What Did PHMSA’s “Consent Agreement” Over Denbury’s CO2 Pipeline Rupture in Satartia Really Do?

Paul Blackburn is an attorney specializing in pipeline law who has represented community and environmental groups including Bold Alliance for over a decade on pipeline projects. He previously worked for a number of environmental organizations, as well as in renewable and fossil fuel energy project development.

On March 24th, 2023, the U.S. Dept. of Transportation’s Pipeline and Hazardous Materials Administration (PHMSA) issued a “Consent Agreement” between it and Denbury Gulf Coast Pipelines, LLC, which is the owner of the carbon dioxide pipeline that ruptured near Satartia, Mississippi, on February 22, 2020. According to an independent investigation, this rupture sent 49 people to the hospital, some with long-term injuries, and required the evacuation of 250 more. Denbury claims these numbers are 45 and 200, respectively.

What is a consent agreement? It’s sort of a plea bargain or settlement agreement containing negotiated fines that Denbury will pay and the actions it voluntarily agrees to take in response to the rupture of its pipeline. If you want to see all of PHMSA’s public documents related to its investigation and the Consent Agreement, you can access them here. Likely, PHMSA collected additional information that it has not made public. 

The advantage of the consent agreement to PHMSA is that Denbury agreed not to fight it in court, thereby saving PHMSA staff and the Department of Justice attorney time, while allowing PHMSA to collect a fine and arranging for Denbury to take certain corrective actions. What Denbury got out of the Consent Agreement was a fine reduced by about $1 million, but more importantly, it did not admit that it did anything wrong and it avoided having PHMSA make any factual findings expressly determining that Denbury violated federal pipeline safety standards.  Paragraph 11 of the Consent Agreement states:

“Except as set forth herein, this Agreement does not constitute a finding of violation of any federal law or regulation and may not be used in any civil proceeding of any kind as evidence or proof of any fact, fault or liability, or as evidence of a violation of any law, rule, regulation, or requirement, except in a proceeding to enforce the provisions of this Agreement or in future PHMSA enforcement actions. Respondent does not admit any allegation or conclusion in the Notice or this Agreement and Order, but agrees, for purposes of this Agreement and Order, to address the alleged risk conditions by completing the terms of this Agreement.”

If PHMSA had issued an order formally finding that Denbury violated federal safety standards, such findings likely would have served as conclusive evidence of negligence in the court cases brought against Denbury by the victims of its pipeline rupture. Also, Denbury can still claim in public with a straight face that its rupture was not caused by any violation of federal safety standards. 

Entering into the consent agreement is easier for PHMSA and good for Denbury, but it leaves the public – and particularly the Satartia victims – without any formal findings of violations of law by the federal government, even though it’s PHMSA’s job to determine if Denbury broke the law.  

Despite the statement in paragraph 11 that the Consent Agreement “does not constitute a finding of violation of any federal law or regulation,” Section III of the Consent Agreement is entitled “Findings of Violations.” This is the sort of legal double speak that allows PHMSA to claim it is tough on law breakers while allowing Denbury to protect itself from liability.  

Still, what violations / not-violations of law did PHMSA find / not find? They relate to three general areas of wrong doing:

• an inadequate geohazard (shifting earth) detection and mitigation program that resulted in Denbury’s failure to detect the unstable soils that physically caused the rupture; 
• inadequate communications by Denbury to local first responders before and during the rupture; and 
• use of an inadequate computer model which incorrectly predicted that a rupture of Denbury’s pipeline would not put Satartia at risk.  

One of the possible reasons why PHMSA decided not to make formal findings of federal law is that the federal safety standards for pipelines are generally vague and allow pipeline companies great discretion in interpreting what is required of them. As long as a pipeline company gives it a “good college try”, it can appeal PHMSA’s findings to court and argue that it complied with these vague standards, even if the company was lazy, sloppy, and negligent.  

Vague standards are difficult to enforce in court. It’s sort of like trying to enforce a speeding law that says only that drivers must drive at a reasonable speed for the circumstances, but without providing any actual numerical speed limit. Without a hard and specific speed limit, those who can afford lawyers can tie up huge amounts of court time and hire well-paid experts to prove that the perp was driving at a reasonable speed, whatever that means.  

