On May 20, 2026, the U.S. Court of Appeals for the Fifth Circuit vacated a final enforcement order issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA) against Florida Gas Transmission Co. (Florida Gas). The Court held that PHMSA acted arbitrarily and capriciously by imposing enforcement actions beyond the scope of its regulations. The decision in Florida Gas Transmission Co. v. U.S. DOT, No. 24-60420 (5th Cir. May 20, 2026), continues a growing line of Fifth Circuit precedent rejecting expansive PHMSA interpretations that attempt to convert discretionary integrity-management concepts into mandatory outcomes.
The ruling is especially significant because the Fifth Circuit expressly relied on its earlier decision in ExxonMobil Pipeline Co. v. U.S. DOT, 867 F.3d 564 (5th Cir. 2017), and effectively concluded that PHMSA failed to learn the central lessons from that case before pursuing another aggressive enforcement theory.
For pipeline operators, the decision reinforces several important principles:
- PHMSA may not impose liability based on regulatory requirements that do not appear in the text of the regulation;
- Generalized integrity-management provisions requiring operators to “consider” risks do not mandate a specific engineering outcome;
- Agencies cannot use hindsight to second-guess engineering judgment after an incident occurs; and
- Operators should carefully evaluate and, where appropriate, challenge enforcement theories that exceed regulations.
Background of the Case
Florida Gas operates the Sanford Lateral, a natural gas pipeline originally constructed in 1959 using low-frequency electric-resistance-welded (LF-ERW) steel pipe. In 2020, the pipeline ruptured along a longitudinal seam. Although no injuries occurred, the incident caused substantial property damage.
Following the rupture, PHMSA initiated an enforcement proceeding and ultimately issued a Final Order alleging that Florida Gas violated:
- 49 C.F.R. § 192.619(a)(3) by failing to maintain adequate records supporting the pipeline’s maximum allowable operating pressure (MAOP); and
- 49 C.F.R. § 192.937(c)(1) by failing to use a circumferential magnetic flux leakage (MFL-C) tool during a 2019 in-line inspection as part of its integrity-management program.
PHMSA imposed civil penalties based on those alleged violations.
Florida Gas petitioned for review before the Fifth Circuit, arguing that PHMSA’s interpretations were arbitrary and capricious and failed to provide fair notice.
The Fifth Circuit Rejected PHMSA’s Attempt to Convert an MAOP Provision Into a Recordkeeping Requirement
The first issue involved PHMSA’s effort to use 49 C.F.R. § 192.619(a)(3) as a basis for penalizing Florida Gas for allegedly insufficient MAOP records.
The Fifth Circuit found that enforcement theory fundamentally inconsistent with the regulatory text.
Section 192.619(a)(3) explains how MAOP is calculated. It does not establish a recordkeeping obligation. The Court emphasized that PHMSA attempted to “convert[] an operating-limit provision into an after-the-fact paperwork rule” without any textual support.
Importantly, the Court noted that PHMSA already possesses a specific regulatory mechanism for addressing MAOP documentation issues: section 192.619(f), which requires operators to “make and maintain records necessary to establish and document the MAOP.”
Rather than proceed under the actual recordkeeping regulation, however, PHMSA attempted to impose liability under the separate MAOP calculation provision that contains no recordkeeping language.
The Fifth Circuit held that approach violated fair notice principles because regulated entities must receive clear notice of prohibited conduct before civil penalties may be imposed. It emphasized that despite section 192.619(a)(3) saying “nothing about recordkeeping,” PHMSA insisted on bringing an enforcement action citing Florida Gas for failing to provide operating pressure records.
This aspect of the opinion is particularly important for operators because it limits PHMSA’s ability to pursue enforcement based on implied obligations or unstated expectations. The Court made clear that PHMSA cannot circumvent carefully constructed regulatory frameworks by retroactively reframing substantive operational rules as documentation requirements.
The Court Again Rejected PHMSA’s Efforts to Turn “Consideration” Requirements Into Mandatory Outcomes
The second portion of the decision may have even broader implications for integrity-management enforcement.
PHMSA alleged Florida Gas violated section 192.937(c)(1) because it used an axially aligned magnetic flux leakage tool (MFL-A) instead of an MFL-C tool during a 2019 inspection.
According to PHMSA, the pipeline’s history and characteristics required Florida Gas to select the more specialized MFL-C technology.
The Fifth Circuit rejected that argument.
