violation.
It’s either going to be a civil penalty. Civil penalties can be pretty high. It’s two million dollars, probably a little more than that. Brianne’s going to go into that later. I’ve never gotten a $2 million parking ticket. [laughs] Maybe those things exist. I would say, it’s something worse than a parking ticket, but not something as bad as the Department of Justice taking you to court.
I don’t know. Brianne, did I totally misstate that?
Brianne: No. You’re right. The maximum civil penalty per day per violation right now, and again, this is per day, is $225,000. That’s an expensive parking ticket. It should be taken seriously. PHMSA enforcement processes are important.
We should mention that there are cases in response to incidents, to Russel’s first point, they’re called Corrective Action Orders, that the agency can issue in response to an incident.
The vast majority of the enforcement we see does not involve an incident. It’s the agency going out, inspecting facilities, inspecting records, and saying, “Did you follow the code? The code says this. Did you do it? Do you have a record to show that you did it?” A lot of procedural violations.
Russel: That’s really helpful for me. I know that enforcement actions can be adjudicated. There’s a process there for saying, “No, PHMSA, you got this wrong. What really happened was this.” There is a process in place for that. I guess you guys you’ll talk a little bit about how all that works as well.
Keith: Yes. Okay, Brianne.
Brianne: There are three ways to respond to an enforcement case. You can ask for a hearing. In most of the cases, other than a warning letter, you can ask for a hearing. That goes before what’s called a presiding official.
There are two presiding officials at PHMSA. They’re both lawyers in PHMSA’s counsel’s office. They are the designated presiding officials that respond to hearings, and that you would present your case before. That’s why we say it’s an informal process because the hearing itself would be just in a conference room at the region level, at the PHMSA regional office. You’re not in court. That’s why we often use the word “informal.”
You can ask for that hearing. You can also contest the case in writing if you don’t want to ask for the hearing. Or you can choose, depending on the type of case, not to contest it if there is a penalty just to pay it, and to take action under that compliance order if there is one.
Russel: Again, that’s helpful. For those of us that aren’t familiar with that process, that’s very helpful.
Keith: As we said at the top, the way that the process starts is PHMSA will decide to use one of its enforcement tools to bring a case against an operator, or in some very limited situations, a category of operators. We have the Notice of Probable Violation, which we talked about, which can include fines or a compliance order.
There’s also a process called a Notice of Amendment process, which is just basically a case about getting an operator to amend inadequate procedures. There’s a warning letter process, which is PHMSA basically warning an operator that it could be in a non-compliance situation and that it needs to take corrective action. Warning items are just that. They’re warnings telling you not to do something in the future or warning you not to do something in the future, but they’re not binding and they’re not adjudicated.
There are three other different types of orders that come up in situations. One is the corrective action order that Brianne mentioned. You’ll get that after an incident or an accident. It’s a pretty big hammer. You need to show their facility is hazardous to get a corrective action order. There are safety orders, which are not used all that much. They’re for more long-term integrity issues.
The last one is a new tool. It’s called an emergency order. This is something that Congress added to the Pipeline Safety Act in a recent amendment. It actually allows PHMSA to issue emergency orders that would, potentially, have an industry-wide effect. Think of something like a recall circumstance where PHMSA became aware that a particular, I don’t know, piece of pipe had a manufacturing issue or a component was failing due to some other circumstance.
In that situation, PHMSA would be able to resort to this emergency order process where they could issue this emergency order that would apply to all of the operators that had the defective piece of equipment or pipe.
Russel: Would a safety order potentially come out if they found something that was…I could certainly see that in terms of known defects and purchased equipment. Could you have a safety order related to a known error in a particular kind of process or approach?
Keith: One of the things you need to show in an emergency order situation is like an imminent hazard. I think that’s a very high bar to meet if it’s just something that’s a known flaw with a practice or a known flaw with a procedure or something like that.
The legal bar to get an emergency order is really high because it’s something that the agency can issue without prior notice. It can affect a large part of the regulated community. We want to make it really hard for an administrative agency to take action like that.
There are other ways that PHMSA can handle things, like advisory bulletins or guidance documents, when they become aware of information about practices that could be harmful or bringing actions or issuing warning letters. I would hope that PHMSA would refrain from using that emergency order to address something like that. I don’t know if Brianne feels differently.
Brianne: No, I agree. I should note that, since they’ve gotten the authority to issue an emergency order, they have not used it yet. I think everyone is in agreement that they will use it in a very narrow capacity, a limited capacity, because it’s so far-reaching. They could issue it to the whole industry.
