SUNOCO PIPELINE L.P. — Notice of Probable Violation

party submissionOfficial PDF120075001_Operator Response_12052007.pdf#

120075001_FinalOrder_09022009_text.pdf, page 1Official PDFSEP 02 2009 Mr. David A. Justin Vice President, Operations Sunoco Pipeline L.P. 525 Fritztown Road Sinking Spring, PA 19608 RE: CPF No. 1-2007-5001 Dear Mr. Justin: Enclosed is the Final Order issued in the above-referenced case. It makes findings of violation and assesses a civil penalty of $150,000. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment. Your receipt of the Final Order constitutes service of that document 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, Eastern Region Director, PHMSA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 0390 0005 6162 5845]#

120075001_FinalOrder_09022009_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 ) ) Sunoco Pipeline L.P., ) CPF No. 1-2007-5001 ) Respondent. ) ______________________________) FINAL ORDER On November 25, 2005, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), Eastern Region, investigated an incident that occurred a few days earlier at the Darby Creek Tank Farm (DC Tank Farm), a hazardous liquid pipeline facility operated by Sunoco Pipeline L.P. (Sunoco or Respondent) and located in Sharon Hill, Pennsylvania. 1 The incident in question involved the overfilling and release of more than 10,000 barrels of crude oil from one of the DC Tank Farm’s breakout tanks, DC-24.2 As a result of that inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated May 15, 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 Sunoco had committed two violations of the hazard liquid pipeline safety regulations and assessing the company a civil penalty of $150,000 for those violations. 1 The DCTF is part of the Fort Mifflin Terminal Complex, a series of facilities that receive, store, and supply crude oil to a nearby refinery in Philadelphia, Pennsylvania. http://www.reuters.com/finance/stocks/companyProfile?symbol=SXL.BE (last accessed Aug. 21, 2009). 2 Specifically, according to the information in the case file, at 10:00 a.m. on November 22, 2005, two Sunoco employees finished filling DC-24 to capacity and began to fill another tank, DC-35, with crude oil. Those employees did not, however, close the “street valve” on DC-24 in making that transition. Consequently, crude oil continued to flow into and out of DC-24 for the next several hours, while Respondent’s day- and night-shift employees continued to fill DC-35 and a subsequent tank, DC-3. Finally, at about 1:15 a.m. the next morning, the amount of crude oil in DC-24 exceeded its capacity and the tank started to overflow. That condition went unnoticed until 40 minutes later, when a Sunoco employee opened an office door and observed crude oil flowing from that tank onto the grounds of the facility. Shortly thereafter, Respondent’s employees closed the street valve and shut down DC-24.#

120075001_FinalOrder_09022009_text.pdf, page 32 probable violations, Respondent described the steps taken by the company to prevent and respond to the overflow of DC-24. The company also requested that the proposed civil penalty be reduced from $150,000 to $25,000 and, if that request was not granted, that an informal hearing be held. Sunoco responded to the Notice by letter dated July 2, 2007 (Response).3 Without disputing the On November 14, 2007, PHMSA convened that hearing via telephone, with an attorney from the Office of Chief Counsel presiding and three individuals appearing on Respondent’s behalf, Mr. David A. Justin, Vice President of Operations, Mr. David Meadows, Manager of DOT Compliance, and Mr. Brad Lange, Region 1 Supervisor. Following the hearing, Sunoco submitted a Post-Hearing Brief, dated December 5, 2007 (Brief), and additional evidence for the record. That evidence included part of the transcript of an October 20, 2006 arbitration proceeding between Respondent and the United Steel Workers Local 10-100, the union representing one of the employees involved in the November 2005 incident. FINDINGS OF VIOLATION Items 1a and 1b of the Notice alleged that Sunoco violated 49 C.F.R. § 195.402(a), which states, in relevant part: § 195.402 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. . . . More specifically, Item 1a alleged that Sunoco violated § 195.402(a) by not following the DC Tank Farm’s written procedures for “Swinging Tanks”4 and performing a “Shift Turnover. ”5 As evidence of that violation, the Notice stated that Respondent’s personnel filled DC-24 to capacity with crude oil on the morning of November 22, but failed to close the street valve on that tank before repeating that same process on DC-35. to the subsequent overflow of DC-24 at 1:15 a.m. on November 23. 6 That failure, according to the Notice, contributed 3 On June 21, 2007, the Director granted Sunoco’s request for an extension of the 30-day deadline for submitting a Response to the Notice. 4 Sunoco Logistics Marketing and Terminals L.P., Darby Creek Tank Farm, Operations Manual, Procedure 20, Swing Tanks (issued Nov. 2004). 5 Sunoco Logistics Marketing and Terminals L.P., Darby Creek Tank Farm, Operations Manual, General Procedure 2, Shift Turnover (issued Nov. 2004). 6 According to Parts B and D of Procedure 20, the employees at the DC Tank Farm are required to ensure that the valves on the previous tank are closed and the new tank are opened when swinging receiving tanks.#

