DISTRIGAS OF MASSACHUSETTS LLC — Notice of Probable Violation

party submissionOfficial PDF120023003_Petition for Limited Reconsideration_11212005.pdf#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 1Official PDFMAY 26 2009 Mr. Francis J. Katulak President Distrigas of Massachusetts, LLC 18 Rover Street Everett, MA 02149 Re: CPF No. 1-2002-3003 Dear Mr. Katulak: Enclosed is the Decision on the Petition for Reconsideration filed by Distrigas of Massachusetts, LLC, in the above-referenced case. For the reasons specified therein, the Decision affirms in part the Final Order, dated November 2, 2005, but also grants the Petition in part by reducing the civil penalty issued for Item 3 in said Final Order. Payment of the total reduced civil penalty of $24,000 is due within 20 days following receipt of this Decision. The Decision is the final administrative action in this proceeding. Your receipt of the document constitutes service under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Byron Coy, Director, Eastern Region, OPS CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 1160 0001 0047 7162]#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 ____________________________________ In the Matter of ) Distrigas of Massachusetts, LLC, ) CPF No. 1-2002-3003 ) ) ) Petitioner. ) ____________________________________) DECISION ON PETITION FOR RECONSIDERATION BACKGROUND In accordance with 49 U.S.C. § 60118 and 49 C.F.R. § 190.213, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Final Order in this matter on November 2, 2005 (Final Order), finding that Distrigas of Massachusetts, LLC (Distrigas or Petitioner), committed certain violations of the agency’s Liquefied Natural Gas (LNG) Facilities Federal Safety Standards regulations (49 C.F.R. Part 193). The Final Order found, inter alia, that Petitioner violated 49 C.F.R. § 193.2715 by failing to provide certain contract security personnel (CSP) with initial security training in accordance with the company’s own security training plan. 1 The Final Order assessed a civil penalty for said violation in the amount of $20,000.2 Under 49 C.F.R. § 190.215, a respondent has the right to file a petition for reconsideration of a final order issued pursuant to § 190.213. Although the regulations do not require that the agency consider repetitious information, arguments or petitions, a respondent may request consideration of additional facts or arguments, provided that the petitioner indicates a valid reason why those facts or arguments were not presented prior to issuance of the final order.3 The purpose of this rule is to allow a respondent to present information or arguments that were unavailable or unknown prior to issuance of the final order and to allow the agency to correct any errors in the final order, not to provide the respondent with the right to an administrative appeal or de novo review. 1 Final Order, Item 3. 2 The Final Order assessed a total civil penalty in the amount of $30,000. The Petition does not seek reconsideration of the $10,000 penalty assessed for Item 2 3 49 C.F.R. § 190.215.#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 32 On November 22, 2005, Petitioner filed a Petition for Reconsideration (Petition) of the Final Order, seeking reconsideration of the finding of violation and the $20,000 civil penalty assessed for Item 3. company’s imprecise summarization of its own records gave PHMSA the incorrect impression that Distrigas failed to comply with its own security training plan. Petitioner’s arguments are discussed in greater detail below. 4 The Petition does not request the consideration of additional facts but claims that the This case arose out of an onsite safety inspection conducted by a representative of the Eastern Region, Office of Pipeline Safety (OPS), PHMSA, on November 26 to 30, 2001, at an LNG terminal operated by Distrigas and located along the Mystic River in Everett, Massachusetts (LNG Plant). At this facility, LNG tanker vessels deliver LNG for storage and distribution. As a result of probable violations discovered during the inspection, PHMSA issued a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order (Notice) to Petitioner on June 17, 2002. The Notice alleged that Petitioner violated 49 C.F.R. § 193.2715 by failing to provide adequate training for certain of its CSP. Specifically, the Notice alleged that Distrigas failed to train the CSP to (1) recognize breaches of security; (2) carry out security procedures under 49 C.F.R. § 193.2903 relating to their duties; (3) be familiar with basic plant operations and emergency procedures that were needed to effectively perform their duties; and (4) recognize conditions where security assistance was needed. The Notice alleged that Petitioner failed in 50 cases to train CSP in accordance with Petitioner’s written LNG facility security procedures. In its Response to the Notice, Petitioner contested all of the allegations and requested an informal hearing, which was held on November 14, 2002, with an attorney from the Office of Chief Counsel, PHMSA, presiding. At the hearing, Petitioner provided PHMSA with certain training records not provided during the inspection. Petitioner later provided PHMSA with a post-hearing submittal (Closing) dated December 13, 2002. Based on these records and the Closing, I found in the Final Order that Distrigas violated § 193.2715 by failing to provide security training for 10 of its security personnel in accordance with the company’s training plan. In its Petition, Distrigas contests the findings and penalties assessed for eight of the 10 individuals. DISCUSSION Item 3 of the Final Order found that 10 of Petitioner’s CSP did not receive the training that the company’s own written Training Standards for Security Personnel required. This finding was supported by Petitioner’s own records, including a training records reconciliation spreadsheet (“Reconciliation”) provided by Distrigas at the hearing. According to the Final Order, the company’s records showed that these 10 individuals did not receive all of their requisite training 4 The Petition incorrectly referred to two separate actions filed by PHMSA against Distrigas (CPF No. 1-2002-3003 and CPF No. 1-2002-3004-M), even though the substance of the Petition dealt solely with the former. The latter was a Notice of Amendment proceeding issued simultaneously with the Notice in this case. PHMSA closed CPF No. 1-2002-3004-M by letter dated April 23, 2003.#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 43 within nine months of their start date, as required by the company’s training plan. Petitioner seeks reconsideration of this finding on two grounds. First, Distrigas asserts in its Petition, for the first time, that it was not required under PHMSA regulations to maintain training records for three of the 10 individuals. 5 According to Petitioner, 49 C.F.R. § 193.2719(b) provides that an LNG operator is required to maintain training records only for one year “after personnel are no longer assigned duties at the LNG plant.” Distrigas presented evidence showing that these three individuals ceased employment at the company more than one year prior to November 26, 2001, the first day of the PHMSA inspection. company argued that since it was not required to keep training records for these employees as of the date of the inspection, it could not be charged with violating the training requirements for those employees under § 193.2715. Even though Petitioner did not raise this argument in its Response for these three individuals, as it did for many other employees, I believe it is a legitimate defense. Accordingly, I find that at the time of the safety inspection, Petitioner was no longer required to maintain training records for security personnel Basinisi, Peterson, and Deters, and that the allegations relating to these three individuals are therefore withdrawn. 6 The requirements of § 193.2715 and its own training plan, as set forth in the “Distrigas Everett Marine Terminal Manual of Security Procedures,” issued March 1997 (“Security Procedures” or “MSP”). The Final Order found that the Reconciliation showed that these five individuals had not received the required training within nine months of their start dates. In its Petition, Distrigas contends that PHMSA failed to consider other company records, in addition to the Reconciliation, that demonstrated compliance with the regulation. Second, Petitioner asserts that five other CSP7 did receive security training that met the A closer examination of Petitioner’s security procedures and training requirements is necessary to determine whether these individuals received their required training. The Security Procedures state: Section 4: Training Standards for Security Personnel 4.1 Objective of the Training Program . . . 4.2 Training Outline Within 90 days of Permanent Security Officer status (refer to Section 3.5; Permanent Security Officer), Officers will be required to satisfactorily complete a program of “On the Job Training” (OJT) that will include, 5 The three employees were identified as Basinisi, Peterson, and Deters. 6 The Reconciliation, included in Petitioner’s Security Training Appendix Supplement, Book Three of Three, and presented at the hearing, shows that the three individuals ceased work at Distrigas prior to November 26, 2000. 7 The five employees were identified as Doten, Loud, Newell, Bursey, and Snider.#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 54 but is not limited to the following areas of instruction: . . . 4.2.1.4 SE-1 Recognizing Breaches of Security 4.2.1.5 SE-2 Security Procedures 4.2.1.6 SE-3 Operations and Maintenance Orientation 4.2.1.7 SE-4 Security Assistance. 