Record Year for Pipeline Fines


Rounding out a year of record enforcement actions against the pipeline industry for coatings, corrosion and other violations, U.S. regulators have levied nearly $200,000 in fines against Columbia Gas Transmission Company.

Columbia, a subsidiary of NiSource Gas Transmission & Storage Company, was hit at the end of December with a final order imposing $197,0000 in civil penalties for violations on its Millennium Pipeline in New York.

The order ended a year of what proved to be a record amount of fines proposed by the U.S. Pipeline and Hazardous Materials Safety Administration. The agency announced Thursday (Jan. 24) that 2012 also saw the second-highest number of enforcement actions the agency has taken against pipeline operators.

$8.7M in Fines

The agency issued a total of $8,748,200 in proposed fines in 2012. The second-highest year for fines was in 2008, when PHMSA issued $8,719,600 in proposed fines.

Less than one month into the new year, PHMSA has already opened four cases with a total of $249,600 in proposed penalties.

Also in 2012, PHMSA issued 116 enforcement orders to pipeline operators for problems with integrity management programs, qualified personnel, corrosion control, and a number of other regulatory violations. In 2011, the agency issued 120 enforcement orders—its highest single-year record.

Columbia Gas Case

Several of the steepest fines from 2012 related to inadequate corrosion protection and improper coating procedures and inspections.

In the case of Columbia Gas, the violations notice alleged that Columbia failed to:

  • Inspect each portion of its exposed pipeline for atmospheric corrosion at least once every three years;
  • Have a cathodic protection system to protect its pipeline against external corrosion (the CP system had only been partially installed, with missing test stations and rectifiers, and pipe-to-soil readings on portions of the line indicating the system was not fully operational);
  • Equip each compressor station with safety equipment to automatically shut off fuel and vent the engine distribution manifold;
  • Construct its transmission pipeline in accordance with written specifications or standards, specifically for damaged pipe coatings from improper bending and handling of the pipe; 
  • Inspect its pipeline to ensure proper construction, specifically instances of pipe coating that had been damaged when the pipe was installed in a ditch; and
  • Have visual welding inspections conducted by a qualified individual, specifically for the welding for three pipeline repairs in 2008.

Separately, NiSource announced Friday (Jan. 25) that it received approval from the Federal Energy Regulatory Commission (FERC) for a customer settlement that will allow it to invest about $300 million per year in system improvements through 2017.

Other Enforcement

Columbia Gas was not the only operator to take a six-figure hit last year from PHMSA.

Also in 2012, the agency issued its largest penalty ever to Enbridge Energy in the amount of $3,699,200 stemming from a July 2010 corrosion-related rupture that spilled more than 20,000 barrels of crude oil into the Kalamazoo River.

PHMSA issued its steepest civil penalty in 2012, totaling almost $3.7 million, against Enbridge Energy for a 2010 rupture in Michigan.

Rockies Express Pipeline LLC, a subsidiary of Kinder Morgan Energy Partners L.P., was also hit with two of the larger proposed fines in 2012.

One of the proposed fines, totaling $347,800, alleged improper welding procedures; nondestructive testing procedures that may have affected the integrity of welds; coatings applied to girth welds that were not in the temperature range specified by the manufacturer; inadequate coating inspections; visible damage to thin film epoxy coatings on the pipe; and more. 

Rockies Express also received a proposed civil penalty of $641,900 for a list of problems with its corrosion control coatings, including not following the coating manufacturer's instructions, improper repair of coating defects, inadequate surface preparation, and more.

"These enforcement numbers are a direct result of improved internal tracking procedures and rigorous investigations and inspections of pipeline facilities by PHMSA field personnel," said Cynthia Quarterman, PHMSA Administrator. "Our job is to ensure pipeline operators comply with federal safety regulations, and I am proud of our enforcement achievements over the last four years."

Pipeline Safety Act

"When President Obama signed the 2011 Pipeline Safety Act into law, it strengthened the Department's ability to help promote a safer, more reliable, and capable American pipeline transportation network," said Ray LaHood, U.S. Tranportation Secretary.

"Through a combination of education, preparation, and enforcement, we can all help prevent pipeline accidents," said LaHood.

The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 was signed into law last year by President Obama. The Act doubled the maximum civil penalty amount PHMSA can issue to pipeline operators for violating pipeline safety regulations from $100,000 to $200,000 for each violation, and from $1 million to $2 million for a related series of violations. The act also authorizes PHMSA to increase its federal pipeline inspector workforce.


Tagged categories: Corrosion; Department of Transportation (DOT); Government; Health & Safety; PHMSA; Pipelines; Regulations

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