Document ID: PHMSA-2016-0010-0001
Agency: phmsa
Document Type: Rule
Title: Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties
Posted Date: 2016-06-30T04:00Z

[Federal Register Volume 81, Number 126 (Thursday, June 30, 2016)]
[Rules and Regulations]
[Pages 42564-42566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15529]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Part 190

[Docket No. PHMSA-2016-0010]
RIN-2137-AF16

Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 
DOT.

ACTION: Interim final rule.

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SUMMARY: PHMSA is revising references in its regulations to the maximum 
civil penalties for violations of the Federal Pipeline Safety Laws, or 
any PHMSA regulation or order issued thereunder. Under the ``Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015,'' 
which further amended the ``Federal Civil Penalties Inflation 
Adjustment Act of 1990,'' federal agencies are required to adjust their 
civil monetary penalties effective August 1, 2016, and then annually 
thereafter, to account for changes in inflation.
    PHMSA finds good cause to amend the regulation related to civil 
penalties without notice and opportunity for public comment. For the 
reasons described below, advance public notice is unnecessary.

DATES: The effective date of this interim final rule is August 1, 2016.

FOR FURTHER INFORMATION CONTACT: Aaron Glaser, Attorney-Advisor, 
Pipeline Safety Division, Office of Chief Counsel, Pipeline and 
Hazardous Materials Safety Administration, by telephone at 202-366-6318 
or by email at aaron.glaser@dot.gov; Melanie Stevens, Attorney-Advisor, 
Pipeline Safety Division, Office of Chief Counsel, Pipeline and 
Hazardous Materials Safety Administration, by telephone at 202-366-5466 
or by email at melanie.stevens@dot.gov.

SUPPLEMENTARY INFORMATION: 

I. Procedures

Background

    Section 701 of the ``Federal Civil Penalties Inflation Adjustment 
Act Improvements Act of 2015'' (Pub. L. 114-72) (the 2015 Act) amended 
the ``Federal Civil Penalties Inflation Adjustment Act of 1990'' (Pub. 
L. 101-410) (Inflation Adjustment Act) to require that federal agencies 
adjust their civil penalties with an initial ``catch-up'' adjustment 
through an interim final rulemaking by July 1, 2016, as well as make 
subsequent annual adjustments for inflation. This interim rule adjusts 
the maximum civil penalties assessed under 49 U.S.C. 60101, et seq., or 
regulations or orders issued thereunder. These adjusted penalties will 
apply to violations occurring on or after the effective date of August 
1, 2016.
    On February 24, 2016, the Office of Management and Budget (OMB) 
issued a ``Memorandum for the Heads of Executive Departments and 
Agencies, Implementation of the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015,'' M-16-06 (OMB Memorandum M-
16-06), providing guidance to federal agencies on how to update their 
civil penalties pursuant to the 2015 Act. OMB Memorandum M-16-06 
directs agencies to use multipliers to adjust their civil monetary 
penalties, or the minimum and maximum penalties, based on the year the 
penalty was established or last adjusted by statute or regulation other 
than under the Inflation Adjustment Act (Base Year). For the catch-up 
adjustment, the agency must use the multiplier, based on the Consumer 
Price Index for October 2015, provided in the table of OMB Memorandum 
M-16-06 and multiply it by the current maximum penalty amount. After 
making an adjustment, all penalty levels must be rounded to the nearest 
dollar, but no penalty level may be increased by more than 150 percent 
of corresponding penalty levels in effect on November 2, 2015.
    PHMSA is revising the maximum civil penalty amounts in its 
regulations, consistent with the process outlined in OMB Memorandum M-
16-06. The ``Pipeline Safety, Regulatory Certainty, and Job Creation 
Act of 2011'' (the 2011 Act) (Public Law No: 112-90) adjusted the 
maximum civil penalties for violations under 49 U.S.C. 60101, et seq. 
In 2013, PHMSA amended 49 Code of Federal Regulations (CFR) Sec.  
190.223(a) to conform to the 2011 Act, effective January 2, 2012. (78 
FR 58897). Based on the 2012 effective date, a multiplier 1.02819 was 
used to calculate the updated penalties for violations under 49 U.S.C. 
60101, et seq., and any regulation or order issued thereunder. The 
civil penalty amounts for violations of 49 U.S.C. 60103 and 60111 were 
last set by Congress in 1994 with the Revision of Title 49, United 
States Code Annotated, Transportation (Pub. L. 103-272), and last 
adjusted by PHMSA in 1996 via regulation amending 49 CFR 190.223(c) (61 
FR 18515). The 1996 multiplier of 1.50245 was used to calculate the 
updated penalties for violations of 49 U.S.C. 60103 and 60111. Lastly, 
the penalty amount for violations of 49 U.S.C. 60129 was last set by 
Congress in 2002 with the passage of the ``Pipeline Safety Improvement 
Act of 2002,'' (Pub. L. 107-355), and last adjusted by PHMSA in 2005 
via regulation amending 49 CFR 190.223(d) (70 FR 11137). The 2005 
multiplier of 1.19397 was used to calculate the updated penalties for 
violations of 49 U.S.C. 60129. These revised penalties are shown as 
follows:

