PHILLIPS PIPE LINE CO — Notice of Probable Violation

120025007_final order_06232003_text.pdf, page 1Official PDFr+& U 5 Department of Transportation Research and Special Programs Administration 400 Seventh St S W Washington D C 20590 Mr. David Ysebaert President Philhps 66 Transportation Company 390 Adams Building Bartlesville, OK 74004 Re: CPF No. 1-2002-5007 Dear Mr Ysebaert: Enclosed is the Final Order issued by the Associate Administrator for Pipehne Safety in the above-referenced case. It withdraws one allegation of violation, makes a finding of violation, and assesses a civil penalty of $35, 000. The Final Order also requires certain corrective action and revision of your integrity management procedures. The penalty payment terms are set forth in the Final Order. Your receipt of the Final Order constitutes service of that document under 49 C. F. R. ) 190. 5. Sincerely, Gwendolyn M. Hri'1 Pipeline Comphance Registry Office of Pipehne Safety Enclosure CERTIFIED MAIL — RETURN RECEIPT RE UESTED#

120025007_final order_06232003_text.pdf, page 2DEPARTMENT OF TRANSPORTATION RESEARCH AND SPECIAL PROGRAMS ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 In the Matter of Phillips 66 Transportation Company, Respondent. CPF No. 1-2002-5007 FINAL ORDER On February 13-14, 2002, pursuant to 49 U S. C. ) 60117, representatives of the Eastern and Central Regions, Office of Pipeline Safety (OPS) inspected Philhps 66 Transportation Company's (Respondent's) integrity management program at Respondent's facility in Bartlesville, Oklahoma As a result of the inspection, the Director, Eastern Region, OPS, issued to Respondent, by letter dated July 3, 2002, a Notice of Probable Violation, Proposed Civil Penalty, Proposed Comphance Order, and Notice of Amendment (Notice). In accordance with 49 C F. R. ) 190. 207, the Notice proposed finding that Respondent had committed two violations of 49 C. F R. ( 195. 452(b), proposed assessing a civil penalty of $50, 000 for one of the alleged violations, and proposed that Respondent take certain measures to correct the alleged violations. The Notice also proposed, in accordance with 49 C. FR. ) 190237, that Respondent amend its integrity management program segment identification procedures. Respondent responded to the Notice by letter dated August 9, 2002 (Response). Respondent contested certain aspects of the Notice, offered information explaining its position, and described the extent to which it intended to take corrective measures Respondent did not request a hearing, consequently Respondent waived its right to one. FINDING OF VIOLATION Item 1 m the Notice alleged that Respondent had violated 49 C. F. R. ) 195. 452(b) by failing to identify all of its pipeline segments that could affect a high consequence area (HCA) by December 31, 2001. Specifically, OPS alleged that Respondent omitted certain highly volatile hquid (HVL) pipehne segments located in or near drinking water and ecological unusually sensitive areas (USAs) from its segment identification process and failed to provide adequate technical justifications for excludmg such HVL pipeline segments.#

120025007_final order_06232003_text.pdf, page 3Under Section 195 452, a hazardous hquid pipeline segment in a HCA is presumed to affect that HCA unless the operator demonstrates otherwise by conducting a risk assessment This presumption apphes to all hazardous hquid pipeline segments, including HVL segments. Under Section 195. 450, the definition of a HCA includes unusually sensitive areas (USAs). Under Section 195. 6, the definition of a USA includes drinking water and ecological resource areas. Therefore, Respondent must have either identified its HVL pipehnes in or near drinking water and ecological USAs as "could affect" segments or provided a rehable engineering assessment demonstrating otherwise by December 31, 2001. In its response, Respondent acknowledged that it did not designate its HVL pipeline segments that intersected with drinking water and ecological USAs as "could affect" segments prior to the December 31, 2001 deadhne, Although Respondent asserts that it had reason to beheve that these segments could not affect the relevant HCAs, it did not provide a technical assessment demonstrating that omitting these HVL segments would not diminish protection of the pubhc and the environment Moreover, in its response, Respondent notified OPS that after the inspection, it had re-evaluated "the criteria for HVLs in USAs" and acknowledged that as a result, it had identified additional pipeline segments that could affect HCAs after the December 31, 2001 deadhne had passed Respondent did not sufficiently rebut the allegation of violation. Accordingly, I find that Respondent violated 49 C. F. R. ) 195. 452(b) by failing to identify all of its pipeline segments that could affect a high consequence area by December 31, 2001. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. WITHDRAWAL OF ALLEGATION Item 2 of the Notice alleged that Respondent had violated 49 C F. R. ) 195. 452(b) by faihng to include the TOSCO 12-inch crude oil pipehne located in northwest Kern County, Cah fornia In its response, Respondent submitted information demonstrating that the allegation was based on the erroneous use of an outdated map. 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. ( 190. 225 require that, m determinmg the amount of the civil penalty, I consider the following criteria nature, circumstances, and gravity of the violation, degree of Respondent's culpabihty, history of Respondent's prior offenses, Respondent's abihty to pay the penalty, good faith by Respondent in attempting to achieve comphance, the effect on Respondent's ability to continue in business, and such other matters as ~ustice may require.#