8 “Permanent Security Officers” are defined as “those with more than six months assigned to the account.”9 All such permanent personnel were required to receive the four training “modules,” which are listed above as “SE-1” through “SE-4.”10 The Security Procedures do not provide any alternative to the completion of these four specific modules. According to the Reconciliation and the other training records submitted by Petitioner, four of the five individuals in question eventually received their SE-1 – SE-4 security modular training, but not within 12 months of their initial start dates. own records showed that four of the five CSP received their training late and that one individual, Mr. Doten, never completed the training at all. 11 The Final Order found that the company’s In its Petition, Distrigas argues that these five individuals did in fact receive all their required training but that such fact might not be readily apparent from the company’s records. The Petition states: However, as noted on the Reconciliation, the five contract security personnel in question each received initial training shortly after each person’s start date. That training is identified on the reconciliation as “Lobby Train” and “Gate 1,” but that is only a shorthand way to identify the documentation date, as 8 Security Procedures, Section 4. 9 Security Procedures, Section 3.5. 10 In its Closing, Distrigas provided further explanation of its security training requirements: Contract security personnel (CSPs) begin as “probationary security officers”. MSP, ¶ 3. During their probation, security officers are given further on-the- job training and supervision as their performance is assessed. Id., MSP, ¶ 3.5 Upon successful completion of the [6-month] probationary period, a security officer is assigned to “permanent” status. Id. Permanent security officers should take the SE modules within 90 days of their assignment, see id. at ¶ 4.2, but the 90 day period may be extended to 180 days at the discretion of the supervisor, see id. at ¶ 4.4. Thus, in conformity with the MSP, SE modular training might not occur for 9 or even 12 months after an initial start date. [emphasis added] Closing, at 54. 11 All of the five except Doten completed their SE-1 – SE-4 training on December 1, 2001, but each of the four started work on or before August 2000, more than a year prior to completion of the training.#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 65 opposed to a description of the extent of the training. As detailed in the subsequent sections of the two-volume Security Training Appendix Supplement, the “1999 Training” included instruction in the EMT modules. Specifically, as the Training Agenda reveals, those employees were trained under the “1999 Training” program by Armand Santacroce and John Clifford, and received “instruction” in the modules as required by the MSP training plan. (emphasis added). . . Training for these five contract security guards was provided on various dates. The individuals documented completion of this training on the dates noted above.... 12 Petitioner appears to assert that these CSP completed all of their training on the dates shown in the Petition under the column labeled “Initial Training Date.” For each, the “Initial Training Date” is the same as the date that each individual completed their “Gate 1” and “Lobby Train” training. Neither Petitioner’s records nor the Petition reflect that the five individuals underwent the entire SE-1 – SE-4 security modular training. Instead, Petitioner asserts that a review of all of its training records shows that while the training received by these five individuals may have been “different in form” from the SE-1 – SE-4 modules, they nevertheless “confirm instruction in the modules to satisfy the requirements of the then-effective written training plan, the MSP, as training courses, referred to as the “Gate 1” and “Lobby Train” trainings, were the same as or receive. described in the Final Order.”13 In other words, Petitioner seems to argue that these other two equivalent to the SE-1 – SE-4 security modular training that each new hire was required to Based upon a careful review and reconsideration of Petitioner’s voluminous training records and Security Procedures, it is clear that the “Security Lobby” and “Gate 1” training courses that these five CSP received did not include and were not equivalent to the full SE-1 – SE-4 security module training.14 The “Training Checklist Security Lobby” and “Training Checklist Gate 1” training documents show that these courses taught employees how to man particular security posts at the LNG plant, i.e., the “Security Lobby” and “Gate 1.” It is true that they included certain security elements, such as “Access Control,” “Visual Observations,” “Visitor Control, ” “Vehicle Access,” and “Visitor’s Passes. ” But when one compares the topics covered by these two courses with those covered by the full SE-1 – SE-4 modules, it is apparent that the former 12 Petition for Reconsideration, at 3, 4. Note that in the Petition, the only “dates noted above” are each of the five employees’ “Start Dates” and “Initial Training Dates.” 13 Petition, at 4. 14 The training records submitted for these five CSP are essentially identical. In addition to the “Security Lobby” and “Gate 1” courses, it appears that they also received training related to “Dock Control Officer” and “Ship Security Post 1,” “Ship Security Post 2,” and other courses related to dock security. These other courses relate to facilities that are under the jurisdiction of the U.S. Coast Guard and are not relevant to LNG Plant security training requirements under 49 C.F.R. Part 193 See Response, at 52.#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 76 neither included nor were equivalent to the SE-1 – SE-4 modules. In fact, they failed to cover certain other critical security elements contained in the SE-1 – SE-4 modules, including: • The [Distrigas of Massachusetts, LLC] Manual of Security Procedures; • Physical Security Systems; • Each security position, patrol schedule, and method of patrolling; • Operations and Maintenance Orientation; • Notifications of supervisory security personnel; and • Security Response to Abnormal Conditions. Petitioner presented evidence, through the company’s “1999 Training Agenda” and the affidavit of one of its trainers, Armand Santacroce, to show that the training provided to these five CSP included or was equivalent to the SE-1 – SE-4 modules. However, I do not find this evidence persuasive. While the “1999 Training Agenda” lists certain subjects that reference three of the four modules, this agenda. Furthermore, the “1999 Training Agenda” is merely an agenda, not a credible record of the substantive content of the modules themselves. 15 there is no evidence as to which, if any, CSP ever received training according to On the contrary, the only training records submitted by Petitioner that appear to follow the “1999 Training Agenda” are the two courses (i.e., “Training Checklist Security Lobby” and “Training Checklist Gate One”) that these five individuals apparently received. These two are listed as subsets of the “Security Procedures” training shown on the “1999 Training Agenda, ” further confirming that these two courses were but a small portion of the overall SE-1 –SE-4 training required. 16 Finally, the affidavit of Armand Santacroce is unhelpful because it does not even purport to show that these five individuals actually received the full training required.17 The strongest basis, however, for upholding the findings and penalties in the Final Order regarding these five CSP is found in the admissions made by Petitioner in its Response. In that document, Distrigas acknowledged that four of the five individuals at issue had not completed all of their SE-1 – SE-4 training modules within the required time frame. The admissions related to the following individuals: 15 “Operations and Manitainence Orientation [sic],” “Recognizing Security Breaches,” and “Security Procedures.” 16 The Petition also contends that under the 1999 Training Agenda, CSP received training in “EMT modules.” Petitioner is presumably referring to emergency medical technician training. While this training was likely very valuable, it is of little relevance to the security training requirements in the Security Procedures of 49 C.F.R. § 193.2715. 17 In his affidavit, Mr. Santacroce merely states that he “prepared an overview of the plant and presented it to attendees on August 7, 1999.” See Affidavit of Armand Santacroce, ¶ 5.#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 87 Snider — The Response stated that “all but two [employees] have documented modular training within one year of their start date, as required by the Manual of Security Procedures. . . The two exceptions are Richard Messenger and Alan Snider. . . Snider started at Distrigas on August 1, 2000 and had initial training that same week. He completed SE training on December 1, 2001 and February 2, 2002 [emphasis added].”18 Doten — The Response acknowledged that Petitioner’s records showed that seven security personnel did not receive SE modular training. One of those 19 was Doten. Loud — The Response stated that “Loud’s security assignment was terminated on January 21, 2002, but he had previously completed SE-1 through SE-4 on December 1, 2001. Distrigas on September 1, 1999, more than a year prior to his completion of security training on December 1, 2001. ”20 The Reconciliation shows that Loud began work at Bursey — The Response stated that “Bursey started on February 1, 2000, completed the SE modules on December 1, 2001 and February 2, 2002. . .” 21 These admissions were neither repudiated nor contradicted by any of the evidence in the record or by the Petition. Furthermore, Petitioner presented no new facts or arguments to support its contention that its own records were misconstrued or that these five CSP actually received all of the training they were required to take. Accordingly, upon reconsideration of all the evidence in the case, I affirm the findings of violation and civil penalties imposed in Item 3 of the Final Order relating to Petitioner’s failure to provide employees Doten, Loud, Newell, Bursey, and Snider with timely initial security training, in violation of the company’s own Security Procedures and § 193.2715. However, I do hereby grant Petitioner’s request to withdraw the findings of violation and penalties imposed under Item 3 of the Final Order relating to Petitioner’s failure to provide employees Basinisi, Peterson, and Deters with timely initial security training, as Petitioner was not required to retain training records for these individuals as of the date of the safety inspection. In accordance with that finding, I am proportionally reducing the civil penalty for Item 3 of the Final Order from $20,000 to $14,000. As noted above, Petitioner did not seek reconsideration of 18 Response, at 61. 19 Response, at 57-58. 20 Response, at 59. 21 Response, at 61.#

