A Look at Recent PHMSA OQ Enforcement Activities – H1 2018
Establishing and maintaining a strong operator qualification (OQ) program requires key ingredients: technology to streamline OQ records verification and management, audit services that help ensure the integrity of your OQ processes and records, high-quality covered task training content, and OQ regulatory expertise.
Establishing and maintaining a strong operator qualification (OQ) program requires key ingredients: technology to streamline OQ records verification and management, audit services that help ensure the integrity of your OQ processes and records, high-quality covered task training content, and OQ regulatory expertise. An effective OQ program is also enhanced by an understanding of the latest pipeline safety enforcement activity trends coming from the U.S. Department of Transportation’s Pipeline & Hazardous Materials Safety Administration (PHMSA).
Recent enforcement actions offer a valuable, real-world perspective of what regulators are looking for during inspections, provide food-for-thought regarding potential trouble spots in your own program, and highlight areas where your company needs to pay special attention to ensure that compliant processes and documentation are in place.
As part of our ongoing efforts to help each of our clients maintain a defensible OQ compliance program, Veriforce keeps tabs on PHMSA enforcement actions. The following is a summary of the OQ-related activity we’ve seen for the first half of 2018.
Proposed Civil Penalties and Compliance Orders – OQ
Of the 35 civil penalties proposed by PHMSA for the first half of 2018, five focused on failures to meet OQ compliance requirements, with suggested fines ranging from $48,000 to $293,000. These companies were cited for a variety of recordkeeping and training failures, such as:
- A pipeline company failed to maintain records that showed personnel had undergone and satisfactorily completed the required initial training and continuing education programs for its LNG plant operations and maintenance at the proper intervals, per §193.2713(b). PHMSA assessed a preliminarily civil penalty of $48,000 for this violation.
- Another pipeline company failed to establish a written OQ program by April 27, 2001, per §195.509, but did create one after PHMSA’s inspection in late 2015. It also failed to qualify personnel performing tasks such as valve maintenance, inspecting valves, repairing valves, shutting down the pipeline, and inspecting, testing, and calibrating pressure limiting devices. PHMSA assessed a preliminary civil penalty for this company of $293,600 total, for failure to comply with written OQ standards plus a variety of other violations.
In general, PHMSA has the authority by law to assess up to a maximum of $209,002 per day, up to a total maximum of $2,090,022 for a related series of violations. Operators have a number of options to respond to a proposed civil penalty – e.g., contest the allegation, or provide information that might reduce the penalty – before PHMSA issues a Final Order.
The five companies found in violation of OQ rules during the first half of 2018 were fined a total of $588,000.
Notices of Amendment – OQ
During the first seven months of 2018, two companies were issued Notices of Amendment (NOAs) for written OQ program plans or procedures that were judged inadequate. Operators have the opportunity to respond to the NOA before PHMSA issues an Order Directing Amendment.
Among one company’s 25 notices of amendment, five were OQ matters related to having and following a written qualification program (§195.505, parts b, c, f, g and h). Specifically, the company failed to:
- (b) Ensure through evaluation that individuals performing covered tasks are qualified.
- (c) Allow individuals that are not qualified to perform a covered task if directed and observed by an individual that is qualified.
- (f) Communicate changes that affect covered tasks to individuals performing those covered tasks.
- (g) Identify those covered tasks and the intervals at which evaluation of the individual’s qualifications is needed.
- (h) Provide training, as appropriate, to ensure that individuals performing covered tasks have the necessary knowledge and skills to perform the tasks in a manner that ensures the safe operation of pipeline facilities.
A second company also failed to have and follow a written qualification program that appropriately identified covered tasks (§195.505). Specifically, the company had written tasks for launching and receiving a cleaning pig, but not for the launching and receiving of in-line inspection (ILI) tools. The company was asked to amend their written OQ program to include the ILI processes.
Warnings – OQ
A warning does not require a response, but the operator is “on notice” that it is subject to additional enforcement actions if the items noted are not corrected. Similar to 2017, most warnings related to failures in recordkeeping, such as:
- Field staff at a natural gas company failed to maintain records per §192.807a, which meant that staff performed line locating tasks, but no records existed to show that these employees were qualified to perform that task.
- A pipeline operator failed to follow the provisions of its written qualification program because it did not ensure personnel performing covered tasks were qualified to do so (§195.505). Specifically, the company had an individual performing aerial patrols of the pipeline when that employee’s qualification to do so had expired and records failed to indicate whether the employee had re-qualified.
- Another pipeline operator failed to inform PHMSA or the participating state agency of significant modifications to its written OQ program after it acquired two other pipeline companies. (§195.505i).
Final Orders – OQ
PHMSA issues Final Orders as the final step in the enforcement process, after the operator in question has responded to a citation.
Thirty-eight final orders were issued by PHMSA the first half of 2018, with nine of those orders focused on OQ. The civil penalties assessed totaled $735,200 and ranged from $0 to $279,400.
The largest fine was levied for multiple recordkeeping failures. At time of inspection, this pipeline company failed to produce records that established the maximum operating pressure (MOP) of its pipeline in accordance with §195.406(a). The company also did not deliver any pressure test records, operating pressure charts, logs, or other supporting evidence to show that the MOP was set in accordance with §195.406(a).
The company further failed to have a written OQ program in place at the time of inspection per §195.505 and records indicated that such written documentation had not been used since 2004. Consequently, the company had no personnel performing covered tasks who were qualified per a written plan that met the provisions of §195.505.
Highlights of smaller OQ cases where final orders were issued include:
- A municipality failed to follow its written qualification program (§192.805).
- One energy company failed to have a written qualification program in place during operation even though employees and contractors were performing covered tasks (§195.509).
- A company failed to ensure through evaluation that an employee was qualified to perform a covered task, per § 192.805(b).
Trends in PHMSA Enforcement Penalties – OQ
The good news for business is that cases initiated and closed are both down significantly from the peak years of 2005 and 2012, and trending down from 2017. If the current pace holds for the remainder of 2018, PHMSA enforcement will match levels not seen since 2002 and 2003.
To learn more about PHMSA pipeline safety enforcement activity, visit the PHMSA website.
Veriforce delivers a uniquely comprehensive solution for PHMSA OQ Rule compliance that supports pipeline operators’ OQ processes from end to end and enables management of all aspects of OQ qualification tracking and recordkeeping within a single system. Learn more about the Veriforce OQ compliance solution and how it unites software with value-added audit, consulting, and training services to maximize the overall effectiveness and defensibility of your OQ program.
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