PHMSA May Not Use MAOP Calculation Rules as Backdoor Recordkeeping Requirements; “Consider” Duties in Integrity Management Do Not Mandate a Specific ILI Tool

I. Introduction

In Florida Gas Transmission v. TRAN (5th Cir. May 20, 2026) (per curiam) (unpublished), the Fifth Circuit reviewed civil penalties imposed by the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), a component of the U.S. Department of Transportation, after a rupture on Florida Gas Transmission Company, L.L.C.’s (“Florida Gas”) Sanford Lateral natural gas pipeline.

The rupture occurred in 2020 along a longitudinal seam of low-frequency electric-resistance-welded steel pipe. Post-incident analysis identified stress-corrosion cracking as the cause—an external condition that can develop over decades and may require metallurgical confirmation.

PHMSA’s final order (Agency No. 4-2022-032-NOPV) found two violations and assessed penalties: (1) a “maximum allowable operating pressure” (“MAOP”) violation based on allegedly inadequate records, charged under 49 C.F.R. § 192.619(a)(3); and (2) an integrity-management/tool-selection violation for not using an MFL-C in-line inspection tool, charged under 49 C.F.R. § 192.937(c)(1) (with “susceptibility” assessed under 49 C.F.R. § 192.917). Florida Gas petitioned for review, arguing the order was arbitrary and capricious and violated fair-notice principles.

II. Summary of the Opinion

The Fifth Circuit vacated PHMSA’s final order, holding:

  1. PHMSA acted unlawfully and without fair notice by using § 192.619(a)(3)—a provision that describes how to calculate MAOP—as an after-the-fact recordkeeping requirement. The court emphasized that recordkeeping is addressed expressly in § 192.619(f) and its reconfirmation regime (including deadlines in § 192.624), which PHMSA did not charge.
  2. PHMSA’s MFL-tool theory failed because the record did not establish “susceptibility” to seam failure that would trigger a specific technology requirement under § 192.917(e)(4) (2004); and the more general “consider/take into account” duties in § 192.917(a) and (b) do not compel a particular outcome, such as choosing an MFL-C tool. ExxonMobil Pipeline Co. v. U.S. Dep't of Transp. controlled that point.

III. Analysis

A. Precedents Cited

  • ExxonMobil Pipeline Co. v. U.S. Dep't of Transp., 867 F.3d 564 (5th Cir. 2017)
    Role in the decision: This was the linchpin for the tool-selection issue. The court relied on ExxonMobil’s holding that regulatory language requiring an operator to “consider” certain factors “unambiguously serves to inform a pipeline operator’s careful and deliberate decision-making process rather than to compel a particular outcome.” Applying that principle, the Fifth Circuit held PHMSA could not fine Florida Gas for failing to reach PHMSA’s preferred outcome (using an MFL-C tool) based solely on the “consider/take into account” framework in § 192.917(a) and (b).
  • FCC v. Fox Television Stations, Inc., 567 U.S. 239 (2012)
    Role in the decision: Cited for the standard of review on fair notice (de novo). The court’s analysis tracked Fox’s due-process-like requirement that regulated parties must have adequate notice of what conduct a rule requires or prohibits before penalties may be imposed.
  • Diamond Roofing Co. v. OSHRC, 528 F.2d 645 (5th Cir. 1976)
    Role in the decision: Provided the Fifth Circuit’s core “fair warning” formulation: an agency may penalize only when a party has “fair warning of the conduct [the regulation] prohibits or requires” and when the standard “reasonably” constrains enforcement discretion. The court used Diamond Roofing to invalidate PHMSA’s attempt to read an unexpressed recordkeeping obligation into § 192.619(a)(3).
  • Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024)
    Role in the decision: Quoted for the proposition that “[q]uestions of law are for courts rather than agencies to decide.” While the panel noted that interpretive-deference doctrines (Auer/Kisor/Seminole Rock) “loom large” when an agency interprets its own regulations, it declined to revisit deference because neither party argued ambiguity. Loper Bright thus functioned as a closing reinforcement of judicial primacy in legal interpretation, not as a dispositive doctrinal pivot.

B. Legal Reasoning

1. MAOP: PHMSA cannot transform § 192.619(a)(3) into a recordkeeping rule

PHMSA alleged Florida Gas failed to maintain adequate MAOP documentation, but charged the violation under § 192.619(a)(3). The court held this was a categorical mismatch: § 192.619(a)(3) “only describes how to calculate MAOP” and “says nothing about maintaining operating pressure records.” In the panel’s view, the agency’s approach effectively converted a substantive operating-limit provision into a punitive paperwork rule “without any textual hook.”

The court emphasized the regulation set that actually addresses recordkeeping: § 192.619(f) requires operators to “make and maintain records necessary to establish and document the MAOP,” and § 192.624 provides a reconfirmation pathway with deadlines spanning 2028 to 2035. PHMSA’s decision not to charge under § 192.619(f) mattered because charging under (a)(3) would “short-circuit[] the carefully crafted reconfirmation regime” and deprive operators of the notice embodied in that phased compliance framework.

This reasoning blends two administrative-law constraints: (i) textual limits (an agency must proceed under the rule it actually has, not the rule it wishes it wrote), and (ii) fair notice (penalties cannot rest on an atextual enforcement theory). The court underscored that even if an extra-textual documentation duty existed, PHMSA still faced an evidentiary problem: Florida Gas had produced an “Enron Gold Sheet” that “is better than nothing,” making PHMSA’s implicit requirement both invented and demanding.

