The pipeline company led by President Donald Trump’s biggest energy donor is trying to upend the way the federal government enforces pipeline safety law.
Dallas-based pipeline giant Energy Transfer is suing the Pipeline and Hazardous Materials Safety Administration, asking a judge to declare the agency’s in-house enforcement system “unconstitutional.”
Victory for the company could mean that PHMSA cases are heard only in federal court where accused companies can get a jury trial. That takes more time, effort and money. So it would likely lead to a lot fewer penalties to deter the safety violations that can lead to leaks and explosions.
“It would grind enforcement down to a halt,” said Joseph Hainline, a former PHMSA staff attorney now in private practice at Van Ness Feldman, in an interview. “PHMSA is not equipped to deal with long, drawn-out litigation outside of the agency. They’re already short-staffed.”
Energy Transfer, overseen by Kelcy Warren — the company’s executive chair and a top Trump donor — is contesting the legitimacy of a $2.5 million fine PHMSA levied from a fatal accident five years ago on its Panhandle Eastern natural gas pipeline, which runs from Texas to Michigan.
Pipeline companies and other critics of PHMSA have long complained about an enforcement process that they say lacks due process and transparency, moves too slowly, and creates uncertainty.
But the lawsuit marks an escalation. Cary Coglianese, a law professor at the University of Pennsylvania who heads the Penn Program on Regulation, called it “swinging for the fences.”
“They’re really throwing the kitchen sink at PHMSA,” Coglianese said.
Energy Transfer, which has a network of 130,000 miles of pipelines and related infrastructure across 44 states, did not respond to a list of questions about its legal challenge. The White House also didn’t respond to POLITICO’s E&E News when asked about the case. PHMSA declined to comment.
The Interstate Natural Gas Association of America, the trade association that represents companies with interstate transmission lines like Panhandle Eastern, declined to comment on whether it agrees with the effort to dismantle PHMSA’s enforcement process. Energy Transfer is not a member of the association.
The company — which had about $82 billion of revenue last year — is best known as the developer of the Dakota Access oil pipeline. Energy Transfer has a reputation for bold business moves and aggressive responses to criticism, such as its lawsuit against Greenpeace in which a North Dakota jury awarded the company more than $660 million.
Warren, Energy Transfer’s co-founder, also is known for spending money to help elect friendly politicians. Warren put $10 million last year toward putting Trump back in power after spending a similar amount on Trump’s failed reelection bid. Warren and a top Energy Transfer executive have been particularly joyful the two times Trump has topped his Democratic opponents.
Energy Transfer’s Panhandle Eastern Pipe Line Co. filed the suit Jan. 27, a week after Trump was sworn in. In addition to a favorable political climate, it faces a favorable legal landscape.
The company was able to pick a judge potentially sympathetic to its complaint. And the Trump administration’s Justice Department has already said it considers enforcement systems similar to PHMSA’s to be unconstitutional. Trump appointees will decide PHMSA’s response to the lawsuit.
Also, the conservative majority on the Supreme Court has already signaled its hostility to the kind of in-house enforcement systems PHMSA uses.
The company filed its suit in the Amarillo Division of the U.S. District Court for the Northern District of Texas, where U.S. District Judge Matthew Kacsmaryk is the only judge.
Kacsmaryk is best known as the judge who reversed the Food and Drug Administration’s 23-year-old approval of an abortion pill. His courtroom has become a favorite venue for conservative litigants to challenge government actions they dislike. Trump last year chose Amarillo as the place to file his lawsuit against CBS for its editing of an interview with then-Vice President Kamala Harris.
“It’s clear they’re making a judgment here that this is the more favorable district within which to file,” Coglianese said.
Spills and leaks
Energy Transfer’s Panhandle Eastern gas pipeline starts near Amarillo, Texas, but the fatal accident at issue in the case occurred in Kansas. A worker died in 2020 after he was struck by a “pigging” device used to clean the pipeline. He had been trying to pry it free from ice buildup in a “pig trap” when it dislodged under pressure.
PHMSA’s investigation found Panhandle had failed to prepare procedures for what to do when the pigging devices got stuck because of ice, even though workers said it was a common occurrence. The agency is seeking a $2.5 million fine.
Energy Transfer is no stranger to PHMSA enforcement. Including subsidiaries, it’s been hit with more than 140 enforcement actions, large and small, since 2002, according to agency records. Including the $2.5 million sought in the unresolved Panhandle Eastern case, PHMSA has sought more than $7 million in fines from the company and its subsidiaries, according to agency records, and the company has paid more than $3 million.
Its Dakota Access pipeline has been hit with safety violations and has had at least 12 spills or leaks, and the company’s spill record is a key issue in ongoing litigation with opponents seeking to get the pipeline shut down.
In 2023, PHMSA said that “pervasive” environmental and safety problems led to a cascade of spills and leaks on the company’s Mid-America oil pipeline.
Repeated spills and an explosion during construction and commissioning in Pennsylvania led to a $30 million fine in 2018 and later criminal charges from state officials.