[[Page 42565]]

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                                                                   Current maximum civil   Revised maximum civil
        Violated statute            CFR Citation      Base year           penalty                 penalty
----------------------------------------------------------------------------------------------------------------
49 U.S.C. 60101 et seq., and     49 CFR 190.223(a).         2012  $200,000 for each       $205,638 for each
 any regulation or order issued                                    violation for each      violation for each
 thereunder..                                                      day the violation       day the violation
                                                                   continues, with a       continues, with a
                                                                   maximum penalty not     maximum penalty not
                                                                   to exceed $2,000,000    to exceed $2,056,380
                                                                   for a related series    for a related series
                                                                   of violations.          of violations.
49 U.S.C. 60103;49 U.S.C. 60111  49 CFR 190.223(a).         1996  A penalty not to        An administrative
                                                                   exceed $50,000, which   civil penalty not to
                                                                   may be in addition to   exceed $75,123, which
                                                                   other penalties under   may be in addition to
                                                                   40 U.S.C. 60101, et     other penalties
                                                                   seq.                    assessed under 49
                                                                                           U.S.C. 60101, et seq.
49 U.S.C. 60129................  49 CFR 190.223(d).         2005  A penalty not to        A penalty not to
                                                                   exceed $1,000.          exceed $1,194.
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    The 2015 Act only applies to penalties prospectively and does not 
retrospectively change any civil penalties previously assessed or 
enforced.
    Starting in January 2017, PHMSA is required to publish in the 
Federal Register annual inflation adjustments for each penalty levied 
under 49 U.S.C. 60101, et seq., and do so no later than January 15 of 
each year.
    The 2015 Act does not alter PHMSA's existing authority to assess 
penalties levied for violations under 49 U.S.C. 60101, et seq. 
Additionally, if future penalties or penalty adjustments are enacted by 
statute or regulation, PHMSA will not adjust these penalties for 
inflation in the first year after these penalties are in effect. PHMSA 
will apply new annual penalty levels to any penalties assessed on or 
after the date these new levels take effect.

II. Justification for Interim Final Rule

    The Administrative Procedure Act (APA) authorizes agencies to 
forego providing the opportunity for prior public notice and comment if 
an agency finds good cause that notice and public procedure are 
unnecessary. See 5 U.S.C. 553(b)(3)(B). In this instance, PHMSA is 
required under the 2015 Act and directed by the OMB Guidance to publish 
this rule by July 1, 2016, with the penalty levels stated herein to 
take effect no later than August 1, 2016. Further, PHMSA is mandated by 
the 2015 Act and directed by the OMB Guidance to adjust the penalty 
levels pursuant to the specific procedures also stated herein. Any 
public comments received through notice and public procedure would 
therefore not affect PHMSA's obligation to comply with the 2015 Act or 
OMB Guidance, nor would they affect the methods used by PHMSA to adjust 
the penalty levels. PHMSA, therefore, finds good cause that APA notice 
and comment are unnecessary for this interim final rule.

