Fifth Circuit Holds Past Pipeline Spills Not Dispositive in Determining Whether Operator “Considered” Pipeline Risk Factors
Is a leaking pipeline indicative of an operator’s failed attempt to consider all relevant risk factors when the pipeline has had leaks in the past? In the context of pipeline integrity management regulations, the Court of Appeals of the Fifth Circuit said no. On August 14, 2017, the Court vacated, in part, a final order issued by the Pipeline Hazardous Materials Safety Administration (“PHMSA”) to ExxonMobil Pipeline Company (“ExxonMobil”), which found that ExxonMobil failed to properly consider the susceptibility of certain portions of its Pegasus Pipeline to seam failure and assessed a civil penalty of $2.6 million. The opinion in ExxonMobil Pipeline Company v. United States DOT determined that, despite an oil leak from its Pegasus Pipeline, ExxonMobil was not in violation of PHMSA regulations requiring it to consider all risk factors that reflected the risk conditions on a certain pipeline segment because ExxonMobil “carefully [underwent] an informed decision-making process in good faith, reasonably taking into account all relevant risk factors in reaching a decision” that the pipeline was not at risk of seam failure. 2017 U.S. App. LEXIS 15144 (Aug. 14, 2017).