2. Tool selection: susceptibility was not established, and “consider” duties cannot force an outcome

PHMSA also fined Florida Gas for not using an MFL-C tool in 2019. The operative requirement in § 192.937(c)(1) (under the pre–July 1, 2020 language, which both parties agreed applied) ties tool choice to threats the segment is “susceptible” to, with susceptibility determined through § 192.917.

The court treated the dispute as a question of whether the line was “susceptible” to seam issues such that the regulations would require seam-integrity-capable technology. It then separated two possible routes:

  • Specific trigger route: § 192.917(e)(4) (2004). If a covered segment contains low-frequency ERW pipe and any segment “has experienced seam failure,” or if operating pressure increased over the maximum in the preceding five years, then the operator must select assessment technology with a proven application for seam integrity and seam corrosion anomalies. The court found the triggers absent: no MAOP violation, and the claimed “seam failure” was not established. PHMSA’s own sources—Florida Gas Transmission Company, Corrective Action Order, CPF No. 2-2009-1002H and Florida Gas Transmission Company, Corrective Action Order, CPF No. 2- 2012-1005H—said the “cause of the failure is unknown” and only that seam “may be a factor,” or that the investigation was ongoing. Conservative remediation (the 2014 sleeve) also was not proof of seam failure.
  • General route: § 192.917(a) and (b). These provisions require operators to “identify and evaluate all potential threats” and to “consider” and “take into account” certain information. Under ExxonMobil Pipeline Co. v. U.S. Dep't of Transp., that sort of language structures decision-making but does not mandate a particular decision. Therefore, PHMSA could not lawfully penalize Florida Gas for not selecting PHMSA’s preferred ILI technology based on those general provisions.

The panel rejected PHMSA’s attempts to distinguish ExxonMobil (that the regulation “singles out” certain threats, and that ExxonMobil had a more sophisticated process), finding those points immaterial: the same kind of “consider these factors” language existed in ExxonMobil, and Florida Gas also had a sophisticated program.

Bottom line: without a proven seam-failure predicate, and with “consider” language insufficient to compel a specific outcome, PHMSA’s finding of susceptibility—and the resulting tooling violation—was arbitrary and capricious.

C. Impact

Although designated “not for publication,” the decision signals several practical constraints on PHMSA enforcement and on regulated-entity compliance strategy in the Fifth Circuit:

  • Charge selection must match regulatory text. The opinion sharply disfavors using one subsection as a “backdoor” to enforce obligations located elsewhere—especially where Congress or the agency has created a phased compliance or reconfirmation framework.
  • MAOP recordkeeping disputes are channeled toward § 192.619(f)/§ 192.624. The court’s emphasis on reconfirmation deadlines (2028–2035) suggests that attempts to accelerate those obligations through penalty theories untethered to the recordkeeping subsection risk vacatur on fair-notice grounds.
  • Integrity-management “consider” duties are weak foundations for penalties demanding a specific technical choice. Where the rule tells operators to “consider” or “take into account” risks, PHMSA may need a clearer “must do X when Y” trigger (like § 192.917(e)(4)) to sustain penalties for not choosing a particular tool or method.
  • Proof matters for “seam failure” predicates. The court required more than inference from historical incidents and conservative repairs; enforcement theories that depend on a technical predicate will need reliable documentation that the predicate actually occurred.

IV. Complex Concepts Simplified

  • MAOP (Maximum Allowable Operating Pressure): The highest pressure at which a pipeline is allowed to operate under federal safety regulations. Rules distinguish between how MAOP is calculated and what records must be kept to document it.
  • Fair notice / fair warning: Before an agency can impose civil penalties, the regulation must give regulated parties clear notice of what is required or forbidden. Agencies cannot impose fines based on obligations that are not reasonably discernible from the rule’s text (as applied).
  • Arbitrary and capricious review: Courts set aside agency action that lacks a rational basis, fails to connect facts to conclusions, or rests on unsupported assumptions.
  • In-line inspection (ILI) tools and MFL-A vs. MFL-C: Magnetic flux leakage tools detect certain pipeline defects. The opinion notes MFL-C tools can be more sensitive to some axially aligned metal-loss defects, but tool choice is legally governed by whether the segment is shown to be susceptible to the relevant threats under the integrity-management rules.
  • Stress-corrosion cracking: A form of cracking often developing externally over time and not necessarily involving significant metal loss, making it difficult to detect through certain inspection methods and often requiring metallurgical analysis for confirmation.
  • “Consider” vs. “must”: A regulation that says an operator “must consider” information typically requires a deliberative process, not a mandated result. A regulation that says an operator “must select” a particular technology when specified triggers occur is more outcome-forcing and penalty-susceptible.

V. Conclusion

The Fifth Circuit vacated PHMSA’s penalties because PHMSA (1) pursued a recordkeeping theory under an MAOP-calculation provision that does not impose recordkeeping duties, violating fair-notice principles and bypassing the explicit reconfirmation regime; and (2) attempted to force a specific integrity-assessment outcome (use of an MFL-C tool) without establishing the regulatory predicates for seam susceptibility and despite controlling precedent that “consider” duties do not compel a particular outcome.

The decision’s central legal takeaway is a rule-of-law constraint on safety enforcement: civil penalties must rest on clear regulatory text and proven predicates, not atextual glosses or outcome-driven readings of process-oriented duties.