120023003_Decision on Petition for Reconsideration_ 05262009_text.pdf, page 98 the other findings of violation and penalty under Item 2 in the amount of $10,000. Therefore, I assess a total civil penalty against Petitioner under the Final Order in the amount of $24,000. Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) require that the payment 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 (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 25082, Oklahoma City, OK 73125; (405) 954-8893. This Decision on Reconsideration is the final administrative action in this proceeding. __________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

CPF No 1-2002-3003 Final Order.pdf, page 1Official PDFU.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 400 Seventh Street, S.W. Washington, D.C. 20590 NOV - 2 2005 Francis J. Katulak Senior Vice President Operations Distrigas of Massachusetts Corporation 18 Rover Street Everett, Massachusetts 02149 Re: CTF NO. l-2OO2-3OO3 Dear Mr. Katulak: Enclosed is the Final Order issued by the Associate Administrator for Pipeline Safety in the above-referenced case. It makes findings of violation and assesses a civil penalty of $30,000. It further finds that you have completed the actions specified in the Notice required to comply with the pipeline safety regulations. When the civil penalty is paid, this enforcement action will be closed. Your receipt of the Final Order constitutes service of that document under 49 C.F.R. fj 190.5. Sincerely, James Reynolds Pipeline Compliance Registry Office of Pipeline Safety Enclosure CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

CPF No 1-2002-3003 Final Order.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 In the Matter of ) Distrigas of Massachusetts LLC ) ) 1 ) Respondent. ) CPF NO. 1-2002-3003 FINAL ORDER On November 26-30, 2001 and April 12, 2002, pursuant to 49 U.S.C. $ 601 17, a representative of the Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of Respondent's facilities and records at the Distrigas Everett Marine LNG Terminal in Everett, Massachusetts. As a result of the inspection, the Director, Eastern Region, OPS, issued to Respondent, by letter dated June 17, 2002, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. $ 190.207, the Notice proposed finding that Respondent had violated 49 C.F.R. §§ 193.2635, 193.271 3, 193.2715 and 193.2717 and proposed assessing a civil penalty of $220,000 for the alleged violations. The Notice also proposed that Respondent take certain measures to correct the alleged violations. Respondent responded to the Notice by letter dated July 19, 2002. (Response) Respondent contested all the allegations and requested a hearing. The hearing was held on November 14, 2002 in Washington, DC. At the hearing, Respondent provided many boxes of materials supporting its arguments. After this hearing, Respondent provided additional information on December 13,2002. (Response-2). FINDINGS OF VIOLATION Notice Item 1 Item 1 in the Notice alleged that Respondent had violated 49 C.F.R. $193.2635 for failing to inspect components protected from atmospheric corrosion within a three year interval. Specifically, the Notice stated that during the OPS inspection, the inspector discovered atmospheric corrosion at the interface of existing carrier pipes and their respective metal pipe supports. (Notice, p.2) The inspector noted that it appeared that the paint coating had degraded. Id. When the OPS inspector asked for evidence to demonstrate the last time that an atmospheric - corrosion inspection was performed in that area; Respondent could not produce any evidence. Id. -#

CPF No 1-2002-3003 Final Order.pdf, page 3Respondent, in its Response, asserted that the burden is on OPS to acquire sufficient evidence to prove the violation and that Respondent does not need to affirmatively prove that it satisfied the regulation. (Response-2, p.4) In support of Respondent's corrosion program, Respondent asserted that "its prior long-standing procedure for monitoring and addressing corrosion was safe and effective." and that it "operates a facility that is constantly manned and constantly inspected through visual inspection made by operations and maintenance personnel on regular rounds." a. Respondent added that "these observations were not typically documented by written records" as indicated in its Maintenance Records procedure EMT- 16M which states that "no written records will be kept of routine daily and weekly checks and observations . . . ." (Response-2, pp. 5-6) Respondent further indicated that in an extensive corrosion investigation that it conducted prior to the hearing, no serious corrosion problems were found. (Response-2, p. 6) Lastly, Respondent requested that, in light of this information and its efforts in resolving the proposed compliance order, this item be closed without an adverse finding. With respect to Respondent's first point, yes - OPS does have the burden of ultimate persuasion. However, once OPS has presented a prima facie case showing that Respondent has violated a regulation, the burden then shifts to the Respondent who must present evidence to rebut the prima facie case. In this case, OPS alleged in the Notice that Respondent failed to inspect components protected from atmospheric corrosion within a three year interval. OPS interviewed Respondent's Operations Manager who indicated that no records existed to show that the inspections for atmospheric corrosion were performed. (See Violation Report, p.3, fl 12 and 14a) The pipeline safety laws state, "To enable the Secretary to decide whether a person owning or operating a pipeline facility is complying with . . . standards prescribed . . . under this chapter [49 USCS $ 5 60101 et seq.], the person shall - - (1) maintain records . . . and provide information . . .; and (2) make the records, . . . and information available . . . ." (49 U.S.C.S. $601 17(b)) Based on the above, OPS has presented a prima facie case and Respondent has not presented evidence to rebut that prima facie case. Therefore, I find Respondent in violation of 49.C.F.R. $ 193.2635. Notice Item 2 Item 2 in the Notice alleged that Respondent had violated 49 C.F.R. 193.2713 for failing to conduct initial training and continuing instruction for all operations personnel and all maintenance personnel within a two-year interval in accordance with its written plan. Specifically, Respondent's records revealed that for (a) Maintenance training - three employees had never received training and several others had either not received initial training or refresher training within the two-year interval; and (b) Operational training - that four employees did not receive initial training and several others had not received refresher training at any time or within the two-year interval. In one of the Response documents entitled - Response of Distrigas of Massachusetts LLC. to Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order, and Notice of Amendment (Response-2) - Respondent allots 42 pages of the 98 page Response document to this issue. Furthermore, Respondent provided thirteen (13) volumes of materials#

CPF No 1-2002-3003 Final Order.pdf, page 4which contain various training records for operations and maintenance personnel. Respondent argues that the violation should be withdrawn because the "records confirm that Distrigas provides and implements a comprehensive, written plan for initial and continuing training . . . ." (Response-2, p 7) OPS based the proposed violation for Item 2 on its review of the Everett Marine Terminal Personnel Training Program (EMT PTP) and training records submitted by Respondent during the inspection. Those training records solely corresponded to the operations and the maintenance training modules. (Notice, pp. 2-4) In its Response-2, Respondent asserts: (1) Modular training is only one part of a "more comprehensive program that includes 'coordinated training, education and career developments ... based on the needs of [Distrigas] and all its employees."' (Response-2, p.9 [citing Source Materials Appendix, SSPM-28, Training Guidelines, Policy, fi 1.1.11) (2) "Training is based on regulatory requirements, the needs of the employee's job description and the discretion of the employee's supervisor or Training Administrator." Id. (citing Source Materials Appendix, SSPM-28, Training Guidelines, Training Administrator and Manager, fi 3 and Training Plans 7 4) (3) "In addition to or in substitution for the written modular training sessions, an employee's training may include safety meetings, toolbox talks, videos, CD ROMs, policy specific training (hands on, in-house instruction), courses and programs at outside schools, on the job training with qualified supervisors and more." Id. (citing Source Materials Appendix, SSPM-28, Training Guidelines, 7 4) (4) "[Tlhe regulations do not specify how the continuing instruction is to be performed. That aspect is left to the company's discretion, provided that the O&M employees 'keep ... current on the knowledge and skills they gained in the program of initial instruction."' Id. (citing 8 193.271 3(b)) - While Respondent did provide extensive documentation of training taken by the employees in question, the training regulations require a written plan of training. (49 C.F.R. $ 193.2713) Respondent appears to rely on the Training Guidelines, SSPM-28, for its written plan. Respondent indicates that "[tlhis written training program, SSPM-28, incorporates the EMT PTP modular training." (Response-2, p.10) Respondent asserts that it can use its discretion as to how the training can be performed. (See number 4 above) However, both the Operations Procedures Training Modules and the Maintenance Procedures Training Modules list as trainees - All permanent operations and maintenance personnel, respectively. (Source Materials Appendix, EMT PTP) These procedures do not leave room for a supervisor's discretion to substitute other training. Furthermore, SSPM-28 states that training must be completed satisfactorily and that satisfactory completion is defined for graded courses as a final grade of 80% or better. (Source Materials Appendix, SSPM-28, p.5) Taking together that all permanent operations and maintenance personnel are required to take the respective operations and maintenance modular training and that graded courses, such as the operations and maintenance modular training, must be completed satisfactorily, I find that in accordance with Respondent's written plan, the#

