# VALERO NATURAL GAS PIPELINE — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 120071013
- **title:** VALERO NATURAL GAS PIPELINE — Notice of Probable Violation
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2007-11-07
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 192.465(b), 192.705(b), 192.745(a).
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- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/120071013
**body:**

Notice of Probable Violation involving VALERO NATURAL GAS PIPELINE. PHMSA's enforcement data identifies the cited regulations as 192.465(b),  192.705(b),  192.745(a). The case was opened on 2007-11-07 and is reported as closed as of 2011-01-19. Proposed civil penalty: $42,000. Assessed civil penalty: $42,000. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

120071013_Final Order_12302010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120071013/120071013_Final%20Order_12302010.pdf

120071013_Final Order_12302010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120071013/120071013_Final%20Order_12302010_text.pdf

120071013_NOPV PCP_11072007.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120071013/120071013_NOPV%20PCP_11072007.pdf

120071013_nopv pcp_11072007_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120071013/120071013_nopv%20pcp_11072007_text.pdf

120071013_Operator Response to Notice and Operator Brief in Lieu of In-person Hearing_06252009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120071013/120071013_Operator%20Response%20to%20Notice%20and%20Operator%20Brief%20in%20Lieu%20of%20In-person%20Hearing_06252009.pdf

120071013_Final Order_12302010_text.pdf

DEC 30 2010
Mr. Rodney L. Reese
Vice President
Valero Natural Gas Pipeline Company
One Valero Way
San Antonio, TX 78249-1112
Re: CPF No. 1-2007-1013
Dear Mr. Reese:
Enclosed please find the Final Order issued in the above-referenced case. It makes findings of
violation and assesses a civil penalty of $42,000. The penalty payment terms are set forth in the
Final Order. This enforcement action closes automatically upon receipt of payment. Service of
the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise
provided 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, PHMSA
Andrew J. Dalton, Counsel
Valero Services, Inc.
Room F2-160
One Valero Way
San Antonio, Texas 78249-1112
CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 1160 0001 0039 9945]



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
____________________________________
)
In the Matter of )
)
Valero Natural Gas Pipeline Company, ) CPF No. 1-2007-1013
)
Respondent. )
____________________________________)
FINAL ORDER
During the week of May 29, 2007, pursuant to 49 U.S.C. § 60117, a representative of the
Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety
(OPS), conducted an on-site pipeline safety inspection of the facilities and records of Valero
Natural Gas Pipeline Company (Valero or Respondent) in Paulsboro, New Jersey. Respondent’s
2.7-mile natural gas pipeline runs from the Philadelphia Airport, under the Delaware River, to a
refinery on the New Jersey side of the river.
As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent,
by letter dated November 7, 2007, a Notice of Probable Violation and Proposed Civil Penalty
(Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Valero had
violated 49 C.F.R. §§ 192.465, 192.705, and 192.745 and proposed assessing a civil penalty of
$42,000 for the alleged violations.
Respondent responded to the Notice by letter dated January 18, 2008 (Response). Respondent
stated that it would present evidence at hearing to establish that the alleged missed inspections
and maintenance actually occurred. Respondent further stated that it would “raise issues
concerning the reasonableness of the penalty,” and requested a hearing. By letter dated May 21,
2009, however, Respondent withdrew its request for a hearing and asked for the right to submit a
Brief in Lieu of In-Person Hearing (Brief). Respondent submitted its Brief on June 25, 2009.
FINDINGS OF VIOLATION
The Notice alleged that Respondent violated 49 C.F.R. Part 192 as follows:
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.465(b), which states:



