# ALYESKA PIPELINE SERVICE CO — Notice of Probable Violation

**Citation:** CPF 520035002  
**Type / status:** enforcement / historical  
**Agency:** Pipeline and Hazardous Materials Safety Administration  
**Effective:** Not stated  
**Published:** 2003-01-23

CLOSED notice of probable violation citing 195.402(a), 195.412(a), 195.420(a), 195.567(c), 195.573(e), 195.575(a).

## Document text

Notice of Probable Violation involving ALYESKA PIPELINE SERVICE CO. PHMSA's enforcement data identifies the cited regulations as 195.402(a),  195.412(a),  195.420(a),  195.567(c),  195.573(e),  195.575(a). The case was opened on 2003-01-23 and is reported as closed as of 2007-09-19. Proposed civil penalty: $18,500. Assessed civil penalty: $17,500. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

520035002_decision on petition for reconsideration_03032006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520035002/520035002_decision%20on%20petition%20for%20reconsideration_03032006.pdf

520035002_decision on petition for reconsideration_03032006_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520035002/520035002_decision%20on%20petition%20for%20reconsideration_03032006_text.pdf

520035002_final order_05192005.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520035002/520035002_final%20order_05192005.pdf

520035002_final order_05192005_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520035002/520035002_final%20order_05192005_text.pdf

520035002_petition for reconsideration_06152005.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520035002/520035002_petition%20for%20reconsideration_06152005.pdf

cpf_520035002.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520035002/cpf_520035002.pdf

CPF_NO5_2003_5002.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520035002/CPF_NO5_2003_5002.pdf

520035002_final order_05192005_text.pdf

U. S. Department
of Transportation
Pipeline and
Hazardous Materials Safety
Administration
400 Seventh Street, S. W.
Washington, D C. 20590
htAY ) 3t
Mr. David Wight
President and CEO
Alyeska Pipeline Service Company
P. O. Box 60469
Fairbanks, Alaska 99706
Re: CPF No. 5-2003-5002
Dear Mr. Wight:
Enclosed is the Final Order issued by the Associate Administr
above-referenced case. The Final Order makes findings of violation,
to comply with the pipeline safety regulations and assesses a civil pen
of the Final Order constitutes service of that document under 49 C. F.
Sincerely,
tor for Pipeline Safety in the
specifies actions to be taken
lty of $18, 500. Your receipt
. 5 190. 5.
James Reynolds
Pipeline Compliance Re)
Office of Pipeline Safellr
1stry
Enclosure
cc: Lee Schoen
Sheila Doody Bishop
Chris Hoidal, Regional Director
Western Region, OPS
CERTIFIED MAIL - RETURN RECEIPT RE UESTED



DEPARTMENT OF TRANSPORTATIO
PIPELINE AND HAZARDOUS MATERIALS SAFETY
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
MINISTRATION'
In the Matter of )
Alyeska Pipehne Service Company, )
Respondent
)
)
)
)
C F No. 5-2003-5002
FINAL ORDER
From July 7-11, 2002, August 12-16, 2002, August 28-September 3,
2002, representatives of the Office of Pipehne Safety (OPS), purs
conducted on-site pipeline safety inspections of Respondent's facilities
Trans Alaska Pipeline System (TAPS).
As a result of the inspections, the Director, Western Region, OPS, iss
dated January 23, 2003, a Notice of Probable Violation, Propos
Compliance Order and Notice of Amendment (Notice). In accordanc
the Notice proposed finding that Respondent had violated 49 C. F. R
195. 575(a), 195. 571 and 195 573(a) and (e), proposed assessing a civil p
of the alleged violations, and proposed that Respondent take certain m
violations. The Notice also proposed, in accordance with 49 C. F. R.
amend its procedures for Operations, Maintenance and Emergencies.
On February 3, 2003, Respondent requested an extension until April
Notice, which the Regional Director granted on March 6, 2003. Respo
to the Notice on April 28, 2003 (Response). Respondent conteste
2002 and September 15-20,
ant to 49 U. S. C. ) 60117,
manuals and records on the
ed to Respondent, by letter
d Civil Penalty, Proposed
with 49 C F. R. $ 190. 207,
) )195. 420(a), 195. 567(c),
nalty of $18, 500 for several
asures to correct the alleged
190. 237, that Respondent
28, 2003 to respond to the
dent submitted its response
the allegations, submitted
This case was initiated by the Office of Pipehne Safety in the Research
Administration (RSPA). However, this case is no longer before RSPA.
2005, the Pipehne and Hazardous Materials Safety Administration (PHP
further the highest degree of safety in pipeline transportation and hazard(
0 a 1 AQ ~C'+L XT~~n~ V hEinotn Q~eonvr h anil
lldllbpvll4HUll. Bee secllon j. vo vj. ILL lluluuul x . xvuxxvsu iivovuivii auiu
Improvement Act (Pubhc Law 108-426, 118 Stat. 2423-2429 (Novembe
70 Fed. R~e. 8299 (February 18, 2005) redelegating the pipeline safety
Administrator, PHMSA.
d Special Programs
Effective February 20,
SA) was created to
us materials
nc ri sl Prnorvmc
30, 2004)). See also,
nctions to the