CPF No 1-2002-3003 Final Order.pdf, page 5modular training is required training for its personnel. Based on this analysis, the issue turns to whether Respondent's operations and maintenance personnel were trained in accordance with the written plan which requires completion of the sections regarding Operating and Maintenance procedures1. Before addressing those specifics, I must first address the statute of limitations that deals with these proceedings. Under 28 USC $ 2462, cases must be "commenced" within 5 years of an alleged violation. In this instance, the case was commenced, with the issuance of the Notice, on June 17,2002. Therefore, the only alleged violations that can be addressed as part of this action are those that occurred on or after June 17, 1997. Based on this date restriction, the only alleged violations that remain are: Operations: H.C.G - Module 4 - exceeded biennial (Jan 98 - Nov 00) B.Y - no modular training in 1998 P.M - all modules - exceeded biennial (Feb 96 - Nov 98) J. S. - no modular training in 1998 L.B. - only received module 4 training in 2001 D. S. - no modular training in 200 1 P.D. -no modular training in 2001 Maintenance: M.K - no modular training since assigned to maintenance in 1999 K.J. - no modular training since assigned to maintenance in 1999 J.C. -no modular training since assigned to maintenance in 1999 R.C. - no modular training in 2000 S.D. - no modular training in 2000 R.M. - no modular training in 1998 and 2000 C.D. - no modular training in 2001 A.D. - no modular training in 2001 After a thorough review of the evidence submitted, I find the following: (a) Maintenance Training (Maintenance Procedures) - Respondent has provided evidence that R.M., C.D. and A.D. were trained in accordance with the written training plan - both C.D. and A.D. fall into the probationary category, and R.M. was assigned to maintenance in 2001. As for the remaining personnel (M.K., K.J., J.C., R.C., and S.D.), Respondent has not provided evidence that they have completed the required maintenance modular training as indicated above. (b) Operations Training (Operating Procedures) - Respondent has provided evidence that the seven operations personnel have completed the required training, in the required time frame. Thus, Respondent was in compliance with 49.C.F.R. $ 193.2713. I The voluminous evidence submitted by Respondent appears more so to be directed at whether the personnel were qualified. That is not the issue in this case and my decision should not be read to imply that personnel were not qualified. The issue is whether they were trained in accordance with Respondent's training plan. 5#

CPF No 1-2002-3003 Final Order.pdf, page 6Therefore, based on the analysis above, I find Respondent to be in violation of 49 C.F.R. 5193.2713 for failing to train several maintenance personnel in accordance with its written training plan. I also make no finding of violation with respect to the operations personnel. Notice Item 3 Item 3 in the Notice alleged that Respondent had violated 49 C.F.R. 9 193.2715 for failing to provide initial training for personnel responsible for security and subsequent continuing instruction at intervals of not more than two (2) years. Specifically, Respondent failed to provide initial training and continuing training to several contract security personnel. In its Response-2, Respondent asserts that the regulations do not prescribe how many security personnel are appropriate, do not require facilities to hire professional security forces, and do not dictate when initial training must be completed or in what manner. (Response-2, p.49) Respondent also asserts that with respect to physical security, "nothing beyond fences, lights and warning signs are required." Respondent further asserts that the "extraordinary security measures" that it has "voluntarily implemented" are exemplary. (Response-2, p.49) Respondent appears to be focusing on the quality of the training. While the quality of the training is important, it is not the issue. The regulation at issue - 49 C.F.R. 5 193.271 5 - states that "[plersonnel responsible for security . . . must be trained in accordance with a written plan . . . ." 49 C.F.R. 5 2715(a) The key words that Respondent is not focusing on is "in accordance with a written plan." Respondent's security training plan is the Everett Marine Terminal Manual of Security Procedures. (Security Training Appendix, MSP) Respondent states with respect to the timing of security training that security personnel begin as probationary security officers with a probationary period that "can last up to six months." (Response-2, p.54, citing Id. at 7 3.5) A security officer is then assigned to "permanent" upon successful completion of the probationary period. Id. Therefore, by six months from the date of being hired, security personnel are either let go or become Permanent Security Officers. Once a security officer becomes a Permanent Security Officer, that person has 90 days to satisfactorily complete the training as outlined in the manual. (Id., citing Security Training Appendix, MSP at 7 4.2) Respondent then states that "the 90 day period may be extended to 180 days at the discretion of the supervisor, see id. at 7 4.4" thus giving up to 12 months from initial start date to complete the modular training outlined in the training manual. (Id., citing Id. at 7 4.4) I do not accept Respondent's assertions. The training plan, section 4 - Training Standards for Security Personnel - deals with security personnel who have reached Permanent status. (Security Training Appendix, MSP at 1 4 ) Once they reach permanent status, they are required to, within 90 days, satisfactorily complete the o u t l i d hzining pmgrzm. (u. at 7 4.2) That training "will include, but is not limited to" modules SE-1 through SE-4. (Security Training Appendix, MSP at 7 4.2) Section 4.4 Qualification Requirements, states "All Officers are#

CPF No 1-2002-3003 Final Order.pdf, page 7subject to a ninety (90) day probationary period. Such period may be extended, at the discretion of the Security Site Supervisor, for a period not to exceed an additional ninety (90) days." (Ic-l. at 7 4.4) Thus, according to the training plan, the probationary period of 90 days is not the same as the 90 days to successfully complete the training. The probationary 90-day period is a mechanism to ensure that personnel are performing their duties or they will be removed. (See &I. at 7 4.4) Once past this period, they have 90 days to meet the training requirements. Therefore, Respondent's personnel have up to nine (9) months from initial state date (6 months to become Permanent + 90 days to complete training) to successfully complete the modular training, not one year. Based on the analysis above, a review of the training records spreadsheet provided by Respondent at the hearing (See Security Training Appendix Supplement, Reconciliation) shows that the following personnel were not trained in accordance with Respondent's written plan: Initials of Respondent's Personnel Start Date End Date as of last documentation received R.M. J.D. M.B. J.P. T.D. W.D. P.L. E.N. J.B. A.S. May 1995 Julv 1995 December 1997 December 1998 December 1998 June 1999 September 1999 November 1999 February 2000 August 2000 None Seutember 200 1 November 1999 Auril2000 January 2000 Seutember 200 1 January 2002 None September 2002 None Completed Modular Training of last documentation (Start Date + 9 received months) February 1996 Auril 1996 September 1998 Se~tember 1999 September 1999 March 2000 June 2000 August 2000 November 2000 May 2001 December 200 1 No record of training No record of training No record of training No record of training No record of traininn December 2001 December 200 1 December 2001 December 200 1 Even if we were to go by Respondent's timing of its security plan training and use one year from start-date, these personnel were still not trained within that time frame. The statute of limitations does not come into play in this case for R.M. and J.D. because the violation continues until the training is completed. In this case, the required training was not completed until well after June 17, 1997. Accordingly, I find that Respondent violated 5 193.2715 by failing to provide training for ten (1 0) security personnel in accordance with its written plan. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent.#