There’s a lot more process that goes with an emergency order based on the statute, based on the language that Congress put in the statute, and for good reason. It’s because it can be so far-reaching and be issued to the entire industry.
Russel: What do you typically see come from PHMSA in terms of the types of things that they’re issuing? What’s the most common?
Brianne: You’ve got those six types of enforcement cases that Keith mentioned. The most common can change from year to year, depending on what’s going on, if there’s a new regulatory scheme in place. But the most common are notices of amendment and warning letters.
Notices of amendment are asking for changes to the text in an operator’s procedure. A warning letter is what it sounds like. It goes out and says, “Hey, you need to take a look at this. You need to take another look at this.” But it’s not carrying a civil penalty or a compliance order. Why do we see that so often? We see that when you have a new regulatory scheme.
Russel: That’s exactly the question I was going to ask.
Brianne: Everybody on both sides of the aisle is getting used to that new scheme, whether it’s the inspectors for the agency or operator personnel. Back when integrity management was brand new, we saw a lot of notices of amendment and warning letters during those initial inspections.
We see the same now with storage. Storage is still relatively new and that’s the reason we’re seeing a lot of warning letters and amendment cases.
Russel: My exposure to all of this started with control room management, which has now been around a little over 10 years. I remember the first round of inspections that were going on. There were a lot of warning letters coming out but a lot of that was just clarifying for the operators how PHMSA was interpreting the audit in the rule and giving the operators an opportunity to respond about that.
It was kind of a formal way for PHMSA to communicate its intent and process to the industry, at least, when they were starting. Now, 10 years in, you’re not seeing nearly as many warning letters. You’re tending to see things with more teeth.
Brianne: Sure, we’ve seen a lot of control room management cases over the last year.
Russel: It seems like there’s a lot more NOPVs, Notice of Probable Violation, coming out. That’s notional for me because I’m not in the data every day but is that true? Is there an increasing level of that coming from PHMSA?
Brianne: We did a study recently to look across years and across political administrations to see if there are shifts, and it’s fairly consistent. The average number of cases, if you go back five years is around 205. I use that as a marker to see if we’re seeing large swings in either direction in terms of enforcement activity.
Last year, for example, there were 195 cases, which is below that average marker, likely due to COVID, I would think. The prior year, there were 223 cases, so above that average marker. We’ll see that from year to year but we don’t see large swings in either direction.
NOPVs are something people focus on because they carry civil penalties, compliance orders, or in some cases, both, but we don’t see large swings in either direction of the number of NOPVs.
Russel: Brianne, do you think that’s because it’s correlated to the pace of audits that are occurring, or is it because of the number of operators? How does that correlate?
Brianne: There’s so much baked in there. It’s the number of audits and what they’re finding. Are they finding something that rises to the level of enforcement? It’s all very case-specific based on an operator’s facility and their records and what the agency thinks they can prove in an enforcement action.
They may have concerns. Years ago, they used to issue letters of concern, which was that seventh type of enforcement case. We didn’t talk about it at the outset because you don’t see too many of them anymore, but letters of concern were something less than a warning letter. The agency may not, on a given case, decide to bring enforcement. It just depends on the facts at hand.
Russel: Interesting. Is there any particular region or area where there’s more focus on enforcement than others?
Brianne: Sure, a lot of that tends to be how many miles of pipe are in a given region. There are five regions for PHMSA. The southern region, which is what it sounds like, the southern part of the eastern part of the United States, they consistently bring the least amount of enforcement cases for as long as I’ve been doing this, which has been a long time.
The other regions shift back and forth depending on what’s going on or was there a series of accidents, was there a new regulatory scheme that one of those regions is in charge of. For example, the eastern region, which is Maine down to Virginia plus West Virginia, they are now responsible for all storage enforcement cases, regardless of where that facility is located.
All enforcement cases involving storage runs through the eastern region. Their numbers are going to be higher because they have that responsibility and we’re hearing this year that the southwest region is going to be responsible for all LNG enforcement cases. We’ll probably see a spike in their activity based on that because they’re consolidating that type of activity into one region.
Russel: Interesting. I’m sitting here. As you’re talking about this, Brianne, I’m processing in my mind storage is relatively new. LNG is relatively new. There are more inspections that are going to be occurring in those new domains that certainly going to have to impact the number of enforcement cases and findings and all that kind of stuff, so I think that’s interesting.