III. Rulemaking Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

    This rule is published under the authority of the 2015 Act, as well 
49 U.S.C. 60101 et seq. These statutes provide PHMSA with the authority 
to levy civil penalties for violations of the federal Pipeline Safety 
Laws. The 2015 Act requires penalties levied by federal agencies 
pursuant to these laws to be adjusted, and for the new adjusted 
penalties to take effect no later than August 1, 2016. Further, 
beginning in January 2017, the 2015 Act requires such penalties to be 
adjusted on an annual basis no later than January 15 of each year.

B. Executive Orders 12866 and 13563, and DOT Regulatory Policies and 
Procedures

    This rule has been evaluated in accordance with existing DOT 
policies and procedures and determined to be non-significant under 
Executive Orders 12866 and 12563. This rule is considered a regulatory 
action under Section 3(e) of Executive Order 12866, and pursuant to 
Section 6(a)(3)(D) of Executive Order 12866. Further, this interim 
final rule is not significant under the Regulatory Policies and 
Procedures of the Department of Transportation because it is limited to 
a ministerial act on which the agency has no discretion and the 
economic impact of this rule is minimal. (44 FR 11034). Accordingly, 
preparation of a regulatory evaluation is not warranted.
    This rule imposes no new costs upon persons conducting operations 
in compliance with federal pipeline statutes and regulations. Those 
operators not in compliance with these statutes and regulations may 
experience an increased cost, based on the penalties levied against 
them for non-compliance; however, this is an avoidable, variable cost 
and thus, is not considered in any evaluation of the significance of 
this regulatory action. The amendments in this rule could provide a 
deterrent effect that could potentially lead to safety benefits; 
however, PHMSA does not expect such benefits to be significant. 
Overall, it is anticipated that costs and benefits from this rule would 
be minimal in real dollars.

C. Executive Order 13132

    PHMSA has analyzed this rule according to Executive Order 13132 on 
federalism. The interim final rule does not have a substantial direct 
effect on the states, the relationship between the national government 
and the states, or the distribution of power and responsibilities among 
the various levels of government. The rule neither imposes substantial 
direct compliance costs on state and local governments nor preempts 
state law governing intrastate pipelines. Therefore, the consultation 
and funding requirements of Executive Order 13132 do not apply.

D. Executive Order 13175

    This rule has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13175 on consultation and 
coordination with Indian tribal governments. Because the rule does not 
have tribal implications, does not impose substantial direct compliance 
costs, and is required by statute, the funding and consultation 
requirements of Executive Order 13175 do not apply.

E. Executive Order 13211

    This rule is not a ``significant energy action'' under Executive 
Order 13211 on actions concerning regulations that significantly affect 
energy supply, distribution, or use. It is not likely to have a 
significant adverse effect on supply, distribution, or energy use. 
Further, the Office of Information and Regulatory Affairs (OIRA) within 
OMB has not designated this rule as a significant energy action.

F. Regulatory Flexibility Act, Executive Order 13272, and DOT 
Procedures and Policies

    The Regulatory Flexibility Act (5 U.S.C. 601-611) requires each 
agency to analyze proposed regulations and assess their impact on small 
businesses and

[[Page 42566]]

other small entities to determine whether the rule is expected to have 
a significant impact on a substantial number of small entities. The 
provisions of this interim final rule may apply specifically to all 
businesses using pipelines to transport hazardous liquids, gas, and LNG 
in interstate commerce. Therefore, PHMSA certifies this rule would not 
have a significant economic impact on a substantial number of small 
entities.

G. Unfunded Mandates Reform Act of 1995

    This rule does not impose unfunded mandates under the Unfunded 
Mandates Reform Act of 1995. It does not result in costs of 
$155,000,000 or more, adjusted for inflation, in any year for either 
state, local, or tribal governments, in the aggregate, or to the 
private sector, and is the least-burdensome alternative that achieves 
the objective of the rule.

H. Paperwork Reduction Act

    This interim final rule imposes no new requirements for 
recordkeeping or reporting.

