EXCLUSIVE — The Department of Transportation is overhauling the process used to punish energy companies accused of violating federal regulations to ensure the law is applied “fairly, transparently, and in a way that respects the core legal principle of due process.”
The Pipeline and Hazardous Materials Safety Administration, one of the DOT’s subagencies that provides oversight over the energy industry, announced it is making “long overdue” reforms to Biden-era policies that govern how energy companies are penalized, including changes to how civil penalties are calculated.
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In applying the new policy on civil violations, energy operators are expected to save thousands in penalties, with officials saying one operator in a pending case will avoid nearly a quarter of a million dollars in “overpayments.” Operators in pending cases are expected to save about 6.5% on average.
“Inspections and enforcement actions are a critical part of PHMSA’s safety program,” said PHMSA acting Administrator Ben Kochman. “After four years of the Biden Administration’s misguided attempts to turn PHMSA into an environmental regulator, we are ensuring due process and putting safety front and center. These long overdue reforms will refocus our enforcement program, so the law is applied fairly, transparently, and in a way that respects the core legal principle of due process.”
PHMSA’s reforms come amid a broader push within the Trump administration to ease restrictions on energy producers.
On his first day in office, President Donald Trump attempted to reverse a ban on future oil and gas drilling in more than 625 million acres of federal water in an executive order. On Monday, the Department of the Interior sought to roll back rules imposed under former President Joe Biden that restricted oil and gas development across 13 million acres of the National Petroleum Reserve in Alaska.
PHMSA’s latest changes include reforms surrounding how the agency calculates civil penalties.
Once PHMSA initially announces a regulatory violation, the agency’s investigation often takes months before the violation is actualized. Under the new policy, PHMSA seeks to prevent retroactive fee increases by charging companies fines based on the date of the actual violation, not the date of the final violation. The move seeks to create more predictable penalties that the Trump administration says will protect businesses from unjust enhanced fines.
PHMSA is also scaling back how aggressively it pursues energy companies accused of violating federal regulations.
The “onus,” or burden of proof, will now be on the PHMSA as it investigates companies for infractions, a policy the Trump administration says stands in contrast to the Biden administration’s approach and ensures a fairer review process. Under the new policy, PHMSA must disclose all pertinent agency records, including potentially exculpatory evidence, to businesses subject to scrutiny, allowing energy companies to dispute claims more effectively.
A memo released by the agency late last month details guidance to the Office of Pipeline Safety to fall in line with mandates to share all records, saying the DOT must “voluntarily share penalty calculation worksheets, manuals, charts, or other appropriate materials that sheds light on the way penalties are calculated to ensure fairness in the process and to encourage a negotiated resolution where possible.”
PHMSA plays a critical role in overseeing the safe transportation of oil, natural gas, and other hazardous liquids by pipelines in the United States. The DOT agency monitors energy projects nationwide, including the Keystone oil pipeline.
Congress is embroiled in conflict over reauthorizing PHMSA due to disagreements over how the federal government should regulate oil and gas pipelines.
During a hearing on the matter last month, Sen. Ted Cruz (R-TX), the chairman of the Senate Commerce Subcommittee on Surface Transportation, Freight, Pipelines and Safety, expressed concern that the agency had wielded too much power under the Biden administration.
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“The unaccountable Biden PHMSA attempted to remake the pipeline safety agency into a climate change agency, because every agency in the federal government under Biden was a climate change agency,” the senator said as his committee debated the development of bipartisan legislation to reauthorize PHMSA.
“Pipelines are the safest and most effective way to transport massive quantities of American oil and natural gas, which is why, as we look to craft legislation reauthorizing PHMSA, we need to ensure unnecessary regulations are not impeding America’s energy dominance,” Cruz added in a statement.