None of Denbury’s violations / non-violations are based on detailed and therefore readably enforceable federal safety standards. Instead, the standards related to geohazards, communication with emergency responders, and determination of the distance that dangerous levels of CO2 would spread are general performance-based standards with no detailed standards. This is true for many federal pipeline safety standards. Even where detailed standards exist, almost all of them are written by the industry itself and many include weasel words that help companies avoid liability.  

Violation / Not-Violation #1:  Failure to Monitor and Prepare for “Geohazards”

So, what is a “geohazard” or “geological hazard”?  Geohazards are active earth events or processes that can break a pipeline open, such as avalanches, rock slides, earthquakes, landslides, mudflows, volcanoes, ground subsidence, and stream erosion. On page 14 of its May 25, 2022, Failure Investigation Report for the Satartia rupture, PHSMA determined that:

“the failure of the [Denbury] Pipeline was a result of soil movement which caused excessive axial loading leading to failure at the girth weld. Area topography, soil type, and large amounts of rain over the preceding months saturated and vertically eroded the loess soil on the side of the hill above the pipeline.”

In other words, the soil around the pipeline got wet and then slumped, and the force of the moving soil snapped the pipe open.  Which begs the question, was this an “Act of God,” and therefore, not Denbury’s fault?  

According to page 4 of PHMSA’s May 26, 2022, Notice of Probable Violation, before the Satartia rupture, Denbury had experienced land movement along its pipeline two to three times per year. Further, it is well known in the pipeline industry that geohazards may break pipelines, so pipeline companies are supposed to monitor their pipelines for evidence of geologically hazardous conditions.  

In fact, PHMSA issued Advisory Bulletin ADB–2019–02 on this subject on May 19, 2019, nine months before the Satartia rupture. Now, mind you, neither the terms “geohazard” nor “geological hazard” appear in PHMSA’s hazardous liquid regulations, 49 C.F.R. Part 195.  Instead, the requirement that pipeline companies guard against geohazards is based on generic requirements in 49 C.F.R. §§ 195.401(b) and 195.452(i) obligating pipeline operators to correct dangerous conditions of any and all types. Also, companies must check for land movements after extreme weather events and other natural disasters. 49 C.F.R. § 195.414. 

Geohazards may also be addressed in industry standards created primarily by the American Petroleum Institute (API) and incorporated by reference into federal law by 49 C.F.R. § 195.3. But the website may not function properly, API provides no search function for these voluminous and technical documents, and your use of these industry standards will be monitored by API.  

PHMSA alleged that, despite the history of land movement along its pipeline and Advisory Bulletin ADB-2019-02, Denbury did not:

• conduct adequate inspections of its pipeline for geohazards; 
• assess the risks to neighboring communities caused by land movements; or 
• take any preventative or mitigative measures to reduce the potential for these geohazards to damage its pipeline and harm neighboring communities. 

According to page 12 of PHMSA’s Notice of Probable Violation, after the rupture but long before the Consent Agreement, Denbury conducted a “photogrammetry” survey by drone and identified 10 previously undiscovered geohazard areas along its pipeline. “Photogrammetry” is a process that uses camera pictures to produce three-dimensional images of an object. This is not new technology. You can do it with any digital camera and free downloaded software. There are other ways to image land movements near pipelines, including using satellites equipped with synthetic aperture radar, but before the Satartia incident, Denbury opted to use World War I-era technology and pay pilots to fly over pipelines once every two weeks or so to see what they could see.  

Denbury apparently knew that it faced geohazard risks, but did not make any particular effort to monitor these risks, did not consider the impact of these risks on neighboring communities, and did not consider taking any actions to reduce these risks. Denbury was on autopilot.  

