IUB hits Sinclair with $200K permit penalty

LEE COUNTY - The Iowa Utilities Board (IUB) Friday issued separate orders assessing civil penalties against two pipeline companies that have been operating hazardous liquid pipelines and underground storage facilities in the state for years without obtaining permits from the IUB.

One of those companies, Sinclair Transportation, has been maintaining a pipeline in Lee County near Fort Madison and is facing $200,000 in fines.

The IUB is taking this action as a result of a 2022 review of hazardous liquid pipelines and company applications (petitions) to the IUB for renewal of expiring HLP permits. In its review, the IUB discovered Enterprise Products Operating, LLC, did not have a current permit for approximately 750 miles of its operational hazardous liquid pipelines located throughout Iowa, and Sinclair Transportation Company did not have a permit for its 11.8-mile hazardous liquid pipeline located in Lee County, Iowa.

Friday’s orders assess civil penalties against Enterprise for not obtaining permits for seven hazardous liquid pipelines and two hazardous liquid underground storage facilities and against Sinclair for operating its hazardous liquid pipeline without a permit. The companies have 30 days to pay the civil penalties.

Sinclair is arguing that a recent acquisition of the company by Holly Energy in March of 2022 should negate the company's responsibility, however the board is arguing that as a subsidiary of Holly Energy, Sinclair was still responsible for the permitting, and has been in violation since 1995.

In 1995, in response to an Eighth Circuit Court decision, the Iowa Legislature enacted Iowa Code chapter 479B to specifically regulate interstate hazardous liquid pipelines. This code chapter requires all interstate hazardous liquid pipeline companies to obtain from the Board a permit for the construction, operation, and maintenance of a pipeline.

Under Iowa law, the IUB can assess penalties of up to $1,000 per day, per violation; however, the law also caps the assessed amount at $200,000 for each related series of violations. All penalties collected pursuant to Iowa Code (section) 479B.21 are designated for the Low-Income Home Energy Assistance Program and Weatherization Assistance Program, administered by the Iowa Department of Human Rights.

The IUB became aware of these Iowa hazardous liquid pipelines via the National Pipeline Mapping System, which is run by the Pipeline and Hazardous Materials Safety Administration (PHMSA), part of the U.S. Department of Transportation. Both companies confirmed their specific pipelines had not been issued the necessary permits required to construct, maintain, or operate a hazardous liquid pipeline in Iowa.

Enterprise and Sinclair, as well as the previous owners of these pipelines, have been in violation of Iowa Code chapter 479B since its enactment by the Iowa Legislature in 1995. Enterprise and Sinclair have since filed new petitions seeking a hazardous liquid pipeline permit, and those applications are pending with the IUB.

Documents regarding the civil penalties are available for review in the IUB’s electronic filing system under Docket Nos. SPU-2023-0002 (Enterprise) and SPU-2023-0003 (Sinclair). The companies’ applications for permits are under review in Docket Nos. HLP-2023-0002 and HLP-2023-0001, respectively.