detailed information to explain the allegations and reserved the right o a hearing. A hearing was
held in the Western Region, OPS, on March 23, 2004. After the he ng, Respondent submitted a
Closmg Response dated May 22, 2004.
FINDINGS OF VIOLATION
Item 4 in the Notice alleged that Respondent had violated 49 C. F. R. ) 195. 420(a) that requires an
operator to maintain each valve that is necessary for the safe operation f its pipeline system in good
working order. The Notice alleged that Respondent had not maintaine the incoming and discharge
valves on Relief Tank No. 111 at PS01. The Notice more specifically al eged that on April 23, 2002,
when Respondent was isolating Tank 111, Respondent found that bot the incoming and discharge
valves would not seal properly and that the valves were leaking int the tank. Because of the
leakage, the Notice alleged that Respondent could not isolate the tank and complete the scheduled
internal inspection within the ten-year time frame required by API 65 .
In its Response Respondent contended that it took maintenance action o address the leaking valves
and that extending the internal tank inspection to 2003 did not jeopar ize the integrity of the tank
or of the system. Respondent maintained that it replaced the 20TO d 20T1 Tank 111 isolation
valves within a reasonable time considering the long lead (12-mo h) requirements, the short
construction window (four months) on the north slope, and the stat of corrosion on the tanks
Respondent further argued that during this period the operating risk w acceptable and the integrity
of the pipeline was never compromised. Respondent explained that in arly 2002 it found the Tank
111 isolation valves were leaking into the tank and installed stopples o the inlet and outlet hnes of
the tank, and in 2003 replaced the isolation valves. According to Resp ndent, the valve installation
was delayed because of the long lead time required for the 48-inch valv s, and, even with expedited
service, it took nine months, until February 2003, to get the new valv s.
Respondent explained that after replacing the isolation valves on Tank 11, it inspected and repaired
the tank bottom. According to Respondent, API standard 653 provide that the inspection interval
is determined by the corrosion rates measured during previous inspect'ons or anticipated corrosion
rates based on experience with tanks in similar service, with a 20-year aximum inspection interval.
Respondent's senior corrosion engineer determined that no significant orrosion would be expected
on the floor of Tank 111, and extending the internal inspection to 20 3 would not jeopardize the
integrity of the tank or system. Respondent mamtained that when it i spected the tank in 2003, its
engineering analysis was verified.
Section 195. 420(a) requires that each valve necessary for the safe oper tion of its system be in good
working order at all times. Although Respondent may have replaced t e valves within a reasonable
time frame, considering the circumstances that necessitated a 12-mont lead time for replacement,
the valves were noi in good working order at aH times. The leakino ~ alves were isolation valves,
and due to their leaking, would not have worked properly to shut off th flow to Tank 111. Because
they were leaking, Respondent could not isolate Tank 111 to perform t e inspection. Although the
corrosion rate may have been slow enough that the integrity of the t floor was not impaired and



the tank inspection could be delayed a year, this does not alter the req
to have been m good working order at all times. Accordingly, I find
) 195. 420(a).
irement that the valves were
hat Respondent violated
Item 5 alleged two violations. The first (Item 5(a)) was that Resp
ndent violated $ 195. 567(c)
because at the Atigun Pass road crossing, from MP 165. 77 to MP 16
l5. 8, a continuity test showed
that the casing test lead was directly shorted to the carrier pipe. The
otice alleged that without a
hard wire connection to the casing, Respondent could not confirm th
t the casing was electrically
isolated from the carrier pipe The regulation requires that an operato
maintain the test lead wires
in a condition that enables the operator to obtain electrical measuremen
s to determine if the cathodic
protection meets criteria.
Item 5's second allegation (Item 5{b)) was that Respondent had violate
Atigun Pass road crossing, both the casing vent and settlement rod indi
of-1. 25 volts. This reading suggested that the casing and/or casing test
with the carrier pipe and not electrically isolated. The regulation requi
isolate each buried or submerged pipehne from other metallic struc
electrically interconnected and cathodically protected as a single unit.
) 195. 575{a), because at the
ated a pipe-to-soil potential
lead was in electrical contact
es an operator to electrically
ures, unless the pipeline is
Respondent agreed that the casing vent at the Atigun Pass road cr
ssing could be shorted and
explained that it planned to correct the potential shorting by the end o~
f 2004, but no later than the
end of 2005. Respondent argued that the existing state of corrosion
oes not represent an unsafe
condition and that the 2004-2005 time frame for repair is reasona
le considering the state of
c orrosl oil.
Respondent's time frame for correcting the shorting is not at issue. Re
the casing and/or test lead may be shorted to the camer pipe; there
committed both violations of )$ 195. 567(c) and 195. 575(a). Respon
condition will be addressed in the Compliance Order section.
pondent did not dispute that
ore, I find that Respondent
ent's actions to correct the
Item 6 alleged four violations of ))195. 571 and 195. 573 (a)(1) and (e
an operator to monitor external corrosion control to determine if cathocf
with one or more of the applicable criteria in NACE standard RP01
specified intervals and to correct any identified deficiency in corrosio
. These regulations require
ic protection (CP) complies
9-96 by conducting tests at
control.
The first allegation was that cathodic protection pipe-to-soil tests con
12. 63 did not meet the CP criteria in NACE standard RP 0169-96 for th
Respondent did not dispute the allegation but maintained it was makin
time frame. Respondent explained it had installed a continuous an
nwwrrant PD rtrrtcarn in '7AAA 4)it that the rc«nnto nwuor cnnnlxr rlili nnf n
Vus+vuL Vx oposvuz us c vvv vugg ui a, uxv xviuvw yv vv vi vuyyig viv uvre, t
planned to install a new power generation and battery storage system in
ucted at MP 12. 31 and MP
years 2000, 2001 and 2002.
the repairs in a reasonable
de (Anodeflex) impressed
«fo««n Resnondent said it
2003 orbytheendof2004.



