# WOLVERINE PIPELINE CO — Notice of Probable Violation **Citation:** CPF 320195016 **Type / status:** enforcement / historical **Agency:** Pipeline and Hazardous Materials Safety Administration **Effective:** Not stated **Published:** 2019-04-11 CLOSED notice of probable violation citing 195.420(a), 195.424(a), 195.446(c)(1), 195.446(c)(2), 195.452(c), 195.452(d), 195.452(h)(4)(i), 195.452(h)(4)(iii), 195.452(l)(1)(ii), 195.579(a), 195.581(a). ## Document text Notice of Probable Violation involving WOLVERINE PIPELINE CO. PHMSA's enforcement data identifies the cited regulations as 195.420(a), 195.424(a), 195.446(c)(1), 195.446(c)(2), 195.452(c), 195.452(d), 195.452(h)(4)(i), 195.452(h)(4)(iii), 195.452(l)(1)(ii), 195.579(a), 195.581(a). The case was opened on 2019-04-11 and is reported as closed as of 2023-07-12. Proposed civil penalty: $121,800. Assessed civil penalty: $65,800. Open the official case record for notices, responses, orders, and the latest status. Official case documents: 320195016_Closure Letter_02242021.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Closure%20Letter_02242021.pdf 320195016_Closure Letter_02242021_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Closure%20Letter_02242021_text.pdf 320195016_Closure Letter_07122023_(16-155088S).pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Closure%20Letter_07122023_(16-155088S).pdf 320195016_Closure Letter_07122023_(16-155088S)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Closure%20Letter_07122023_(16-155088S)_text.pdf 320195016_Decision on Petition for Reconsideration_02022021.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Decision%20on%20Petition%20for%20Reconsideration_02022021.pdf 320195016_Decision on Petition for Reconsideration_02022021_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Decision%20on%20Petition%20for%20Reconsideration_02022021_text.pdf 320195016_Final Order_09032020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Final%20Order_09032020.pdf 320195016_Final Order_09032020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Final%20Order_09032020_text.pdf 320195016_Hearing Scheduled_08202019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Hearing%20Scheduled_08202019.pdf 320195016_Hearing Scheduled_08202019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Hearing%20Scheduled_08202019_text.pdf 320195016_NOPV PCP_04112019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_NOPV%20PCP_04112019.pdf 320195016_NOPV PCP_04112019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_NOPV%20PCP_04112019_text.pdf 320195016_Op Pet for Review (US Court of Appeals for 6th Circuit)_04292021_(16-155088S).pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Op%20Pet%20for%20Review%20(US%20Court%20of%20Appeals%20for%206th%20Circuit)_04292021_(16-155088S).pdf 320195016_Operator Petition for Reconsideration_09282020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Operator%20Petition%20for%20Reconsideration_09282020.pdf 320195016_Operator Post-Hearing Submission_01302020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Operator%20Post-Hearing%20Submission_01302020.pdf 320195016_Operator Pre-Hearing Submissions_10252019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Operator%20Pre-Hearing%20Submissions_10252019.pdf 320195016_Operator Response to Notice and Request for Hearing_07222019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Operator%20Response%20to%20Notice%20and%20Request%20for%20Hearing_07222019.pdf 320195016_PHC Hearing Scheduled_08272019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_PHC%20Hearing%20Scheduled_08272019.pdf 320195016_US Court of Appeal Decision_06022023_(16-155088S).pdf: https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_US%20Court%20of%20Appeal%20Decision_06022023_(16-155088S).pdf 320195016_US Court of Appeal Decision_06022023_(16-155088S).pdf Case: 21-3405 Document: 32-1 Filed: 06/02/2023 Page: 1 (1 of 24) Deborah S. Hunt Clerk UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT 100 EAST FIFTH STREET, ROOM 540 POTTER STEWART U.S. COURTHOUSE CINCINNATI, OHIO 45202-3988 Tel. (513) 564-7000 www.ca6.uscourts.gov Filed: June 02, 2023 Mr. Jeremy C Marwell Mr. Ronald J. Tenpas Vinson & Elkins 2200 Pennsylvania Avenue, N.W., Suite 500 W. Washington, DC 20037 Mr. Casen Ross Ms. Abby Christine Wright U.S. Department of Justice 950 Pennsylvania Avenue, N.W. Washington, DC 20530 Re: Case No. 21-3405, Wolverine Pipe Line Company v. DOT, PHMSA Originating Case No. : 3-2019-5016 Dear Counsel, The court today announced its decision in the above-styled case. Enclosed is a copy of the court’s published opinion together with the judgment which has been entered in conformity with Rule 36, Federal Rules of Appellate Procedure. Yours very truly, Deborah S. Hunt, Clerk Cathryn Lovely Deputy Clerk Enclosures Mandate to issue. Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 1 (2 of 24) RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 23a0116p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT ┐ WOLVERINE PIPE LINE COMPANY, │ Petitioner, │ > No. 21-3405 │ v. │ │ UNITED STATES DEPARTMENT OF TRANSPORTATION, │ Pipeline and Hazardous Materials Safety │ Administration, │ │ Respondent. ┘ On Petition for Review from the United States Department of Transportation, Pipeline and Hazardous Materials Safety Administration. No. 3-2019-5016. Argued: March 10, 2022 Decided and Filed: June 2, 2023 Before: BATCHELDER, NALBANDIAN, and READLER, Circuit Judges. _________________ COUNSEL ARGUED: Joshua S. Johnson, VINSON & ELKINS, LLP, Washington, D.C., for Petitioner. Casen B. Ross, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Respondent. ON BRIEF: Joshua S. Johnson, Ronald J. Tenpas, Jeremy C. Marwell, VINSON & ELKINS LLP, Washington, D.C., for Petitioner. Casen B. Ross, Abby C. Wright, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Respondent. NALBANDIAN, J., delivered the opinion of the court in which READLER, J., joined. BATCHELDER, J. (pp. 19–22), delivered a separate dissenting opinion. Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 2 (3 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 2 _________________ OPINION _________________ NALBANDIAN, Circuit Judge. The Pipeline and Hazardous Materials Safety Administration imposed a civil penalty on Wolverine Pipe Line Company for violating two of its pipeline regulations. Wolverine claims this action was arbitrary and capricious and violated its due process rights. We disagree, and we affirm the agency’s decision and deny Wolverine’s petition. I. A. Regulatory Framework. More than two million miles of pipeline crisscross the United States. These pipelines carry oil, gasoline, and natural gas from state to state, powering American homes, infrastructure, and industry along the way. But with energy reward comes risk. Pipelines can leak, fail, or spill, hurting the environment or wreaking havoc in populated areas. To protect against such risks, Congress enacted a series of pipeline safety laws. See 49 U.S.C. §§ 60101 et seq. These laws direct the Secretary of Transportation to issue minimum safety standards for pipelines. Id. § 60102(a)(2). The Secretary, in turn, delegates this standard- issuing authority to an agency: the Pipeline and Hazardous Materials Safety Administration. See 49 C.F.R. § 1.97. The agency, PHMSA for short, has used this authority to issue a host of regulations. Although these regulations are complex, PHMSA’s collaborative approach to pipeline safety is simple. That is, the regulations grant pipeline operators flexibility on the front end, but PHMSA approves operators’ plans and verifies their regulatory compliance on the back end. Examples illustrate the point. For instance, pipeline operators retain discretion to develop and implement their own integrity management programs, or IMPs. These IMPs set plans for periodic pipeline assessments, as well as remedial plans for any pipeline repair issues an assessment brings to light. See generally 49 C.F.R. § 195.452(b). What’s more, in many instances, the regulations allow operators to choose the methodology they will use to conduct Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 3 (4 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 3 those assessments. By implementing “performance-based standards,” the regulations permit operators to choose an assessment method that best fits the needs of their specific pipelines. 65 Fed. Reg. 75,382, 75,388 (Dec. 1, 2000). This front-end flexibility requires back-end verification. To that end, PHMSA approves operators’ IMPs and reviews operators’ records to check for regulatory compliance. The regulations here, known as the integrity management regulations, fit this collaborative mold. Taking specific aim at spill prevention in “high consequence areas,” these regulations set repair standards for pipelines that transport hazardous liquids. See 49 C.F.R. § 195.452(h); PHMSA, HL IM Performance Measures, https://www.phmsa.dot.gov/pipeline/ hazardous-liquid-integrity-management/hl-im-performance-measures (last updated Jan. 28, 2020). The standards start with discovery, which “occurs when an operator has adequate information to determine that a condition presenting a potential threat to the integrity of the pipeline exists.” 49 C.F.R. § 195.452(h)(2). Under PHMSA’s timeline, an operator must discover an integrity issue “promptly, but no later than 180 days” after it receives an assessment that identifies the problem. Id. Post-discovery, PHMSA classifies integrity issues on a spectrum. The higher the risk, the faster an operator must act. In this vein, some especially dangerous repair conditions require immediate repair. If an operator identifies an immediate repair condition—like certain metal loss, a predicted pipe burst—or, as relevant here, a pipeline dent—it “must temporarily reduce the operating pressure or shut down the pipeline until the operator completes the repair of the[] condition[]” to “maintain safety.” Id. § 195.452(h)(4)(i). Other repairs, like 180-day or 60-day conditions, require less urgent treatment. Id. § 195.452(h)(4)(ii)-(iv). Although an operator must complete the repair within a given timeline, it needn’t reduce pressure or shut down the pipeline. With this background in mind, we turn to Wolverine’s case. B. Factual Background. Wolverine transports refined petroleum products in its 700-mile pipeline system. These pipelines run from refineries in the Chicago area to terminals and other Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 4 (5 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 4 pipelines in and around Indiana and Michigan. Because Wolverine transports refined petroleum, a hazardous liquid, the company falls into PHMSA’s regulatory orbit. A few years ago, PHMSA conducted a routine inspection of Wolverine’s records, procedures, and facilities. That inspection identified several issues. So not long after, PHMSA sent Wolverine a Notice of Probable Violation, or a NOPV. The Notice, which acts as an informal charging document for the agency, described nine potential violations of PHMSA’s regulations. Only two of those items—“Item 5” and “Item 6”—matter here. 1. Item 5 We begin with the events prompting Item 5. An in-line inspection report (ILI report) landed in the inbox of Daniel Cooper, Wolverine’s only risk management specialist at the time, on June 10, 2015.1 But Cooper didn’t open the ILI report for another 13 days. Why? On June 10, Cooper was on vacation. And right after, Wolverine sent him on a work trip. Cooper explained that he “did not have access to email” on vacation. (Hr. Tr., A385.) Later, he noted that he “may have seen the e-mail, but [he] did not open the report until [he] got back from [his] travels.” (Id.) In any event, Cooper eventually returned to the office and read the report on June 23, 2015. The report described a dent with metal loss on the topside of one of Wolverine’s pipe segments. Once Cooper learned about the dent, he sprang into action. First, he reached out to the third-party vendor who prepared the ILI report to confirm that the pipe showed metal loss. After the vendor confirmed, Cooper convened a June 26, 2015 meeting with his Wolverine coworkers. There, they decided to treat the pipeline “anomaly” as a “possible immediate repair.” (Hr. Ex. 29, A589.) As Wolverine worked toward a repair, the operator prepared to implement the temporary pressure reduction the regulations require. 1Pipeline operators typically outsource pipeline assessments to third-party analysts, who prepare ILI reports. These reports give operators a segment-by-segment look at their pipes and identify any integrity issues. Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 5 (6 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 5 But this pressure reduction never came to pass. Based on an eight-month-old hydrostatic test,2 Cooper felt “confident” that the dent could withstand any pressure “and was not likely to fail in the next few days.”3 (Hr. Tr., A356.) Besides, in its IMP, Wolverine had interpreted the immediate repair regulation to give it a choice: “[C]omplete” the repair within “up to 5 . . . working days” after an operator determines there is “an immediate repair condition” or “implement a pressure reduction as necessary.” (Hr. Ex. 28, A585; Hr. Tr., A351–53.) Relying on its IMP and the recent testing, and using June 26 as the relevant trigger date, Wolverine took the first path. Within four days of the June 26 meeting, Wolverine completed the repair without implementing a temporary pressure reduction. During the inspection, PHMSA reviewed Wolverine’s response and found it lacking. So Item 5 of the Notice cited Wolverine for a violation of the immediate repair regulation, 49 C.F.R. § 195.452(h)(4)(i)(C). Wolverine, PHMSA explained, had “received a final ILI report on June 10, 2015 . . . claimed a discovery date of June 26, 2015 and completed repairs on the pipeline segment on June 30, 2015.” (NOPV, A71.) But for the time spanning June 10 to June 30, Wolverine “could not provide a record that a temporary pressure reduction was taken.” (Id.) Because Wolverine “failed to temporarily reduce the operating pressure,” the Notice alleged that Wolverine “committed [a] probable violation[]” of the regulation and recommended a $36,000 penalty. (Id. at A68, 71, 74.) And PHMSA’s subsequent Violation Report stated that this violation started on June 10, 2015—the date Cooper received, and failed to open, the ILI report. 2. Item 6 Next, we turn to Item 6. This item dealt with 180-day conditions, rather than immediate repair conditions. One of the 180-day conditions occurs when “[a] calculation of the remaining strength of the pipe shows an operating pressure that is less than the current established 2“A hydrostatic test is performed by subjecting a pipeline to pressures that exceed its maximum operating pressure, thereby identifying the weakest segments of the pipeline.” ExxonMobil Pipeline Co. v. U.S. Dep’t of Transp., 867 F.3d 564, 568 n.1 (5th Cir. 2017). 3According to Wolverine, the average pressure per square inch at the location of the dent hovered around 200 pounds. About a year earlier, in October 2014, the pipe had withstood 1,700 pounds of pressure per square inch during hydrostatic testing. In Cooper’s view, if the pipe withstood 1,700 pounds of pressure per square inch a year earlier, it could withstand 200 pounds of pressure until Wolverine completed the immediate repair. Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 6 (7 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 6 maximum operating pressure at the location of the anomaly.” 