PHMSA is currently investigating a leaking jet fuel pipeline that has contaminated drinking water in a neighborhood in Bucks County, Pennsylvania. An Energy Transfer spokesperson said the company has done everything regulators have requested regarding the jet fuel spill, such as providing bottled water and installing water treatment systems.
Most PHMSA enforcement is handled in-house. Accused companies can ask for an informal hearing or closed-door consultation. The final decision is made by the top career pipeline safety official. That official’s ruling can be appealed to a federal appeals court.
PHMSA, which is part of the Department of Transportation, has the authority to bring enforcement actions in U.S. district court, where it would be represented by the Justice Department. But it hasn’t brought cases in that manner on its own. Records on the agency’s website show that it has participated in four enforcement cases that started in federal court. All of them were done jointly with EPA — and sometimes included additional agencies.
Pipeline companies, their critics and safety advocates have long voiced concerns about the informality of the hearings.
The Pipeline Safety Trust advocacy group and news outlets complained for years that enforcement hearings were closed to the public. In 2018, the Reporters Committee for Freedom of the Press and E&E News, now owned by POLITICO, threatened legal action to open a hearing, and PHMSA agreed to open it and other hearings.
Pipeline companies have criticized a lack of due process in hearings. The informal hearings do not abide by rules of evidence. Company attorneys say PHMSA has refused to give accused companies documents they would be entitled to in court and withheld the system used to calculate fines. In its lawsuit, Energy Transfer noted that PHMSA “waited approximately three years” to file a notice of probable violation after the worker was killed.
“There are definitely good questions raised here on the due process issues with PHMSA’s enforcement proceedings,” Hainline said.
Amid quiet lobbying from the oil and gas industry, lawmakers have added new protections for companies charged with violations in recent years, such as requiring the agency to give companies more of the documents they’re seeking. And Congress has been weighing new changes as it works on a periodic review of the country’s pipeline safety program.
Energy Transfer’s Panhandle Eastern lawsuit tracks with a national conservative legal push that has been gaining steam in recent years to diminish the regulatory powers of federal agencies by cutting their ability to use in-house administrative law judges for enforcement.
“They have prevailed in a very sustained way,” said Penn’s Coglianese, adding that the shift could not have happened without the judges that Trump nominated to the Supreme Court. “This is not something that has just been a fluke. Had Trump not been elected and nominated three justices, the law wouldn’t be changing like it is.”
‘Not enough lawyers’
The movement scored a big win last year when the Supreme Court ruled 6-3 that a hedge fund manager facing fraud charges from the U.S. Securities and Exchange Commission was entitled to a jury trial. The ruling in Securities and Exchange Commission v. Jarkesy is expected to broadly reshape the role of administrative law judges at agencies such as the Federal Energy Regulatory Commission.
Energy Transfer filed an amicus brief in the case, comparing it to a $20 million fine FERC levied against it in a case stemming from construction of its Rover gas pipeline and the company’s demolition of a historic Ohio home near its path.
The company also took FERC to court to challenge the agency’s in-house enforcement system. The case has been on hold for years because of the Jarkesy litigation.
The Trump Justice Department took up the cause in late February, announcing it will not defend protections for administrative law judges.
In the Panhandle Eastern lawsuit, Energy Transfer says PHMSA’s presiding officials are “akin” to administrative law judges. It also detailed procedural difficulties, most notably getting the agency to explain how it calculated the fine.
The company “is being forced to endure an unconstitutional agency proceeding where it is being denied due process,” wrote attorneys for Energy Transfer.
One possible outcome of the Panhandle Eastern suit — allowing companies the option of a jury trial in pipeline enforcement cases — would not be hugely disruptive to PHMSA’s ability to enforce safety laws, according to Hainline.
Most companies accused of violations wouldn’t want to take their cases to federal court, he said. It would be more difficult and costly for the agency, he said, but also for the companies themselves. And a big complaint of companies has been how long enforcement cases drag out. Lawsuits in federal court, he said, take even longer.
But lawyers familiar with pipeline safety enforcement say a more extreme ruling, requiring every PHMSA enforcement action to be brought in federal court, could all but end PHMSA enforcement.
“As a practical matter, there are not enough lawyers in the Department of Justice to bring all of the enforcement actions that PHMSA currently handles,” said Sara Rollet Gosman, an associate professor at the University of Arkansas School of Law. She serves on the board of the Pipeline Safety Trust and on a PHMSA advisory board.
That could be a particular problem for smaller violations, such as a pipeline operator’s failure to document procedures in manuals and plans. While documentation may seem like a small issue, the pipeline safety regulatory framework relies on operators to explain and document how they properly incorporate safety practices into their day-to-day operations.
Many businesses chafe at federal regulations as overly restrictive. But Hainline said overturning the pipeline safety enforcement practice could boomerang on the pipeline industry.
Pipeline companies want to build thousands of miles of pipelines for gas exports and carbon dioxide storage, he said, and could face obstacles if the public perceives a lack of safety oversight.
“If there is a perception that operators are trying to do anything they can to avoid enforcement, and that there is no enforcement body that’s capable of holding the bad actors to compliance standards,” he said, “that’s going to make everything that much more difficult.”
