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MDU Resources Group Facing Up to $2.5M in Washington Pipeline Fines

State of Washington regulators on Monday approved a settlement under which Kennewick-based Cascade Natural Gas Corp. could eventually pay $2.5 million in fines for violating state and federal pipeline safety rules.

Under the settlement agreement approved by the Washington Utilities and Transportation Commission (UTC), the MDU Resources Group gas utility will pay a $1 million fine and could face an additional $1.5 million in penalties if Cascade fails to complete a comprehensive compliance program it agreed to in the settlement, a UTC spokesperson said.

A UTC staff investigation last year revealed that Cascade was unable to provide required documentation for nearly 40% of its high-pressure pipelines in Washington. The lack of documentation regarding maximum allowable operating pressure (MAOP) in 2013 prompted UTC staff to launch an investigation.

Ultimately, Cascade failed to submit its MAOP compliance plan in August 2015, and not until January 2016 did the utility submit its initial MAOP determination and validation plan. In April 2016 the utility submitted its revised plan.

The compliance program under which Cascade is obligated calls for validation of MAOP for "every pipeline operating above 60 psig, focusing on high-risk pipelines," said a UTC spokesperson. And the utility is required to submit a third-party audit evaluating the company's pipeline safety management program.

Last July, UTC staff alleged that Cascade failed to maintain records and documentation of the MAOP for at least 116 pipeline segments. "Cascade has demonstrated a lax attitude toward compliance that exposes the public to an unacceptable level of risk," UTC staff said at the time. By September, the three-member UTC started a proceeding from which the settlement has resulted.

In that agreement, Cascade agreed to:

  • Pay a $1 million penalty within 10 business days of the order;
  • Pay up to an additional $1.5 million in penalties for failure to comply with the settlement;
  • Be subject to additional penalties or other corrective action that UTC staff is still authorized to impose; and
  • Alert UTC as soon as it identifies any "significant changes" in the company's MAOP validation progress.

The settlement spells out a compliance program for the Washington-based gas utility, identifying 116 specific pipeline segments for which there is critical information missing. A prioritized corrective work schedule is outlined, and deadlines by the end of this year and in subsequent years are also specified.

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