49 C.F.R. § 195.452(h)(4)(iii)(D). To calculate the remaining strength, the regulation allows operators to use “suitable” methods, including, but not limited to, two methods called the B31G method and the R-STRENG method. Id. Wolverine received another ILI report identifying four such conditions on June 12, 2015. At each anomaly location, the report calculated the remaining strength of the pipes using both the R-STRENG and the B31G method. But the different methods yielded different results. Under the R-STRENG method, the strength value of each anomaly was greater than the maximum operating pressure at that location. But under the B31G method, the strength values were less than the maximum operating pressure at the four anomaly locations. So if Wolverine accepted and confirmed the R-STRENG calculations, the four anomalies would not qualify as 180-day conditions. But if it took the other path, relying on B31G instead, they would. Wolverine took the latter route. With the report in hand, Cooper worked to confirm its contents. But he only recalculated and relied on the B31G values. Indeed, at the agency hearing, Cooper stated he “[n]ormally . . . use[d] [the] B31G [method]” to “prepar[e] repair plans.” (Hr. Tr., A429.) Although he doesn’t “doubt” the R-STRENG values provided in ILI reports, he doesn’t “have all the information necessary to assess [them],” which leads him to “take the more conservative [B31G] approach.” (Id.) Wolverine’s repair plans confirm Cooper’s assessment that Wolverine solely relied on the B31G calculations to classify the four anomalies as 180-day conditions. The plans state that Cooper ran “the modified ASME B31G calculations” and found that four anomalies qualified as 180-day conditions. (JO-KA Repair Plan 10/19/2015, A148–49; JO-KA Repair Plan Summary 10/19/2015, A627.) With the plans complete, Wolverine started on repairs. For two of the anomalies, the company met the 180-day mark. But at the other two locations, it missed the deadline. PHMSA noted the missed deadlines during its inspection. So in Item 6 of its Notice, PHMSA cited Wolverine for violating the 180-day condition regulation and recommended a $39,200 penalty. In response to the Notice, Wolverine provided a written response that admitted it did not meet Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 7 (8 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 7 the deadline and assured PHMSA that new procedures were put in place to prevent the violation from happening again. Agency Hearing. After it received the Notice, Wolverine contested PHMSA’s accusations. Its defense started with a request for an agency hearing. See 49 C.F.R. § 190.211. There, the parties debated the Item 5 and Item 6 violations. Wolverine’s approach to Item 5 emphasized June 26 as the discovery date. To understand why, recall the language of the immediate repair regulation: “To maintain safety, an operator must temporarily reduce the operating pressure or shut down the pipeline until the operator completes the repair.” 49 C.F.R. § 195.452(h)(4)(i). In Wolverine’s view, this regulation didn’t impose a categorical command. Instead, it believed the regulation was most naturally read as not requiring the pipeline operator to implement a pressure reduction if the operator could complete the repair quickly. Under that approach, Wolverine contended it didn’t violate the regulation. It discovered the repair on June 26 and completed the repair on June 30 “before there was time to effectuate the pressure reduction.” (Hr. Tr., A391.) For Wolverine to win on this theory, it needed PHMSA to accept the June 26 discovery date. So at the hearing, Wolverine went back and forth with PHMSA’s investigators about Wolverine’s claimed discovery date of June 26. In one such instance, Wolverine’s counsel asked one of PHMSA’s investigators, Ms. Alexander, about the discovery date. Wolverine’s counsel said: “[D]o you dispute that June 26th, 2015, is the date of discovery for this subject condition?” (Hr. Tr., A329.) Alexander answered: “No, I’m not disputing it. That is per Wolverine.” (Id.) But Wolverine’s counsel persisted: “I want to know what you think . . . . Do you have a dispute with June 26th as the discovery date?” (Id.) This time, Alexander simply answered: “No.” (Id.) This conversation, though, was just one of many instances when the parties argued about discovery for Item 5. At the start, Wolverine’s counsel read the Notice to Alexander. Twice counsel asked if the allegation that Wolverine discovered a dent was “the regulatory version of discovery? 49 C.F.R. 195.452(h)(2).” (Id. at A326–327.) Alexander confirmed. She also stated: “Wolverine claims a discovery date.” (Id. at A327.) Later, PHMSA’s lawyer, Ms. Stevens, emphasized that June 26th was “Wolverine’s date.” (Id. at A339.) When Wolverine’s Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 8 (9 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 8 counsel retorted that Ms. Alexander “indicated no dispute with that date,” Ms. Stevens clarified “there’s no dispute that Wolverine stated that date [of June 26]. That’s what she’s indicating.” (Id.; see also id. at A341 (“Wolverine claimed the discovery date on June 26th.”).) As for Item 6, Wolverine came to the table with a new theory: The repairs weren’t 180- day conditions under the regulation. To make its case, Wolverine first pointed out that the regulation included both the R-STRENG and B31G as “[s]uitable remaining strength calculation methods.” 49 C.F.R. § 195.452(h)(4)(iii)(D). And under the R-STRENG values, Wolverine contended that the anomalies weren’t 180-day conditions. To shore up its argument, it introduced a new chart that incorporated the R-STRENG values from the ILI report. This chart compared the R-STRENG values with the maximum operating pressure at each anomaly, showing that the R-STRENG value was greater than the maximum operating pressure. So if Wolverine had used the R-STRENG values instead of the B31G values, the repairs wouldn’t have qualified as 180-day conditions. (Hr. Ex. 33, A626; see also Wolverine Post-Hearing Br., A655 (asserting that Wolverine could “have rested on the RSTRENG results and done absolutely nothing”).) Still, as one of PHMSA’s officers pointed out, Wolverine didn’t provide any R-STRENG analysis until October 2019—two years after PHMSA’s inspection and four years after it first formulated its repair plans. PHMSA’s decision. In the end, Wolverine’s arguments at the hearing failed to convince PHMSA. The agency’s Final Order found Wolverine liable for violating both the immediate repair and 180-day condition regulations. And although Wolverine petitioned for reconsideration, the agency stayed firm, upholding both its liability findings and its $65,800 fine. Wolverine now petitions for review of PHMSA’s Item 5 and Item 6 decisions, arguing that each was arbitrary and capricious and contrary to law. II. We review PHMSA’s action under the Administrative Procedure Act. See 49 U.S.C. § 60119(a)(3). Under that Act, we may “set aside” the agency’s decision only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). Arbitrary and capricious review is deferential. The question is not what we would Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 9 (10 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 9 have done, nor whether we agree with the agency’s action. Rather, the question is whether the agency “examine[d] the relevant data and articulate[d] a satisfactory explanation for its action.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (explaining that there must be a “rational connection between the facts found and the choice made” (citation omitted)). So long as “the agency’s path may reasonably be discerned,” we will uphold a decision of even “less than ideal clarity.” Alaska Dep’t of Env’t Conservation v. EPA, 540 U.S. 461, 497 (2004) (citation omitted). III. We consider PHMSA’s Item 5 adjudication first. Wolverine contends this decision violated its due process rights and is arbitrary and capricious. PHMSA responds that its conclusion was a textbook application of the immediate repair regulation. We think PHMSA has the better of the two arguments here. The text of the regulation goes a long way to showing why. “To maintain safety,” the regulation tells us, “an operator must temporarily reduce the operating pressure or shut down the pipeline until the operator completes the repair of these conditions.” 49 C.F.R. § 195.452(h)(4)(i) (emphasis added). In its Item 5 decision, PHMSA simply read the regulation to mean what it says. “[C]lear on its face,” the provision informed the regulated community “that, pending repair, an operator must take certain actions.” (Reconsideration Decision, A19.) According to PHMSA, this mandate “does not afford operators the ability to defer a pressure reduction . . . if, in their engineering judgment it is simply more convenient to proceed to a repair.” (Id. at A18.) Put another way, the regulation represents PHMSA’s call that “[t]o maintain safety,” an operator must reduce pressure pending a repair. 49 C.F.R. § 195.452(h)(4)(i). This position, long taken by the agency, leaves no room for an operator, like Wolverine, to impose its own judgment. See, e.g., In the Matter of Centurion Pipeline, LP, CPF No. 4-2014- 5028, 2017 WL 1363408, at *9 (D.O.T. March 30, 2017) (noting that “[i]n prior enforcement proceedings . . . PHMSA has [] determined that § 195.452(h)(4) requires a pressure reduction or a shutdown even if the condition meets immediate repair criteria only after factoring in conservative tool tolerances”); id. (“An operator must immediately reduce pipeline operating Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 10 (11 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 10 pressure or shut down a pipeline that has an immediate repair condition.” (emphasis added)); In the Matter of Buckeye Partners, L.P., CPF No. 1-2011-5013, 2012 WL 4025918, at *2 (D.O.T. Jul. 27, 2012) (“Pipeline operators are obligated to take immediate action including temporarily reducing operating pressure . . . .”). No matter the discovery date and no matter the speed of the repair, operators must take steps to reduce the pressure or shut down the pipeline. Wolverine never took these actions. Did it have a dent that met the criteria for an immediate repair? Wolverine admits as much. Did it complete the repair without temporarily reducing the pressure? Wolverine concedes the point. Indeed, during oral argument, Wolverine took the position that whether it opened the letter on June 10 or June 26, it would not have implemented a pressure reduction. In PHMSA’s view, these two concessions were enough to find Wolverine liable for violating the regulation. Wolverine reads the immediate repair regulation differently. It contends that the regulation “cannot reasonably be read to require a pressure reduction or shutdown if the repair can precede those actions.” (Wolverine Reply Br. at 10.) “Any alternative interpretation,” it suggests, would “require[] a repair to be delayed pending implementation of a pressure reduction or shutdown” and “undermine” the regulation’s express “objective of maintaining safety.” (Id. (citation omitted).) So, the argument goes, operators do not need to reduce pressure or shutdown a pipeline if simply repairing it would be faster. But Wolverine’s reading runs headlong into the regulation’s text, which tells operators: “To maintain safety, an operator must temporarily reduce operating pressure or shut down the pipeline until the operator completes the repair of th[at] condition.” 49 C.F.R. § 195.452(h)(4)(i) (emphasis added). This “prophylactic” directive represents PHMSA’s call about the best way to “maintain safety.” (PHMSA Br. at 6 (“Immediate repair conditions are those that PHMSA has determined could result in imminent pipeline failure; the agency thus promulgated this prophylactic measure—requiring an operator to reduce or shut down a pipeline’s pressure while repairing these conditions—to ‘maintain safety’ by minimizing strain on the pipeline and decreasing the prospect of imminent failure.”).) That we can imagine a scenario where an operator could complete a repair before implementing a pressure reduction is of no moment. The text of the regulation is clear. An operator must implement a pressure Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 11 (12 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 11 reduction or shut down the pipeline. Wolverine asks us to read an exception into this straightforward directive. We decline to do so.4 Wolverine challenges this conclusion on several additional fronts. It starts with two due process arguments and then makes a Chenery claim. We consider each in turn. Due Process. Before we address the heart of Wolverine’s argument, we begin with a bit of context. The Fifth Amendment’s due process clause applies to “administrative proceedings just as it does to other instances of government action.” Karst Robbins Coal Co. v. Dir., Off. of Workers’ Comp. Programs, 969 F.3d 316, 329 (6th Cir. 2020); see also Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 313 (1950). And in the administrative law context, due process arguments often come in two forms. First, an agency offends due process if it “sustain[s] a charge different from any listed in the complaint,” Hodgins v U.S. Dep’t of Agric., 238 F.3d 421, 430 (6th Cir. 2000) (table) (citations omitted), or “change[s] theories in midstream without giving [] reasonable notice of the change,” Yellow Freight Sys., Inc. v. Martin, 954 F.2d 353, 357 (6th Cir. 1992) (citation omitted). And second, even if an agency “properly construe[s]” a regulation, its action might violate due process if “the regulation is so vague in its requirements that its enforcement would violate” the 4In fact, Wolverine is as likely to fall within its proposed exception as it is to fall outside of it. In other words, it’s not clear how long the pressure reduction process would have taken versus the actual repair. This is because, on the record before us, it doesn’t seem that Wolverine determined how long it would have taken to reduce pressure. (Hr. Tr., A380 (Cooper indicated Wolverine took some steps to “begin[] the” pressure reduction “process” but didn’t know whether Wolverine ever took “further action to actually implement any kind of a pressure reduction” or “what documentation exist[ed].”).) Instead, it seems that Wolverine made a judgment call based on experience. (Id. at A354 (Cooper recommended that Wolverine forego a pressure reduction because it could “get in within just a few days and repair [the pipeline].”); Id. at A356 (In Cooper’s judgment, “if [the] anomaly had survived a 1,700 pound eight-hour test [] it was not likely to fail in the next few days at 50 pounds or maybe 200 pounds.”).) Later, the operator posited that it “might have achieved a pressure reduction ‘as soon as possible,’ and safely so, but never will we know since the repair was effected so quickly.” (Wolverine Post-Hearing Br., A662.) “Never will we know” about sums up the record on this issue. Wolverine can point to no record evidence—other than its own uncorroborated statements to the contrary—that shows it could have completed the repair “before there was time to effectuate a pressure reduction.” (Wolverine Br. at 34 (citation omitted).) Finally, Wolverine is not in a great position to be advocating for an interpretation that is grounded in speediness. Wolverine, after all, received information identifying an immediate repair on June 10 and completed that repair on June 30. During that time, as PHMSA noted, Wolverine took a “lackadaisical approach,” failing to even open the report for 13 days. (Reconsideration Decision, A20.) Then, acting on its own, Wolverine found a pressure reduction unnecessary because it could complete the repair quickly. Given the 20 days between receipt of the report and the repair, Wolverine had no excuse for its failure to act. Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 12 (13 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 12 Fifth Amendment. Diebold, Inc. v. Marshall, 585 F.2d 1327, 1335 (6th Cir. 1978); see also Ohio Cast Prods., Inc. v. OSHA, 246 F.3d 791, 798–99 (6th Cir. 2001); Albert C. Lin, Refining Fair Notice Doctrine: What Notice is Required of Civil Regulations? 