The second allegation was that in 2001, based on the coupon test statio' survey, the coupon pipe-to-
soil potentials at seven locations did not meet either the -850mV or 1 OmV depolarization criteria
in NACE standard RP 0169-96. Respondent did not dispute that th pipe-to-soil readings at the
seven locations failed to meet the NACE criteria. Respondent presen ed information showing that
in subsequent CP coupon testing in 2002, five of the seven locations met criteria, and in 2003, all
the coupons met the criteria.
The third ailegatton tn Item 6 was that based on the close interval stIrvey (CIS) Respondent had
conducted in 2001, pipehne pipe-to-soil potentials at survey markers 0312+50 to 30321+00 (MP
574. 1 to MP 574. 26) and 31195+50 to 31197+80(MP 590. 82 to 590. 8 ) did not meet the CP criteria
in RP Standard 0169-96. The Notice further alleged that the mainlin corrosion control report for
the period ending December 31, 2000 indicated several areas o f low pi e-to-soil potentials between
MP 574. 01-578. 01 and MP 590 82. Respondent did not dispute that t ere were low pipeline-to-soil
potentials at these locations, but maintained that CIS data, by itsel, does not demonstrate the
adequacy of CP. Respondent explained that it took action in 200 to adjust the Black Rapids
rectifier and that all but one location now showed adequate cathodic rotection.
I find that Respondent committed the three violations of ($195. 57) and 195. 573 (a)(1) and (e)
concerning deficiencies in its cathodic protection at the cited locati)ns. A close interval survey
(CIS) gives a better condition of the cathodic protection (CP levels) $n the pipe. A coupon only
measures the CP protection on a coupon, not on the pipe. HoweveI; a CIS &s similar to a prpe
reading in that the CIS lead is connected to the pipe. The CIS is surveyed every foot along the pipe
compared with a pipe station that is located about every /g mile. Thus, CIS covers more of the pipe
than a test station or coupon. A CIS can confirm that CP potentials a e low.
Item 6's fourth allegation was that Respondent had violated $)195. 571 and 195. 573 (a)(1) and (e)
because at the Valdez Marine Terminal (VMT) the crude oil piping etween West Metering and
Berth 4, and between Berths 4 and 5 did not meet the NACE cr teria for adequate cathodic
protection.
Respondent did not dispute the allegation that the cathodic protectio was deficient on this piping
but maintained it had, nonetheless, demonstrated good faith in addressi g cathodic protection system
deficiencies. Respondent explained that the piping from West Mete 'ng to Berth 4 and between
Berths 4 and 5 is protected by a single rectifier and the low cathodi protection is due to a poor
rectifier and anode bed design. According to Respondent, piping rep ir projects have necessitated
Respondent's turning off the rectifier to assure its workers' safety. Bec use of the short construction
season, cathodic protection testing is done when the rectifier is off or hen insufficiently polarized.
Respondent discussed the cathodic protection system repairs it ha conducted to improve the
cathodic protection.
In its Response and at the hearing, Respondent agreed that there wer deficiencies m the cathodic
protection on this piping. After submitting its Response and bef re the hearin, Respondent
submitted a letter, dated June 25, 2003, to OPS maintaining that Res ondent now considered the



