COLONIAL PIPELINE CO — Notice of Probable Violation

120025009_Final Order_12102003.pdf, page 1Official PDFt~ u 5.Depa ~ of~~ ~~~ $p8CaI ~ ,.. Au~~"~~ ~ s.v.nth 51. S W W81h...~. DC 20580 DEC 1 0 ~ Mr. William D. Scott Vice President Colonial Pipeline Company P. O. Box 1624 Alpbaretta, GA 3<XM>9-9934 RE: CPF No. 1-2002-5009 Dear Mr. Scott: Enclosed is the Final Order issued by the Associate Administrator for Pipeline Safety in the above-referenced case. It withdraws one of the allegations of violation, makes findings of violation, requires certain corrective actions and assesses a civil penalty of$1 01 ,000. Your receipt of the Final Order constitutes service of that document under 49 C.F.R.§ 190.5. At such time that the civil penalty is paid and the tenDS of the compliance order are completed, as detennined by the Director, Eastern Region. this enforcement action will be closed. Sincerely, ~ 0 ~ ~~ James Reynolds Pipeline Compliance Registry Office of Pipeline Safety cc: Ms. Carole P. Sims, Senior Attorney Mr. William H. Oute, Director, OPS Eastern Region#

120025009_Final Order_12102003.pdf, page 2DEPARTMENT OF TRANSPORT A nON RESEARCH AND SPECIAL PROGRAMS ADMINISTRA nON OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 In tbe Matter or C'olonial Pipeline Company. Respondent ) ) ) ) CPF No. 1-2002-5009 nNAL ORDER Betwea. January 10.2001 8Ixf November 21.2001 pD'lUmlt to 49 V.S.C. § ~117. ~~~ of the Eastern ReJion. Office of Pipeline Safay (OPS), a rqnIaJtative of the Commonwealth of Virginia State Corporation Commiuion (V A-SCC), and a representative of the State of New York Public Service Commission (NY -PSC) coIxtucted onaite pipeline safety inspections and I~id reviews of Respondent . s facilities in Delaware, GeoI'lia. M8ryi8ld. Pennsylvania. New Jersey. New Y Oft. North Carolina. aDd Virginia. As a result ofdtis investigation. the Director. Eastern Region. OPS. issued to Respond5t. by letter dated September 13, 200~ 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 RCSpond5t bad committed violations of 49 C.F .R. Part 19S,p roposed as-.ing a total civil penalty of$ 1 82.S00 for the alleged violations.lrMlpro poIa1 that R~xICIJt take certain me8Jra to ~~ the aIJeaeci violations. ReIpOIKient requested IIxI W8 IfIDted In extension of time to ~xt to the Notice by November 30.2002. Respondent rapoIlded to the Notice by letter dated, November 27.2002 (Response). Respondent contested four of the aIlegationiy off~ infonnation in explanation of the allegations arxI in mitigation of the proposed penalty and requested a hearing. The hearing wu held on March 4. 2003 in W ashin gto ~ DC . AfteI' this hearing. RellMJlMteIIt provided addi tiona1 information IIxi a closing Response dated April 3. 2003. In its post hearing submission and at the hearing. Respondent requested to enter into a Consent Older pursuant to 49 C.F.R. § 190.219. A consent order would not be appropriate in thil matter as there 8'e findings of violations and the ~tofacivil paIalty. In addition, thisOrd«Iddr~ the issues raise by R.apolxlent ~prding the tams of the compliance order.#