The Court first determined that PHMSA failed to establish the triggering conditions necessary under section 192.917(e)(4). PHMSA argued prior incidents demonstrated seam failure susceptibility. But the corrective action orders on which PHMSA relied expressly stated that the causes of those earlier failures were unknown.
The Court further held that conservative remediation decisions—such as installing sleeves following anomaly identification—did not themselves establish seam failure.
Most significantly, however, the Fifth Circuit concluded that PHMSA’s broader enforcement theory was foreclosed by ExxonMobil.
In ExxonMobil, the Fifth Circuit examined PHMSA’s attempt to enforce integrity-management regulations that required operators to “consider” certain threats and risk factors. The Court held that those provisions govern the operator’s decision-making process rather than compel a specific engineering result.
The Fifth Circuit found the same principle controlled here.
Just as in ExxonMobil, PHMSA attempted to convert a regulation requiring operators to evaluate and consider threats into a strict-liability standard mandating a particular outcome—in this case, selection of a specific inspection technology.
The Court rejected that approach, emphasizing that the regulations did not require operators to reach PHMSA’s preferred engineering conclusion after the fact.
PHMSA’s Failure to Learn the Lessons of ExxonMobil
The Florida Gas decision raises broader concerns regarding PHMSA’s continued reliance on enforcement theories the Fifth Circuit already rejected nearly a decade ago.
The central holding of ExxonMobil was clear: generalized integrity-management requirements requiring operators to “consider” threats or “take into account” certain factors do not authorize PHMSA to impose liability merely because the agency later disagrees with an operator’s engineering judgment.
Yet the Florida Gas case reflects PHMSA pursuing essentially the same enforcement strategy.
Instead of identifying a clear violation of a mandatory regulatory requirement, PHMSA attempted to impose liability based on retrospective disagreement with the operator’s technical decisions following an incident.
That approach creates substantial regulatory uncertainty for operators.
Integrity-management regulations intentionally preserve engineering discretion because pipelines differ significantly based on materials, age, operational history, environmental conditions, and available assessment technologies. The regulations therefore require operators to perform technical evaluations—not to predict with perfect hindsight which assessment tool PHMSA later may prefer after an accident occurs.
The Fifth Circuit’s decision reinforces that agencies cannot use enforcement proceedings to create new substantive obligations that were never adopted through notice-and-comment rulemaking.
The Decision Reflects Broader Judicial Skepticism Toward Expansive Agency Interpretations
The opinion also reflects broader post-Loper Bright, 603 U.S. 369 (2024), judicial skepticism toward expansive agency interpretations advanced during enforcement proceedings.
The Fifth Circuit closed its opinion by quoting the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo: “questions of law are for courts rather than agencies to decide.”
That statement is likely to have important implications for future PHMSA enforcement matters.
Courts appear increasingly willing to independently evaluate regulatory text rather than defer to agency interpretations developed during enforcement litigation. Operators therefore may have stronger grounds to challenge PHMSA positions that stretch beyond the actual language of PHMSA’s regulations.
This trend is especially important in the pipeline safety context, where PHMSA frequently advances broad interpretations of generalized integrity-management provisions following incidents.
Why the Decision Matters for Pipeline Operators
The Fifth Circuit’s decision in the Florida Gas matter underscores why operators should carefully evaluate PHMSA enforcement theories rather than assume they are legally sustainable. Enforcement actions often shape industry expectations long before judicial review occurs, creating pressure to accept expansive agency interpretations even where those interpretations exceed the regulatory text.
The opinion provides significant support for challenging enforcement theories that:
- impose obligations not expressly stated in PHMSA’s regulations;
- convert process-oriented or discretionary standards into mandatory outcomes;
- rely on hindsight critiques of engineering judgment after an incident occurs;
- impose recordkeeping expectations unsupported by the governing regulations;
- circumvent formal rulemaking requirements; or
- deprive operators of fair notice.
More broadly, the decision reinforces that the Administrative Procedure Act requires reasoned agency decision-making grounded in the actual regulatory text. PHMSA enforcement proceedings cannot be used to impose unwritten standards or retroactively create new obligations after an incident occurs.
The ruling also highlights the importance of building a strong administrative record during PHMSA investigations and hearings. Florida Gas successfully demonstrated that PHMSA’s own prior corrective action orders failed to support the agency’s seam-failure theory.
Nearly nine years after the ExxonMobil decision, the Fifth Circuit has again made clear that PHMSA cannot impose liability simply because the agency would have preferred a different engineering judgment in hindsight.
For more information, please contact Ahuva Battams.