Background
Florida Gas Transmission Company operates the Sanford Lateral, a natural gas pipeline built in 1959. In 2020, the pipeline ruptured along its longitudinal seam, causing significant property damage but no injuries. The Pipeline and Hazardous Materials Safety Administration investigated and issued a final order fining the company for violating two federal regulations regarding maximum allowable operating pressure records and the use of specific inspection tools.
The court’s reasoning
The court reviewed the agency’s action under an arbitrary and capricious standard. Regarding the first violation, the court found that the agency improperly used a regulation governing pressure calculations to penalize a lack of recordkeeping, a requirement that exists in a different section of the regulations with its own timeline. This atextual application failed to provide fair warning. Regarding the second violation, the court determined that the regulation requiring specific inspection tools only applied if the pipeline was susceptible to seam failure. The record showed no prior seam failure, and general provisions requiring operators to consider threats did not mandate a specific tool selection. The court concluded the agency’s findings were unsupported and the order was arbitrary.
What it means going forward
The decision limits the Pipeline and Hazardous Materials Safety Administration’s ability to impose fines based on atextual interpretations of safety regulations and reinforces the requirement for clear fair notice before penalizing operators.
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