VMT mani fold piping downstream of the breakout tank outlet pressur
controlling device excluded
from regulation. At the hearing Respondent again contended that OP
did not regulate this piping.
Respondent maintained that the piping is terminal piping exclu
ed from regulation under
(195. 1(b)(8)(ii) This provision excludes from regulation the trans
ortation of hazardous hquid
through facihties located on the grounds of a materials transport
tion terminal that are used
exclusively to transfer oil between a non-pipeline mode (tank vessels)
and a pipehne mode (except
for any device and associated pipehne necessary to control pressu
e in the mainline pipeline).
Respondent presented several interpretations by OPS addressing que
tions about the regulation of
in-plant and terminal piping and drawings used by the Transportation '
Safety Institute (TSI), which
Respondent argued approximated the VMT piping at issue.
In its after-hearing Statement, Respondent submitted a diagram of the piping at issue. Respondent
continued to contend that the VMT piping was not regulated becaus it is used to transfer crude
between the pipeline and the tankers.
Part 195 excludes from its regulation transportation ofhazardous hqui through facihties located on
the grounds of a materials transportation terminal that are used excl sively to transfer hazardous
hquid between non pipehne modes of transportation or between a non ipeline mode and a pipeline,
not including any device and associated piping that are necessary to c ntrol pipehne pressure. The
OPS interpretations cited in Respondent's response provide that pipel e facihties at a terminal are
regulated except for the pipmg used exclusively to transfer product froIn a storage or breakout tank
to a non pipeline mode of transportation or between non pipeline mod~s of transportation. The TSI
diagrams illustrate this concept. However, the piping configuration t VMT is different from the
piping described in the interpretations and illustrated in the TSI diagr ms. The VMT piping is not
used exclusively as transfer piping. The 48-inch piping from MP 8 0 to the loading berths is a
continuation of the mainline. The configuration is such that the tank could be bypassed and the
crude oil could flow directly from MP 800 to the berths. The piping se s mainline pressure because
mainline pressure, i. e hydraulic head pressure, rather than pumps, is t e force that causes the oil to
flow to the berths.
Thus, I find that the VMT piping at issue is regulated under Part 195. ince Respondent agreed that
the cathodic protection on the piping was low because of poor recti ier and anode bed design, I
father find that Respondent violated ) )195. 571 and 195. 573 (a)(1) and e). Respondent's corrective
actions to increase the cathodic protection are discussed in the Compl ance Order section below.
These findings of violation will be considered prior offenses in any su sequent enforcement action
taken against Respondent.
PENALTY ASSESSMENT
Under 49 U. S. C. ) 60122, Respondent is subject to a civil penalty ot to exceed $100, 000 per
violation for each day of the violation up to a maximum of $1, 000, 00 for any related series of
violations. The Notice proposed a total civil penalty of $18, 500 for t e violation of )) 195. 420(a)
(Item 4), and the four violations of $$ 195. 571 and 195. 573(a) (1)(e) Items 6a, 6b, 6c and 6d)



49 U. S. C. ) 60122 and 49 C. F. R $ 190. 225 require that, in determi ing the amount of the civil
penalty, I consider the following criteria: nature, circumstances, and avity of the violation, degree
of Respondent's culpabihty, history of Respondent's prior offenses, R)spondent's abihty to pay the
penalty, good faith by Respondent in attempting to achieve complianc), the effect on Respondent's
ability to continue in business, and such other matters as ~ustice may quire.
The Notice proposed a civil penalty of $10, 000 for violation of 49 P. F. R. ) 195. 420(a) for not
maintainmg the incoming and discharge valves on Rehef Tank 111 at Pgmp Station 1. As mitigating
factors, Respondent offered that it had replaced the valves in a reasonable time frame, considering
the long lead time necessary to make such a repair, and that pipeline saf ty was not threatened during
the time as evidenced by the state of corrosion on the tanks. Res ondent added that the tank
isolation valves have never been used to isolate the tanks in an emerg ncy situation.
Tank isolation valves are critical valves to the pipehne system, even if Respondent has not had to
use them in an emergency. Although Respondent has not had to use th valves in an emergency, an
emergency is not the time to find they do not work. That is why they are to be maintained in good
working order at all times. But because they were leaking, the two valv s would not have functioned
as they were intended to function. Respondent replaced the leaking v Ives, but this was necessary
to have functioning valves. Mitigation is not warranted for aetio s to bring the valves into
comphance. Nor is mitigation warranted because the corrosion rate w s slow enough that the tank
inspection could be delayed. Therefore, I assess a civil penalty of $1, 000 for this violation.
The Notice proposed civil penalties of $2000, $3500 and $2000 for t e three violations of
)) 195. 571 and 195. 573 (a) and (e) for the cathodic protection defici ncies (Items 6a, 6b and 6c).
Respondent asked that the penalty amounts be reconsidered. For tho e areas not corrected by the
2003 testing, Respondent said it would take additional action to correc the low cathodic protection
areas by installing a new impressed current remote power supply. Re pondent maintained it uses
sound engineering practice to control corrosion through alternate me s, and its pig data shows the
state of corrosion does not threaten pipehne safety.
Mitigation is not warranted for taking corrective action to address he low cathodic protection
readings, and to bring them into compliance with one or more o the NACE criteria, as the
regulations require. Some of the low cathodic protection readings e isted for at least three years
(2000-2002). Respondent's use of in-line inspection tools to monitor c rrosion is prudent but is not
a substitute for restoring protection to required levels. Furthermore, R spondent's assertions about
examining pig data it had obtained since 1994 (locations cited in 6a) 1998 (locations cited in 6b
and 6c) are unclear as to how these pig runs correspond to the period hen the areas did not meet
the NACE criteria. Although Respondent asserts that pipeline safety as not jeopardized, this was
luck, not a reason for mitigation. The purpose of external monitorin for corrosion is not for an
'+ be fore Iow cathodic nrotertion eadings result in corrosion
in~urious to the pipeline. I assess $2, 000 for the low readings at the lo ations cited in 6a, $3500 for
the low readings at the locations cited in 6b, and $2000 for the low re dings at the locations cited
111 6c.