55 Baylor L. Rev. 991, 1001 (2003) (explaining that courts often treat “[w]hether an agency’s interpretation is permissible and whether an agency gave adequate notice of that interpretation” as “separate issues”). Wolverine claims that the agency’s actions violated both strands of due process doctrine. First, Wolverine contends that PHMSA “violated due process by relying on a novel theory of untimely discovery not adequately alleged” in the Notice. (Wolverine Br. at 30 (cleaned up).) In other words, Wolverine argues it lacked fair notice that the agency took issue with its claimed discovery date of June 26. (Id. at 37–38.) Second, Wolverine asserts it lacked fair notice that its conduct would violate the discovery regulation because the regulation’s mandate to act “promptly” is unconstitutionally vague. (Id. at 42–43.) We reject Wolverine’s argument that it did not know its claimed discovery date would be at issue in the proceedings. Wolverine’s claimed discovery date played an “ancillary part” throughout the proceedings. (Reconsideration Decision, A21.) This is because an operator’s “obligation to [reduce pressure] is dictated by when it discovers that it has an immediate repair condition on its pipeline.” (Id. at A17.) And so PHMSA sought to determine when that obligation kicked in. Right off the bat, PHMSA’s informal charging documents put Wolverine on notice that the agency took issue with the operator’s timeline. The Notice began by faulting Wolverine for failing to “temporarily reduce the operating pressure when it discovered a dent.” (NOPV, A71.) It then added that “Wolverine received a final ILI report on June 10, 2015” but “claimed a discovery date of June 26, 2015 and completed repairs on June 30, 2015.” (Id.) In addition, PHMSA’s follow-on Violation Report listed “the [d]ate the violation started” as June 10, 2015. (Violation Report, A112.) These documents gave Wolverine sufficient warning that PHMSA took issue both with the time between the receipt of the ILI report and the repair and with Wolverine’s failure to implement a pressure reduction during that time. See ECM BioFilms, Inc. v. FTC, 851 F.3d 599, 618 (6th Cir. 2017) (“Although the complaint does not define ‘reasonably Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 13 (14 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 13 short period of time’ as a specific time period, that level of detail was unnecessary to ‘reasonably apprise’ [the company] of the issues in controversy.”). Next, Wolverine’s own actions confirm that it understood that PHMSA took issue with the time between the receipt of the ILI report and the repair. At the agency hearing, Wolverine tried to pin PHMSA down on the June 26 discovery date. And the parties wrangled over the discovery date multiple times.5 Also, leading up to this discussion about Wolverine’s claimed discovery date, Wolverine had a line of questioning about how quickly operators must reduce pressure when an immediate repair condition is identified. Again, in its post-hearing recommendation (which Wolverine responded to), PHMSA took issue both with the time between the receipt of the ILI report and the repair and with Wolverine’s failure to implement a pressure reduction. So it is not true that PHMSA shifted its theory from alleging that Wolverine violated the immediate repair regulation by failing to reduce pressure to alleging that Wolverine violated the immediate repair regulation by failing to reduce pressure in a timely fashion. Timeliness was an “ancillary” issue throughout. (Reconsideration Decision, A21.) And at the end of the day, PHMSA found that Wolverine violated the immediate repair regulation without fixing a discovery date, without charging Wolverine with a discovery regulation violation, cf. Carlisle Equip. Co. v. Sec’y of Lab. & Occupational Safety, 24 F.3d 790, 795 (6th Cir. 1994); Yellow 5Wolverine contends that certain exchanges between its counsel and Alexander (a PHMSA investigator) confirmed that PHMSA didn’t dispute its claimed discovery date. But viewing the transcript as a whole, it’s clear that’s not the case. (Hr. Tr., A326–27 (Wolverine Counsel: “[The notice] says that Wolverine discovered a dent. Top line over to the right side. Discovered a dent.” Alexander: “I didn’t say they discovered a dent. I said Wolverine claims a discovery date.” Wolverine Counsel: “We’ll come to that in a moment . . . .”); Id. at A329 (Wolverine Counsel: “Regarding the statement that Wolverine claimed a discovery date of June 26, 2015, do you dispute that June 26, 2015, is the date of discovery for this subject condition?” Alexander: “No, I’m not disputing it. That is per Wolverine.” Later, Wolverine Counsel: “Do you have a dispute with June 26 as the discovery date?” Alexander: “No.”); Id. at A338–39 (Wolverine Counsel: “Just a couple things inside the violation report . . . . [T]here is a question, the date of violation started and it says what date.” Alexander: “It says June 10, 2015.” Later, Wolverine Counsel: “Why did you start that on receipt of the ILI report? Earlier you suggested that the action needed to be taken — you didn’t suggest. You stated very clearly the actions should occur upon discovery of the condition. What date was that?” PHMSA Counsel: “Wolverine’s date. That’s what — Wolverine’s discovery date was June 26.” Wolverine Counsel: “She indicated no dispute with [the 26th].” PHMSA counsel: “Well, there’s no dispute that Wolverine stated that date [June 26]. That’s what [Alexander’s] indicating.”); Id. at 340–41 (Alexander states that the violation report didn’t talk about discovery and she “didn’t contest discovery.” Wolverine Counsel: “That’s right. And the discovery in the NOPV is stated as what date?” Alexander: “Wolverine claimed the discovery date on June 26.”).) Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 14 (15 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 14 Freight, 954 F.2d at 355, 358, and without changing its theory of the case, cf. Bendix Corp. v. FTC, 450 F.2d 534, 542 (6th Cir. 1971).6 Chenery. Wolverine next invokes Chenery I and Chenery II, arguing that PHMSA shifted its reasoning on appeal. This matters because agency action “cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained.” SEC v. Chenery Corp., 318 U.S. 80, 95 (1943). Wolverine points to the fact that, during the agency proceedings, PHMSA acknowledged that discovery played an “ancillary” part of its immediate-repair regulation analysis and spent much time chastising Wolverine for its “lackadaisical approach.” (Reconsideration Decision, A20–21.) But on appeal, PHMSA left out that chastisement, asserting that “any dispute as to when Wolverine discovered the dent that required repair is orthogonal to the regulatory requirement that Wolverine reduce or shutoff the pipeline pressure.” (PHMSA Br. at 28.) Wolverine argues these differences in framing require us to vacate the agency’s order below. We disagree. Whatever the space between “ancillary” and “orthogonal,” it doesn’t change our outcome here. Chenery “tells us not to sustain an administrative order on a different ground from the one the agency offered.” MISO Transmission Owners v. FERC, 860 F.3d 837, 843 (6th Cir. 2017); Chenery Corp., 318 U.S. at 94–95; accord SEC v. Chenery Corp., 332 U.S. 194, 196 (1947). It doesn’t keep this Court from upholding an agency action “on the same basis articulated in the order by the agency itself.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 169 (1962). As the Reconsideration Decision held: “This finding of violation is, and always has been, squarely focused on the fact that Wolverine never took a pressure reduction or shut down the pipeline.” (Reconsideration Decision, A21.) And we’ve explained, the immediate repair regulation tells an operator it “must temporarily reduce the operating pressure or shut down the pipeline.” 49 C.F.R. § 195.452(h)(4)(i) (emphasis added). Because Wolverine failed to take either action, PHMSA did not act arbitrarily or capriciously when it determined 6Because PHMSA’s theory of the case did not depend on whether Wolverine violated the discovery regulation, we decline to address Wolverine’s argument that the discovery regulation’s terms are vague. To the extent that PHMSA concluded that Wolverine did not act “promptly,” as required by the discovery regulation, that is dicta, and we need not address it. (Reconsideration Decision, A18–19.) Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 15 (16 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 15 Wolverine violated the regulation. This failure formed the core of PHMSA’s decision below, and it informs our decision now. IV. We turn our attention next to Item 6, which concerns PHMSA’s 180-day condition regulation. Because Wolverine’s repair of two pipeline anomalies exceeded the 180-day limit, PHMSA found the operator violated the regulation. Wolverine doesn’t contest that its repairs stretched past 180 days. Rather, it argues that the anomalies didn’t qualify as 180-day conditions in the first place and that PHMSA’s contrary conclusion was arbitrary and capricious. It was not. Far from being “arbitrary and capricious,” PHMSA’s Item 6 adjudication aligned with its front-end flexibility, back-end verification approach to regulation. On the front end, PHMSA explained that an operator may “run 10,000 different methodologies (provided those methodologies were proven) — as long as it documented its calculations and relied on those calculations to devise an implementation strategy.” (Reconsideration Decision, A22.) But on the back end, PHMSA must be able to verify an operator’s decision-making during an inspection. This means an operator must “determine what methodologies to use, record its calculations, and present those calculations to inspectors if called upon to justify [its] conduct.” (Id.) Wolverine failed to follow these simple steps. A step-by-step walk through the time between its receipt of the ILI report and PHMSA’s inspection proves the point. Recall that the report included both R-STRENG and B31G values. But once Wolverine had the ILI report in hand, it only ran, recalculated, and relied on the B31G data. Cooper testified as much at the hearing. (Hr. Tr. at 429 (“Normally in preparing plans, I will use B31G . . . Oftentimes the tool vendors will provide values based on R-STRENG or the effective area method . . . which while I don’t doubt those, I don’t have all of the information necessary to assess that, so I take the more conservative [B31G] report.”).) And Wolverine’s repair plans tell a similar tale. They flagged the anomalies as 180-day conditions under B31G. (See JO-KA Repair Plan 10/19/2015, A148 (explaining Cooper ran “the modified ASME B31G calculations” and found the four anomalies qualified as 180-day conditions); see also Hr. Ex. 35: JO-KA Repair Plan Summary, A627.) Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 16 (17 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 16 Although the ILI report listed the raw R-STRENG values, Wolverine did nothing with that data. Indeed, during the inspection, Wolverine presented no documents that showed use of the R-STRENG values would lead to a different conclusion. As a result, PHMSA’s Notice faulted the operator for missing the 180-day deadline for a few of its repairs. Wolverine admitted as much when it responded. But at the agency hearing, the operator changed its tune. There, Wolverine produced a chart that incorporated the R-STRENG values and showed the anomalies didn’t qualify as 180-day conditions under that method. PHMSA weighed this new evidence along with the rest and found Wolverine violated the regulation. “Operators may not,” it explained, “rely on one calculation method, devise an implementation strategy and repair plan deadlines, then when presented with an allegation of violation four years later, run different calculation methods.” (Reconsideration Decision, A22.) This decision was neither arbitrary nor capricious. PHMSA “examine[d] the relevant data,” including Wolverine’s last-minute R-STRENG calculations, and “articulate[d] a satisfactory explanation for its action.” State Farm Mut. Auto. Ins. Co., 463 U.S. at 43. What’s more, when viewed through the lens of PHMSA’s collaborative regulatory approach, its decision was reasonable. On the front end, Wolverine received two sets of values: One B31G, the other R-STRENG. Then, it documented, recorded, and relied on only one of those “[s]uitable remaining strength calculation[s]”—the B31G method—to classify the anomalies as 180-day conditions. 49 C.F.R. § 195.452(h)(4)(iii)(D). On the back end, PHMSA assessed Wolverine’s own record and determined the operator missed the 180-day deadline. Because that record omitted any R-STRENG calculations or statements that would have shown otherwise, we cannot say PHMSA’s decision was arbitrary or capricious. Wolverine pushes back against this holding in three ways. First, it contends that PHMSA’s decision relied on a mistake of fact. To make its case, it points to a single footnote in PHMSA’s Reconsideration Decision. It provided: “The evidence presented here is strong—and supports the allegation that the Petitioner solely ran (and relied) on the B31G calculation methodology.” (Reconsideration Decision, A23 n.20). Wolverine asserts this statement shows PHMSA erroneously concluded “that the ILI vendor did not provide Wolverine with the R-STRENG values.” (Wolverine Br. at 50.) We disagree. Neither the Final Order nor the Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 17 (18 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 17 Reconsideration Decision assume or find that Wolverine received only B31G values from its ILI vendor. Instead, PHMSA’s analysis focused on what Wolverine did with the ILI values. Here, the record shows Wolverine only used, confirmed, and relied on the B31G values during the time leading up to the 2017 inspection. It was only during the 2019 hearing that Wolverine gave PHMSA R-STRENG data suggesting a different result. It follows that PHMSA did not premise its decision on a “factual error.” (Id. at 49.) Although Wolverine received both R-STRENG and B31G values from the ILI vendor, the record showed it “solely ran (and relied) on the B31G calculation methodology.” (Reconsideration Decision, A23 n.20.) Next, Wolverine asserts that PHMSA’s reading of the regulation “cannot be squared with” its “plain language,” which says “nothing about holding operators to an ‘upfront choice between calculation methods.’” (Wolverine Br. at 51 (quoting Final Order, A7.).) But this argument selectively quotes the record to misstate PHMSA’s position. True, PHMSA’s Final Order offered: “[W]hile the regulation offers the upfront choice between calculation methods, an operator is held to its choice.” (Final Order, A7.) But its Reconsideration Decision elaborated, explaining that an operator could run “10,000 different methodologies” as long as PHMSA could check the work and follow the decision-making process. (Reconsideration Decision, A22.) Contrary to Wolverine’s assertions, this position is not “founded on an unsupportable interpretation of” the regulation. (Wolverine Br. at 50.) Rather, like the regulation, it allows operators to use any number of “[s]uitable remaining strength calculation methods” when deciding whether they have a 180-day condition on their hands. 49 C.F.R. § 195.452(h)(4)(iii)(D). Here, Wolverine ran and used one calculation, B31G, to classify its pipeline anomalies as 180-day conditions. PHMSA’s decision, which assessed Wolverine’s data based on the one calculation it ran, is not contrary to the regulation’s text. Last, Wolverine laments that PHMSA’s decision will “deter[] operators from going beyond the regulatory minimum standard of care.” (Wolverine Br. at 28.) We do not share its concern. PHMSA only objects to post-hoc rationalizations. As noted above, PHMSA explained that “[i]f Wolverine had evidence that it conducted two (or more) analyses when first making its determinations,” the outcome here would change. (Reconsideration Decision, A22–23.) But such evidence must be available during the agency inspection. Any other course, in the Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 18 (19 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 18 PHMSA’s view, would “undermine pipeline safety” by “effectively permit[ting] an operator to avoid regulatory scrutiny by invoking after-the-fact [] methodolog[ies] that PHMSA could not evaluate during routine inspections.” (PHMSA Br. at 38, 40.) Two takeaways follow. First, in the future, a savvy operator should run alternative calculations before, not after, PHMSA knocks at its door. And next, dueling notions of safety and deterrence lie in PHMSA’s domain, not ours. So to the extent Wolverine believes another approach would better achieve PHMSA’s desired policy outcomes, its argument “is one for resolution by [PHMSA].” Lake Bldg. Prods., Inc. v. Sec’y of Lab., 958 F.3d 501, 506 (6th Cir. 2020). V. For these reasons, we deny Wolverine’s petition for review. Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 19 (20 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 19 _________________ DISSENT _________________ ALICE M. BATCHELDER, Circuit Judge, dissenting. I believe that Wolverine used sound judgment in compliance with the regulations, whereas the Agency concocted after-the-fact excuses for its contrived rulings. I refuse to condone the Agency’s conduct. Item 5. On June 25, 2015, Daniel Cooper, Wolverine’s Risk and Integrity Specialist, was reading an apparently routine In-Line Inspection (ILI) Report from a contractor and came across a surprising item about the contractor’s discovery of a worrisome dent in the pipeline. According to the Report, the contractor had discovered the dent during a regular pipeline assessment back in April, but had not immediately called or emailed Cooper or the local operations engineer to alert Wolverine. Instead, the contractor just wrote it into the Report and emailed that Report to Wolverine over two months later, on June 10, without any indication of an emergency condition that would require immediate response. When Cooper read about the dent, however, he immediately called the contractor for confirmation and clarification, called Wolverine personnel working that portion of the pipeline for information, and scheduled a conference call with consultants, contractors, and Wolverine personnel for the next morning, June 26. Thus, on June 26, Wolverine found that the dent presented an emergency-repair situation. And Wolverine determined that the safest and most expedient means of resolving that potentially hazardous situation was to repair the dent immediately, without the unnecessary delay of shutting off the pipeline and reducing the pressure. Wolverine completed the repair of the pipeline dent four days later, on June 30, without incident. By any practical measure, this was a success. But not according to the Agency. The Agency fined Wolverine $28,000 for violating certain regulations by failing to shut off the pipeline and reduce the pressure. During the administrative hearing to adjudicate the violation, Wolverine argued that it discovered the dent on June 26 and promptly repaired it on June 30, in compliance with the regulations. The Agency Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 20 (21 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 20 did not dispute that argument at the hearing, but later insisted in its post-hearing briefing that Wolverine discovered the dent on June 10 when its contractor emailed the ILI Report. In his opinion, the Agency Administrator acknowledged that “Wolverine [had] capably argued that, even when a condition is identified as an immediate repair, a pressure reduction cannot be implemented immediately. There are a number of intervening steps that an operator must take to capably and safely implement a pressure reduction.” Therefore, if the discovery date were June 26, then a repair by June 30 meant that Wolverine satisfied the requirement that “[r]epairs must be made as soon as practicable.” But the Administrator instead accepted the Agency’s post-hearing claim that the discovery date was June 10 and found that “the time that elapsed” between June 10 and June 30 “was too long and did not meet the regulatory standard” for an immediate repair. The Administrator held Wolverine in violation of the regulations and imposed the fine. There is no honest dispute that Wolverine actually discovered the hazard on June 26 and repaired it within days, or whether that was the basis of Wolverine’s defense at the hearing. The most that the Agency and its Administrator can contend is that Wolverine should have discovered (constructively discovered) the existence of the hazard on June 10, when the contractor sent the IRI Report email. While that seems reasonable enough, and fits the Agency’s and Administrator’s desired outcome in this case, I question whether that is the law. Certainly, the opinion points to no regulation or rule to support that view. In fact, Wolverine might have constructively discovered the existence of the dent in April, when its agent (contractor) discovered it, or maybe Wolverine should have, with due diligence, discovered it even earlier—I saw nothing in the record to establish how or when the dent actually happened. The point is that the question of when Wolverine should have discovered, or constructively discovered, the dent became the determinative question in the adjudication, but Wolverine was never told that question was at issue and, in fact, was led to believe that it was not. So Wolverine had no opportunity to be heard on the facts or circumstances of that question. I cannot agree that satisfies Wolverine’s right to notice and fair hearing. Item 6. In April 2015, in a different part of the pipeline, a Wolverine contractor performing an integrity test pursuant to the regulations, conducted the test twice using two Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 21 (22 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 21 different methods: once with a method named B31G and once with a method named R- STRENG. Both methods are specifically approved in the regulations. Under the more conservative B31G method, the contractor identified four suspect locations requiring further inspection and repair within 180 days of discovery. Under the more lenient R-STRENG method, however, those same locations passed the testing and required no further investigation. Wolverine could have relied solely on the R-STRENG results and taken no further action at these locations. But it did not. Instead, Wolverine conducted further assessments using B31G, prepared repair plans, and conducted repairs. By any practical measure, this was a commendable approach to pipeline maintenance and safety. But not to the Agency. The Agency fined Wolverine $37,000 for failing to complete its voluntarily undertaken repairs within 180 days at two of those four locations. Wolverine argued that, because the locations passed the R-STRENG test, there was no 180-day-repair requirement and, therefore, no violation. The Agency answered that the R-STRENG test was irrelevant because Wolverine had elected to use the B31G results to pursue the follow-up assessment and repair. In rendering his decision, the Administrator added this oddity: “while the regulation offers the upfront choice between calculation methods, an operator is held to its choice of calculation methodology.” But the regulations do not require any “choice”—“upfront” or otherwise—nor do the regulations suggest, much less state, anything whatsoever about the operator’s being forever “held to that choice.” The pertinent regulation says only: “Suitable . . . test methods include, but are not limited to, [] B31G and [] R-STRENG.” 49 C.F.R. § 195.452(h)(4)(iii)(D). This is not an issue of “interpretation”; this is the Agency’s adding a requirement (i.e., an upfront choice) that is not contained in the regulation at all. In rejecting Wolverine’s motion to reconsider, the Administrator opined that “it would be perfectly permissible for [Wolverine] to run 10,000 different methodologies (provided the methodologies were proven)—as long as it documented its calculations and relied on those calculations to devise an implementation strategy,” but Wolverine “may not rely on one calculation method [to conduct proactive, voluntary assessment and repair], then when presented with an allegation of violation years after Case: 21-3405 Document: 32-2 Filed: 06/02/2023 Page: 22 (23 of 24) No. 21-3405 Wolverine Pipe Line Co. v. DOT, PHMSA Page 22 the fact, [use those] alternative calculations as a defense.” The Administrator does not offer any justification for this ipse dixit proclamation. Nor does he explain why it is appropriate for the Agency to raise “an allegation of violation years after the fact,” concerning an operator’s voluntary repairs, but inappropriate for the operator to respond to that unexpected allegation by producing the evidence that informed its years-ago decision. There is no honest dispute that Wolverine tested its pipeline using the R-STRENG, in complete compliance with the regulations, and the pipeline passed the test. At the time, Wolverine also tested the pipeline using B31G and when four locations failed that test, Wolverine proactively and voluntarily undertook a precautionary assessment and repair in full compliance with all regulations. As a practical matter, this was not only appropriate, it was commendable. So, when the Agency showed up four years later imposing a $37,000 fine for Wolverine’s failure to complete all of its voluntary repairs within 180 days, why is Wolverine prohibited from demonstrating that the repairs were not required at all, much less within 180 days, based on the R-STRENG results? I cannot agree that satisfies Wolverine’s right to notice and a fair opportunity to be heard. I would vacate the order. Because majority sees it differently, I respectfully dissent. Case: 21-3405 Document: 32-3 Filed: 06/02/2023 Page: 1 (24 of 24) UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT No. 21-3405 WOLVERINE PIPE LINE COMPANY, Petitioner, v. UNITED STATES DEPARTMENT OF TRANSPORTATION, PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION, Respondent. Before: BATCHELDER, NALBANDIAN, and READLER, Circuit Judges. JUDGMENT THIS MATTER came before the court upon the petition for review by the Wolverine Pipe Line Company of an order of the Pipeline and Hazardous Materials Safety Administration. UPON FULL REVIEW of the record and the briefs and arguments of counsel, IT IS ORDERED that the petition for review is DENIED. ENTERED BY ORDER OF THE COURT Deborah S. Hunt, Clerk 320195016_PHC Hearing Scheduled_08272019.pdf 2 DECEIVE of Transportation U.S. Department SEP 05 2019) 1200 New Jersey Ave., SE Pipeline and Hazardous Materials BY: Washington, DC 20590 Safety Administration August 27, 2019 VIA CERTIFIED MAIL AND EMAIL TO: Vince.Murchison@pipelinelegal.com and Allan.Beshore @dot.gov Mr. Vince Murchison 325 North Saint Paul Street Murchison Law Firm, PLLC Suite 2700 Dallas, Texas 75201 Mr. Allan Beshore Director, Central Region Pipeline and Hazardous Materials Safety Administration 901 Locust Street, Suite 462 Kansas City, Missouri 64106 Re: Notice of Hearing, Wolverine Pipeline Company CPF No. 3-2019-5016 and CPF No. 3-2019-5015M Dear Mr. Murchison and Mr. Beshore: In accordance with 49 C.F.R. § 190.211, an informal hearing will be held regarding the Notice of Pipeline Company by the Office of Pipeline Safety in the above-referenced case. The hearing wil Probable Violation and Proposed Civil Penalty and Notice of Amendment issued Wolverin take place on November 5, 2019, beginning at 8:30 a.m. Central Time. The hearing will be at the PHMSA Chicago office, 2300 E. Devon Avenue, Suite 350-1, Des Plaines, Illinois 60018. Upon arrival at the building, attendees will be required to present photo identification to security personnel. At least 10 calendar days prior to the hearing (or by October 26, 2019), both parties must submit and exchange any additional written materials they intend to present at the hearing and a list of attendees. This information should be provided electronically. Materials not submitted by this date may be excluded. If you have any questions, please do not hesitate to call me at (202) 366-6139. Sincerely, Kristin Baldwin Presiding Official CC: Ms. Melanie Stevens, Counsel, Central Region, Office of Pipeline Safety, PHMSA 320195016_Final Order_09032020_text.pdf September 3, 2020 VIA ELECTRONIC MAIL TO: saul flota@wplc.com Mr. Saul Flota President Wolverine Pipe Line Company 8075 Creekside Drive, Suite 210 Portage, Michigan 49024 Re: CPF No. 3-2019-5016 Dear Mr. Flota: Enclosed please find the Final Order issued in the above-referenced case. It withdraws one allegation of violation, makes two findings of violation, and assesses a reduced civil penalty of $65,800. The penalty payment terms are set forth in the Final Order. When the civil penalty has been paid, as determined by the Director, Central Region, this enforcement action will be closed. Service of the Final Order by electronic mail is effective upon the date of transmission, as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Mr. Allan Beshore, Director, Central Region, Office of Pipeline Safety, PHMSA Mr. Thomas Morneau, Esq., General Counsel, Wolverine Pipe Line Company, tom_morneau@wplc.com Mr. Vince Murchison, Esq., Counsel for Respondent, Murchison Law Firm, PLLC, vince.murchison@pipelinelegal.com CONFIRMATION OF RECEIPT REQUESTED U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 In the Matter of ) Wolverine Pipe Line Company, ) CPF No. 3-2019-5016 ) ) ) Respondent. ) ____________________________________) FINAL ORDER From May through July 2017, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities, procedures and records of Wolverine Pipe Line Company (Wolverine or Respondent), in Illinois, Indiana, and Michigan. Wolverine has headquarters in Portage, Michigan. The pipeline system consists of 700 miles that transport refined products, including gasoline and diesel fuel, from Illinois to Michigan. 1 As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated April 11, 2019, a Notice of Probable Violation and Proposed Civil Penalty (Notice), which also included warnings pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Wolverine committed various violations of Part 195 and proposed assessing a civil penalty of $121,800 for three of the alleged violations. The warning items required no further action but warned the operator to correct the probable violations or face possible future enforcement action. The Murchison Law Firm, on behalf of Wolverine, responded to the Notice by letter dated July 22, 2019 (Response). The company contested all the warning items and the allegations of violation, offered additional information in response to the Notice, requested that the proposed civil penalty be withdrawn or reduced, and requested an in-person hearing. A hearing was subsequently held on November 5, 2019, before a PHMSA Presiding Official. At the hearing, Respondent was represented by counsel. Respondent provided additional materials prior to the hearing on October 25, 2019 (Pre-hearing submission), and following the hearing on January 30, 2020 (Post-hearing submission). The Director submitted a post-hearing recommendation on March 27, 2020 (Recommendation), to which the Respondent submitted a response on April 15, 2020 (Response to the Region Recommendation). 1 Wolverine Pipe Line Company website, available at https://wolverinepipeline.com/shippers/systems-overview/ (last accessed August 24, 2020). CPF No. 3-2019-5016 Page 2 FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.446(c), which states: § 195.446 Control room management. (a) …. (c) Provide adequate information. Each operator must provide its controllers with the information, tools, processes and procedures necessary for the controllers to carry out the roles and responsibilities the operator has defined by performing each of the following: (1) Implement API RP 1165 (incorporated by reference, see 195.3) whenever a SCADA system is added, expanded or replaced, unless the operator demonstrates that certain provisions of API RP 1165 are not practical for the SCADA system used; (2) Conduct a point-to-point verification between SCADA displays and related field equipment when field equipment is added or moved and when other changes that affect pipeline safety are made to field equipment or SCADA displays; … The Notice alleged that Respondent violated 49 C.F.R. § 195.446(c) by failing to conduct point- to-point verifications between SCADA displays and related field equipment when field equipment is added or moved and when other changes that affect pipeline safety are made to field equipment or SCADA displays. Specifically, the Notice alleged that Wolverine failed to conduct point-to-point verifications between added field equipment and SCADA displays of the valve and the pressure transmitters at the South Metro Parkway valve site prior to starting the pipeline segment. 