120025009_Final Order_12102003.pdf, page 32 FINDINGS OF VIOLATION (Uncontested) At the hearing, Respondent did not contest three of the alleged violations in the Notice. Accordingly, I find that Respondent violated the following sections of 49 C.F.R. Part 195,. more fully described in the 49 C.F.R. § 195.402(a) -- failing to prepare and follow a manual of written procedures forcond ucting nonnalopera nons and main~e activities and handling abnormal operations and emergencies, as the Main Line Relief Block Valve at the Woodbury, NJ facility was found in the open position and not "locked open" as specified in Respondent's procedures. The "working" field alignment sheets in Richmond, V A did not have up-to-date revisions and changes to the Pipeline System Design and Drawings to show five new Main Line Block Valves installed on Line #27 in 1999. 49 C.F.R. § 195.404(a) - failing to maintain cunent records of its pipeline system, as the Allentown, NJ facility had a themlal pressure relief valve on a pump casing tagged at a pressure of 770 psig but the thcnnal relief valve set pressure recorded in the facility inspection test records listed the set pressure as 800 psig. 49 C.P.R. § 195.410(a) -- failing to maintain clearly visible line markers with the couect name of the operator and a telephone number (including are code) where the operator can be reached at all times. Seventeen pipeline markers at the Craney Island, V A facility did not have the con'ect toll free emergency notification telephone number on them. At the Mitchell, V A facility eight pipeline marker signs at the road crossing for Highways #40 and Route #649 had fra}oed and peeling Sticker decals with outdated emergency notification telephone numbers. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. (Contested I Item 1 in the Notice alleged that Respondent violated 49 C.F.R. § 195.401 (b) by failing to timely correct conditions that could adv~ely affect the safe operation of its pipeline system, as Respondent had 12 cathodic protection stations with low pipe-to-soilread ings between the airport at Greensboro, NC and the NCN A (Virginia) state line. The low pipe--to-soi1 readings were below Respondent's established criteria of -O.85Ov. At the time of the inspection, th~ was no indication in the records that any action was taken to correct the low potentials, which existed at one test station from 1998 to 2000 and at the other eleven test stations during 1999 and 2000.#

120025009_Final Order_12102003.pdf, page 4f In response to the Notice and at the hearing, Respondent acknowledged the low pipe-to-soil readings. However, Respondent argued that the condition could not adversely affect the safe operation of the pipeline system because it had initiated several projects to address low pipe to soil readings in the subject area. Respondent advised that intemalline inspections conducted on Line 03 and 04 in 1995 and 1997 resulted in the evaluatio~ excavation and repair of external corrosion indications between the Greensboro, NC and the NCN A State line. Respondent further advised that in response to a previous Notice, CPF #27501, it established re-inspection intervals for these line segments based on conservative con-osion rate evaluations, which are scheduled for completion in 2003. Respondent explained that its plans to address future low pipe-to-soil condition readings were discussed with the OPS Eastern Region in April 2001. Nevertheless, Respondent does not dispute the violation report indicating that 12 cathodic protection stations had low pipe-to-soil readings between the airport at Greensboro, NC and the NCN A State line. Although Respondent argued that it had initiated several proj~ts to address low pipe to soil readings in the subject area, OPS presented evidence that at the time of the May 2001 inspection, there was no indication in the records that any action was taken to correct the low potentiaJs. OPS evidence included Respondent's Test Report Exceptions for Corrosion Area 3 for Lines 03 and 04, which provides data from January 1, 1998 to December 21, 2000 showing structme pipe-to-soil readings less than -O.85Ov or casing pipe-to-soil readings less than -O.85Ov. Respondent's Exception Report, dated May 29, 200 1, demonstrates the low pipe-to-soil readings. Consistent low cathodic protection readings indicate that a pipeline is not receiving adequate protection, a condition that could adversely affect the safe operation of a pipeline system. The risk of corrosion on the pipeline significantly increases with inadequate pipe-to-soil potentials and can result in a pipeline failure. Preventive maintenance is critical to safety of the public, environment and property. Respondent had 12 cathodic protection stations with low pipe-to-soil readings with no indication or documentation of timely corrective action. One station had low readings for three consecutive years and eleven stations had low readings in 1999 and 2000. Accordingly, I find that Respondent violated 49 C.F.R. §19S.401(b) by not taking actions to correct the condition within a reasonable amount of time. Item J in the Notice alleged that Respondent had violated 49 C.F .R. § 195.402( d) when Respondent failed to follow procedures for abnormal operations to provide safety when operating design limits were exceeded. An 'llnscheduled Shutdown Report" dated February 8, 2000, reported the mcOlTect opening of a valve, but did not include an investigation or information to demonstrate that the cause of the incident was investigated and corrected. Specifically, "[t]bc shipper oil manifold selection panel was set-up to swing from Motiva to Citgo. When the cut button was pressed, the Old Dominion manifold valve opened instead of the Citgo valve. Situation was verified, then Citgo valve was opened and pressure released. " Respondent provided no records to show d1at maintenance or repairs were perfonned on the valve or instrumentations and controls, as required by Respondent's Maintenance Proj ect Work and Document Management Procedures to demonstrate that the abnonnal operation condition had been properly investigated, corrected or documented to prevent a recurrence.#

