PHMSA Assesses Big Safety Penalty Against El Paso

January 2010 Vol. 65 No. 1

One pipeline industry official suggested Quarterman was sending a message about the Obama administration’s toughness on pipeline safety. But this enforcement case began under the George W. Bush administration, with the fine being reduced under the Obama administration. It is true, however, that the fine is the biggest PHMSA has ever handed out, on its own authority. But there have been much bigger fines in instances where PHMSA has teamed with the Justice Department, for example. In July 2007, PHMSA and the Department of Justice announced the settlement of a civil action against El Paso Pipeline Company, arising out of an incident near Carlsbad, NM, in which 12 people were killed. That settlement included a civil penalty of $15.5 million. That case represented the largest judicial settlement ever brought under the Federal Pipeline Safety Laws.

Asked whether the Obama PHMSA was sending the industry a message with the $2.3 million fine, Damon Hill, a PHMSA spokesman, says, "The message is in the press release." He is referring to quotes from Quarterman and Treasury Secretary Ray LaHood who was quoted as saying: "The Department will hold pipeline operators accountable for the safety of those who live and work in the vicinity of their systems and negligence will not be tolerated."

Quarterman replaces Carl T. Johnson, the PHMSA administrator during the last year of the Bush administration, who was widely viewed as an ineffective placeholder. Quarterman comes to PHMSA from a Washington law firm called Steptoe & Johnson where she represented producers and pipeline companies in matters before the Department of the Interior, the Federal Energy Regulatory Commission and the Department of Transportation. Prior to that she was deputy director of Minerals Management Service within the Interior Department during the Clinton administration. Her number two at PHMSA is now Cynthia Douglass, who replaces Stacey Gerard as assistant administrator and chief safety officer.

FERC Questions Pipeline Rates In Case With Broad Implications (subhed)

An apparently pioneering FERC investigation into interstate pipeline rates has led to an unusual verbal attack on FERC by one of the commission's targets. A FERC investigation in November alleges that Northern Natural Gas Company, Great Lakes Gas Transmission LP, and Natural Gas Pipeline Company of America may be substantially over recovering their cost of service.