The Notice proposed a civil penalty of $1, 000 for the violation of ))
95. 571 and 195. 573 (a) and
(e) for the cathodic protection deficiencies on the piping at the Valdez
Marine Terminal (Item 6d).
Respondent maintained that it demonstrated good faith in addressing
he CP system deficiencies.
Although Respondent has tried to address the low cathodic protec
ion on the Valdez Marine
Terminal piping, these actions to come into compliance with the r)
gulations do not warrant a
reduced civil penalty.
Accordingly, having reviewed the record and considered the assessmentt criteria, I assess Respondent
a total civil penalty of $18, 500.
Payment of the civil penalty must be made within 20 days of service. Federal regulations
(49 C. F. R. ) 89. 21(b)(3)) require this payment be made by wire transfer, through the Federal Reserve
Communications System (Fedwire), to the account of the U. S. Treas . Detailed instructions are
contained in the enclosure. Questions concerning wire transfers sho ld be directed to: Financial
Operations Division (AMZ-120), Federal Aviation Administration, ike Monroney Aeronautical
Center, P. O. Box 25082, Oklahoma City, OK 73125; (405) 954-8893.
Failure to pay the $18, 500 civil penalty will result in accrual of interes at the current annual rate in
accordance with 31 U. S. C. $ 3717, 31 C. F. R. $ 901. 9 and 49 C. F. R. $ 8 . 23. Pursuant to those same
authorities, a late penalty charge of six percent (6%) per annum will e charged if payment is not
made within 110 days of service. Furthermore, failure to pay the civil enalty may result in referral
of the matter to the Attorney General for appropriate action in a Unite States District Court.
WARNING ITEMS
Item 1 in the Notice warned Respondent that it had not reviewed its elding manual WL-1 since
May 15, 1995. Section 195. 402(a) requires an operator to review it manual of procedures for
conducting normal operations and maintenance each calendar year, a intervals not exceeding 15
months. Respondent maintained that when it reviewed a document an did not make changes, the
revision date was not changed. Rather, the documents showing the eview were filed with the
document management group.
Item 2 warned Respondent that it was not following its procedures for eeping all rectifier data on
work done on the rectifiers in the rectifier cabinet. Respondent explai ed that the official record is
kept in the pump station files, not at the rectifier box. Respondent s bmitted copies of the work
order package for rectifier readings, which shows that the official fo is to be filed at the pump
station.
Respondent must continue to ensure that it makes and documents the re
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lndlludlb dllV llldl LA dL luaL zw veau avvpulg io vvllOJOWLJI TT Lu
warned that if OPS finds a violation for any of these items in a subsequ
action will be taken.
uired reviews of each of its
grec 2 ecnnndent ic again
nt inspection, enforcement



COMPLIANCE ORDER
The Notice proposed a compliance order with respect to the items hs
6a, 6b, 6c and 6d.
ed in the Notice as 4, Sa, Sb,
For violation of 49 C. F. R. $ 195. 412(a) (Item 4), the Notice propose
suction and discharge valves 20TO and 20T1 and complete an internal i
It will not be necessary to include this item in a comphance order beca
the isolation valves and made the inspection.
that Respondent repair the
spection of relief Tank 111.
se Respondent has replaced
For the two violations of $ ) 195. 567(c) and 195. 575(a) (Items Sa and
Respondent evaluate the cathodic protection levels on the undergrou
road crossing and take appropriate action to bring the level of cathodi
with the criteria in NACE standard RP0169-96. Respondent maintain
the road crossmg ends to investigate and correct any potential shorting
the casing test lead. Respondent said it planned to correct the potentia
or 2005 and until corrected would momtor corrosion using high
technology The Region has verified that Respondent has excavated
road crossing. Therefore, there is no need to include this item in a co
b), the Notice proposed that
d piping at the Atigun Pass
protection into comphance
d that it planned to excavate
d problems associated with
shorting by the end of 2004
esolution inhne inspection
d repaired the casing at the
pliance order.
For the three violations of $$ 195. 571 and 195. 573 (Items 6a, 6b and 6
Respondent evaluate the cathodic protection levels at MP 12. 31, MP
770. 66, 773. 78, 780. 61, 789. 49, 789. 84, MP 574. 1 to 574. 26 and
appropriate action to bring the level of cathodic protection into comph
criteria in NACE standard RP0169-96, and add cathodic protection
), the Notice proposed that
12. 63, MP 754. 35, 760. 09,
P 590. 82 to 590. 86, take
ce with at least one of the
here appropriate.
In response to 6a, Respondent said it would repair the power supply
power generation and battery storage system The Region has confi
now working and that the cathodic protection levels are now adequat
subsequent testing in 2003 showed all coupons at issue (Locations 754.
780 61, 789. 49, 789. 940) met the criteria. To address 6c, Respondent
the Black Rapids rectifier, which corrected the cathodic protection at a
part of its Corrosion Monitoring and Mitigation and Capital Improve
additional action in 2004 to correct the areas with low readings. The
coupons at the cited locations now meet the NACE criteria. Because
the proposed corrective actions, they will not be included in the Comp
n 2004 by instalhng a new
ed that the power supply is
For 6b Respondent said
5, 760. 09, 770. 66. 773. 78,
aid that m 2003 it adjusted
1 locations but one, and, as
ents Programs, would take
Region confirmed that the
Respondent has carried out
iance Order.
To address 6d, Respondent said it was taking appropriate action althou
h the VMT piping was not
regulated under the pipehne safety regulations. As discussed in the Fin
ings section, this piping is
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Compliance Order.