CPF No 1-2002-3003 Final Order.pdf, page 8WITHDRAWAL OF ALLEGATION The Notice alleged that Respondent had violated 49 C.F.R. $ 193.271 7 by failing to conduct fire training and fire drills. At the hearing, OPS recognized that this regulation incorporates fire protection standards under 49 CFR Part 193, Subpart I, which have been revoked. Based on this information, I am withdrawing this allegation of violation. ASSESSMENT OF PENALTY Under 49 U.S.C. $ 60122, Respondent is subject to a civil penalty not to exceed $100,000 per violation for each day of the violation up to a maximum of $1,000,000 for any related series of violations. 49 U.S.C. $ 60122 and 49 C.F.R. 8 190.225 require that, in determining the amount of the civil penalty, I consider the following criteria: nature, circumstances, and gravity of the violation, degree of Respondent's culpability, history of Respondent's prior offenses, Respondent's abiiity to pay the penalty, good faith by Respondent in attempting to achieve compliance, the effect on Respondent's ability to continue in business, and such other matters as justice may require. The Notice proposed a total civil penalty of $ 220,000 for violation of $ 5 193.271 3, 193.271 5 and 193.2717. The Notice proposed in Item 2 a civil penalty of $50,000 for violations of 49 C.F.R. $ 193.2713 for not training Operations personnel in accordance with Respondent's written training plan. Based on the evidence provided at the hearing and the statute of limitations, there is no violation and thus no civil penalty will be assessed. The Notice proposed in Item 2 a civil penalty of $50,000 for violations of 49 C.F.R. $ 193.27 13 for not training Maintenance personnel in accordance with Respondent's written training plan. As mitigating factors, Respondent offered that the violations were minor and did not significantly increase the risk to the environment or public safety. (Response-2, p.68) Respondent also added that its personnel did receive extensive training that ensured that its personnel were knowledgeable. Id. at pp. 68 and 69. Therefore, Respondent requested that the civil penalty be "eliminated or at least vastly diminished" since OPS appeared to have based the civil penalty on the "gravity of offense." a. at pp. 3 and 71. The number of personnel that had not taken the required training within the regulatory time frame would justify the proposed civil penalty. The proposed civil penalty was based on 25 instances of non-compliance (missed training modules within the required time frames). However, I found only 5 instances of non-compliance. Therefore, I will reduce the civil penalty from $50,000 to $10,000. The Notice proposed in Item 3 a civil penalty of $1 00,000 for violations of 49 C.F.R. 5 193.271 5 for not training Security personnel in accordance with Respondent's written training plan. As mitigating factors, Respondent offered that its personnel did receive training that "meets or#

CPF No 1-2002-3003 Final Order.pdf, page 9exceeds the regulatory standards." (Response-2, p.69) Respondent argued that OPS seemed to have based the amount of the civil penalty on the "gravity of offense" and, based on the evidence, the civil penalty should be "eliminated or at least vastly diminished." Id. at pp. 3 and 71. The proposed civil penalty reflected OPS's concerns over the training of Respondent's Security personnel. The proposed violation was based on 50 instances of alleged non-compliance (missed training within the required time frames). Based on the evidence presented by Respondent at the hearing, I found only 10 instances of non-compliance. Therefore, I will reduce the civil penalty from $100,000 to $20,000. Respondent asserts various other mitigating factors that I did not find relevant for the following reasons: 1. 2. The inspection was not reasonable in time and scope as required by 49 C.F.R. 8 190.203(a). Respondent asserts that the timing of the inspection was unreasonable because it was held "just two months after 911 1 and less than four weeks after the facility was back on line" when there was intense opposition from city government, a ban on LNG tankers from the Port of Boston and intense media scrutiny. (Response-2, pp.7land 72) I do not find the timing to have prejudiced Respondent. Respondent was given the opportunity to present further evidence of its compliance at the hearing held in November 14, 2002 - over a year after 911 1. That evidence has been taken into account and this Order is a result. Respondent also asserts that it did not receive fair notice about the scope of the inspection. (Response-2, p.72) Respondent states that it was "expecting a typical biennial review," not the comprehensive inspection that it received. (Response-2, pp. 72 and 73). Respondent fbrther states that it did not have the necessary advance notice that it needed to make the documents available, nor "the resources at the time to assist the inspector in interpreting and understanding the records." (Response-2, p. 73) I do not find the fact that Respondent was not aware of the scope of the inspection to have prejudiced it. As stated above, Respondent was given the opportunity to present further evidence of its compliance at the hearing held in November 14, 2002. That evidence has been taken into account and this Order is a result. Distrigas' culpability, if any, is inadvertence not intentional wrongdoing. The regulations by which pipelines are held to, do not require culpability or intent. Pipelines are held to a strict liability standard. If OPS had any reason to believe that a violation was committed knowingly or intentionally, that operator would be subject to criminal penalties as indicated in 49 C.F.R. 8 190.229.#

CPF No 1-2002-3003 Final Order.pdf, page 103. Distrigas has an impeccable safety and security record. Respondent's safety record was acknowledged by OPS in the Notice. However, compliance with safety regulations in the past is not a reason to mitigate a civil penalty. Compliance is an operator's responsibility. 4. Distrigas' extraordinary efforts to ensure public safety after 911 1 demonstrate its good faith and justify a limited waiver of the standards allegedly violated. All of the violations regarding security training occurred prior to 911 1. Therefore I see no reason to consider efforts taken after 911 1. 5. The proposed civil penalty contradicts the DOT'S public testimony and offends traditional principles of justice and fair play. The issues in the Notice concerned a failure to conduct training in accordance with your written plan. As discussed above, whether Respondent's personnel were qualified to do their jobs was not an issue of the Notice. OPS expressed its concern regarding the risk that the lack of training could have on safety. It did not state that the facility was not safe. 6. OPS failed to consider all of the relevant factors required by statute. Respondent asserts that the "civil penalty issued under 49 U.S.C. $ 60122 is not valid" unless OPS can demonstrate that it considered all of the penalty considerations. (Response-2, p.2) Respondent acknowledges that the "OPS Case File does contain some references to each of the four statutory factors" however, Respondent asserts that the "references do not demonstrate that OPS has met the statutory requirements." (a. at p.3) I do not accept Respondent's assertions. Section 60122 states "[iln determining the amount of a civil penalty, under this section - - (1) the Secretary shall consider - -." (49 U.S.C. $ 60 122(b)(l)) It then lists the factors to consider. Id. The factors are listed in the OPS Case File Violation Report. (Violation Report, p. 11) OPS made a notation under each factor. Under the Compliance History section, OPS wrote "NONE." Id. OPS found that there were no previous violations for Respondent. If there had been, the proposed civil penalty would likely have been increased if the previous violations had been similar to the ones in this case. Under the Gravity of Offense section, OPS wrote about the potential safety concern presented by the violations. Id. Gravity was reflected in the number of occurrences. I mitigated the civil penalty when, the number of occurrences were reduced. Degree of Culpability was addressed by OPS. It wrote that Respondent had capable in-house staff that could prevent these types of violations. Id. Having capable staff is expected of every Operator. With respect to both the Ability to Continue in Business and the Ability to Pay, OPS wrote "No Impact." Id. This reflects that OPS determined that if Respondent had to pay the $220,000 proposed civil penalty, doing so would not affect Respondent's ability to run its business; and OPS determined that Respondent has the ability to pay the proposed#

CPF No 1-2002-3003 Final Order.pdf, page 11civil penalty. Lastly, under the Good Faith in Attempting to Achieve Compliance section, OPS acknowledged Respondent's good faith. Id. If OPS had concerns that Respondent did not want to comply, this might have been reflected in the proposed civil penalty. Therefore, based on the above, I find that the notations show that each factor was "considered." Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of $30,000. Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. 9 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. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire transfers should be directed to: Financial Operations Division (AMZ- 120), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 25082, Oklahoma City, OK 73 125; (405) 954-8893. Failure to pay the $30,000 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. 5 3717, 31 C.F.R. 8 901.9 and 49 C.F.R. 5 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 United States District Court. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1, 2, 3 and 4 in the Notice for violations of 49 C.F.R. 58 193.2635, 193.2713, 193.2715 and 193.2717. Under 49 U.S.C. 5 601 18(a), each person who engages in the transportation of hazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. The Regional Director has indicated that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to Item 1, Respondent hired expert consultants to assist in conducting a thorough, comprehensive visual inspection of all appropriate system components that may be subject to atmospheric corrosion. This plan was reviewed by the OPS and found it to address the proposed compliance order. 2. With respect to Items 2 and 3, Respondent has assembled comprehensive training records and conducted a thorough review of present and historic training for all operations, maintenance and security personnel. The records were reviewed by the OPS and found to address the proposed compliance order. 3. With respect to Item 4, this allegation of violation was withdrawn. Accordingly, since compliance has been achieved with respect to these violations, the compliance terms are not included in this Order.#

CPF No 1-2002-3003 Final Order.pdf, page 12Under 49 C.F.R. 5 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be received within 20 days of Respondent's receipt of this Final Order and must contain a brief statement of the issue(s). The filing of the petition automatically stays the payrnent of any civil penalty assessed. However if Respondent submits payment for the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective on receipt. NOV - 2 2005 Date Issued#