120025009_Final Order_12102003.pdf, page 54 In response to the Notice andat the hearing, RespoDdent contended that § 19S.4O2(d) is applicable to situations and in which the ,-- operating design limits have been exceeded, but does not apply in this particular instance. R. esponden t argued that the equipment perfonned exactly as it was designed to perfonn, making § 195.402(d) inapplicable. Respondent further argued that OPS incorrectly interpreted the teml 66operating design limit" in § 195 .402( d) as 6'nonnal operating design limit.. during the bearing. Respondent takes the position that if the regulation was intended to be interpreted as 6~orma1 operating design limit,.. then the ~ would have used the modifier "nonnal... much like it did in § 195.402(d)(1)(ii) when referring to 6'nonnal operating limits.'. Nevertheless, Respondent advised that it now uses a computerized system, «aperational Performance Information System.', which includes a section for Abnormal Event reports that require a review and analysis by the Operations Manager and Operations Excellence Coordinator. Respondent explained that the new system will track the analysis, trending and follow-up corrective actions. OPS argued that the allegation of violation refers to the procedures for documentation of personnel actions and equipment operation when there is a maffimction. In support of its position, OPS argued that "operating design Jimits" are characterized in § 195.402(d)(1)(v) as "any other malfunction of a component, deviation from normal operation, or personnel error which could cause a hazard to persons or property." The proposed violation concerns Respondent's failure to properly investigate, correct and document the unintended valve closure. '"When the cut button was pressed, the Old Dominion manifold valve opened instead of the Citgo valve..' When the cut button was pressed the expectation was that the Citgo manifold valve would open. However, an unintended or unexpected valve opened when the cut button was pressed, which was unperceived. The valve that would nomlally open and was expected to open failed to do so. This malfunction or deviation ftom the noon resulted in the generation of an "Unscheduled Shutdown Report", which recorded an abnonnal operation. This unscheduled or unexpected opening of the incorrect valve suggests that there was nothing nonnal about this occurrence, ergo the report was generated. In s~ the regulations require operators to have and to follow a manual of written procedures for conducting Donnal operations and maintenance activities and handling abnonnal operations and emergencies. Furthennore, Respondent's Maintenance Project Work and Document Management Procedures require personnel to document that the incident had been investigated and that correcti ve action was taken to mitigate further occunences. However. no investigation or infonnatioD was documented to demonstrate that what caused the Old Dominion manifold valve to open instead of the Citgo valve was ever investigated and corrected. Accordingly, I find that Respondent violated 49 C.F.R. §19S.402(d), as required by §19S.402(a). Item 6 in the Notice alleged that Respondent violated 49 C.F.R. § 19S.416(a) by failing to conduct tests from 1997 to 200 I on each buri~ in contact with the ground, or submerged pipeline. Eighty- nine (89) readings were not recorded for forty-five (45) cathodic protection test stations in New Jersey, New Yo~ and Maryland#

120025009_Final Order_12102003.pdf, page 6$ In response, Respondent submitted docmnentation regarding its cathodic protection test station readings. Although, Respondent acknowledged that readings were not recorded for some test stations, Respondent argued that the number was less than the number stated in the Notice. Based upon the documentation submitted by Respondent, OPS has determined that from 1997 to 2001 a total of 43 readings were not recorded for 29 cathodic protection test stations in New Jersey, New York, and Maryland and not 89 readings for 45 test stations as originally proposed, as more fully described in the Table below: 1- -- -- - Missed/Undocumented-- I l_- - - - -- - Cathodic Protection Test StationReidi np: ,.1 Monitoring critical locations of a pipeline or a structure where the risk of con'OSion is greatest allows personnel to take immediate action against the potential for a pipeline failure. Inspection and testing at the required intervals are essential to knowing that the pipeline equipment is being maintained, will function properly and that the integrity of the pipeline system is not compromised. The magnitude of the risk of failure increases when there is a lack of monitoring of a pipeline's condition and the efficiency of any mitigation program to reduce or arrest oom>sion. AccordingIYt I find Respondent violated 49 C.F.R. §195.416(a)t by failing to record 43 readings for 29 cathodic protection test stations from 1997 to 2001 in New Jersey, New Yo~ and Maryland. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent.#