120025007_final order_06232003_text.pdf, page 4The Notice proposed a civil penalty of $50, 000 for violation of 49 C. ~~ . ( ), . F R ~~ 195. 452(b), faihng to identify all pipehne segments that could affect a HCA by December 31, 2001. The mtegrity management program regulations require hazardous liq p p p ' uid i eline o erators to develop a written t t anagement program that identifies, assesses, and manag es the risks on each pipehne segment that could affect a HCA in the event of a discharge. A full and accurate identifica ion o all i ehne segments that could affect HCAs was a crucial first step before an operator could implement further integrity management program requirements, such as ch as the baseline assessment and remediation of the identified segments. After receiving the Notice, Respondent demonstrated good faith in attempting to come into 1 . I 't sponse letter Respondent acknowledged that it failed to identify its pipeline segments that could affect the referenced drinking water and ecological HCAs prior to t e ea ine. Notably, Respondent initiated timely corrective action and has now identified additional pipehne segments that could affect HCAs. Respondent has also expressed its intent to bring its integrity management segment identification procedures into comp ia hance in accordance with the Notice. Accordingly, having reviewed the record and considered the assessme nt criteria I assess Respondent 7 a civil penalty of $35, 000 for the violation. Pa ent of the civil penalty must be made within 20 days of service Federal regulations aymen o ec (49 C. F. R. ( 89. 21(b)(3)) require this payment be made by wire transfer, throug e a sfer throu htheFederalReserve Communications System (Fedwire), to the account of the U . ury. S. Treas . 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 Aeronautica Center, P. O. Box 25770, Oklahoma City, OK 73125; (405) 954-4719 Failure to pay the $35, 000 civil penalty will result in accrual of interest at the current annual rate m accordance with 31 U. S. C. j . j 3717 31 C. F R ) 901. 9 and 49 C. F. R. $ 89. 23. Pursuant to those same h 1 t enalt charge of six percent (6%) per annum will be charged if payment is not aut orities, a a e pena yc made within 110 days of service. Furthermore, failure to pay the civi pena y may resu of the matter to the Attorney General for appropriate action in a United a es is ri nited States District Court. COMPLIANCE ORDER The Notice ro osed a comphance order with respect to the violati on of Section 195 452(b). Under e o ice propo 49 U. S. C. $ 60118(a), each person who engages in the transportation o az ortation of hazardous hquids or who r operates a pipeline facihty is required to comp y 1 with the a hcable safety standards pp established under chapter 601 Pursuant to the authority of 49 U. S. C. ) ( ) 60118 b and49C. F. R P $ 190 217, Respondent is ordered to take the following actions o to ensure corn hance with the pipehne safety regulations apphcable to its operations: Evaluate all 1, mi es o e 302 I f the HVL pipeline system in accordance with the requirements of , Part 195 and identi fy all pipeline segments that could affect HCAs, mc u ing segm in or near HCAs composed of drinking water and ecological USAs;#

120025007_final order_06232003_text.pdf, page 52 For any segment of the HVL system in or near a HCA that is not identified as a "could affect" segment as a result of completing Item 1, provide a reliable engmeering study illustratmg why a worst case discharge scenario involving the segment would not affect the HCA it is in; 3. For any HVL segment where an engineering study performed pursuant to Item 2 fails to demonstrate that the segment could not affect the HCA it is in, as determined by the Director, Eastern Region, OPS, designate the segment as a "could affect" segment in the master hst 4. Within 90 days following receipt of this Final Order, submit documentation demonstrating completion of the required items to the Director, Eastern Region, Office of Pipeline Safety, 400 7 " Street, SW, Room 7128, Washington, DC 20590. AMENDMENT OF PROCEDURES The Notice alleged inadequacies in Respondent's integrity management program procedures and proposed to require amendment of Respondent's segment identification procedures to comply with the requirements of 49 C. F. R. ) 195. 452. In its response, Respondent indicated that it had revised certain elements of its segment identification procedures. Although these revisions were summarized in the response letter, the revised procedures themselves were not appended. Therefore, there is insufficient information to determine whether the revisions address all of the inadequacies described in the Notice. Accordingly, I find that Respondent's procedures are inadequate to assure the safe operation of its pipeline system. Pursuant to 49 U. S. C. ) 60108(a) and 49 C. F. R. ) 190. 237, Respondent is ordered to make the following amendments to its integrity management program segment identification procedures: 1. Amend the procedures to include a field vahdation and quahty assurance review of the results of the segment identification process to ensure that all pipehne segments that could affect a HCA have been identified; Amend the procedures to include a periodic review of HCA boundaries drawing on information from field personnel, control center data, census data, and other resources for the purpose of identifying areas newly falhng within the HCA definition; Amend the procedures to include an accepted, techmcally sound land flow analysis usmg site-specific spill modehng that incorporates factors such as topological and hydrauhc gradients that could stretch the spill pool footprint, or alternatively, provide adequate technical justifications demonstrating that the overland flow assumptions bemg used for determining buffer zone size are consistent with conservative or worst case discharge scenarios;#

120025007_final order_06232003_text.pdf, page 6Amend the procedures to account for presence of longer range transport paths such as streams and waterways, and air dispersion in the case ofhighly volatile hquid pipehnes, that can transport releases of commodity or fire-fighting contaminants to HCAs; Within 30 days following receipt of this Final Order, submit the amended procedures and all technical Justifications demonstrating comphance with this Order to the Director, Eastern Region, Office of Pipeline Safety, 400 7 Street, SW, Room 7128, Washington, DC 20590. Failure to comply with any provision of this Final Order may result in the assessment of civil penalties of up to $100, 000 per violation per day, or in the referral of the case for judicial enforcement. Under 49 C F R ) 190. 215, Respondent has a right to petition for reconsideration of this Final Order. However, if the civil penalty is paid, Respondent waives the right to petition for reconsideration. The fihng of a petition for reconsideration automatically stays the payment of any civil penalty assessed. 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). All other terms of the Order, including any required corrective actions, remain in full effect unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this Final Order are effective on receipt. Stacey Gerard Q Associate Administrator for Pipeline Safety Date Issued#