120023003_Final Order_11022005.pdf, page 1Official PDF@ oU.S. Depqrtment of Trqnsporlqfion Plpeline snd Hozordous *loleriots sqtety Admlnlstroillon 4O0 Seventh Sfe€t. S.W. Washington, D.C. 20590 ilot, - 2 m05 Francis J. Katulak Senior Vice President Operations Distrigas of Massachusetts Corporation 18 Rover Street Everett, Massachusetts 027 49 Re: CPFNo. 1-2002-3CC3 Dear Mr. Katulak: Enclosed is the Final Order issued by the Associate Administrator for Pipeline Safety in the above-referenced case. It makes findings ofviolation and assesses a civil penalty of$30,000. It further finds that you have completed the actions specified in the Notice required to comply with the pipeline safety regulations. When the civil penalty is paid, this enforcement action will be closed. Your receipt of the Final Order constitutes service of that document under 49 C.F.R. I 190.5. Sincerely, James Reynolds Pipeline Compliance Registry Office of Pipeline SafetY Enclosure#

120023003_Final Order_11022005.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OF 'ICE OT' PIPELINE SAF'ETY WASHINGTON. DC 20590 In the Matter of Distrigas of Massachusetts LLC Respondent. CPF No. l-2002-3003 FINAL ORDER On November 26-30,2001 and April 12, 2002, pursuant to 49 U.S.C. $ 60117, a representative of the Offrce of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of Respondent's facilities and records at the Distrigas Everett Marine LNG Terminal in Everett, Massachusetts. As a result of the inspection, the Director, Eastern Region, OPS, issued to Respondent, by letter dated June 17, 2002, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. $ 190.207, the Notice proposed finding that Respondent had violated 49 C.F.R. gg 193.2635, 193.2713, 193.2715 and 193.2717 and proposed assessing a civil penalty of $220,000 for the alleged violations. The Notice also proposed that Respondent take certain measures to correct the alleged violations. Respondent responded to the Notice by letter dated July 19,2002. (Response) Respondent contested all the allegations and requested a hearing. The hearing was held on November 14, 2002 in Washington, DC. At the hearing, Respondent provided many boxes of materials supporting its arguments. After this hearing, Respondent provided additional information on December I 3, 2002. (Response-2). FINDINGS OF VIOLATION Notice Item 1 Item 1 in the Notice alleged that Respondent had violated 49 C.F.R. $193.2635 for failing to inspect components protected from atmospheric corrosion within a three year interval. Specifically, the Notice stated that during the OPS inspection, the inspector discovered atmospheric corrosion at the interface of existing carrier pipes and their respective metal pipe supports. (Notice, p.2) The inspector noted that it appeared that the paint coating had degraded. Id. When the OPS inspector asked for evidence to demonstrate the last time that an atmospheric corrosion inspection was performed in that area; Respondent could not produce any evidence. Id.#

120023003_Final Order_11022005.pdf, page 3Respondent, in its Response, asserted that the burden is on OPS to acquire sufficient evidence to prove the violation and that Respondent does not need to affrmatively prove that it satisfied the regulation. (Response-2, p.4) In support of Respondent's corrosion program, Respondent asserted that "its prior long-standing procedure for monitoring and addressing corrosion was safe and effective." and that it "operates a facility that is constantly manned and constantly inspected through visual inspection made by operations and maintenance personnel on regular rounds." Id. Respondent added that "these observations were not typically documented by written records" as indicated in its Maintenance Records procedure EMT-16M which states that "no written records will be kept of routine daily and weekly checks and observations . . . ." @esponse-2, pp. 5-6) Respondent fuither indicated that in an extensive corrosion investigation that it conducted prior to the hearing, no serious corrosion problems were found. (Response-2, p. 6) Lastly, Respondent requested that, in light of this information and its efforts in resolving the proposed compliance order, this item be closed without an adverse finding. With respect to Respondent's first point, yes - OPS does have the burden of ultimate persuasion. However, once OPS has presented a prima facie case showing that Respondent has violated a regulation, the burden then shifts to the Respondent who must present evidence to rebut the prima facie case. In this case, OPS alleged in the Notice that Respondent failed to inspect components protected from atmospheric conosion within a three year interval. OPS interviewed Respondent's Operations Manager who indicated that no records existed to show that the inspections for atmospheric corrosion were performed. (See Violation Report, p.3, llt| 12 and l4a) The pipeline safety laws state, "To enable the Secretary to decide whether a person owning or operating a pipeline facility is complying with . . . standards prescribed . . . under this chapter [49 USCS $$60101 etseq.],thepersonshall--(l)maintainrecords...andprovideinformation...;and (2) make the records, . . . and information available . .. ." (49 U.S.C.S. $60117(b)) Based on the above, OPS has presented a prima facie case and Respondent has not presented evidence to rebut that prima facie case. Therefore, I find Respondent in violation of 49.C.F.R. $ 193.2635. Notice Item 2 Item 2 in the Notice alleged that Respondent had violated 49 C.F.R. S 193.2713 for failing to conduct initial training and continuing instruction for all operations personnel and all maintenance personnel within a two-year interval in accordance with its written plan. Specifically, Respondent's records revealed that for (a) Maintenance training - three employees had never received training and several others had either not received initial training or refresher training within the two-year interval; and (b) Operational training - that four employees did not receive initial training and several others had not received refresher training at any time or within the two-year interval. In one of the Response documents entitled - Response of Distrigas of Massachusetts LLC. to Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order, and Notice of Amendment (Response-2) - Respondent allots 42 pages of the 98 page Response document to this issue. Furthermore, Respondent provided thirteen (13) volumes of materials#

120023003_Final Order_11022005.pdf, page 4which contain various training records for operations and maintenance personnel. Respondent argues that the violation should be withdrawn because the "records confirm that Distrigas provides and implements a comprehensive, written plan for initial and continuing training . . . ." (Response-2, p 7) OPS based the proposed violation for Item 2 on its review of the Everett Marine Terminal Personnel Training Program (EMT PTP) and training records submitted by Respondent during the inspection. Those training records solely corresponded to the operations and the maintenance training modules. (Notice, pp. 2-4) In ils Response-2, Respondent assorts: (l) Modular training is only one part of a "more comprehensive program that includes 'coordinated training, education and career developments... based on the needs of [Distrigas] and all its employees."' (Response-2, p.9 [citing Source Materials Appendix, SSPM-28, Training Guidelines, Policy, fl 1.1.11) (2) "Training is based on regulatory requirements, the needs of the employee's job description and the discretion of the employee's supervisor or Training Administrator." Id. (citing Source Materials Appendix, SSPM-28, Training Guidelines, Training Administrator and Manager, tf 3 and Training Plans t[ 4) (3) "In addition to or in substitution for the written modular training sessions, an employee's training may include safety meetings, toolbox talks, videos, CD ROMs, policy specific training (hands on, in-house instruction), courses and programs at outside schools, on the job training with qualified supervisors and more." Id. (citing Source Materials Appendix, SSPM-28, Training Guidelines, fl 4) (4) "[T]he regulations do not specify how the continuing instruction is to be performed. That aspect is left to the company's discretion, provided that the O&M employees 'keep ...current on the knowledge and skills they gained in the program of initial instruction."' Id. (citing 9193.2713(b) While Respondent did provide extensive documentation of training taken by the employees in question, the training regulations require a wfitten plan of training. (49 C.F.R. $ 193.2713) Respondent appears to rely on the Training Guidelines, SSPM-28, for its written plan. Respondent indicates that "[t]his written training program, SSPM-28, incorporates the EMT PTP modular training." (Response-2, p.10) Respondent asserts that it can use its discretion as to how the haining can be performed. (See number 4 above) However, both the Operations Procedures Training Modules and the Maintenance Procedures Training Modules list as trainees - All permanent operations and maintenance personnel, respectively. (Source Materials Appendix, EMT PTP) These procedures do not leave room for a supervisor's discretion to substitute other training. Furthermore, SSPM-28 states that training must be completed satisfactorily and that satisfactory completion is defined for graded courses as a final grade of 80% or better. (Source Materials Appendix, SSPM-28, p.5) Taking together that all permanent operations and maintenance personnel are required to take the respective operations and maintenance modrrlar training and that graded courses, such as the operations and maintenance modular training, must be completed satisfactorily, I find that in accordance with Respondent's written plan, the#

