Audit: NC agency rarely fined gas rules violators

Posted December 29, 2011

— A state agency responsible for checking the safety of propane and other liquefied petroleum gas facilities rarely fined operators even when they repeatedly violated regulations, according to an audit released Thursday.

Inspectors for the standards division of the state Department of Agriculture and Consumer Services found 7,466 violations representing potential threats to public health and safety in the year after October 2009, when the agency was authorized to impose stiffer civil penalties, the audit by State Auditor Beth Wood's office found. LP gas can burn or explode if it comes in contact with a spark.

The violations were at facilities where propane is stored and sold, from tank farms and home heating companies to grocery stores.

They included nearly 200 cases in which emergency shut-off valves didn't work, the report said. Other violations included gas storage plants that were not locked when unattended, leaks around tanks and pipes, and documentation deficiencies, the report said. Nearly 10 percent of the violations were repeat discoveries of problems that hadn't been fixed, with some operators having as many as seven repeat violations.

"There were remote shut-off valves that weren’t working – 178 of those violations were shut-off valves that weren’t working. You have pipes that were leaking. These are not just, 'I don’t have a no-smoking sign posted.' Some of these – a lot of these – were extremely serious," Wood said.

The Agriculture Department could have assessed fines of up to $2.5 million for those violations. About 80 percent of fines collected go to public education.

"(Schools) could have used $2 million dollars this year, and you multiply that over several years," Wood said.

Instead, just two facilities were fined, totaling $7,100, the report said. State auditors said those fines were negotiated down to $4,000.

The Agriculture Department said in a response it assessed few penalties because its database was incapable of tracking violations, and without the database it risked inconsistent treatment of companies being fined different amounts for similar violations. Propane tanks State audit criticizes lack of fines for propane violations

"They didn't have any way to track what they charged or what they did for the companies with the same violation, so they didn't do anything," Wood said.

It's unclear why no system was in place. The LP-Gas Section had been given the power to fine violators in the summer of 2009. One person in the office - supervising LP-Gas Engineer Richard Fredenburg - was in charge of reviewing violations and deciding what fines should be imposed. Standards Division Director Stephen Benjamin was required to sign off on the fines. 

Department of Agriculture officials declined to make Fredenburg or Benjamin available for an on-camera interview. But Benjamin told auditors that besides being regulators, the Agriculture Department sees its job as educating those it inspects and suggesting solutions to their problems. The department is more concerned with getting companies in compliance with regulations than punishing them for violations, Benjamin said in an interview with The Associated Press.

The report by Wood's office rejected that view.

"Based on the volume of repeat violations at LP-gas facilities, the department's expectation of voluntary compliance with respect to repairs or corrective action has been ineffective," the audit report said. "Thus, the threat to public health and safety continues and directly conflicts with the department's mission to protect consumers."

Besides allowing some propane companies to violate regulations without penalty while others spent the money needed to comply, "Standards Division inspectors said that low morale was prevalent because management did not assess penalties for repeat violations," the report said.

A complaint from the public triggered the review of the state agriculture agency's LP gas program, the audit report said.

In a response letter accompanying the audit report, Agriculture Commissioner Steve Troxler said the $2.5 million figure for potential fines totaled the maximum penalty on all violations, though state law allows the commissioner to consider the extent of potential harm.

"The wording of the statute would seem to preclude the imposition of the maximum penalty for all violations," said Troxler, who is a Republican. Wood is a Democrat.

The database and a schedule aligning violations with penalties became effective for inspections of bulk storage plants in September, and since then seven civil penalties have been issued, the agency said. Other types of facilities will be added to the database in the future, the agency said.

The executive director of the North Carolina Propane Gas Association declined to comment on the report.


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  • coolwill43 Dec 29, 2011

    Agriculture monitors propane?

  • pbjbeach Dec 29, 2011

    ladybluue the phoenix

    i am afarid that you are woefuly misinformed for it is an has been all cause by the repbulcian party an their special instrest an their coporate instrest an the total deregulation of the various state agencys acorss this state in order to protect the business instrestthat state personnel are no longer being allowed to actually perform their state dutys an that being inforcement of regulations that might effect the bottom lines of the repbulicans an their business instrest an campaign donners this is the reason for the total deregulation of the various state agencys across this state to othe point that the state very own state personnel cant eevn carry out their jobs dutys without being fired or threathen to be fired by thier upper mangers / managment an exective mangament thank you

  • pbjbeach Dec 29, 2011

    You darn state employee had better quit picking on these poor little old business instrest the firt thing that you know all of you inpsectors will be out in the cold an looking for a job just as i am for just doing my jobs duty's within the ncdot materials aan test unit. an because the contractors didnt want anyone imposing any form of regulation upon not even the pne that protect the taxpayers instrest from fraud being committed agains the taxpayers of this state with regards to cotracting issues on newly contructed roadways wher the contractors was supposley to abide by the staes own state specefications . in the first place but was allowed to file claims for 1.2 million dollars of fraudlent claims against the state an resulted in these claims being wrongfully pay out to the contracting enitys envolved thank you

  • ladyblue Dec 29, 2011

    (ya would almost think the Republicans were running it). lol

    seems like all these boo boos from wasting our tax dollars, fraud and everything else the last decade or so has been your lovely democrats at work..a

  • ladyblue Dec 29, 2011

    The more we hear of the incompetence going on in our state the more i think it's time to fire them all and hire some reliable people. Do they do anything correctly anymore in any departments. Don't know where the vehicles and license plates are, have to repave new roads as no one paying attention to contractors, overpay unemployment benefits, don't do audits correctly .The list goes on and on .... Hey time for new faces working for NC.

  • ajpettitt Dec 29, 2011

    Afraid of inconsistent fines, easy solve, set fine rates much as NC DMV has, improper shut off $---.00 No warning signs ____. leaks no fine shut them down til fixed. problem solved. reinspect with 15 to 30 days unannounced. issued not resolved shut them down. The do not care about the safety of their community and its people, most insurance companies would agree, as then the risk of big pay offs are lowered.

  • Rebelyell55 Dec 29, 2011

    What did ya expect? Them people ain't ones to buck the system. So far I think the audit agency has been doing a fine job. Keep up the good work. (ya would almost think the Republicans were running it). lol

  • MrPearce Dec 29, 2011

    One more point: the system will never be able to consistently come down on large privately held system effectively, unless the government is given total control of everything, which brings a new set of problems to the table.

    State organizations move most effectively against individuals that are not corporations, because unless you have the treasure of Solomon, most individuals can't mount a counter assault on government.

    Hence why the little people get fines and go to jail for relatively small infractions, and why corporations don't.

    Now, I don't think government should acquire the power to go after powerful individuals either, instead, I think the other way: the government should just back away from many of the pies they currently have their fingers in.

  • harmstrong4 Dec 29, 2011

    Kick backs???

  • cwood3 Dec 29, 2011

    Another state agency not doing their job-how surprising is that??