Under 49 U. S. C. ) 60118(a), each person who owns or operates a p
jpeline facility is required to
comply with the applicable safety standards established under chapter
01 Pursuant to the authority
of 49 U. S. C. $ 60118(b) and 49 C F. R. ( 190. 217, Respondent is
hereby ordered to take the
following actions to ensure compliance with the pipehne safety
egulations applicable to its
operations Respondent must—
1 Evaluate the cathodic protection levels on the piping at the Val
West Metering and Berth 4 and between Berth 4 and Berth 5 a
protection into comphance with one or more of the apphcable c
set forth in paragraphs 6. 2 and 6. 3 of NACE standard RPO16
2 Submit documentation to the Western Regional Director de
protection deficiencies have been addressed.
3 Complete the above-hsted items within 60 days from issuanc
The Regional Director may extend the period for complying with an
Respondent requests an extension and adequately justifies the reason
AMENDMENT OF PROCEDURES
The Notice (Item 3) alleged inadequacies in Respondent's Mainhn
proposed that Respondent amend the procedures to require ground su
surveillance, to observe the conditions Respondent characterizes as n
with Vertical Support Members. The Notice alleged that some of the n
be seen by ground surveillance.
Respondent disagreed that its procedures are inadequate and nee
explained that its manual defines notable conditions as those which c
d~ng aerial inspection. Respondent contended that its weekly a
requirements of )195. 412, and that the regulation does not require gr
Section 195. 412 requires an operator to inspect the surface conditions o
right-of-way at specified intervals. The method of inspection is leA to
is concerned that the aerial surveillance may not adequately assess the c
Vertical Support members, the record does not substantiate the necess
its manual. The record does not support a finding that the procedures fo
combined with quarterly ground surveillance, and an annual line walk a
the conditions Respondent hsts as notable. Therefore, Respondent wil
~wsa~A its hEninlw~n aiinrow11anra Vnaniinl nmr S iiiiVS'C
lv Qillbilv iQ iYlciilliiiiv slii v viilullvv xllulluuL pvvvuvxvu
ez Marine Terminal between
d bring the level of cathodic
'teria for cathodic protection
-96.
onstrating that the cathodic
of this Final Order.
of the required items if the
for the extension.
Surveillance Manual and
eillance, rather than aerial
table conditions associated
table conditions could only
amendment. Respondent
be qualitatively observed
'al inspections exceed the
und surveillance.
or adjacent to each pipehne
he operator. Although OPS
nditions associated with the
ty for Respondent to amend
weekly aerial surveillance,
e not adequate for assessing
not be required at this time
Failure to comply with this Final Order may result in the assessmen of civil penalties of up to
$100, 000 per violation per day, or in the referral of the case for judici I enforcement



10
Under 49 C F. R. $ 190. 215, Respondent has a right to petition for
Order. The petition must be received within 20 days of Respondent's r
must contain a brief statement of the issue(s). The filing of the pet
payment of any civil penalty assessed. All other terms of the order, incl
action, remain m full effect unless the Associate Administrator, upo
terms and conditions of this Final Order are effective upon receipt.
econsideration of this Final
ceipt of this Final Order and
tion automatically stays the
ding any required corrective
request, grants a stay. The
Stacey Gerard
Associate Achninistrator
for Pipeline Safety
Date Issued

520035002_decision on petition for reconsideration_03032006_text.pdf

OP ~)
U. S. Department
of Transportation
Pipeline and
Hmardous Materials Safety
Administration
400 Seventh Street, S. W.
Washtngton, D. C. 20590
NH — 3 "'0
Mr. David Wight
President and CEO
Alyeska Pipeline Service Company
P. O. Box 60469
Fairbanks, Alaska 99706
i4 '~QA ic, . gy
Re: CPF No. 5-2003-5002
Dear Mr. Wight:
Enclosed is a decision on the petition for reconsideration filed in the above-referenced
case. The Associate Administrator for Pipeline Safety has granted the petition regarding
item 6d in the Final Order. The civil penalty is reduced by $1, 000. Payment of the
remaining $17, 500 civil penalty is due immediately. The Compliance Order portion of the
Final Order is amended by striking all portions related to item 6d. Please be advised that
appropriate corrective action regarding the remainder of the Compliance Order and all
Warning Items must be taken if such action has not already been completed. Your receipt
of this decision constitutes service under 49 C. F. R. $ 190. 5.
Sincerely,
James Reynolds
Pipeline Compliance Registry
Office of Pipeline Safety
Enclosure
CERTIFIED MAIL — RETURN RECEIPT RE UKSTED



DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
In the Matter of
Alyeska Pipeline Service Company,
Petitioner
CPF No. 5-2003-5002
DECISION ON PETITION FOR RECONSIDERATION
On May 19, 2005, pursuant to 49 U. S. C. $ 60112, the Associate Administrator for
Pipeline Safety (Associate Administrator) issued a Final Order in this case finding that
Petitioner had violated the pipeline safety regulations and assessing a civil penalty in the
amount of $18, 500. The Final Order also ordered Petitioner to take certain actions to
ensure compliance with the pipeline safety regulations. The Final Order warned
Petitioner to take appropriate corrective action regarding some of Petitioner's practices
for recording data and reviewing documents.
On June 15, 2005, Petitioner filed a petition for reconsideration of the Final Order. ' In its
petition, Petitioner sought reconsideration of one finding of violation in the Final Order,
on the grounds that the relevant piping was covered by the "termmal facilities exception"
in 49 C. F. R $ 195 I (b)(8)(ii). Petitioner also complained the delay between the filing of
Petitioner's response to the Notice of Probable Violation (NOPV) and the issuance of the
Final Order violated Pipeline and Hazardous Materials Safety Administration (PHMSA)
regulations and Executive Order 12988.
The Final Order found Petitioner committed six violations of the pipeline safety
regulations. Petitioner seeks reconsideration of the finding that Respondent violated
sections 195. 571 and 195. 573(a)(1), (e) due to inadequate cathodic protection of crude oil
piping between West Metering and Berth 4 and between Berths 4 and 5 at the Valdez
Marine Terminal (VMT) (heremafter "violation 6d"). Petitioner also seeks a stay of the
Final Order with regard to violation 6d
1 The petition for reconsideration mdicated Petitioner intended to brief the issues raised m the petition
PHMSA did not receive a brief on the petition
' Although Petitioner "complained" about the delay, Petitioner did not state what relief, if any, it sought
Petitioner did not allege any pre~udice or harm resulting from the delay



Petitioner argues that, unless violation 6d is withdrawn, the Final Order would
amend the terminal facilities exception by imposing size and pressure requirements
as part of the exception. Petitioner claims the piping at issue in violation 6d is not
within PHMSA's jurisdiction to regulate Petitioner further argues that, even if the
piping is within PHMSA's statutory jurisdiction, it is not within the scope of the
current regulations and that PHMSA cannot now extend the scope of regulation to
include this piping without notice and comment rulemaking.
Through delegations from the Secretary of Transportation, the Hazardous Liquid
Pipeline Safety Act of 1979 ("HLPSA") provides the authority for PHMSA to
prescribe mmimum safety standards for pipeline transportation, which is "the
movement of hazardous liquid by pipeline, or the storage of hazardous liquid
incidental to the movement of hazardous liquid by pipeline, in or affecting interstate
773
or foreign commerce.
" Pipeline transportation "does not include moving
hazardous liquid through . . . onshore production, refining, or manufacturing
facihties; or storage or in-plant piping systems associated with onshore production,
refining, or manufacturing facilities. "
Accordingly, PHMSA's jurisdiction encompasses the movement of hazardous
liquids by pipeline and the storage incidental to that movement. There is no
question that the terminal facilities at the Valdez Marine Terminal are "incidental"
to a pipeline. The facility is connected to a pipeline and receives hazardous liquids
directly from a pipeline, making it incidental to pipeline transportation. See, e g,
Exxon v. U. S. Secretary of Transportation, 978 F. Supp. 946, 950 (E. D. Wash.
1997). Therefore, all piping at this terminal clearly falls within the statutory
definition o f pipeline transportation. 5
As noted by Petitioner, however, even if the piping is within PHMSA's statutory
jurisdiction, the piping may not fall within the area traditionally regulated by
PHMSA. The plain language of the terminal facilities exception, found at
49 C. F. R ) 195. 1(b)(8)(ii), states that Part 195 does not apply to transportation of a
hazardous liquid through facilities located on the grounds of a materials
transportation terminal that are used exclusively to transfer the hazardous hquid
between a non-pipeline mode and a pipeline. However, Part 195 does apply to "any
device and associated piping that are necessary to control pressure in the pipeline
under ) 195. 406(b)" that would otherwise be excepted from Part 195 under the
terminal facilities exception. 6
Several pertinent facts are undisputed. Other than the piping associated with the
breakout tanks, no piping at the terminal facility is used to transport hazardous
liquids out of the terminal by pipeline — all hazardous liquids leave the facility by a
See 49 U S C $ 60101(19) and (22)(A)
49 U S C $ 60101(22)(B)(n) and (ni)
5 The Valdez Manne Terminal facihties are not onshore production, refining, or manufacturing facihties, or
storage or in-plant piping systems associated with onshore production, refining, or manufacturing facdities
49 C F R $ 195 1(b)(8)(n)