2
§ 192.465 External corrosion control: Monitoring.
(a) ….
(b) Each cathodic protection rectifier or other impressed current
power source must be inspected six times each calendar year, but with
intervals not exceeding 2½ months, to insure that it is operating.
The Notice alleged that Valero violated 49 C.F.R. § 192.465(b) by failing to inspect a certain
rectifier adjacent to the Valero Paulsboro Refinery at least six times each calendar year, but with
intervals not exceeding 2½ months, to insure that it was operating. Specifically, the Notice
alleged that Valero only inspected the rectifier five times during 2006, instead of the required six
times. Also, the Notice alleged that the inspection interval exceeded 2½ months on two
occasions: (1) September 6, 2006 – January 3, 2007 (three months, 28 days); and (2) January 3,
2007 - April 9, 2007 (three months, six days).
In its Response, Valero stated that it would present evidence at the hearing showing that it had
performed inspections at the required frequency. However, Respondent withdrew its request for a
hearing and subsequently stated in its Brief that it did not contest the above-cited alleged
violated 49 C.F.R. § 192.465(b) on two occasions by permitting more than 2½ months to pass
between inspections of the rectifier located adjacent to Valero Paulsboro Refinery in Paulsboro,
New Jersey.
violation.1 Accordingly, based upon a review of all of the evidence, I find that Respondent
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.705(b), which states:
§ 192.705 Transmission Lines: Patrolling.
(a) ….
(b) The frequency of patrols is determined by the size of the line, the
operating pressures, the class location, terrain, weather, and other relevant
factors, but intervals between patrols may not be longer than prescribed in
the following table:
Class location
of the line
At highway and railroad
crossings
At all other places
1, 2 7½ months; but at least twice
each calendar year
15 months; but at least
once each calendar year
3 4½ months; but at least four
times each calendar year
7½ months; but at least
twice each calendar year.
The Notice alleged that Respondent violated 49 C.F.R. § 192.705(b) by failing to conduct patrols
of its pipeline at one particular railroad crossing in a Class 3 location within the required interval
of 4½ months, but at least four times each calendar year. Specifically, the Notice alleged that at
the location where Respondent’s pipeline intersected with a railroad crossing near the
Philadelphia Airport, Respondent performed only two patrols in 2005 and three patrols in 2006,
the last being on October 11, 2006. The only patrol that had occurred in 2007 as of the May 29,
1 Brief, at 1.



3
2007 OPS inspection occurred was May 1, 2007. Therefore, according to the Notice, over 5½
months had passed between the last two pipeline/railroad crossing patrols.
In its Response, Valero stated that it would show at the hearing that this particular section of
pipeline near the Philadelphia Airport was not in a Class 3 but a Class 2 location and that the
required patrol frequency was twice a year, with inspection intervals not to exceed 7½ months.
Respondent also stated that it would show that it had completed six patrols of its pipeline at this
location during 2006. However, Respondent subsequently withdrew its request for hearing and
upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.705(b) on
four occasions by permitting more than 4½ months to pass between inspections of its gas
transmission pipeline where it intersected a railroad crossing near the Philadelphia Airport.
stated in its Brief that it was not contesting the above-cited alleged violations.2 Accordingly, based
Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 192.475(a), which states:
§ 192.745 Valve Maintenance: Transmission Lines
(a) Each transmission line valve that might be required during any
emergency must be inspected and partially operated at intervals not
exceeding 15 months, but at least once each calendar year.
The Notice alleged that Respondent violated 49 C.F.R. § 192.745(a) by failing to inspect and
partially operate two transmission line valves that might be required during an emergency, at
maintenance intervals not exceeding 15 months but at least once each calendar year. Specifically,
it alleged that Valero failed to perform valve maintenance on valves 2A and 2B, adjacent to the
Valero Paulsboro Refinery, during calendar year 2006.
In its Response, Valero stated that it would provide evidence at the hearing to show that the
required annual maintenance was performed in September 2006. However, Respondent
subsequently withdrew its request for hearing and stated in its Brief that it was not contesting the
above-cited alleged violations. Accordingly, based upon a review of all of the evidence, I find that
Respondent violated 49 C.F. R. § 192.745(a) when it failed to perform required annual
maintenance on valves 2A and 2B.
These findings of violation will be considered prior offenses in any subsequent enforcement action
taken against Respondent.
ASSESSMENT OF PENALTY
Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed
$100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any
related series of violations. In determining the amount of a civil penalty under 49 U.S.C. § 60122
and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and
gravity of the violation, including adverse impact on the environment; the degree of Respondent’s
2 Brief, at 1.