Violation / Not-Violation #2:  Failure to Communicate and Coordinate with First Responders

Federal pipeline safety regulations, including 49 C.F.R. §§ 195.65(a), 195.402(c)(8), 195.402(e)(1) and (7), 195.403, 195.408(b)(2), 195.414(d)(5), and 195.452(i)(1) require that pipeline companies provide information to, conduct training exercises with, and otherwise cooperate and communicate with, local first responders. This being said, the federal regulations do not contain safety standards for or otherwise regulate state and local emergency response agencies. PHMSA has no jurisdiction to impose safety standards on state and local emergency responders, because its jurisdiction to impose “safety standards” is limited to regulation of “owners and operators of pipeline facilities.” 49 U.S.C. § 60102(a)(2)(A). As a result, pipeline company emergency response plans regulate internal company response, but do not regulate local government agency response.  

The overall structure of U.S. emergency response is a layered approach relying initially on local agencies who may be supported, depending on the scale of the emergency, by state and then federal resources. This approach makes sense, because, just like in Satartia, almost always the first response personnel on the scene are local responders – not state, federal, or pipeline company personnel. But company response plans address only the planning and preparation needs of company employees and contractors – not state or local responders. As a consequence, it is critical that local responders have their own emergency plans and make their own preparations for CO2 pipeline ruptures.  

As demonstrated by the Satartia rupture, local agency emergency response planning, preparation, and training is critical, because it is likely that the company response team may not arrive on site until hours after a rupture, by which time the acute phase of a CO2 pipeline emergency may be over. Moreover, since pipeline companies have no authority to act as rescue agencies, to enforce laws, or to provide emergency medical services, for liability reasons they generally limit the actions of company employees strictly to CO2 pipeline technical matters, such as closing valves and securing the site for subsequent technical investigations.  

So, what does PHMSA’s Consent Agreement say Denbury failed to do? First, it failed to meet formally with the local fire department, because it assumed that a rupture of its pipeline would not put the citizens of Satartia at risk. Federal pipeline regulations require that operators identify “High Consequence Areas” (HCA), which are vaguely defined by 49 C.F.R. § 195.450 to include places that may be affected by a pipeline rupture, including those that contain 50,000 or more people or more than 1,000 people per square mile, but that also include any place that “contains a concentrated population, such as an incorporated or unincorporated city, town, village, or other designated residential or commercial area.” 

Also, federal regulations contain no detailed standards for the methodologies a CO2 pipeline company must use to determine if a pipeline rupture may affect an HCA. These are examples of the vague nature of federal pipeline safety regulations. If PHMSA had pushed this issue in court, Denbury could have argued that, given these vague regulations, it was not clear that the small town of Satartia was an HCA, and even if it was that Denbury incorrectly assessed the threat.  

For practical purposes, after a rupture, PHMSA will likely treat an area as an HCA if a rupture could create a politically unacceptable body count, or cause substantial damage to critical natural resources. But, this is cold comfort to those who are harmed.  

Denbury did meet informally with the head of the local fire department, but this likely public-relations-grade contact clearly did not inform the fire department in any practical way of the risks resulting from a rupture, and did not result in adequate training and equipping of all local emergency personnel — including those in firefighting, law enforcement, emergency medical services and local hospitals. Companies tend to believe their pipelines are safe, and so when they meet with local first responders, may downplay their risks. As a consequence, local response personnel may be lulled into a false sense of security by vague company assurances, with the result that local response agencies might simply trust a pipeline company and fail to take the risk of a CO2 pipeline rupture seriously and plan proactively.  

Also, Denbury failed to alert local first responders immediately after the company’s computer control system warned operators that a rupture may have happened. As a consequence, a county sheriff’s officer drove into the plume and began rescue operations without any information about the cause, nature, or risks of the rupture. According to the Consent Agreement, first contact between Denbury and local emergency response was initiated by the local fire chief approximately 42 minutes after Denbury first learned of the possible rupture. 

The threats posed by CO2 pipeline ruptures are remarkably different from petroleum and natural gas pipeline ruptures. For most oil pipeline and petroleum product ruptures, the primary role of local agencies is to isolate the area of the spill and wait for company cleanup contractors to arrive. Local emergency agencies may also help with evacuations, but local residents generally are able to simply drive away from their homes and places of employment. Rarely, petroleum pipelines ignite, which can cause explosions and fires, but the resulting fires and damage are obvious and within the experience and technical ability of agency responders. Similarly, when a large natural gas pipeline ruptures, it often ignites causing obvious fires and damage, which are also within the experience and ability of agency first responders.  