120023003_Final Order_11022005.pdf, page 5modular training is required training for its personnel. Based on this analysis, the issue turns to whether Respondent's operations and maintenance personnel were trained in accordance with the written plan which requires completion of the sections regarding Operating and Maintenance procedures'. Before addressing those specifics, I must first address the statute of limitations that deals with these proceedings. Under 28 USC S 2462, cases must be "commenced" within 5 years of an alleged violation. In this instance, the case was commenced, with tle issuance of the Notice, on June 17, 2002. Therefore, the only alleged violations that can be addressed as part ofthis action are those that occurred on or after June 17, 1997. Based on this date restriction, the only alleged violations that remain are: Operations: H.C.G - Module 4 - exceeded biennial (Jan 98 - Nov 00) B.Y - no modular training in 1998 P.M - all modules - exceeded biennial (Feb 96 - Nov 98) J.S. - no modular training in 1998 L.B. - only received module 4 training in 2001 D.S. - no modular training in 200. ' P.D. - no modular trainine in 2001 Maintenance: M.K - no modular training since assigned to maintenance in 1999 K.J. - no modular training since assigned to maintenance in 1999 J.C. - no modular training since assigned to maintenance in 1999 R.C. - no modular training in 2000 S.D. - no modular training in 2000 R.M. - no modular training in 1998 and 2000 C.D. - no modular training in 2001 A.D. - no modular training in 2001 After a thorough review of the evidence submitted, I find the following: (a) Maintenance Training (Maintenance Procedures) - Respondent has provided evidence that R.M.. C.D. and A.D. were trained in accordance with the written training plan - both C.D. and A.D. fall into the probationary category, and R.M. was assigned to maintenance in 2001. As for the remaining personnel (M.K., K.J., J.C., R.C.., and S'D.), Respondent has not provided evidence that they have completed the required maintenance modular training as " indicated above. (b) Operations Training (Operating Procedures) - Respondent has provided evidence that the seven operations personnel have completed the required training, in the required time frame. Thus, Respondent was in compliance with 49.C.F.R. g 193.2713. I The voluminous evidence submitted by Respondent appears more so to be directed at whether the personnel were qualified. That is not the issue in this case and my decision should not be read to imply that personnel were not qualified. The issue is whether they were trained in accordance with Respondent's training plan. J#

120023003_Final Order_11022005.pdf, page 6Therefore, based on the analysis above, I find Respondent to be in violation of 49 C.F.R. 5193.2713 for failing to train several maintenance personnel in accordance with its written haining plan. I also make no finding of violation with respect to the operations personnel. Notice Item 3 Item 3 in the Notice alleged that Respondent had violated 49 C.F.R. S 193.2715 for failing to provide initial training for personnel responsible for security and subsequent continuing instruction at intervals of not more than fwo Q) years. Specifrcally, Respondent failed to provide initial training and continuing training to several contract security personnel. In its Response-2, Respondent asserts that the regulations do not prescribe how many security personnel are appropriate, do not require facilities to hire professional security forces, and do not dictate when initial training must be completed or in what manner. (Response-2, p.49) Respondent also asserts that with respect to physical security, "nothing beyond fences, lights and warning signs are requireci." Respondent lurther asserts that the "extraordinary security measures" that it has "voluntarily implemented" are exemplary. (Response -2, p.49) Respondent appean to be focusing on the quality of the training. While the quality of the training is important, it is not the issue. The regulation at issue - 49 C.F.R. S 193.2715 - states that "fp]ersonnel responsible for security . . . must be trained in accordance with a written plan . . ' ." 49 C.F.R. $ 2715(a) The key words that Respondent is not focusing on is "in accordance with a written plan." Respondent's security training plan is the Everett Marine Terminal Manual of Security Procedures. (Security Training Appendix, MSP) Respondent states with respect to the timing of security training that security personnel begin as probationary security officers with a probationary period that "can last up to six months." (Response-2, p.54, citing Id. at tf 3.5) A security officer is then assigned to "permanent" upon successful completion ofthe probationary period. Id. Therefore, by six months from the date ofbeing hired, security personnel are either let go or become Permanent Security Officers. Once a security officer becomes a Permanent Security Officer, that person has 90 days to satisfactorily complete the training as outlined in the manual. (Id., citing Security Training Appendix, MSP at ![ 4.2) Respondent then states that "the 90 day period may be extended to 180 days at the discretion of the supervisor, see id. atl4.4" thus giving up to 12 months from initial start date to complete the modular training outlined in the training manual. (Id.; citing Id. at !f 4.4) I do not accept Respondent's assertions. The training plan, section 4 - Training Standards for Security Personnel - deals with security personnel who have reached Permanent status. (Security Training Appendix, MSP at !f 4) Once they reach permanent status, they are required to, within 90 days, satisfaetorily complete the outlined r:a:ning prograrn. (Id. at fl 4.2) That training "will include, but is not limited to" modules SE-l through SE-4. (Security Training Appendix, MSP at tf 4.2)Section 4.4 Qualification Requirements, states '?ll Officers are#

120023003_Final Order_11022005.pdf, page 7subject to a ninety (90) day probationary period. Such period may be extended, at the discretion oftheSecuritySiteSupervisor,foraperiodnottoexceedanadditionalninety(90)days." (Id.at ![ 4.4) Thus, according to the training plan, the probationary period of 90 days is not the same as the 90 days to successfully complete the training. The probationary 90-day period is a mechanism to ensure that personnel are performing their duties or they will be removed. (See Id. at\ 4.4) Once past this period, they have 90 days to meet the training requirements. Therefore, Respondent's personnel have up to nine (9) months from initial state date (6 months to become Permanent + 90 days to complete training) to successfirlly complete the modular training, not one year. Based on the analysis above, a review of the training records spreadsheet provided by Respondent at the hearing (See Security Training Appendix Supplement, Reconciliation) shows that the following personnel were not trained in accordance with Respondent's written plan: Initials of Respondent's Personnel Start Date End Date as of last documentation received Date Should Have Completed Modular Training (Start Date + 9 Date Completed Modular Training as of last documentation received months) R.M. May 1995 None February 1996 December 2001 J.D. Julv 1995 September 2001 April1996 No record of trainins M.B. December 1997 November 1999 September 1998 No record of trainins J.P. December 1998 April2000 September 1999 No record of trainine T.D. December 1998 Januarv 2000 Seotember 1999 No record of trainins W.D. June 1999 September 2001 March 2000 No record of trainins P.L. September 1999 Ianuary 2002 June 2000 December 2001 E.N. November 1999 None August 2000 December 2001 J.B. February 2000 September 2002 November 2000 December 2001 A.S. Ausust 2000 None May 2001 December 2001 Even if we were to go by Respondent's timing of its security plan training and use one year from start-date, these personnel were still not trained within that time frame. The statute of limitations does not come into play in violation continues until the training is completed. In completed until well after June 17, 1997. this case for R.M. and J.D. because the this case, the required training was not Accordingly, I find that Respondent violated S 193.2715 by failing to provide training for ten (10) security personnel in accordance with its written plan. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent.#