2 In its Response and at the hearing, Wolverine explained that as an initial matter, it believed that OPS acted inappropriately in issuing the Notice. Respondent explained that OPS waited nearly two years before issuing the NOPV, thereby prejudicing the Respondent’s ability to defend itself. Wolverine argued that the Notice and the proposed civil penalties should be withdrawn. 3 I have considered these arguments and noticed no substantial prejudice to the Respondent in defending itself against this Notice. There are no missing documents or unavailable witnesses. Furthermore, the length of time between inspection and the issuance of the Notice is not so long as to deprive the Respondent of any due process rights. Wolverine acknowledged that, during the inspection, its personnel led OPS inspectors to believe that the valve and pressure transmitters were data points being displayed on the SCADA system. However, neither communications nor power had been set up at the South Metro Parkway site 2 Notice, at 1-2. 3 Amended and Restated Statement of Issues of Wolverine Pipe Line Company to Notice of Probable Violation and Proposed Civil Penalties, at 2. CPF No. 3-2019-5016 Page 3 prior to the pipeline starting operation, and therefore, the valves were being operated manually. Since OPS was under the misimpression that the valves were being operated remotely, it correctly considered whether or not those data points had been added to the SCADA system. During the hearing, Wolverine demonstrated that the valves were operated manually, and therefore, no point-to-point verification was required. OPS considered the evidence, and in its Recommendation, decided to recommend withdrawal of this allegation. Accordingly, I withdraw this allegation. Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(h)(4)(i), which states: § 195.452 Pipeline integrity management in high consequence areas. (a) …. (h) What actions must an operator take to address integrity issues? (1) …. (4) Special requirements for scheduling remediation- (i) Immediate repair conditions. An operator’s evaluation and remediation schedule must provide for immediate repair conditions. To maintain safety, an operator must temporarily reduce the operating pressure or shut down the pipeline until the operator completes the repair of these conditions. An operator must calculate the temporary reduction in operating pressure using the formulas referenced in paragraph (h)(4)(i)(B) of this section. If no suitable remaining strength calculation method can be identified, an operator must implement a minimum 20 percent or greater operating pressure reduction, based on actual operating pressure for two months prior to the date of inspection, until the anomaly is repaired. An operator must treat the following conditions as immediate repair conditions: (A) …. (C) A dent located on the top of the pipeline (above the 4 and 8 o’clock positions) that has any indication of metal loss, cracking or a stress riser. The Notice alleged that Respondent violated 49 C.F.R. § 195.452(h)(4)(i) by failing to evaluate and remediate an immediate repair condition by temporarily reducing the operating pressure or shutting down the pipeline until the operator completes the repair of these conditions. Specifically, the Notice alleged that Wolverine failed to temporarily reduce the operating pressure on the Niles to Ferrysburg pipeline segment after a final in-line inspection (ILI) reported a dent with an indication of metal loss located on the topside of the pipeline. In the Notice, OPS stated that Wolverine claimed that it discovered the dent on June 26, 2015, and then completed repairs on June 30, 2015. The Violation Report further stated that Wolverine received a final ILI report on June 10, 2015, and OPS maintains that Wolverine’s failure to reduce the pressure between June 10, 2015, and June 30, 2015, constitutes a violation of § 195.452(h)(4)(i). The determination of whether or not Wolverine violated § 195.452(h)(4)(i) hinges on whether, following discovery that the dent met the criteria, it implemented a pressure reduction or shut CPF No. 3-2019-5016 Page 4 down the pipeline. It is undisputed that Wolverine never implemented a pressure reduction or shut down the pipeline. Furthermore, Wolverine does not argue that the dent did not meet criteria. Therefore, the only remaining issue is whether or not the Respondent failed to act on the immediate repair condition, as required by the regulation. In its Response and at the hearing, Wolverine explained that as an initial matter, it believed that OPS has issued vague guidance that deprives the regulatory community of the certainty that it needs to determine exactly when and how an immediate repair condition must be addressed. Wolverine argues that it acted in conformity with its applicable Integrity Management Program in High Consequence Areas procedure (IMP procedure) (Section 2.3.6.4) and PHMSA’s Integrity Management Frequently Asked Questions (FAQs) to determine how to address this immediate repair condition, per § 195.452(h)(4)(i). Wolverine’s IMP procedure outlines, among other things, the Respondent’s process for the completion of integrity assessments and the timeline requirements for discovery of immediate repair conditions. In Section 2.3.6.4.4, Safety Related Condition Requirements, states: Data indicating a possible immediate repair condition must be analyzed quickly not to exceed 5 working days before an operator must determine whether the indication is an immediate repair condition or not. After the 5 day determination period, an operator has up to 5 additional working days (not to exceed 10 working days total from first knowledge of a condition) to either complete a repair of the condition, implement a pressure reduction as necessary, [and] possibly implement other mitigation… 4 Since OPS lodged no objection to the IMP procedure during its inspection, Wolverine claims that OPS cannot now claim that its procedure is inadequate to fulfill its regulatory obligations under § 195.452(h)(4)(i). Therefore, in Wolverine’s view, if it complied with its own procedures, OPS should be satisfied that it complied with the regulatory procedure. Wolverine further argues that it formally discovered the condition on June 26, the date its team met to discuss the final ILI report, and was only then required to commence acting to evaluate and remediate the dent. Working with a discovery date of June 26, 2015, Wolverine argues that, since it could complete repairs on June 30, 2015, a pressure reduction was both unnecessary and not required by its own procedures. As OPS correctly points out, however, this argument ignores the fact that, once an operator determines that it has an immediate repair condition, the regulation requires it to temporarily reduce operating pressure or shut down the pipeline while it proceeds to repair the condition. OPS stated: Regardless of when Mr. Cooper chose to open the ILI report to review it, Wolverine was in possession of the final ILI report on June 9, 2015, and did not act upon the findings of the report until June 23, 2015, at 4 Hearing Exhibit 28, at 71. CPF No. 3-2019-5016 Page 5 the earliest. Between June 95, 2015 and June 23, 2015, the report sat in Mr. Cooper’s email inbox with no action being taken. When Mr. Cooper finally did open the report, the report identified a dent with metal loss. Had the report been opened and reviewed when it was received, Wolverine would have been aware of a potential immediate repair condition on June 9 2015 and been able to take steps toward implementing a temporary pressure reduction until a repair could be completed.6 Wolverine’s Post-hearing submission argues that the Integrity Management FAQs7 support its position as to when it must have addressed the dent cited in the final ILI report. The FAQs state that “Repairs must be made as soon as practicable. An operator must reduce pressure … as soon as safety allows and operate at or below that pressure until a repair can be made.” Wolverine received the ILI report noting the dent on June 10. Whatever Mr. Cooper, Wolverine’s integrity analyst, was doing at the time he received the final ILI report is immaterial to the question of whether the information was treated as an immediate repair condition that had to be acted upon “as soon as practicabl[y].” At the hearing and in its Post-hearing submission, Wolverine demonstrated that, even when a condition is identified as an immediate repair, a pressure reduction cannot be implemented immediately. There are certain intervening steps that an operator must take to capably and safely implement a pressure reduction. Nevertheless, the time that elapsed between receipt of the ILI report on June 10, and the evaluation and repair that occurred from June 26 to June 30, was too long and did not meet the regulatory standard. The analysis of what time period is sufficient to comply with this regulatory requirement requires a fact dependent analysis of the repair that will vary from cases to case. In certain circumstances, an operator can immediately implement a pressure reduction, while in other cases, safety will dictate a longer time period for evaluation and repair. However, the fact that Wolverine did not take any action between June 10 and June 26 was a critical factor in my determination that the operator did not meet the regulatory requirement in this case. Wolverine’s own procedure requires that data be “analyzed quickly.” While the NOA did not allege that Wolverine violated its own procedure, this immediate repair condition was not quickly analyzed. 5 The record includes contradictory dates as to the date that the ILI report was received. For the purposes of this Final Order, June 10 is used, the date used in the Notice. 6 Mr. Cooper serves as Wolverine’s contract risk and integrity specialist and testified during the hearing. Among other things, he is responsible for implementing the company’s IMP. Mr. Cooper recounts: Ms. Williams: So can I ask who receives the final report? Who got that on June 10th? Presiding Official: You mean the ILI report? Ms. Williams: Yeah, who got the June 10th report? Where did it go? Mr. Cooper: That was e-mailed to me by the vendor. Ms. Williams: And you were on vacation? Ms. Cooper: And I did not have access to e-mail at that point. Ms. Williams: So it sat in your e-mail box from June 10th until? Mr. Cooper: Until I was able to open it. I think I may have seen the e-mail, but I did not open the report until I got back from travels, which went on for a couple weeks. As soon as I got back, I reviewed it, posed the questions to the vendors and some others about some details about it, and confirmed it and called a conference call on the 26th . So what is that, 16 days later. 7 Liquid Integrity Management Rule, FAQs, dated August 31, 2016. CPF No. 3-2019-5016 Page 6 Accordingly, after considering all of the evidence and the legal issues presented, I find that Respondent violated 49 C.F.R. § 195.452(h)(4)(i)(C) by failing to evaluate and remediate an immediate repair condition by temporarily reducing the operating pressure or shutting down the pipeline until the operator completes the repair of these conditions. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.452, which states: § 195.452 Pipeline integrity management in high consequence areas. (a) …. (h) What actions must an operator take to address integrity issues? (4) Special requirements for scheduling remediation- (iii) 180-day conditions. Except for conditions listed in paragraph (h)(4)(i) or (ii) of this section, an operator must schedule evaluation and remediation of the following within 180 days of discovery of the condition: (D) A calculation of the remaining strength of the pipe shows an operating pressure that is less than the current established maximum operating pressure at the location of the anomaly. Suitable remaining strength calculation methods include, but are not limited to, ASME/ANSI B31G and PRCI PR-3-805 (R-STRENG). The Notice alleged that Respondent violated 49 C.F.R. § 195.452(h) by failing to address four integrity issues within 180 days of discovery of the conditions. Specifically, the Notice alleged that Wolverine failed to, within 180 days, schedule the evaluation and remediation of four integrity issues on the 18-inch Joliet to Kennedy Avenue pipeline segment, including: (1) Dig 7 (repaired on May 26, 2016, 400 days after the completed integrity assessment and 349 days after Wolverine received the final ILI report); (2) Dig 31 (evaluated on October 18, 2016, 545 days after the completed integrity assessment and 494 days after Wolverine received the final ILI report); (3) Dig 31.5 (evaluated on February 18, 2016, 302 days after the completed integrity assessment and 251 days after Wolverine received the final ILI report); and (4) Dig 34.5 (evaluated on June 3, 2016, 408 days after the completed integrity assessment and 357 days after Wolverine received the final ILI report).8 The Region argued that Wolverine was required by regulation to complete remediation of the 180-day conditions within 180 days of receiving the final ILI report.9 Wolverine argues that, by using a more accurate calculation method, the conditions are not properly classified as 180-day conditions. In the alternative, Wolverine argues that it did not exceed the 180-day timeline for two of the four dig sites. In order to decide whether or not the Respondent violated this regulation, I must determine: (1) were these four anomalies 180-day conditions; and if so, (2) did the operator exceed the 180 days allotted to it in order to evaluate and remediate the conditions. 8 PHMSA Pipeline Safety Violation Report, pages 41-42, (on file with PHMSA). 9 Condensed Transcript, at 241. CPF No. 3-2019-5016 Page 7 B31G and R-STRENG are two calculation methods that are used to determine if the remaining strength of a pipeline at an anomaly site should be considered a condition that must be evaluated and remediated within 180 days. Wolverine strenuously argues that, unless the condition meets the criteria for a 180-day condition under both the B31G and RSTRENG methods, an anomaly does not meet the criteria. However, while the regulation offers the upfront choice between calculation methods, an operator is held to its choice of calculation methodology. At the hearing, Mr. Cooper, Wolverine’s integrity analyst, testified that Wolverine elected to use B31G, the method used in the final ILI report. Additionally, from the Violation Report, there is no indication that Wolverine intended to rely on any other calculation method until this matter was contested by hearing. In the Violation Report, “Describe the evidence”, OPS stated that Wolverine provided a written response admitting that the deadlines had not been met and that new procedures were in place to ensure that future deadlines would be met.10 Therefore, I find that, Wolverine should be held to its decision to use B31G methodology, and therefore, the subject conditions were 180-day conditions. As for the required determination on whether or not the operator exceeded the 180-day timeline, it is necessary to determine the date on which discovery occurred. 