In contrast, when a CO2 pipeline ruptures, the CO2 is heavier than air so when it converts to a gas it can hug the ground, flow downhill and threaten communities far away from the rupture site.  Further, the source of the rupture may not be apparent, because CO2 gas is odorless and colorless, and because the geyser of CO2 may be difficult to see at night, or in fog or mist. As a consequence, the extent of the danger zone for CO2 pipeline ruptures may be much larger and far more difficult to define than the danger zone for petroleum and natural gas pipeline ruptures.  First responders need accurate estimates of CO2 pipeline danger zones as well as necessary response equipment including SCBA and CO2 detectors – before a rupture, not after. 

All of these factors make company communication with local first responders particularly critical for CO2 pipelines, but they also mean that first response agencies should not expect to play a passive role in response to a CO2 pipeline rupture or to receive any assistance from the pipeline company during the most dangerous period of the rupture. Instead, local response agencies must prepare proactively for CO2 pipeline ruptures, including by requiring disclosure of company risk information, such as modeling of the potential extent of dangerous CO2 levels.  

Denbury failed to adequately coordinate its efforts with the local Satartia emergency responders, either before or after its pipeline ruptured. When lives are on the line, local response agencies and citizens should independently and proactively prepare for the worst. 

Violation / Not-Violation #3:  Failure to Use an Adequate Computer Model to Determine How Far the CO2 Would Spread

According to the Consent Agreement and Notice of Probable Violation, in 2011 Denbury used a computer model named “PHAST” to determine how far CO2 would spread following a rupture. This is a relatively inexpensive and unsophisticated computer model that had previously been shown by scientific research to inadequately predict the distance that dangerous levels of CO2 could spread following a major CO2 pipeline rupture. Researchers in Europe had conducted multiple test ruptures of different sizes of pipe showing that simple chemical dispersion models, such as PHAST, did not adequately predict how far dangerous levels of CO2 could spread. By relying on this cheap modeling, Denbury estimated that the danger zone following a rupture would be much smaller than it actually was. As a result, Denbury didn’t consider Satartia to be able to be affected by a rupture of its pipeline, a designation which would have triggered higher inspection and maintenance standards for the pipeline near Satartia. Before the rupture, Denbury did not take the safety of neighboring communities seriously enough to research all computer modeling options and pay for more reliable modeling.  

According to page 5 of the Consent Agreement, after the rupture Denbury recognized the inadequacy of its modeling effort and “supplemented” its modeling with an unnamed and undescribed “overland spread analysis” that it ran for all High Consequence Areas within two miles of the pipeline. This supplemental analysis showed that a rupture of the pipeline could threaten Satartia. Presumably, PHMSA has seen this modeling, but it is hiding the name and nature of this “overland” modeling and has not disclosed its predictions, either with regard to what other communities are threatened by Denbury’s pipeline or the range of distances that the CO2 could spread from a rupture site.  

PHMSA certainly knows that many communities have questions about the danger zone adjacent to proposed CO2 pipelines, yet it has kept Denbury’s modeling out of sight, not even naming the type of modeling used, probably because it believes that the modeling results are non-public security information — even though the data and software needed for such modeling is publicly available. PHMSA fails to recognize that pipeline safety will increase where citizens know if and when their communities are threatened, the potential distance that the CO2 could spread, and their safest evacuation routes. As the Satartia rupture demonstrated, the greatest threat to citizen safety in the event of a rupture may be their ignorance of risks caused by the condescension and bureaucratic paternalism of the pipeline industry and PHMSA. Citizens should be empowered to protect themselves; they should not be assumed to be victims. 

The PHMSA Wrist Slap

So, what punishment did PHMSA inflict on Denbury? First, PHMSA dropped its fine from a proposed $3,866,734 to $2,868,100, a decrease of $998,634. The final fine is the equivalent of about 36,000 barrels of oil at current prices. In 2022, Denbury produced an average of 46,809 barrels of oil per day, so the fine is equivalent in value to about 0.2% of Denbury’s annual oil production. Denbury’s market capitalization (net worth) is currently about $4.77 billion, so the fine theoretically reduced Denbury’s net worth by 0.0006%. Denbury generated $480,160,000 in revenue in 2022, making the fine equivalent to 0.6% of its annual revenue. 