120023003_Final Order_11022005.pdf, page 8WITHDRAWAL OT' ALLEGATION The Notice alleged that Respondent had violated 49 C.F.R. 5 1g3.2717 by failing to conduct fire training and fire drills. At the hearing, OPS recognized that this regulation incorporates fire protection standards under 49 CFR Part 193, Subpart I, which have been revoked. Based on this information, I am withdrawing this allegation of violation. ASSESSMENT OF'PENALTY Under 49 U.S.C. $ 60122, Respondent is subject to a civil penalty not to exceed $100,000 per violation for each day of the violation up to a maximum of $1,000,000 for any related series of violations. 49 U.S.C. 5 60122 and 49 C.F.R. $ 190.225 require that, in determining the amount of the civil penalty, I consider the following criteria: nature, circumstances, and gravity of the violation, degree of Respondent's culpability, history of Respondent's prior offenses, Respondent's ability to pay the penalty, good faith by Respondent in attempting to achieve compliance, the effect on Respondent's ability to continue in business, and such other matters as justice may require. The Notice proposed a total civil penalty of $ 220,000 for violation of $$ 193.2713, 193.2715 arfi 193.2717. TheNotice proposed in Item 2 acivil penalty of $50,000 forviolations of 49 C.F.R. $ 193.2713 for not training Operations personnel in accordance with Respondent's written training plan. Based on the evidence provided at the hearing and the statute oflimitations, there is no violation and thus no civil penalty will be assessed. The Notice proposed in Item 2 a civilpenalty of $50,000 for violations of 49 C.F.R. S 1g3.2t13 for not training Maintenance personnel in accordance with Respondent's written training plan. As mitigating factors, Respondent offered that the violations were minor and did not significantly increase the risk to the environment or public safety. (Response-2, p.68) Respondent also added that its personnel did receive extensive training that ensured that its personnel were knowledgeable. Id. at pp. 68 and 69. Therefore, Respondent requested that the civil penalty be "eliminated or at least vastly diminished" since OPS appeared to have based the civil penalty on tl-re "gravity of offense." Id. at pp. 3 and71. The number of personnel that had not'taken the required training within the regulatory time frame would justify the proposed civil penalty. The proposed civil penalty was based on 25 instances of non-compliance (missed training modules within the required time frames). However, I found only 5 instances of non-compliance. Therefore, I will reduce the civil penalty from $50,000 to $10,000. The Notiee proposed in Item 3 a civil penalty of $100,000 for violations of 49 C.F.R. S 193.2715 for not training Security personnel in accordance with Respondent's written training plan. As mitigating factors, Respondent offered that its personnel did receive training that "meets or#

120023003_Final Order_11022005.pdf, page 9exceeds the regulatory standards." (Response-2, p.69) Respondent argued that OPS seemed to have based the amount of the civil penalty on the "gravity of offense" and, based on the evidence, the civil penalty should be "eliminated or at least vastly diminished." Id. at pp. 3 and 71. The proposed civil penalty reflected OPS's concerns over the training of Respondent's Security personnel. The proposed violation was based on 50 instances of alleged non-compliance (missed training within the required time frames). Based on the evidence presented by Respondent at the hearing, I found only 10 instances of non-compliance. Therefore, I will reduce the civil penalty from $100,000 to $20.000. Respondent asserts various other mitigating factors that I did not frnd relevant for the following reasons: l The inspection was not reasonable in time and scope as required by 49 C.F.R. $ i90.203(a). Respondent asserts that the timing of the inspection was unreasonable because it was held 'Just two months after 9/ll and less than four weeks after the facility was back on line" when there was intense opposition from city govemment, a ban on LNG tankers from the Port of Boston and intense media scrutiny. (Response-2, pp.Tland 72) | do not find the timing to have prejudiced Respondent. Respondent was given the opportunity to present further evidence of its compliance at the hearing held in November 14, 2002 - over a year after 9/11. That evidence has been taken into accoullt and this Order is a result. Respondent also asserts that it did not receive fair notice about the scope of the inspection. (Response-2, p.72) Respondent states that it was "expecting a typical biennial review," not the comprehensive inspection that it received. (Response -2, pp. 72 and 73). Respondent further states that it did not have the necessary advance notice that it needed to make the documents available, nor'othe resources at the time to assist the inspector in interpreting and understanding the records." (Response-2, p. 73) I do not find the fact that Respondent was not aware of the scope of the inspection to have prejudiced it. As stated above, Respondent was given the opportunity to present further evidence of its compliance at the hearing held in November 14, 2002. That evidence has been taken into account and this Order is a result. 2. Distrigas' culpability, if any, is inadvertence not intentional wrongdoing. The regulations by which pipelines are held to, do not require cutpability or intent. Pipelines are held to a strict liability standard. If OPS had any reason to believe that a violation was committed knowingly or intentionally, that operator would be subject to criminal penalties as indicated in 49 C.F.R. 5 190.229.#

120023003_Final Order_11022005.pdf, page 103. Distrigas has an impeccable safety and security record. Respondent's safety record was acknowledged by OPS in the Notice. However, compliance with safety regulations in the past is not a reason to mitigate a civil penalty. Compliance is an operator,s responsibility. +- Distrigas' extraordinary efforts to ensure public safety after 9/1 1 demonstrate its good faith and justify a limited waiver of the standards allegedly violated. All of the violations regarding security training occurred prior to 9/l l. Therefore I see no reason to consider efforts taken after 9/11. 5. The proposed civil penalty contradicts the Dols public testimony and offends traditional principles ofjustice and fair play. The issues in the Notice concemed a failure to conduct training in accordance with your written plan. As discussed above, whether Respondent's personnel were qualified to do their jobs was not an issue of the Notice. OPS expressed its concern regarding the risk that the lack of training could have on safety. It did not state that the facility was not safe. 6. OPS failed to consider all ofthe relevant factors required by statute. Respondent asserts that the 'tivil penalty issued under 49 U.S.C. $ 60122 is not valid" unless OPS can demonstrate that it considered all of the penalty considerations. (Response-2, p.2) Respondent acknowledges that the "OPS Case File does contain some references to each of the four statutory factors" however, Respondent asserts that the "references do not demonstrate that OPS has met the statutory requirements." (Id. at p.3) I do not accept Respondent's assertions. Section 60122 states "[i]n determining the amount of a civil penalty, under this section - - (l) the Secretary shall consider - -." (49 U.S.C. $ 60122(bxl)) It then lists the factors to consider. Id. The factors are listed in the OPS Case FiIe Violation Report. (Violation Report, p. I l) OPS made a notation under each factor. Under the Compliance History sectiorl OPS wrote *NONE." Id. OPS found that there were no previous violations for Respondent. Ifthere had been, the proposed civil penalty would likely have been increased ifthe previous violations had been similar to the ones in this case. Under the Gravity of Offense section, OPS wrote about the potential safety concem presented by the violations. Id. Gravity was reflected in the number of occurrences. I mitigated the civil penalty when, the number of occurrences were reduced. Degree of Culpability was addressed by OPS. It wrote that Respondent had capable in-house staff that could prevent these types of violations. Id. Having capable staff is expected of every Operator. With respect to both the Ability to Continue in Business and the Ability to Pay, OPS wrote "No Impact." Id. This reflects that OPS determined that if Respondent had to pay the $220,000 proposed civil penalty, doing so would not affect Respondent's ability to run its business; and OPS determined that Respondent has the ability to pay the proposed 10#

120023003_Final Order_11022005.pdf, page 11civil penalty. Lastly, under the Good Faith in Attempting to Achieve Compliance section, OPS acknowledged Respondent's good faith. Id. If OPS had concerns that Respondent did not want to comply, this might have been reflected in the proposed civil penalty. Therefore, based on the above, I find that the notations show that each factor was "considered." Accordingly, having reviewed the record and considered the assessment criteria. I assess Respondent a total civil penalty of$30,000. 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 ffansfer, 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 transferi should be directed to: Financial Operations Division (AMZ-120), Federal Aviation Administration, Mike Monroney Aeronautical center, p.o. Box 25092, oklahoma city, oK 73125; (405) 954-gg93. Failure to pay the $30,000 civil penalty will result in accrual of interest at the current annual rate in accordance with 3l u.s.c. $ 3717,31c.F.R. $ 901.9 and 49 c.F.R. $ 99.23. pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within ll0 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 United States District Court. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1, 2, 3 and 4 in the Notice for violationsof49c.F.R. gg 193.2635, 193.2tt3,193.271sandt93.2717. Under49u.s.c. $ 60118(a), each person who engages in the transportation ofhazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. The Regional Director has indicated that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to Item l, Respondent hired expert consultants to assist in conducting a thorough, comprehensive visual inspection of all appropriate system components that may be subject to atmospheric corrosion. This plan was reviewed by the OPS and found it to address the proposed compliance order. 2. With respect to Items 2 and3, Respondent has assembled comprehensive training records and conducted a thorough review of present and historic training for all operations, maintenance and security personnel. The records were reviewed by the OPS and found to address the proposed compliance order. 3. With respect to Item 4, this allegation of violation was withdrawn. Accordingly, since compliance has been achieved with respect to these violations, the compliance terms are not included in this Order. 11#

120023003_Final Order_11022005.pdf, page 12Under 49 C.F.R. $ 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be received within 20 days of Respondent's receipt of this Final Order and must contain a brief statement of the issue(s). The filing of the petition automatically stays the pa)ment of any civil penalty assessed. However if Respondent iubmits payment for the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective on receiot. l,toy - 2 2005 Date Issued a2#