4
culpability; the history of Respondent’s prior offenses; the Respondent’s ability to pay the penalty
and any effect that the penalty may have on its ability to continue doing business; and the good
faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I
may consider the economic benefit gained from the violation without any reduction because of
subsequent damages, and such other matters as justice may require. The Notice proposed a total
civil penalty of $42,000 for the violations cited above.
Item 1: The Notice proposed a civil penalty of $14,000 for Respondent’s violation of 49 C.F.R.
§ 192.465(b), for failing to inspect a certain rectifier at the appropriate intervals. In its Brief,
Respondent did not contest the alleged violation but did challenge the amount of the civil penalty
proposed in the Notice.
Valero argues that the $14,000 civil penalty proposed for this violation is “clearly excessive in
light of the agencies (sic) prior decisions” and that “it would be arbitrary and capricious for
PHMSA to assess the proposed $14,000 penalty.” Respondent cites several PHMSA final orders
from prior years that assessed civil penalties for violations of this same 49 C.F.R. § 192.465(b).
The following table summarizes the cited cases, including the instant case:
Operator and CPF Duration(s) of
Violation
Number of
Instances
Proposed Civil
Penalty
Pacific Operators
Offshore
5-2004-2002
2/10/2000 –
3/10/2000
1 $1,000
Venoco Inc.
5-2002-0008
11/16/1998 –
9/25/2001
1 $3,000
City of Danville
1-2002-0004
8/21/2000 -
12/4/2000 (inspected
but not recorded)
1 0
Questar Pipeline
Company
5-2003-1010
10/18/01 – 9/24/02 1 $5,000
Valero Energy
Corporation
1-2007-1013
11/22/06 – 1/3/07
AND 3/19/07 –
4/9/07
2 $14,000
Respondent is correct that the above-listed enforcement actions resulted in varying civil penalties
and that the proposed civil penalty in the instant case is the highest of those listed. However, this
does not indicate that the proposed civil penalty is either excessive or improper.
Although the cases that Respondent cites all contain findings of violation of 49 C.F.R.
§ 192.465(b), the facts surrounding each violation differ. First, the violations occurred at different
times. Respondent’s violations of § 192.465(b) began at least five years after the ones cited in the
other cases. In the most recent of the earlier cases, Questar Pipeline was assessed a civil penalty of
$5,000 for its violation of § 192.465(b); further, Pacific Operators Offshore was assessed a $1,000
civil penalty for violation of § 192.465(b) two-and-a-half years earlier. Although the civil



5
penalties assessed in these cases have varied in amount, they show a consistent upward trend in
civil penalties assessed. This trend is informed by a growing body of information about the
dangers of external corrosion and the need to encourage compliance with Part 192.
In addition, the cited violations differ in the length and number of violation. Respondent’s
violation of § 192.465(b) is unique in that Valero came into compliance after a period of non-
compliance and then immediately again exceeded the required inspection interval in the following
cycle.
It is widely recognized that administrative agencies have wide latitude in enforcing the statutes that
Congress has entrusted to them. As the Supreme Court stated in 1973, “The employment of a
sanction within the authority of an administrative agency is…. not rendered invalid in a particular
case because it is more severe than sanctions imposed in other cases.”3 In the absence of statutory
language mandating “uniformity of sanctions for similar violations,” agencies are free to assess
penalties in a manner that “best serves to deter violations and achieve the objectives of that
statute.”4 The Pipeline Safety Law (PSL) lists the factors that the Secretary “shall” and “may”
consider in assessing civil penalties. Nowhere in the statute or in 49 C.F.R. Part 190 is there any
provision requiring that the Secretary consider civil penalties assessed in other cases for similar
violations in calculating a proposed penalty.5
Respondent’s contention that it would be “arbitrary and capricious” for PHMSA to assess the
proposed $14,000 for this violation suggests, but does not explicitly state, an argument based upon
requirements of the Administrative Procedure Act (APA). The APA states that courts will set
aside agency actions that are “arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law.”6 The courts have interpreted the term “arbitrary and capricious” under
penalties have been set aside for such reasons, courts have been reluctant to set aside disparate
remedies just because they vary in size or because different remedies are selected.
the APA to mean “unwarranted in law or without justification in fact.”7 While administrative
In Butz, the court declined to overturn the Department of Agriculture’s suspension of a stockyard
operator’s registration as being overly harsh, noting that Congress had plainly intended to give the
Secretary broad discretion in fashioning appropriate remedies. “Therefore, mere unevenness in the
application of the sanction does not render its application in a particular case ‘unwarranted in
3 Butz v. Glover Livestock Commission Company, Inc., 411 U.S. 182, 187 (1973).
4 Id.
5 49 U.S.C. § 60122(b) states: “Penalty considerations.--In determining the amount of a civil penalty under this
section--(1) the Secretary shall consider-- (A) the nature, circumstances, and gravity of the violation, including adverse
impact on the environment; (B) with respect to the violator, the degree of culpability, any history of prior violations,
the ability to pay, and any effect on ability to continue doing business; and (C) good faith in attempting to comply; and
(2) the Secretary may consider-- (A) the economic benefit gained from the violation without any reduction because of
subsequent damages; and (B) other matters that justice requires.”
6 5 U.S.C. § 706(2)(A).
7 Cross v. United States, 512 F.2d 1212, 1218 (5th Cir. 1975).