49 C.F.R. § 195.452(h)(2) states: Discovery of a condition occurs when an operator has adequate information to determine that a condition presenting a potential threat to the integrity of the pipeline exists. An operator must promptly, but no later than 180 days after an assessment, obtain sufficient information about a condition to make that determination, unless the operator can demonstrate the 180-day interval is impracticable. OPS argues that Wolverine had sufficient information on April 22, 2015, the date that Wolverine received the final ILI report. It emphasizes an OPS inspector’s testimony at the hearing that the final ILI report included adequate information to make a threat determination. In its Response and at the hearing, Wolverine argued that operators, even after receiving final ILI reports, must execute various tasks prior to declaring a date of discovery, thereby triggering the 180-day clock between discovery of the condition and evaluation and remediation of the condition. While OPS argues that the date of discovery was the date Wolverine received the final ILI report, Wolverine maintains that the discovery date was October 19, 2015, the date that the company received the report from the risk integrity specialist who conducted various evaluations of the ILI report.11 The Integrity Management FAQs state that “Depending on circumstances, an operator may have adequate information when the operator receives the preliminary internal inspection report, gathers and integrates information from other inspections, or when an operator receives the final 10 “Wolverine provided a written response that stated ‘Wolverine will evaluate and implement improvements to repair plan monitoring to help ensure all future deadlines are met. Note: this dig site was on a multi year remediation plan, stewards failed to move this dig site up the priority list when the subsequent tool reclassified this from an ‘other condition’ to a potential 180 day repair. New Repair Tracking sheet being used, Open Items are reviewed at monthly Integrity Meetings to ensure deadlines are being met.” Violation Report, at 42. 11 Wolverine, Exhibit No. 36. CPF No. 3-2019-5016 Page 8 internal inspection report.” After receiving the final ILI report, an operator may use a certain amount of time for data integration and repair plan development. Based on the testimony presented during the hearing by Mr. Cooper, Wolverine’s integrity analyst, I find that there is ample evidence that the company spent considerable time analyzing the ILI report and taking the steps precedent to completing evaluation and remediation of these dig sites. Mr. Cooper testified that he routinely validates the calculations in the ILI reports, and the regulation allots an operator no more than 180 days to perform such validation, among other things. OPS has found, in previous cases, that the discovery date is not necessarily the date that the operator receives the final ILI report if the operator can demonstrate that it needed more information in order to formally discover a condition. In the Matter of Natural Gas Pipeline Co. of America, a subsidiary of Kinder Morgan, Inc., Final Order, CPF 3-2015-1002, dated March 30, 2017, OPS found that the operator’s claim of May 13, 2010, as the date of discovery was more appropriate than May 6, 2010, the day it received the final ILI report. This Final Order noted that, although an operator will normally be able to enable discovery of a condition upon receipt of an ILI report, sometimes an operator can demonstrate that further data integration is necessary. Based on the extensive testimony regarding the actions taken following receipt of Wolverine’s final ILI report to gather and integrate information from other sources, I accept the operator’s discovery date of October 19, 2015. Nevertheless, even if I accept Wolverine’s argument that the NOPV failed to accurately state the date of discovery (and therefore the number of days that the 180-day deadline was exceeded), the fact remains that, even using their October 19, 2015 discovery date, Wolverine exceeded the 180-day time limit for two of the four dig sites cited in the Notice, Dig 7 and Dig 31.12 Accordingly, after considering all of the evidence and the legal issues presented, I find that Respondent violated 49 C.F.R. § 195.452(h) by failing to schedule evaluation and remediation of 180-day conditions within 180 days of discovery of the condition. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.13 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent 12 Dig 34.5 was completed 37 days prior to the deadline, after allowing for an extension permitted by Wolverine’s procedures. NOPV Hearing Transcript, at 263. 13 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223. CPF No. 3-2019-5016 Page 9 in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $ 121,800 for the violation cited above. Item 4: The Notice proposed a civil penalty of $46,600 for Respondent’s violation of 49 C.F.R. § 195.446 for failing to conduct point-to-point verifications between added field equipment and SCADA displays of the valve and the pressure transmitters in the South Metro Parkway valve site prior to starting the pipeline segment. As stated above, I accept the Region’s recommendation that the Item and the associated civil penalty be withdrawn. Item 5: The Notice proposed a civil penalty of $36,000 for Respondent’s violation of 49 C.F.R. § 195.452(h) for failing to treat a dent located on the topside of the pipeline with an indication of metal loss as an immediate repair condition. In its Response, Wolverine presented several arguments for a reduction in the civil penalty. I will address each one separately below. First, Wolverine argues that the Culpability assessment consideration should be changed to “took significant steps to comply with a requirement” rather than “failed to take appropriate action to comply with a requirement that was clearly applicable.” Wolverine states that it believes its actions to address the immediate repair condition, including following its IMP procedures, necessitate a change in the point designation.14 The Region Recommendation supports a change in the Culpability designation and I agree it is appropriate.15 Therefore, the Culpability assessment consideration will be weighted as “took significant steps to comply with a requirement but did not achieve compliance.” Second, Wolverine argues that the Good Faith assessment consideration should be changed from “did not make a reasonable interpretation of the requirement or did not have a credible justification for its actions or lack of actions” to “[t]he operator’s interpretation of the requirement was reasonable, and it had a credible justification for the actions it took.” Respondent argues that its interpretation of the integrity management regulation was a reasonable one. However, as explained above, the agency has been very clear that action must be taken as soon as practicably. While the agency allows for operators to take time to accomplish pressure reductions or shut down the pipeline in a safe manner, both the regulation and the accompanying FAQs emphasize that time is of the essence. I do not think this circumstance warrants a credit for Good Faith, and therefore, I decline to adjust this assessment consideration. Based upon the foregoing, I assess Respondent a reduced civil penalty of $28,800 for violation of 49 C.F.R. § 195.406(a). Item 6: The Notice proposed a civil penalty of $39,200 for Respondent’s violation of 49 C.F.R. § 195.452(h) for failing to schedule the evaluation and remediation of multiple 180-day 14 Response, at 39. 15 Region Recommendation, at 5. CPF No. 3-2019-5016 Page 10 conditions on its pipeline system. In its Response, Wolverine presented several arguments for a reduction in the civil penalty. I will address each one separately below. First, Wolverine contends that, since OPS cannot prove that the subject conditions were 180-day conditions using both B31G and RSTRENG calculations, that OPS cannot prove that there was a violation of § 195.452(h)(4)(iii), and accordingly, no penalty should be assessed for the violation of this regulation. As explained above, the regulation offers each operator an election among various calculation methods, including B31G and RSTRENG. Once it has determined which method to use, the operator is bound by those calculations. Wolverine elected the most conservative strategy and it cannot now use the other method to defend itself against the allegation. Second, Wolverine contends that the proposed civil penalty should be significantly reduced given that the Respondent is guilty of only two of the four instances of violating the evaluation and remediation timelines.16 The Region does not address this argument. As addressed above, an operator is entitled to a certain amount of time for data integration and repair plan development. Nevertheless, by Respondent’s own discovery date, it exceeded the 180-day timelines twice. Therefore, I will lower the number of instances from four to two, and adjust the penalty accordingly. Third, Wolverine argues that the civil penalty should be significantly reduced because the NOPV overstates the amount of time that it was allegedly late with evaluation and remediation of the alleged 180-day conditions.17 I disagree. Contrary to Wolverine’s assertion, the original penalty calculation factored in a duration of 10 days.18 Since the duration of the violation exceeded 10 days for each of the two instances where I have found that Respondent violated this regulation, I will not adjust the duration of the violation. Fourth, Wolverine requests a reduction on the basis of 49 C.F.R. § 190.225(b)(2) for “[s]uch other matters as justice may require.” Respondent argues that OPS, given the Department of Transportation’s stated commitment to fair enforcement practices, should further reduce the civil penalty. However, I have adjusted the penalty assessment to address each of the penalty assessment considerations where I have made a factual finding contrary to the Notice, and therefore, the Respondent is not prejudiced in any way that deprives it of any due process rights or offends standards of fair play and justice. Finally, the company contends that it should be afforded good-faith credit because it is being judged per a novel interpretation of this regulation. However, as explained above, OPS’ position is consistent with prior precedent and its FAQs. 16 Post-hearing submission, at 40. 17 Post-hearing submission, at 41. 18 “Enter duration of violation in days - enter 10, if evidence indicates 10 or more, but exact total cannot be determin[ed].” Civil Penalty Worksheet. CPF No. 3-2019-5016 Page 11 Based upon the foregoing, I assess Respondent a reduced civil penalty of $37,000 for violation of 49 C.F.R. §195.452(h)(4)(iii). In summary, having reviewed the record and considered the assessment criteria for each of the Items cited above, I assess Respondent a total reduced civil penalty of $65,800. Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire transfers should be directed to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the $65,800 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a district court of the United States. WARNING ITEMS With respect to Items 1-3 and 7-9, the Notice alleged probable violations of Part 195, but identified them as warning items pursuant to § 190.205. The warnings were for: 49 C.F.R. § 195.420 (Item 1) ─ Respondent’s alleged failure to maintain each valve that is necessary for the safe operation of its pipeline system in good working order at all times; 49 C.F.R. § 195.424(a) (Item 2) ─ Respondent’s alleged failure to take a pressure reduction to not more than 50 percent of the maximum operating pressure when moving line pipe; 49 C.F.R. § 195.446(c) (Item 3) ─ Respondent’s alleged failure to provide its controllers with the information, tools, processes and procedures necessary for the controllers to carry out the roles and responsibilities that the operator has defined 49 C.F.R. § 195.452(l) (Item 7) ─ Respondent’s alleged failure to maintain documents to support decisions and analyses, including any modifications, justifications, deviations and determinations made, variances, and actions taken to implement and evaluate each element of its integrity management program; 49 C.F.R. § 195.579(a) (Item 8) ─ Respondent’s alleged failure to investigate the corrosive effect of the hazardous liquid or carbon dioxide on its pipeline and to CPF No. 3-2019-5016 Page 12 take adequate steps to mitigate internal corrosion; and 49 C.F.R. § 195.581 (Item 9) ─ Respondent’s alleged failure to protect against atmospheric corrosion by cleaning and coating each pipeline or portion of pipeline that is exposed to the atmosphere. At the hearing, Wolverine presented evidence and testimony to refute the allegations in the warning items. Under § 190.205, PHMSA does not adjudicate warning items. Accordingly, this order contains no findings on any of the warning items. If OPS finds a violation of any of these items in a subsequent inspection, the Respondent may be subject to future enforcement action. Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final Order to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of this Final Order by Respondent. Any petition submitted must contain a statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays the payment of any civil penalty assessed. The other terms of the order, including corrective action, remain in effect unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. September 3, 2020 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety 320195016_Decision on Petition for Reconsideration_02022021_text.pdf February 2, 2021 VIA ELECTRONIC MAIL TO: saul flota@wplc.com Mr. Saul Flota President Wolverine Pipe Line Company, LLC 8075 Creekside Drive, Suite 210 Portage, Michigan 49024 Re: CPF No. 3-2019-5016 Dear Mr. Flota: Enclosed please find the Decision on the Petition for Reconsideration filed by Wolverine Pipe Line Company, LLC in the above-referenced case. For the reasons explained therein, the Decision denies your Petition for Reconsideration. This Decision constitutes the final administrative action in this proceeding. Service of the Decision by electronic mail is deemed effective upon the date of transmission, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipe Line Safety Enclosure cc: Mr. Gregory Ochs, Director, Central Region, Office of Pipe Line Safety, PHMSA Mr. William V. Murchison, Esq., Murchison Law Firm, PLLC, vince.murchison@pipelinelegal.com CONFIRMATION OF RECEIPT REQUESTED U.S. DEPARTMENT OF TRANSPORTATION PIPE LINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPE LINE SAFETY WASHINGTON, D.C. 20590 In the Matter of ) Wolverine Pipe Line Company, ) ) ) ) Petitioner. ) ____________________________________) DECISION ON PETITION FOR RECONSIDERATION On September 3, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Final Order to Wolverine Pipe Line Company (Wolverine or the Respondent), in connection with a Notice of Probable Violation and Proposed Civil Penalty (NOPV or Notice) issued to the Respondent on April 11, 2019. The Final Order withdrew one allegation of violation and made two findings of violation. Specifically, the Final Order stated that Wolverine violated 49 C.F.R. Part 195.452(h)(4)(i) by failing to evaluate and remediate an immediate repair condition by temporarily reducing the operating pressure or shutting down the pipeline until the operator completed the repair; violated 49 C.F.R. Part 195.452(h) by failing to schedule evaluation and remediation of 180-day conditions within 180 days of discovery of the condition; and assessed a civil penalty of $65,800. On September 28, 2020, Wolverine filed a Petition for Reconsideration1 of the Final Order requesting that PHMSA reconsider its findings of violation for Items 5 and 6. It also requested that the civil penalties be reconsidered. Background From May-July 2017, OPS conducted a comprehensive inspection of the Respondent’s pipeline facilities, procedures, and records. On April 11, 2019, PHMSA issued the Notice, which alleged three violations, six warning items, and proposed a total civil penalty of $121,800. Wolverine filed a timely Request for Hearing on July 22, 2019, and participated in a hearing on November 5, 2019. On September 3, 2020, PHMSA issued a Final Order that withdrew one item, upheld two findings of violation under 49 C.F.R. Part 195.452(h)(4)(i) and 49 C.F.R. Part 195.452(h), and assessed a reduced civil penalty of $65,800. After requesting and receiving an extension, Wolverine submitted a timely Petition for Reconsideration on September 28, 2020. 