120075001_FinalOrder_09022009_text.pdf, page 43 The Notice also stated that Sunoco’s personnel did not discuss the status of the valve position on DC-24 when turning over from the day to the night shift, and that the records from the day shift incorrectly indicated that the valve on DC-24 was closed, not open. 7 Finally, the Notice stated that in a January 10, 2006 meeting, Sunoco representatives admitted that the day shift operator “was busy with other activities” and “did not close [the Tank #24] valve per” the company’s written procedures. Respondent has not disputed any of these allegations. Consequently, I find that Sunoco violated § 195.402(a) by failing to “follow . . . [its] manual of written procedures for conducting normal operations and maintenance activities[,]”to include closing valves on breakout tanks and performing shift turnovers. Item 1b alleged that Sunoco further violated § 195.402(a) by not following the DC Tank Farm’s written procedures for responding to high level alarms.8 In support of that allegation, the Notice first stated that Respondent’s personnel ignored an initial high level alarm, erroneously considered it to be false. The Notice also stated those employees failed to respond to a second alarm “because an audible component was not connected and the control monitor could only acknowledge [these] alarms contributed to the overflow of [Tank #24] and subsequent damage to the tank.” display tanks the operator designated as active.”9 According to the Notice, Sunoco’s “failure to Respondent has not disputed any of these allegations. Accordingly, I find that Sunoco violated § 195.402(a) by failing to “follow . . . [its] manual of written procedures for . . . handling abnormal operations and emergencies[,]”to include responding to high level alarms. These findings of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. 7 General Procedure 2 requires, among other things, that “within [the] first hour of [a] shift change” an employee “[d]iscuss ongoing operations” and “entries in the ‘Operating Summary’ Report with [the] outgoing crew,” “[c]heck logbooks for ongoing operations[,] . . . [v]isually check all tanks, lines, valves and pumps[,] . . . [c]heck that all important information received agrees with the logbooks.” 8 Sunoco Logistics Marketing and Terminals L.P., Darby Creek Tank Farm, Operations Manual, Procedure 12, Respond to Tank High Level Alarm (issued Nov. 2004). Procedure 12 requires, among other things, that an employee respond to a high level alarm by “[d]etermin[ing] which tank is in high level alarm condition and acknowledge[ing] [the] alarm” and then “verify[ing] the high level condition immediately” by “[g]et[ting] the gauge on [the] tank.” Id. That procedure further states that “IF [a] high level in [the] tank exists, THEN divert [the] flow to another tank . . . ([i]f possible)” and “IF unable to divert [the] flow to another tank, THEN [to] notify the source of the flow to shutdown.” Id. Finally, the procedures requires the employee to “[s]ecure the tank” and “[g]et [the] closing gauge on [that] tank and determine [the] volume of crude that must be gravitated or pumped out of the tank to return [the] tank to [a] normal level.” 9 According to the transcript of the October 2006 arbitration proceeding submitted by Sunoco, a set of speakers intended to magnify the sound of one of the high-level alarms was inexplicably disconnected at the time of the incident.#