120025009_Final Order_12102003.pdf, page 7~' WITHDRAWAL OF ALLEGAnON Item 7 in the Notice alleged that Respondent violated 49 C.F .R. § 195.436, by failing to adequately secure its facility from unauthorized entry, as an el~trical service cutoff switch, which is the main power supply to the valve site, was located outside the fence. In response, Respondent submitted infonnation to evidence that Virginia Power Company considers the electrical equipment at issue to be their equipment and subj~t to their control. The contract language between the Respondent and Virginia Power states that Virginia Power "shall have the right to discontinue the supply of electricity without notice if access is denied." As set forth under § 110(08) in Virginia Power's Infonnation and Requirements for Electrical Service 1998, "[t]he company shall have the right of access to the customer'sp remises at all reasonable times for the purpose of reading company meters, removing company property, and for any other proper purpose." In furtherance, § 230(02) of that document provides "[t]be customer shall provide and maintain a suitable space for the installation of the necessary metering apparatus. This space shall be readily accessible and convenient for reading, testing, maintaining, and servicing of the meter equipment". Because this is an unmanned location, relocation of the switch inside die fence would be considered by Virginia Power to be a denial of access, and creating an el~tric power safety issue. Therefore, security has been addressed by having the valve status monitored in die Alpharetta Control Center. Based on this inforntation, I am withdrawing this allegation of violation. ASSESSMENT OF PENAL TV The Notice proposed. $182,500 civil penalty for violation of 49 C.F.R. §§ 195.40 1 (a), 195 .402( a), 195.402(d), 195.4O4(a). 195.410(a), and 195.416(a). Under 49 U.S.C. § 60122, Respondent is subject to a civil penalty not to exceed $100tOOO per violation for each day of the violation up to a maximum of $1 ,000,000 for any related series of violations. 49 V.S.C. § 60122 and 49 C.F.R. § 190.225 require that, in detennining 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 Respondenrs 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 proposed penalty for Item 1 is S13,<XX> for violation of 49 C.F.R. § 19S.40I(b). Respondent failed to timely correct conditions at 12 cathodic protection stations with low pipe-to-soil readings, which could adversely affect the safe operation of its pipeline system. Without adequate cathodic protection, corrosion can occur resulting in a pipeline failure. A failme in a line carrying hazardous liquids poses a danger to the pub lic and the environment. Respondent bas not provided any evidence that would justify mitigation of the penalty. Accordingly. baving reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty ofS13,OOO.#

120025009_Final Order_12102003.pdf, page 87 The proposed penalty for Item 2 is $2.000 for violation of49 C.F.R. § 195.402(8). Respondentdid not contest the alleged violation but advised that it had instituted corrective measures and contended dtat the proposed civil penalty was excessive. Respondent has not provided any evidence that would justify mitigation of the penalty. Accordingly. having reviewed the record and considered the assessment criteria. I assess Respondent a civil penalty of $2.000. The proposed penalty for Item 3 is $1,000 for violation of 49 C.F.R. § I 95.402(d). Respondent failed to follow procedures to conduct an investigation or gather information to demonstrate that the cause of an incorrect valve opening was investigated, corrected or documented to prevent a recunence. Respondent argued that proposed civil penalty should be withdrawn because the equipment perfonned exactly as it was designed to perfonn. making § 195.402( d) inapplicable. The unscheduled or unexpected opening of the incorrect valve suggests that there was nothing normal about this occurrence. Respondent did not deny that no infonnation was gathered to demonstrate that the cause of the opening of an incorrect valve was investigated and corrected. Respondent has not provided any evidence that would justify the withdrawal of the propos ed civil penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of$I,OOO. The proposed penalty for Item 4 is 2,000 for violation of 49 C.F .R. § 195.4O4(a). Respondent did not contest the alleged violation but requested that the proposed civil penalty be reduced. Documentation is essential not only to show that the set pressure and test pressure of critical safety valves are accurately maintained but to ensure the safe operation. mainteoance and repair of pipeline systems and components. Without documentation and sound record keeping, it is difficult for an operator to ensure that all inspections. testing. calibration. and repair records are accurately maintained. Respondent bas not provided any evidence that would justify mitigation of the civil penalty. Accordingly, having reviewed the record and considered the assessment criteria. I assess Respondent a civil penalty of $2,000. The proposed penalty for Item 5 is $25,000 forviolationof49 C.F.R. § 195.410(a). Respondentdid not contest the alleged violation but explained that the facility where some of the line markers are located is a govemment-controlled environment which limits its access to the line markers. Respondent further explained that the operator at the facility has Respondent's correct emergency telephone number in its emergency plan. Respondent requested mitigation of the civil penalty because the scope of the pipeline marker survey is overbroad and should be reduced to a limited geographical area. rather than 5,000 miles. Based upon a review of recent inspection and compliance activities, the area Respondent is required to survey will be limited to the geographical boundaries of the Richmond District. from Witt Station to the south and the Rapidan River to the north. Limiting the geographical area of the survey in no way reduces the gravity of the violation. The geographical limitation is merely tailored to Respondent's organizational structure. In the event of an emergency, the lack of clearly visible line markers will interfere with and delay first respondss' efforts to contact the Respondent, which poses a danger to the public and the environment. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $25,000.#