1 Petition for Reconsideration, dated September 28, 2020 (Petition). Standard of Review Under 49 C.F.R. § 190.243, a respondent is afforded the right to petition the Associate Administrator for reconsideration of a Final Order. However, that right is not an appeal or an opportunity to seek a de novo review of the record.2 It is a venue for presenting the Associate Administrator with information that was not previously available or requesting the correction of any errors in the Final Order. Requests for consideration of additional facts or arguments must be supported by a statement of reasons as to why those facts or arguments were not presented prior to the issuance of the Final Order. Repetitious information or arguments will not be considered. Analysis Issues of General Application This section addresses Petitioner’s general claims regarding “misunderstanding or oversight, due process, arbitrary and capricious agency action, the burden of proof, and fair notice.”3 Specific claims regarding Items 5 and 6 will be addressed in the sections below. I. Due Process, Fair Notice, and Burden of Proof Petitioner’s arguments regarding due process and fair notice are considered in the sections below that address Items 5 and 6. Contrary to the Petitioner’s claims, the Final Order does not advance any novel interpretations of fact or law. II. Item 5 The Final Order found that Wolverine violated §195.452(h)(4)(i), a section of the pipeline integrity management regulations that deals with immediate repair conditions discovered on hazardous liquid pipelines located in high consequence areas. Simply put, OPS requires that operators consider certain conditions as needing immediate repair when they are found to have certain defects. When, as here, an operator has discovered a dent located on the top of a pipeline (above the 4 and 8 o’clock positions) with any indication of metal loss, it must treat the condition as an immediate repair. For such conditions, an “operator must temporarily reduce the operating pressure or shut down the pipeline until the operator completes the repair of these conditions (emphasis added). ”4 2 49 C.F.R. § 190.243(a)-(d). 3 Petitioner’s Petition for Reconsideration (Petition), at 1. 4 §195.452(h)(4)(i). To clarify the matter further, Wolverine does not dispute that (1) there was a dent that met criteria5 for an immediate repair; or (2) it completed the repair of this condition without either temporarily reducing the operating pressure or shutting down the pipeline. As thoroughly discussed in the Final Order, these facts are undisputed. Nevertheless, the Petitioner advances several arguments in support of its argument that it did not violate §195.452(h)(4)(i). The Petitioner’s primary objection lies in the Final Order’s claimed “inference”6 that Wolverine discovered the immediate repair condition on June 10, 2015. The timing of discovery is an issue in this case because the Petitioner’s obligation to act is dictated by when it discovers that it has an immediate repair condition on its pipeline. Contrary to the Petitioner’s allegation, the Final Order included no finding that discovery occurred on June 10, 2015. The Petitioner again argues that Mr. Cooper, Wolverine’s contract risk and integrity specialist,7 used the time between June 10, 2015, the date that the final in-line inspection (ILI) report was delivered to Mr. Cooper, and June 26, 2015 (the date that it claims it formally discovered the immediate repair condition) for data integration and repair plan development. However, the facts demonstrate otherwise. At the hearing, it became evident that, at the time of the alleged violation, Wolverine had only a single person qualified to review data for immediate repair conditions. Mr. Cooper was on vacation on June 10, 2015, the date that he was emailed a report indicating that Wolverine had an immediate repair condition. Since he was on vacation, he did not even begin the process of data integration and repair plan development until June 23, 2015. After examining these facts, it is evident that Wolverine wasted critical time to begin the process of implementing the requirements of §195.452(h)(4)(i) and Wolverine’s own integrity management program (IMP) procedures. After returning from his vacation, Mr. Cooper convened a meeting on June 26, 2015, at which time he declared discovery of the condition. He declined to either start the process of shutting down the pipeline or implementing a reduction in the operating pressure – and instead proceeded to repair, which was completed on June 30, 2015. Mr. Cooper testified that he “recommended that we focus efforts on the repair of the anomaly because they did determine quickly that it was accessible, that they felt they could get in within just a few days and repair it.” Mr. Murchison, Wolverine’s counsel, specifically questioned Mr. Cooper as to why he did not 5 At the hearing, Mr. Cooper, Wolverine’s risk and integrity specialist, testified at length about the reported dent, which he acknowledged met criteria for an immediate repair. Though Wolverine does not contest the fact that the dent met the criteria for an immediate repair condition, it should be noted that there is substantial evidence in the record that the condition met the established criteria for an immediate repair condition. In Wolverine’s potential immediate repair conference meeting minutes, it clearly states that the dent with metal loss was “confirmed.” Under “summary information about the anomaly,” it was noted that the dent was in a high consequence area (HCA) and was a “1.25% OD (outside diameter) dent with metal loss at 2:16 o’clock.” Operator Hearing Exhibit G, at 1. 6 Petition for Reconsideration, at 5. 7 Mr. Cooper is a contract Risk and Integrity Specialist. As of the date of the hearing, Mr. Cooper was the only person that Wolverine had in place with the specialized knowledge required to declare an immediate repair condition. “I’m the only qualified individual for Wolverine—as far as reviewing reports and developing repair plans.” Transcript, at 212. implement a pressure reduction. Mr. Cooper replied that “I was confident that if that anomaly had survived a 1,700 pound eight-hour test that it was not likely to fail in the next few days at 50 pounds or 17 maybe 200 pounds.”8 The problem with this reasoning is that the regulation does not afford operators the ability to defer a pressure reduction or a shutdown if, in their engineering judgement, it is simply more convenient to proceed to a repair. The following exchange in the hearing transcript9 is illustrative: MS. STEVENS: I just have one clarifying question about the call on the 26th. So the call on the 26th was convened because you had identified or discovered an immediate repair condition. My understanding is you were on vacation, you got back, you started moving things along. I think you said Tuesday the 23rd of that week--- MR. COOPER: That’s right. That would have been the first I had an opportunity to review the report and start the process of investigating it. Given that it was addressing an immediate repair condition, Petitioner’s decision to not even begin investigating the anomaly until the 23rd (13 days after the June 10th email) and not begin implementing a pressure reduction or shutting down the pipeline pending its repair, ran afoul of the requirements of §195.452(h)(4)(i). While the Petitioner would have us believe that Mr. Cooper needed time to contact the vendor to confirm the anomaly, convene a meeting with technical experts, and pore over data in the ILI Report, the evidence demonstrates that, in actuality, he was on vacation and Wolverine had no other person available to receive or act on the reported condition. The Petitioner presented no evidence to justify why a pressure reduction or shutdown was not initiated between June 10, 2015 and June 26, 2015, Wolverine’s claimed discovery date. In fact, Mr. Cooper testified that he did not even look at the report until June 23, 2015, and subsequently completed the repair on June 30, 2015, which belies the Petitioner’s arguments that it used the time between June 10 and June 26, 2015 for data confirmation and repair plan development. Accordingly, I reject the notion that “Mr. Cooper acted ‘promptly’ upon identifying the reported dent with metal loss, and [he] ‘analyzed quickly’ the data.”10 For whatever reason, the Petitioner exclusively focuses on the fact that Mr. Cooper did not take 180 days to achieve discovery, even though the regulation governing discovery makes it clear that “an operator must promptly, but no later than 180 days after an integrity assessment, obtain sufficient information… (emphasis added).” According to Merriam-Webster, “promptly” is an adverb meaning “in a prompt manner, without delay, [or] very quickly or immediately.” The evidence demonstrates that Wolverine did not act “promptly” and Petitioner advances no credible justification for why it should not be held to the regulatory standard.11 Even when it was evident that a critical report 8 Transcript, at 174 and 176. 9 Transcript, at 214. 10 Petition for Reconsideration, at 6. 11 7.3 What constitutes 'discovery of a condition'? had sat unread for 16 days, Mr. Cooper made a purposeful decision to simply schedule a repair and evade the regulatory requirement that mandated a pressure reduction or shut down pending repair. 12 Therefore, Petitioner’s argument that Wolverine acted “promptly” must fail under the regulation governing discovery since it took 16 days for the Petitioner to confirm discovery of a condition for which it received initial notification on June 10, 2015. Beyond summary statements to the contrary, there is no evidence in the record that Petitioner needed 16 days to obtain any additional information on the condition to ascertain whether it had a potential threat to the integrity of its pipeline. Following discovery, the subject regulation of this Item, §195.452(h)(4)(i), requires either a shutdown or pressure reduction pending repair. “To maintain safety, an operator must temporarily reduce the operating pressure or shut down the pipeline until the operator completes the repair of these conditions.” This regulation is not ambiguous or misleading. The regulation is clear on its face and it afforded the regulatory community of adequate notice that, pending repair, an operator must take certain actions. Wolverine did not abide by this requirement and therefore has violated this regulation. While I decline to affix a precise discovery date since the cited regulation is for §195.452(h)(4)(i), and not §195.452(h)(2), there is ample evidence to carry the agency’s burden of proof under the preponderance of the evidence standard. PHMSA must carry the burden of proof for both the burden of production and the burden of persuasion.13 The agency has demonstrated that (1) the required action was not taken; and (2) based the finding of violation, in part, on testimony given by Wolverine’s own employees. The Petitioner also takes issue with sundry other issues. First, the Petitioner alleges that the Region’s witness for Item 5 (one of several inspectors who developed and prosecuted this case), tied the Region’s hands in disputing that Wolverine should have discovered the condition prior to June 26, 2015. This claim is spurious. Consider the following exchange14 between the Petitioner’s counsel, Mr. Murchison, and the Region’s witness, Ms. Alexander. Discovery of a condition occurs when an operator has adequate information about the condition to determine that it presents a potential threat to the integrity of the pipeline. Depending on circumstances, an operator may have adequate information when the operator receives the preliminary internal inspection report, gathers and integrates information from other inspections, or when an operator receives the final internal inspection report. Operators are required to obtain sufficient information about a condition to make this determination no later than 180 days after an integrity assessment, unless the operator can demonstrate that the 180-day period is impractical. Liquid Integrity Management Rule Frequently Asked Questions. 12 Ms. Alexander: I have another question. Has Wolverine qualified anyone else to be a risk and integrity specialist of are you still the only qualified person? Mr. Cooper: Currently the only qualified one. We have another person who, I think, in November is supposed to be certified or has the evaluation to obtain that qualification. (Transcript, at 217-218). 13 “A sanction may not be imposed or rule or order issued except on consideration of the whole record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and substantial evidence.” 5 U.S.C. § 556(d). 14 Condensed Transcript, at 149. MR. MURCHISON: I find that nonresponsive, Your Honor. Let’s move on then. Regarding the statement that Wolverine claimed a discovery date of June 26th, 2015, do you dispute that June 26th 2015, is the date of discovery for this subject condition? MS. ALEXANDER: No, I’m not disputing it. That is per Wolverine. Mr. MURCHISON: Regarding the statement that the repair was completed on June 30 of 2015, does the Agency dispute that date: MS. ALEXANDER: Per Wolverine, no. MR. MURCHISON: I want to know what you think. I want to know what Wolverine thinks. I want to know what you think. Do you have a dispute with June 30 as the repair date? MS. ALEXANDER: No. MR. MURCHISON: Thank you. Do you have a dispute with June 26th as the discovery date? MS. ALEXANDER: No. The Petitioner argues that Ms. Alexander’s testimony precludes OPS from contesting Wolverine’s claimed June 26, 2015 discovery date. This is a deliberate misstatement of the above exchange. When asked if she disputes the June 26, 2015 discovery date, Ms. Alexander stated: “No, I’m not disputing it. That is per Wolverine.” The simplest interpretation of Ms. Alexander’s statement is that she is not disputing the fact that Wolverine claimed that June 26 2015 was the discovery date. Despite Mr. Murchison’s follow-up questions, where he attempts to corner the witness into acceding to the June 26, 2015 date, it is clear that Ms. Alexander was simply confirming Wolverine’s claim. It is my opinion, having reviewed the testimony, that Ms. Alexander was not stating that the Region concurred with Wolverine’s claimed discovery date of June 26, 2015. Second, the Petition falsely refers to Mr. Cooper’s “inability to access and address the final ILI report until Tuesday, June 23…” As stated above, Mr. Cooper was on a vacation. The ILI report was available on June 10, 2015 – although it simply sat unattended to for 13 days. Whether or not Wolverine knew that Mr. Cooper was on vacation, it made the decision to have only one person qualified to act on that information. This circumstance does not constitute an “inability.” Petitioner argues that Mr. Cooper acted “promptly” and “analyzed [the data] quickly” without any explanation for why the time period between June 10 and June 23 could not be considered when assessing its claimed discovery date. Taken to the extreme, Petitioner’s argument would allow operators to defer responsibility for actionable items until they decided to “open the mail. ” That approach is contrary to reason and common sense. Contrary to the Respondent’s argument that it utilized the time between June 10 and June 23 for data integration and verification, the evidence presented at the hearing and in the case file demonstrates that the Respondent took a very lackadaisical approach towards discovering an immediate repair condition. Regardless, this item of violation relates to §195.452(h)(4)(i), which requires a shutdown or pressure reduction pending repair, an action that was never taken by Wolverine. Third, the Respondent argues simultaneously that the Final Order should include a finding of discovery date and that it should not have to defend its claimed discovery date since it “received no notice