I. Environmental Assessment

    The National Environmental Policy Act of 1969 (NEPA), as amended 
(42 U.S.C. 4321-4375), requires federal agencies to consider the 
consequences of major federal actions and prepare a detailed statement 
on actions significantly affecting the quality of the human 
environment. When developing potential regulatory requirements, PHMSA 
evaluates those requirements to consider the environmental impact of 
these amendments. Specifically, PHMSA evaluates the risk of release and 
resulting environmental impact; risk to human safety, including any 
risk to first responders; if the proposed regulation would be carried 
out in a defined geographic area; and the resources, especially in 
environmentally sensitive areas, that could be impacted by any proposed 
regulations.
    This interim final rule would be generally applicable to pipeline 
operators, and would not be carried out in a defined geographic area. 
The adjusted, increased civil penalties listed in this interim final 
rule may act as a deterrent to those violating the Federal Pipeline 
Safety Laws, or any PHMSA regulation or order issued thereunder. This 
may result in a positive environmental impact as a result of increased 
compliance with the Federal Pipeline Safety Laws and any PHMSA 
regulations or orders issued thereunder. Based on the above discussion, 
PHMSA concludes there are no significant environmental impacts 
associated with this interim final rule.

J. Privacy Act

    Anyone is able to search the electronic form of any written 
communications and comments received into any of our dockets by the 
name of the individual submitting the document (or signing the 
document, if submitted on behalf of an association, business, labor 
union, etc.). You may review DOT's complete Privacy Act Statement in 
the Federal Register published on April 11, 2000 (Volume 65, Number 70, 
pages 19477-78) or online at https://www.federalregister.gov/articles/2000/04/11/00-8505/privacy-act-of-1974-systems-of-records or https://www.gpo.gov/fdsys/pkg/FR-2000-04-11/pdf/00-8505.pdf.

K. Executive Order 13609 and International Trade Analysis

    Sections 3 and 4 of Executive Order 13609 direct an agency to 
conduct a regulatory analysis and ensure that a proposed rule does not 
cause unnecessary obstacles to foreign trade. This requirement applies 
if a rule constitutes a significant regulatory action, or if a 
regulatory evaluation must be prepared for the rule. This interim final 
rule is not a significant regulatory action, but a regulatory action 
under Section 3(e) of Executive Order 12866. PHMSA is not required 
under Executive Orders 12866 and 13563 to submit a regulatory analysis.

L. Regulation Identifier Number (RIN)

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
the spring and fall of each year. The RIN contained in the heading of 
this document can be used to cross-reference this action in the Unified 
Agenda.

List of Subjects in 49 CFR Part 190

    Administrative practice and procedure, Penalties, Pipeline safety.

    In consideration of the foregoing, PHMSA is amending 49 CFR part 
190 as follows:

PART 190--PIPELINE SAFETY ENFORCEMENT AND REGULATORY PROCEDURES

0
1. The authority citation for part 190 is revised to read as follows:

    Authority: 33 U.S.C. 1321(b); 49 U.S.C. 60101 et seq.; 49 CFR 
1.97; Pub. L. 114-74, section 701; Pub. L. No: 112-90, section 2; 
Pub. L. 101-410, sections 4-6.

0
2. Section 190.223 is amended by revising paragraphs (a) though (d) to 
read as follows:

Sec.  190.223  Maximum penalties.

    (a) Any person found to have violated a provision of 49 U.S.C. 
60101 et seq., or any regulation or order issued thereunder is subject 
to an administrative civil penalty not to exceed $205,638 for each 
violation for each day the violation continues, except that the maximum 
administrative civil penalty may not exceed $2,056,380 for any related 
series of violations.
    (b) Any person found to have violated a provision of 33 U.S.C. 
1321(j) or any regulation or order issued thereunder is subject to an 
administrative civil penalty under 33 U.S.C. 1321(b)(6), as adjusted by 
40 CFR 19.4.
    (c) Any person found to have violated any standard or order under 
49 U.S.C. 60103 is subject to an administrative civil penalty not to 
exceed $75,123, which may be in addition to other penalties to which 
such person may be subject under paragraph (a) of this section.
    (d) Any person who is determined to have violated any standard or 
order under 49 U.S.C. 60129 is subject to an administrative civil 
penalty not to exceed $1,194, which may be in addition to other 
penalties to which such person may be subject under paragraph (a) of 
this section.
* * * * *

    Issued in Washington, DC, under authority delegated in 49 CFR 
Part 1.97.
Marie Therese Dominguez,
Administrator.
[FR Doc. 2016-15529 Filed 6-29-16; 8:45 am]
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