120025009_Final Order_12102003.pdf, page 98 The proposed penalty for Item 6 is $139,500 for violation of 49 C.F.R. § 195.416(a). Respondent failed to conduct tests from 1997 to 200 1 on each buried, in contact with the ground, or submerged pipeline. The Notice alleged that eighty-nine (89) readings were not recorded for forty-five (45) cathodic protection test stations in New Jersey, New York, and Maryland. Respondent acknowledged that readings were not recorded for some test stations, but argued that the nmnber was less that the Notice alleged. Respondent indicated that many of the missing records were a result of poor internal management. Subsequently, Respondent submitted associated records relative to the missing records. Based upon a review of this documentation, OPS has detennined that from 1997 to 2001 a total of 43 readings were not recorded for 29 cathodic protection test stations. Respondent has provided evidence that would justify mitigation of the civil penalty. After further review of the number of missed test stations and the number of years the test stations were missed, the OPS Compliance Officer computations were recalculated. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $58,000. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of$1 01,000. A detennination bas been made that Respondent bas the ability to pay this penalty without adversely affecting its ability to continue business. Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F .R. § 89.21 (b )(3» require this payment be made by wire transfer, through dle Federal Reserve Communications System (Fedwire), to dle 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 73125; (405) 954-4719. Failure to pay the $101 tOOO civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717,31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authoritiest a late penalty charge of six percent (6%) per annum will be charged ifpayment is not made within 110 days of service. Fw'dlennorc, failure to pay dle civil penalty may result in referral of the matter to dle Attorney General for appropriate action in a United States District Court. The Notice §195.410(a). ~sed a compliance order with respect to Item S for violation of 49 C.F oR. Under 49 U.S.C. § 6O118(a), each person who engages in the transportation of hazardous liquids or who owns or operates a pipeline facility is required to comply widt dte applicable safety standards established WIder chapter 601. Pursuant to the audtority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with the pipeline safety regulations applicable to its operations. Respondent must -#

120025009_Final Order_12102003.pdf, page 109 1. Survey all its pipeline marker signs on all pipeline~ stations. block valves. stubs, laterals to Roanoke and Norfolk. connecting stubs and delivery lines from the Witt Station to the south and the Rapidan River to the north in Virginia, for incorrect emergency tel~hone numbers and illegible signs including any fraying or weathered decals/signs and replace them as necessary to ensure that correct active emergency notification telephone numbers are clearly displayed and legjble as required by 49 C.F.R. §195. 410(a). The principle pipeline numbers are 3, 4. 25. and 27. Legible and ~.~ be posted with n urn bers telephone must this Order. 180 days of receipt of 2. Submit. !i 1:0 Eastern OPS, and/or evidence of completion of these actions to the Director. 409 31d Street, SW, Suite 300, Washington, DC 20024. J. The Director, OPS, Eastern Region may grant an extension of time for compliance with any of the tenDS ofdris order for good cause. A request for an extension must be in writing. Failure to ly with comp this Final Order may result assessment in the of civil penalties of up to $100,(XK) 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 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 payment of any civil penalty assess ed. All other terms of the order, including any required colTeCtive ~tion, remain in full effect unless the Associate Administrator, upon request, grants a stay. The tenns and conditions of this Final Order are effective on receipt. DEC 10m3 for Pipeline I'\dmlnistrator Safety#