of a discovery issue or claim until it received the Region Recommendation.” Neither argument can withstand even cursory scrutiny. The Notice referenced the Petitioner’s claimed discovery date stating, “Wolverine claimed a discovery date of June 26, 2015 and completed repairs on the pipeline segment on June 30, 2015. However, following the inspection, Wolverine could not provide a record that a temporary pressure reduction was taken for an integrity ‘immediate repair condition’ on the pipeline segment.”15 The Petitioner was on notice that its claimed discovery date was at issue as soon as it received the Notice. In addition, at the hearing the Petitioner questioned OPS at length regarding the discovery date in this case, as the previous transcript interlude amply demonstrates. The Petitioner here strenuously objects that it is being forced to defend itself against claims for which it had no notice.16 However, the discovery date issue was presented in the Notice, discussed at the hearing, and briefed thoroughly by the parties. Therefore, I reject the argument that Petitioner did not have adequate notice that the discovery date was an ancillary part of the determination as to whether it violated §195.452(h)(4)(i). The Petitioner also advances the argument that the Final Order erred in not establishing a date certain for the date of discovery. However, the Final Order included a finding that Wolverine’s claimed discovery date of June 26, 2015 was not in accordance with the regulatory mandate. While the Petitioner would rather have a fixed date, it must make due with the finding that its claimed discovery date, June 26, 2015, was outside the bounds allowed by common sense and the pipeline safety regulation for which it was cited, 49 C.F.R. § 195.452(h)(4)(i)(C). This finding of violation is, and always has been, squarely focused on the fact that Wolverine never took a pressure reduction or shut down the pipeline after finding an immediate repair condition on its pipeline. Therefore, I uphold the finding of violation as to Item 5. III. Item 6 49 C.F.R. § 195.452(h) provides special requirements for scheduling the evaluation and remediation of certain conditions, namely “180-day conditions.” To determine whether it has an 180-day condition, the regulation allows an operator to elect among various suitable strength calculation methods. The Petitioner repeats its claim that it used both the B31G and RSTRENG methodologies to determine that the subject conditions were not 180-day conditions. This position is belied by the evidence, as thoroughly explained in the Final Order. Following an inspection and prior to issuance of an NOPV, operators are allowed to submit evidence of compliance. Wolverine did not submit any evidence that it concluded that it was compliant with this regulation because, at the time the NOPV was issued, it believed that it had missed the 180-day deadline. The Violation Report, which records the contemporaneous statement of the operator’s position states: 15 Notice, at 4. 16 Petition, at 8. “Wolverine provided a written response that stated ‘Wolverine will evaluate and implement improvements to repair plan monitoring to help ensure all future deadlines are met. Note: this dig site was on a multi-year remediation plan, stewards failed to move this dig site up the priority list when the subsequent tool reclassified this from an ‘other condition’ to a potential 180-day repair. New Repair Tracking sheet being used, Open Items are reviewed at monthly Integrity Meetings to ensure deadlines are being met.”17 Wolverine argues that the Final Order misinterprets the regulation that requires it to meet these 180-day deadlines and allows it to use any calculation method it chooses at whatever time it elects to run said calculation. However, the Petitioner deliberately misunderstands both the Final Order and the Region’s position. Contrary to the Petitioner’s allegations, the Final Order does not advance a novel interpretation of this regulation. It applies common sense. Operators may not rely on one calculation method, then when presented with an allegation of violation years after the fact, run alternative calculations as a defense. The Petitioner states “Respondent’s program for evaluation and remediation of the conditions applied both the B31G methodology and the RSTRENG methodology,” a statement which is belied by the evidence in this case. 18 Nonetheless, it would be perfectly permissible for an operator to run 10,000 different methodologies (provided the methodologies were proven) – as long as it documented its calculations and relied on those calculations to devise an implementation strategy. That is not what happened in this case. In this case, as amply demonstrated by the facts in the Violation Report and at the hearing, the evidence shows that Wolverine used the B31G calculation method. Wolverine itself believed that it had missed the 180-day deadline and admitted as much when questioned.19 This conduct presented a grave danger, as the operator itself believed that it was missing deadlines and took no action to address integrity threats on its pipeline. The regulation provides a 180-day deadline because, beyond this deadline, certain conditions are expected to become more unstable and compromise pipeline integrity. In order to comply with the regulation, an operator must simply determine what methodologies to use, record its calculations, and present those calculations to inspectors if called upon to justify their conduct. Had Wolverine done so, it would have never been cited in the first place. However, the Petitioner would have us disregard any evidence that is not supportive of its own conclusions. The Final Order bases its findings on the facts in evidence. It is perfectly appropriate to consider an operator’s statements following receipt of the Notice. Weighing the evidence in its totality and proper context are critical to the final adjudication of fact and law. Operators may not, as here, rely on one calculation method, devise an implementation strategy and repair plan deadlines, then when presented with an allegation of violation four years later, run different calculation methods. It matters greatly that Wolverine relied on a methodology, then ignored the deadline for 180-day conditions. Wolverine itself believed that it missed these deadlines and that the subject conditions threatened the integrity of the pipeline. If Wolverine 17 Violation Report, at 42. 18 Petition, at 10. 19 Violation Report, at 42. had evidence that it conducted two (or more) analyses when first making its determinations, and then did not therefore classify the conditions as 180-day conditions, the Petitioner’s arguments would be apposite. 20 However, there is evidence directly contradictory to that factual scenario. Wolverine used one calculation methodology, missed the deadline, and was cited for that noncompliance in the Notice. To defend itself by, years after the fact, running another calculation, does not transform the Respondent’s original conduct into compliance with the express language of the regulation. For obvious reasons, I decline to exclude the statement of the operator’s own personnel and use this as direct evidence that Respondent violated 49 C.F.R. § 195.452(h). IV. New Evidence and Arguments This Decision does not consider any new evidence or arguments presented by the Petitioner. 21 Part 190.243 states clearly “If the respondent requests the consideration of additional facts or arguments, the respondent must submit the reasons why they were not presented prior to issuance of the final order.” Since the Petitioner does not present any reasons why the evidence or arguments were not presented prior to issuance of the Final Order, I decline to consider any evidence or facts that have not been fully briefed by both parties.22 Furthermore, Petitioner’s requests23 for the exclusion of testimony or other evidence on the basis of the formal Rules of Evidence or Procedure are also denied. As is clearly demonstrated by our regulations, the conduct of PHMSA’s hearings is strictly informal, the design of which is to enable the parties to present all evidence that leads to findings that are in the best interests of pipeline safety.24 Both the Petitioner and OPS presented testimony and evidence that were evaluated for probity, and then fairly adjudicated. Given that our regulations explicitly state that the design of our hearing process is informal, it would be inappropriate to grant any request for the exclusion of evidence on any basis other than falsity. Violation Reports, which often record 20 I specifically reject the Petitioner’s argument that there is any “choice directive” or that an operator is bound once it applies either methodology. The evidence presented here is strong – and supports the allegation that the Petitioner solely ran (and relied) on the B31G calculation methodology. 21 “Respondent submits herewith one new item of evidence which is offered solely for the purpose of allowing precision in the calculation of whether Respondent acted appropriately in the context of Item 5. Further, new arguments asserted herein are for the purpose of illuminating perceived issues raised by the Final Order itself.” Petition, at 2. 22 If the respondent requests the consideration of additional facts or arguments, the respondent must submit the reasons why they were not presented prior to issuance of the final order. § 190.243(b). 23 “Respondent submits herewith one new item of evidence which is offered solely for the purpose of allowing precision in the calculation of whether Respondent acted appropriately in the context of Item 5. Further, new arguments asserted herein are for the purpose of illuminating perceived issues raised by the Final Order itself.” Petition, at 2. 24 “The hearing is conducted informally without strict adherence to rules of evidence.” §190.211. contemporaneous statements of the parties during inspections, are specifically listed in Part 190 as a part of the case file that the Associate Administrator considers in making a decision.25 The Petitioner has made no allegations that the statements of its own employees were false. Accordingly, they may be considered as evidence, along with the testimony of both parties at the hearing. Civil Penalties Having dismissed Petitioner’s arguments for Items 5 and 6, I find there is no reason to reassess the penalties set in the Final Order. I therefore uphold the civil penalties. RELIEF GRANTED Based on the information provided in the Petition, a review of the record, and for the reasons stated above, the relief sought in the Petition is denied and the finding of violation in Items 5 and 6 of the September 3, 2020 Final Order are upheld. This Decision is the final administrative action in this proceeding. February 2, 2021 _____________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipe Line Safety 25 §190.207. 320195016_Closure Letter_02242021_text.pdf VIA ELECTRONIC MAIL TO: saul flota@wplco.com, richard mourglia@wplco.com, and vince.murchison@pipelinelegal.com February 24, 2021 Mr. Saul Flota President Wolverine Pipe Line Company 8075 Creekside Drive, Suite 210 Portage, Michigan 49024 Re: CPF 3-2019-5016 Dear Mr. Flota: On September 3, 2020, the Pipeline and Hazardous Materials Administration (PHMSA) issued to Wolverine Pipe Line Company a Final Order in the above referenced case. This Order included a Notice of Probable Violation and Civil Penalty. Based on our review of the documentation provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of the Order. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Gregory A. Ochs Director, Central Region, OPS Pipeline and Hazardous Materials Safety Administration Cc: Mr. Richard Mourglia, General Counsel, Wolverine Pipe Line Company, richard mourglia@wplco.com Mr. Vince Murchison, Esq., Counsel for Respondent, Murchison Law Firm, PLLC, vince.murchison@pipelinelegal.com 320195016_Hearing Scheduled_08202019_text.pdf August 20, 2019 VIA CERTIFIED MAIL AND EMAIL TO: Vince.Murchison@pipelinelegal.com and Allan.Beshore@dot.gov Mr. Vince Murchison Murchison Law Firm, PLLC 325 North Saint Paul Street Suite 2700 Dallas, Texas 75201 Mr. Allan Beshore Director, Central Region Pipeline and Hazardous Materials Safety Administration 901 Locust Street, Suite 462 Kansas City, Missouri 64106 Re: Notice of Hearing, Wolverine Pipeline Company CPF No. 3-2019-5016 Dear Mr. Murchison and Mr. Beshore: In accordance with 49 C.F.R. § 190.211, an informal hearing will be held regarding the Notice of Probable Violation and Proposed Civil Penalty issued Wolverine Pipeline Company by the Office of Pipeline Safety in the above-referenced case. The hearing will take place on November 5, 2019, beginning at 8:30 a.m. Central Time. The hearing will be at the PHMSA Chicago office, 2300 E. Devon Avenue, Suite 350-1, Des Plaines, Illinois 60018. Upon arrival at the building, attendees will be required to present photo identification to security personnel. At least 10 calendar days prior to the hearing (or by October 26, 2019), both parties must submit and exchange any additional written materials they intend to present at the hearing and a list of attendees. This information should be provided electronically. Materials not submitted by this date may be excluded. If you have any questions, please do not hesitate to call me at (202) 366-6139. Sincerely, Kristin Baldwin Presiding Official cc: Ms. Melanie Stevens, Counsel, Central Region, Office of Pipeline Safety, PHMSA 320195016_Closure Letter_07122023_(16-155088S)_text.pdf VIA ELECTRONIC MAIL TO: saul flota@wplco.com, richard mourglia@wplco.com, and vince.murchison@pipelinelegal.com July 12, 2023 Mr. Saul Flota, President Wolverine Pipe Line Company 8075 Creekside Drive, Suite 210 Portage, Michigan 49024 Re: CPF 3-2019-5016 Dear Mr. Flota: On September 3, 2020, the Pipeline and Hazardous Materials Administration (PHMSA) issued to Wolverine Pipe Line Company (“Wolverine”) a Final Order in the above-referenced case. This Order was issued following a hearing on a Notice of Probable Violation and Civil Penalty. On September 28, 2020, Wolverine filed a Petition for Reconsideration of the Final Order requesting reconsideration of the findings of violation for Items 5 and 6, which Petition was denied on February 21, 2021. Thereafter, Wolverine filed a Petition for Review with the U.S. Court of Appeals for the Sixth Circuit, which Petition was denied by the Court on June 2, 2023. Based upon the above and foregoing and confirmation of payment of the civil penalty, it has been determined that Wolverine has complied with the terms of the Final Order. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Gregory A. Ochs Director, Central Region, OPS Pipeline and Hazardous Materials Safety Administration cc: Richard Mourglia, General Counsel, Wolverine Pipe Line Company, richard_mourglia@wplco.com William V. Murchison, Esq., Murchison Law Firm, PLLC, vince.murchison@pipelinelegal.com ## Provenance - Official: Yes - Source: - Source ID: `phmsa-enforcement` - SHA-256: `59dceba3ba2ac362b998cda181f0665568c52f14b41ebce55b4433c6f73bfff3` - Retrieved: 2026-08-20T04:44:44.458Z - Exported: 2026-08-23T18:30:02.290Z - Document slug: `phmsa-enforcement-320195016` ### Source metadata ```json { "cpf": "320195016", "operator": "WOLVERINE PIPELINE CO", "region": "Central", "pipelineType": "INTERSTATE LIQUID ONSHORE", "caseStatus": "CLOSED", "citedSections": [ "195.420(a)", "195.424(a)", "195.446(c)(1)", "195.446(c)(2)", "195.452(c)", "195.452(d)", "195.452(h)(4)(i)", "195.452(h)(4)(iii)", "195.452(l)(1)(ii)", "195.579(a)", "195.581(a)" ], "dataAsOf": "08/04/2026 12PM", "caseDataAsOf": "2026-08-04", "attachmentCount": 19, "attachments": [ { "name": "320195016_Closure Letter_02242021.pdf", "url": "https://primis.phmsa.dot.gov/enforcement-documents/320195016/320195016_Closure%20Letter_02242021.pdf", "bytes": 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Agency-issued documents may also include a verified local PDF and page-level text representation.", "jurisdiction": "US", "operatorName": "WOLVERINE PIPELINE CO" } ```