non-pipeline mode of transportation. Therefore, there is no question that the piping
is on the grounds of a materials transportation terminal. It is also clear that
hazardous liquids flow only from a pipeline to a non-pipeline mode of
transportation. At issue is whether the outlet piping from the storage tanks is
necessary to control pressure in the pipeline. 7
The terminal facihties exception finds its basis m the HLPSA. The HLPSA
provides that PHMSA does not have the authority to regulate storage facilities that
are not incidental to pipeline transportation. PHMSA has declined to regulate any
terminal facilities except those that are necessary to control the pressure in the
pipeline The fundamental basis of the terminal facilities exception is to exempt
from regulation storage facilities. Facilities that are operationally part of the
pipehne and that are not part of storage have never been excepted from Part 195
regulation.
Petitioner argues that it does not use the piping to transport hazardous liquids
directly to marine vessels, as described in the Final Order. Instead, Petitioner
asserts that it only uses the piping to transfer hazardous liquids between storage
tanks and non-pipeline modes of transportation. Petitioner argues that its ability to
use the piping as a continuation of the mainline does not affect its exclusive use as
transfer piping.
Although I believe it was not the intent of the Office of Pipeline Safety to exempt
piping under circumstances such as these, the piping between West Metering and
Berth 4 and between Berths 4 and 5 at the Valdez Marine Terminal (VMT) falls
within the language of the terminal facilities exception. The piping is not necessary
to control pressure under section 195. 406(b). Therefore, the piping is not breakout
tank piping subject to Part 195. Furthermore, the Deputy Associate Administrator
for Pipeline Safety issued an interpretation letter dated December 27, 1995,
regarding sections 195. 1(b)(6) and (b)(7). Paraphrased, the letter states:
1) Terminal facilities include piping located on the grounds of a terminal and
used to transfer hazardous liquid between a pipeline and a non-pipeline
mode of transportation, not including any device and associated piping
necessary to control pressure in the pipeline under section 195. 406(b).
2) If there is no pressure control device on terminal grounds which is required
by section 195. 406(b) for safe operation of a jurisdictional pipeline serving
the plant, the terminal facilities extend to the terminal boundary
3) If there is such a device on termmal grounds, Part 195 applies to the device
and to transfer piping that connects the device to the jurisdictional pipeline.
In addition to the plain language of the regulation and the interpretation letter,
language in the notice of proposed rulemaking proposing (NPRM) the current text
of the regulation further supports Pet!tioner's position The NPRM stated:
Id ' See Exxon Corporation v U S Secretary of Transportation, 978 F Supp 946, 953 (E D Wash 1997)



Also, because the pipeline mode of transportation is not
mentioned, $ 195. 1(b)(7) has led some to conclude that
terminal facilities used to transfer hazardous liquid between
a pipeline and another mode of transportation are covered
by part 195. However, this inference is incorrect, smce part
195 does not apply to facilities at pipeline terminals other
than breakout tanks, as defined is $ 195. 2, and associated
piping.
The basis for violation 6d was that the piping is not transfer piping, but rather was
part of the mainline because hazardous liquids could flow directly from the main
pipehne, through the piping at issue, to the marine vessels. I agree that, if the
piping was used in that way, the piping would be subject to Part 195. However,
Petitioner states, and the OPS does not contest, that the piping is not, in fact, used in
that manner. Instead, the hazardous liquids flow through storage tanks to the
vessels. Therefore, the piping at issue is transfer piping between the storage tanks
and the non-pipeline mode of transportation.
Relief Granted
Based on the information provided in the Petition, I find that the piping at issue in
violation 6d is within the statutory jurisdiction of PHMSA but meets the terminal
facilities exception and therefore is not regulated under Part 195. The civil penalty
of $1, 000 for violation 6d is withdrawn; therefore, the civil penalty assessed in the
Final Order is reduced to $17, 500. Furthermore, the Compliance Order is amended
by removing item 6d. All other terms of the Final Order remain in effect.
MAR - 3 Z);j6
Date Issued
S ce
A soc
fo
Ger d
ate Administrator
eline Safety

## Provenance

- Official: Yes
- Source: <https://primis.phmsa.dot.gov/enforcement-data/case/520035002>
- Source ID: `phmsa-enforcement`
- SHA-256: `752cf436a17797354137e607ace30c5e15a6e2caa450b451002cd557b083dc7e`
- Retrieved: 2026-08-20T04:44:44.458Z
- Exported: 2026-08-22T13:16:12.620Z
- Document slug: `phmsa-enforcement-520035002`

### Source metadata

```json
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  "region": "Western",
  "pipelineType": "INTERSTATE LIQUID ONSHORE",
  "caseStatus": "CLOSED",
  "citedSections": [
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  ],
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```