120075001_FinalOrder_09022009_text.pdf, page 54 ASSESSMENT OF PENALTY In determining the amount of a civil penalty, 49 U.S.C. § 60122 and 49 C.F.R. § 190.225 require that I consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s 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 $100,000 civil penalty for Item 1a and a $50,000 civil penalty for Item 1b, for a total civil penalty of $150,000. Respondent argues that these amounts are excessive and that the total civil penalty should be no more than $25,000. 10 Sunoco supported that position in its Response by arguing that there was nothing “else it could have done to prevent the [i]ncident short of having a supervisor present 24/7 to watch over the employees’ tasks, which is . . . unworkable.”11 Indeed, Sunoco observed that the culpable employees had received all the training needed to safely and effectively operate DC-24, but simply ignored that training and the DC Tank Farm’s operating procedures on the day and night in question. 12 Sunoco also noted that it disciplined those employees, one of whom received a suspension without pay and the other of whom was terminated before obtaining reinstatement via arbitration, that each of them underwent additional training and requalification on the procedures at issue, and that their role in causing the overflow of DC-24 is noted in the company’s personnel records. 13 Sunoco similarly argued in its Brief that the company had all of the procedures required to safely operate and maintain the DC Tank Farm, and that the personnel responsible for the overfilling of DC-24 received proper training on the execution of those procedures. Respondent also noted that the release only had a minimal impact on the environment and did not affect the public, a result of the successful mitigation provided by the company’s facilities and procedures for spill containment. Sunoco further stated that the company cooperated with PHMSA during the investigation, disciplined the culpable employees, and derived no economic benefit from the incident. In fact, Respondent noted that it actually spent some $250,000 in responding to and remediating this incident. Lastly, the company reiterated that “two properly trained and qualified employees simply chose to ignore Sunoco Pipeline’s manuals and procedures and their own extensive training and qualifications.”14 10 Response at 1-2. 11 Response at 2. 12 Response at 1. 13 Id. 14 Brief at 1-2.#