Brianne: Then something we definitely look at because it’s a common question we get from operators — is there a certain region that’s just more interested in enforcement? We look at it every year. This year, of course, is not over. We saw four months of data to go, but at the moment the central region has issued the most cases.
Russel: Another question I want to ask is, how does this ebb and flow between administrations? PHMSA is part of the executive branch. The president’s policies and how he documents and goes about executing those policies affect a lot of things. To what degree does that impact enforcement activity?
Brianne: The total number of cases tends to stay pretty consistent. I mentioned we did the study, and we looked across presidential administrations to see if there were spikes in enforcement.
The total number of cases stays the same, relatively. Where we’re seeing changes is what type of case are they bringing, or are they using their civil penalty authority more? You can figure that out by looking at the number of civil penalty cases rather than the civil penalty figure itself, because that’s all based on an operator’s enforcement history, what actually happened in the case.
You’re not looking at the civil penalty, like the $100,000 civil penalty. You’re looking at the number of civil penalty cases and seeing if that is on the rise. At the moment for this year, for the Biden Administration, that number is looking like it’s trending to be on the rise, but we’ll have to wait till the end of the year to really make a conclusion.
Keith: There are some years where particularly significant incidents or events that result in enforcement have, I would say, a greater influence on the amount of civil penalties that are tallied up for any one year.
If you have a significant pipeline incident that results in a multi-million dollar enforcement case, that ends up being issued or adjudicated in a particular year, you’re probably going to see a bit more of a bump in the civil penalties for that year. Whether that’s probably more a result of the nature of the event that occurred, perhaps not so much a result of the nature of the administration that happens to be in power at the time.
That’s something that we’ve seen influence the total amount of civil penalties assessed in particular years would be particular events that result in high penalties.
Russel: Are the amount of the assessments or the penalties presently headed up, or is it the same thing, it kind of tends to say stay the same?
Brianne: The agency just increased the daily civil penalty caps and the related in a series cap in May. They increase them periodically for inflation. The current numbers are $225,000 per day per violation, and over $2 million for what’s called related in a series. I don’t want to give your listeners a wrong impression. It’s not capped at $2 million. The related in a series cap is when there’s the same facts or the same evidence.
Think about one violation, a single violation over a series of dates. That will be ultimately capped at the $2 million dollar cap. It doesn’t mean that the agency’s authority is capped at $2 million. Unfortunately, we see cases that are higher than $2 million from time to time.
Russel: What I’m wondering is does the agency focus on different things, so that where those fines are coming from is different year over year?
Brianne: It is. This is something we look at on an annual basis. Every year, some of the trends are the same, but for the most part, they change in a given year based on what the focus is of the agency. We try to piece that together looking at some of the data.
To give you a sense of what’s happening this year, we’ve got eight months of data we have through the end of August. The agency posts their cases on its website, so they’re publicly available. We go through the cases, and we dig into them, and we look at the citations, and we try to get a sense of, what is the common question that the agency is asking in an inspection?
What is rising to the level of enforcement? What are they feeling comfortable bringing an enforcement case on? Some of the things, just to give you some flavor for this year that we saw, there was a heavy focus on procedures, particularly effectiveness reviews. Are you periodically reviewing the work done by your folks to determine that your procedures are effective?
That, of course, is a requirement on the gas side in 192.605, it’s also on the liquid side, and it’s sprinkled throughout the code. We see it in CRM. We’ve seen it in storage. That’s a common theme. That’s what we try to do, not just look at the single citation in a case, but really have that broad look and say, “Okay, this seems to be a theme that we’re seeing out of the agency.”
Russel: That’s really good, Brianne. As I’m thinking about this, if I’m an operator, I’d want to know what the agency is focusing on, because that’s going to influence where I expend my resources around regulatory compliance. I’d prefer to be ahead of that way versus behind it.
Brianne: For instance, with storage, we looked for the first couple of years of all those warning letters and notices of amendment. It was very clear that one of the common questions that the agency was asking, and that they felt that operators weren’t providing the right documentation on was annular monitoring.
Were they looking at that flow, that annular flow, and making sure they were monitoring it, and making sure that they had records? We saw that so many times that we started saying, “Okay, folks, have you looked at that? Are you aware of that, because this question is coming?”
Russel: I certainly saw those trends in the control room space, because I was close enough to it as that rule was coming out. That ebbs and flows over time as new rules are coming out, and as various incidents occur, and as new technologies come out, those questions change. PHMSA, they don’t really publicly and overtly share that kind of information. I mean to frame that as a question.