PHMSA also required that Denbury take the following actions:

• Identify and inform potentially impacted emergency response agencies and stakeholders.  The Consent Agreement requires that Denbury identify all federal, state, and local government organizations that may respond to a pipeline emergency, as well as “stakeholders,” include them in its educational programs, meet with them, and provide them with a copy of Denbury’s “district area emergency response procedures.” With regard to the scope of the stakeholders, it is not clear that this list will include hospitals, which are either for-profit or nonprofit entities, and not government-owned, yet the emergency medical response to the Satartia rupture suffered, due to a lack of awareness by hospital staff of the causes of the injuries. It is also not clear that Denbury considers neighboring residents to be “stakeholders” or whether it will provide residents with any meaningful information or resources, such as evacuation routes, home and business CO2 detectors, or an emergency alert system including sirens and text/phone alerts that could be triggered in the event of a rupture. Moreover, since Denbury conducted new “overland” plume modeling for all potential High Consequence Areas within two miles of the pipeline to determine which of them might be affected by a rupture – before it signed the Consent Agreement – it seems likely that the Consent Agreement will not require Denbury to take actions it has not already accomplished.  
• Improve its pipeline inspection to identify geohazards.  The Consent Agreement required that Denbury review its patrol requirements with regard to identification of potential geohazards, but since Denbury used a drone for photogrammetry before the Consent Agreement came into effect, it appears that this requirement may not have required anything not already accomplished by Denbury.
• Use a better CO2 plume dispersion model.  The Consent Agreement required that Denbury update its CO2 plume dispersion model so that it considers the “characteristics of CO2 and the effects of the specific terrain . . . including effects of both elevation changes and channeling . . . [and] to allow for variable inputs relating to foreseeable weather and pipeline operating conditions.” Yet, it appears that Denbury adopted and utilized a new dispersion model that meets these requirements long before it signed the Consent Agreement.
• Take its new dispersion modeling into account when it identifies HCAs.  The Consent Agreement required that Denbury take its new dispersion model into account when it identifies High Consequence Areas (HCAs). As part of this effort, Denbury was also required to conduct an internal risk assessment to identify additional “preventative and mitigative measures” to enhance public safety and environmental protection. Since Denbury apparently ran its model for all potentially affected communities within two miles of the pipeline, it seems likely that Denbury also took these actions long before the Consent Agreement was signed. This being said, the Consent Agreement did not identify any particular required “preventative and mitigative measures,” such that it contains no hard requirements for any particular improvements to Denbury’s management of its pipeline or its emergency response activities. The Consent Agreement allows Denbury full discretion with regard to the operational improvements it might adopt.  

Therefore, it appears that the Consent Agreement may not have required Denbury to take any actions that it had not already completed or imposed any specific operational improvements on Denbury.  

This situation is like having a person who, due to bald tires, crashes his car into a CO2 pump station causing a rupture that sends 49 people to a hospital, then negotiating a settlement with a district attorney in which he admits no wrongdoing, but agrees to pay $300 (based on a $50,000 per year salary) and promises to replace tires that he has already replaced. The Consent Agreement does give PHMSA authority to monitor and enforce these requirements in the future, but for liability reasons alone it is very likely that Denbury will comply with them, regardless.

As are many federal laws, industry has worked with Congress and federal agencies to rig the pipeline regulatory system in favor of pipeline companies. In many ways, Congress has tied PHMSA’s hands, but PHMSA has also limited its own enforcement capacity by adopting vague and difficult to enforce safety standards.  

The bottom line is that local first responders and citizens should not trust the federal government or pipeline operators to adequately inform them of the risks caused by CO2 pipeline ruptures, or to provide them with meaningful support immediately after a rupture. Instead, they should protect themselves by seeking the information they need to conduct proactive local planning, preparation, training, and public education. Local agencies and residents near pipelines should see themselves as being full partners in CO2 pipeline rupture planning and response, and not helpless victims.

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