6
law.’”8 Once the fact of a violation had been properly established, “the views of the Secretary as
to the appropriate sanction in a given case of violation are entitled to very great, if not conclusive,
weight.”9
In its Brief, Respondent cited two Commodity Futures Trading Commission (CFTC) cases to
support its contention that PHMSA’s imposition of the proposed penalty here would be arbitrary
and capricious.10 However, those cases are inapposite because the CFTC had a policy that
explicitly required the Commission to review and consider penalties imposed in other cases as part
found that the Commission had improperly excluded evidence from the record, and the civil
penalty issued was $2.745 million, whereas the next highest civil penalty ever assessed by the
penalty because the CFTC had not appropriately construed the facts relied upon in assessing a
of its assessment of civil penalties.11 Furthermore, in R& W Technical Services v. CFTC, the court
Commission had been less than $100,000. In Monieson v. CFTC, the court similarly reduced the
$500,000 penalty.
In this case, Respondent did not dispute PHMSA’s allegations of violation and has not alleged that
PHMSA violated its own procedures or policies in proposing the penalty. Given that the
company’s failure to monitor rectifier operability could result in accelerated corrosion and pose a
public safety hazard, I find that the proposed civil penalty is not arbitrary and capricious.
Accordingly, having reviewed the record and considered the assessment criteria, I assess
Respondent a civil penalty of $14,000 for violation of 49 C.F.R. §192.465(b).
Item 2: The Notice proposed a civil penalty of $14,000 for Respondent’s violation of 49 C.F.R.
§ 192.705, for failing to patrol its pipeline at the intersection of a railroad crossing a minimum of
four times per calendar, with a maximum interval between patrols of 4½ months. In its Brief,
Respondent did not contest the violation or the proposed penalty of $14,000. Respondent’s failure
to conduct patrols could have allowed undiscovered excavation activity or equipment problems to
persist, threatening the pipeline’s safety in a Class 3 location. Accordingly, having reviewed the
record and considered the assessment criteria, I assess Respondent a civil penalty of $14,000 for
violation of 49 C.F.R. § 192.705.
Item 3: The Notice proposed a civil penalty of $14,000 for Respondent’s violation of 49 C.F.R.
§ 192.745(a), for failing to test valves 2A and 2B during 2006. In its Brief, Respondent did not
contest the alleged violation but did challenge the civil penalty proposed in the Notice.
8 Butz, 411 U.S. at 188.
9 Cross, 512 F.2d at 1218.
10 R & W Technical Services LTD v. Commodity Futures Trading Commission, 205 F.3d 165, 177 (5th Cir. 2000);
Monieson V. Commodities Futures Trading Commission, 996 F.2d 852 (7th Cir. 1993).
11 R & W Technical Services LTD v. CFTC, 205 F.3d at 177; Monieson v. CFT C, 996 F.2d at 862, 863. The court, in
Monieson, noted that the CFTC itself had enumerated a number of factors to be considered in arriving at a specific
sanction or at a combination of sanctions. These factors included “a review of the sanctions imposed in the past for
similar violations” (quoting In the Matter of The Siegel Trading Co. [1977-1980 Transfer Binder] Comm.Fut.L.Rep.
(CCH) ¶ 20,452 at 21,847 (CFTC July 26, 1977). No equivalent PHMSA policy exists to consider or weigh the
penalties imposed in other cases.