Brianne: They don’t. Some of it, honestly, is based on the inspector, what their preference is. Have they seen it in prior inspections, then they’re going to repeat that question going forward. What is their background?
If they have a background in corrosion, they’re probably going to be more interested in the corrosion side of an operator’s program, because they’re familiar with it, and they understand it, and they’re comfortable. There’s a lot of factors there. It’s something that we take a look at, and we watch out for.
Keith: One of the things that you look at for an effective agency enforcement program is the agency using the enforcement process to drive good outcomes, not just to fine for fine sake, or not just to enforce just for the heck of it.
An agency should have organized priorities on things that they want to focus on, so that they’re making sure that operators are focusing on those things, to encourage compliance, to make the systems safer. That’s a sign of a healthy enforcement program. It’s not a sign that PHMSA has blinders on, or that operators are only focusing on certain things because that’s where PHMSA’s attention is.
In an ideal world, PHMSA is communicating its enforcement priorities to operators. Operators are responding to those priorities and investing the resources where they should go because everybody’s in agreement that that’s going to produce a better compliance outcome than the notion that PHMSA at any point in time could walk into your facility, and go through the whole codebook, and pull out any regulation, and cite you for it. That’s not, from my perspective anyway, an effective or reasonable expectation from an enforcement program.
Russel: Keith, that’s a great clarification. Certainly in my experience, the nature of what the agency is trying to do is…they’re like the operators. They have limited resources to expend on these activities, and they’re trying to expend them in a way that has the greatest overall industry safety impact. Likewise, the operators are trying to do the same thing. I think it’s good to be mindful of that fact.
Keith: The agency has — other than just the inspector and the boots on the ground that are doing the audits and things like that — a whole list of guidance documents related to enforcement, interpretations, things that help on the regulatory side. All of these things, at least the hope is, that all of these things are leading to better outcomes in terms of compliance. Not just setting things up for people to find violations or make mistakes.
Russel: Absolutely. Let me ask this question as we come to the end of our time. What should operators be looking out for at present? What are the kinds of themes that you guys are seeing presently?
Brianne: Across the board, it’s procedures and records. You want to keep those procedures alive. You want to review them. Make sure you’re following them. Make sure that you have documentation that you can prove you follow them.
We see that across the board, not just, obviously, in like we were talking about, CRM, but all through the O&M, or operations and maintenance space. That’s a huge part of the code and that’s a real focus of PHMSA and enforcement. The vast majority of NOPVs are O&M cases, or operations and maintenance cases, ranging from control room management, right-of-way patrols, and valve inspections. All those kinds of things are under that O&M umbrella. That’s a big piece of it.
The number two category is corrosion control. We’ve seen that for years. That’s a huge part of their enforcement profile. Looking at the big three in corrosion control, atmospheric, external and internal, but a lot of atmospheric cases. You see those over and over again.
Keith: Just some practical advice for operators that are facing the PHMSA enforcement process, whether you’re really familiar with it, not so familiar with it, just make sure that if you do get into a situation where you’re facing an enforcement case, that you ask for the documents that you’re entitled to receive.
PHMSA should have a post-inspection memo that you can ask for that provides information about how the inspection went. If you do end up in a situation where you get an enforcement case, in addition to the charging document, or the notice document, you may want to ask for the violation report, which lays out some of the rationales for why you ended up getting the case.
There’s also a civil penalty worksheet that includes some of the thoughts that went into, or some of the process that was followed, in coming up with your fine. Just make sure when you get one of these, in a situation like this, make sure you’re asking for what you’re entitled to get.
Then, the other thing that we suggest to our clients, too, is you have a right to contest these cases if it’s something you feel comfortable doing. Don’t forget that. There’s a process at PHMSA for contesting these cases. It’s an informal process but it’s there for you to use in appropriate circumstances.
We don’t tell people, “Do scorched Earth. Litigate every case you get. Contest every notice you get.” That’s not an effective strategy, long-term, for the company and it’s probably not going to be the best recipe for success with the agency.
But if you do get an enforcement document that doesn’t smell right, doesn’t look right, doesn’t seem to line up with how you understand things have been done in the past or how the rules work, you have the right to ask the agency to defend the position. If you need to avail yourself of a written response or requesting a hearing, you should do that in appropriate cases.