120075001_FinalOrder_09022009_text.pdf, page 65 I do not find Respondent’s arguments for reducing the proposed civil penalty persuasive. As the operator of the DC Tank Farm, Sunoco is responsible for ensuring that its employees comply with all applicable PHMSA regulations. That includes the requirement that Respondent’s personnel “conduct[] normal operations and maintenance activities and handl[e] abnormal existence of such procedures and provision of employee training on their proper execution does not satisfy the former obligation. To the contrary, Sunoco has a separate and distinct duty to ensure that its employees actually implement its written procedures when performing normal operations and maintenance activities and responding to abnormal operations and emergencies. Therefore, even if Respondent developed and provided adequate training on the procedures in question, that fact alone does not preclude an appropriate civil penalty for its failure to ensure that the personnel at the DC Tank Farm actually followed those procedures on November 22 and 23, 2005. operations and emergencies” per the terms of its written procedures.15 Moreover, the mere Likewise, while relevant in terms of deterring future violations, Sunoco’s decision to discipline and retrain the offending employees is not a compelling basis for reducing the civil penalty in this case. Such post-hoc measures do not change the fact that an unauthorized release of hazardous liquids occurred at the DC Tank Farm and that Respondent, as the operator of that facility, is ultimately responsible for that violation. Similarly, the fact that Sunoco had alarms and other equipment for detecting abnormal operations at the time of the incident does not warrant a reduction in this civil penalty. The violations here relate solely to the actions of Respondent’s employees, not the presence or operability of its alarms and equipment. Furthermore, contrary to Sunoco’s arguments, a 10,000-barrel-plus release of crude oil is an environmentally significant event, a fact best demonstrated by the large volume of such a spill and the costs associated with its remediation. More importantly, PHMSA considered the mitigating factors identified by Sunoco in calculating the civil penalty in this case, 16 and the total amount proposed is consistent with the penalties 15 49 C.F.R. § 195.10 (noting that “[a]n operator may make arrangements with another person for the performance of any action required by [Part 195, Title 49, Code of Federal Regulations, but that] . . . the operator is not thereby relieved from the responsibility for compliance with any requirement of [Part 195]”). 16 Pipeline Safety Violation Report (Violation Report), PHMSA, C.P.F. 1-2007-5001 (signed May 17, 2007) (on file). Indeed, the Violation Report confirms that PHMSA fully understood and considered the totality of the circumstances presented, including the mitigating factors identified by Sunoco, when calculating the proposed civil penalty amounts in this case. For example, the Violation Report notes under “Civil Penalty Assessment Considerations” for Item 1A that Sunoco “appears to have a thorough safety program and is traditionally respons[ive] to identified compliance and safety issues.” Id. at 4. It further notes that Sunoco “conducted a very extensive accident investigation to determine that employees did not follow procedures . . . [and had] initiated changes to negate the need to issue a compliance order.” Id. Similarly, the Violation Report notes in the “Civil Penalty Assessment Considerations” for Item 1B that Sunoco’s “procedures were clear about how personnel are required to monitor and react to alarms conditions,” that Respondent “[wa]s making significant changes in [its] operating procedures . . . [and] to [its] control room technology to make equipment status and alarms more apparent,” and that it “[wa]s implementing several procedural changes to improve [its] response to emergencies and consistency at each of the operator’s eight other manned operating facilities in the eastern region,” thereby “negat[ing] the need to issue a compliance order.” Id. at 6. The Violation Report also contains a thorough and accurate description of the November 2005 incident, including the fact that Sunoco lost $7,800 worth of crude oil, incurred $28,800 in property damage, and expended more than $211,100 in other remediation costs. Id. at 3. In other words, Sunoco’s bases for requesting a reduction in the civil penalty are already reflected in the original amounts proposed in the Notice.#

120075001_FinalOrder_09022009_text.pdf, page 76 assessed for analogous violations involving spills of similar magnitude. For example, PHMSA recently imposed a $105,000 civil penalty for a violation that resulted in a spill of 9,030 gallons of oil. 17 Like Sunoco, the operator in that case “requested a reduction or elimination of the civil penalty based upon: (1) the company's prompt response to the accident, including cleanup; (2) the corrective actions it initiated after the accident to prevent similar accidents; (3) the minimal impact that the accident had on public safety and the environment; (4) its cooperative response to unconvincing, however, stating: the OPS investigation; and (5) its compliance history.”18 PHMSA found those arguments The corrective actions to which Respondent refers . . . were taken after the accident had already occurred. It is true that PHMSA considers any “good faith” efforts in calculating and assessing civil penalties, but only for those actions that an operator has taken in a reasonable attempt to achieve compliance. Once an accident has occurred or a violation has been discovered, PHMSA would expect any prudent and responsible operator to cooperate in preventing another accident or violation. With respect to Respondent's contention that the release's impacts on public safety and the environment were minimal, I would note that virtually any release of hazardous liquids from a pipeline can result in serious risk of injury. In this case, the pipeline ruptured and released approximately 9,030 gallons of crude oil into the environment. Respondent is fortunate that no greater environmental harm or physical injury occurred. The record indicates that at least one . . . employee was on site at the time of the incident and therefore could have been injured.19 I find this reasoning applicable and extremely persuasive here. For these reasons, I find that a civil penalty of $100,000 for Item 1a and $50,000 for Item 1b is justified by the penalty assessment criteria. Accordingly, I assess Respondent a total civil penalty of $150,000. PAYMENT OF PENALTY Payment of the $150,000 civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) require this payment be made by wire transfer, through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. 17 In the Matter of Enbridge Pipelines LLC-North Dakota, C.P.F. No. 3-2007-5022 (Jun. 2, 2009) (finding that operator violated 49 C.F.R. § 194.406(b) by failing to provide an adequate pressure relief device on an isolated pipeline segment which later failed). 18Id. 19 Id.#