7
As in Item 1, Valero argues that the $14,000 civil penalty proposed for this violation is "clearly
excessive" in comparison to penalties assessed in past cases involving violations of the same
regulation. Respondent argues that "it would be arbitrary and capricious for PHMSA to assess the
proposed $14,000 penalty " Respondent cited several PHMSA final orders from prior years that
assessed penalties for violation of 49 C.F.R. § 192.745(a). Respondent calculated the "per valve"
in each case, based on the amount assessed for the violation and the number of missed tests.
Respondent cited the following cases, with "per valve" amounts:
Operator and CPF
Years of
"Per Valve"
Total Civil Penalty for
No.
Violation
Calculation
violation of
§192.745(a)
AN Pipeline
2001-2001
$277.78
2-2004-1004
Company
$5,000
Trunkline Gas
2000-2002
$413.33
$31,000
Company
4-2004-1001
CenterPoint Energy
2001-2004
$520.59
Gas Transmission
$88,500
4-2005-1008
Company
Although not cited in Respondent's Brief, the following table reflects all other recent (violations
occurring during or after 2000) violations of § 192.745(a) in which a penalty was assessed,
including the instant case:
Operator and CPF
Years of
"Per Valve"
Total Civil Penalty for
violation
Calculation
Violation of §192.745(a)
Natural Gas Pipeline
2002-2003
$527.78
Company of
$9,500
America, a subsidiary
of Kinder Morgan,
Inc.
4-2005-1012
Dominion
2000-2003
$1,363.63
$15,000
Transmission, Inc.
1-2004-1005
Pacific Operators
2003-2004
Offshore
$5,000
$10,000
5-2007-0003
Valero Natural Gas
2006
Pipeline Company
$7,000
$14,000
1-2007-1013



8
Respondent is correct that the listed cases show a wide range of civil penalties assessed for general
violation of the § 192.745(a) when considered on a “per valve” basis. The cases suggest an
upward trend in civil penalties assessed, but such a trend simply reflects an appropriate matter of
agency discretion and is informed by the critical role of valves in emergencies and the need for
them to function properly in the event of a release. There is nothing suspect or irrational about
such a trend.
As stated above, the APA and case law interpreting it establish that once a proper agency
determination has been made that a violation of law has occurred, an agency has broad discretion
to assess a civil penalty that will achieve the objectives of the statute. Neither Congress nor this
agency has required or recommended that PHMSA assess penalties that match those assessed in
the past. Given the critical role valves play in the event of an emergency, Respondent’s failure to
test valves 2A and 2B is a serious violation that could jeopardize public safety. Accordingly,
having reviewed the record and considered the assessment criteria, I assess Respondent a civil
penalty of $14,000 for violation of 49 C.F.R. § 192.745(a).
In summary, having reviewed the record and considered the assessment criteria for each of the
Items cited above, I assess Respondent a total civil penalty of $42,000.
Payment of the civil penalty must be made within 20 days of service. Federal regulations
(49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal
Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed
instructions are contained in the enclosure. Questions concerning wire transfers should be directed
to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike Monroney
Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial
Operations Division telephone number is (405) 954-8893.
Failure to pay the $42,000 civil penalty will result in accrual of interest at the current annual rate in
accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those
same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is
not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in
referral of the matter to the Attorney General for appropriate action in a district court of the United
States.
Under 49 C.F.R. § 190.215, Respondent has the right to submit a Petition for Reconsideration of
this Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline Safety,
PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a
copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA will accept
petitions received no later than 20 days after receipt of service of the Final Order by the
Respondent, provided they contain a brief statement of the issue(s) and meet all other requirements
of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of any civil
penalty assessed but does not stay any other provisions of the Final Order, including any required
corrective actions. If Respondent submits payment of the civil penalty, the Final Order becomes
the final administrative decision and the right to petition for reconsideration is waived.



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The terms and conditions of this Final Order are effective upon service in accordance with 49
C.F.R. § 190.5.
___________________________________ __________________________
Jeffrey D. Wiese Date Issued
Associate Administrator
for Pipeline Safety
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