Russel: You guys gave me some information in advance of our sitting down here on the mic. One of the things you have as a bullet point is something that’s called effectiveness reviews. What are effectiveness reviews and how do they apply to this whole conversation?
Brianne: That’s one of the areas where we’re seeing a trend in enforcement this year. Operators have a procedural obligation to review their procedures and review the work that’s being done under their procedures to make sure that those procedures are effective.
For whatever reason, we’re seeing throughout this year and a little bit last year a lot of cases that are saying, you don’t have that in your procedures, or you have it but you can’t demonstrate that you did it. We’re seeing that across the board and it’s not just on the gas side, for instance. We’re seeing it on both sides.
Russel: Yeah, that’s really helpful, Brianne. I certainly am seeing that in the control room space because there’s a certain number of specified annual and monthly reviews that have to occur and those are the things that I think operators often have the hardest time getting done.
You’re so busy just doing the daily work that the ability to gather up the data and do the program review and the procedure review and all of that, it gets tough sometimes.
Brianne: Most of the time, you’ve done it, but it’s just hard to prove if you don’t have that document. We see that, too.
Keith: Russel, remember the last time we talked, document the decision, document the reason for the documentation, and then document the reason for the documentation for the documentation.
Keith: Documents are key. In the legal world, we work with a lot of documents but being able to take credit for work that you’ve done is a good thing. Make sure you make a document. It doesn’t have to be perfect, but do something.
Russel: We’re actually, in our businesses, engaging this concept that we call Natural Compliance, which simply stated, means that my policy and procedure drives the systems I choose to do the work and the systems I use to do the work automatically create, retain, and organize the records. What we tend to do, let me get on my soapbox a little bit so you guys can comment. If you think I’m out to lunch, please say so, because that’ll be entertaining for people. Here’s my theory.
What we’ve tended to do historically is we do a lot of work to get our program defined and to write our procedures, and then we go about doing the work, but we’re not really closing the loop in the way we create the records. Then when we come to do a review, we tend to review the procedures and the policy but we’re not reviewing the system. We really need to get to the point that we’re reviewing the system.
My theory is, for us as an industry, to get to another level or an order of magnitude in safety performance, we’ve got to become more system-focused and less task-focused. What do you think? Am I nuts or does that make sense?
Keith: I think we’ve seen themes like that in some of the safety management systems, some of the other regulatory programs that apply to other industries like aviation, things like that. I think it’s a point that’s well taken. You’re going to all this trouble, right? You’re putting these procedures together. You’re doing all this work. Just do your best to close the loop on that.
Make sure you’re documenting the things that you’re doing, and then making sure, as appropriate, you’re taking a look back at the documents that you have and feeding that information back into your processes to make sure you’re staying quick and up to speed on everything.
Russel: Yeah. Get the systems, and then once you have the systems, the next order of magnitude comes from doing the analysis around those things. You can’t do that analysis if you don’t have the system in place.
Keith: To be quite honest, if you are at that level of compliance, you’re probably not going to get a whole lot out of this conversation about the PHMSA enforcement process, because you shouldn’t be facing a whole lot of enforcement. If you’re operating at that high of a level, that’s great and you’re probably never going to need to call me or Brianne about anything, which maybe it’s not so great for me and Brianne, but it’s probably better for safety.
Russel: Yeah, short commercial announcement, right?
Russel: Don’t call the lawyer. Call the software guy. [laughs] Don’t call the lawyer after. Call the software guy before.
Keith: Until you get hacked, then call the lawyer.
Russel: Yeah. [laughs] That’s true. Indeed. Listen, guys, this has been great, as always. Brianne, it’s been awesome to have you on. I have learned a lot today. This has been great.
Brianne: It’s been a great experience.
Keith: The secret is out that all the decent things about me come from Brianne. Now, everybody knows that.
Russel: All right, guys. Thanks again and look forward to talking to you next time.
Keith: Thanks, Russel.
Brianne: Thanks, Russel.
Russel: I hope you enjoyed this week’s episode of the Pipeliners Podcast and our conversation with Keith and Brianne. Just a reminder before you go, you should register to win our customized Pipeliners Podcast YETI tumbler. Simply visit pipelinerspodcast.com/win to enter yourself in the drawing.
Russel: If you have ideas, questions, or topics you’d be interested in, please let me know on the Contact Us page at pipelinerspodcast.com or reach out to me on LinkedIn. Thanks for listening. I’ll talk to you next week.
Transcription by CastingWords