120075001_FinalOrder_09022009_text.pdf, page 87 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, OK 73125; (405) 954- 8893. Failure to pay the $150,000 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 United States District Court. 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 terms of the order, including any required corrective action and amendment of procedures, shall remain in full force and effect unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this Final Order shall be effective upon receipt. Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

120075001_notice letter_05152007.pdf, page 1Official PDFU5. Deportment of Tronsporlolion Plpelln€ ond HszElclour moteliolt sotw Admlnlrttdlon 409 3rd Stree! SW' Suite 300 Washington, DC 2OO24 NOTICE OF PROBABLE VIOLATION and PROPOSED CIVIL PENALTY cERTrFrEp MArL - RETURN RESETPT REOTIESTED May 15,2007 Mr. David A. Justin Vice President, Operations Sunoco Pipeline L.P. 525 Fritztown Road Sinking Spring PA 19608 CPF No. 1-2007-5001 Dear Mr. Justin: On Novembet 25,2005, a representative of the Pipeline and Hazardous Materials Safety Adminisnation (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected the site of the Novenrber 22,2005 insident reported by Sunoco Ingistics at its Darby Creek Tank Farm facility located in Sharon Hill, PA. As a result of the inspection, it appears that you have committed aprobable violation of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation is:#

120075001_notice letter_05152007.pdf, page 2l. $195.402 Procedural manual for operations, maintensnce' and emergencies' a) General Each operator shall prepare and follow for each pipeling I manual of written procedures for conducting operetions and maintenance activities and for emergency response. la. On November 22,2A05 Sunoco Logistics operations personnel did not follow Operations Procedure 20 - Valve Closure, which specifies that "...b"fo; swinging ta arpther tank get the closing gauge on previous tank and enter on work sheets. " Failure to follow the procedure to ensure closure of the sheli valve fot Darby Creek (DC) Tank #24 prior to swinging to another tank after it was taken off line contributed to the overflow of the tank. Also, there was a failure by operating personnel to discuss the status of valve positions during the change between the day and night shifts as required by company pfocedures. The closrrre of the valve for DC'24 was indicated on the worksheet. According to Sunoco Logistics re,presentatives dr.ring a meeting on this matter held on January t0, Z00O the "fd Operator for the day shift was busy with other aetivities, did not close Dc-24 frank #24) value per Operation Procedures 20- Sunoco Logistics O&M Procedure$ are also evidence of the probable violation. lb. On November 23,2005 Sunoco Logistics operating personnel did not follow Operations Procedure 12 which specifies that: "all high level alarms must receiv e immediate attention.' " Sunoco Logistics operation personnel could not determine that DC-24 was filling and an initial alann was considered {alse. Operator personnel continued with other responsibilities during the initial alarm. A second alarm was not acted upon because an audible component was not connected and the contol monitor could only display tanks the operator designatd as active. The systern was set to acknowledge multiple alarms. Also, Sunoco Logistic operation personn€l could not monitor the higlt flow rate nDC-24 ot the rate of flow in and out of DC-24. The failure to acknowledge the alarms contributed to the ovefflow of DC-24 and subsequent damage to the tank.#

120075001_notice letter_05152007.pdf, page 3In addition to the procedures already cited, further evide,lrce of the probable violation was supported dwing the review of the following Sunoco Logistics' documentation: o routine facility checks report, r leak detection systern, o overflow incident timeline report, o pump sheet log, r shift change log . daily product inventory, o vessel transfer sheet, o tank monitoring log at the time of the incident r O & M Procedure 2: Shift Turnover, o O & M Procedure 6: Tank Overflow A review of plant records verified that the valve for DC-24 was noted as closed, wherrin fact it was left in the open position and not recognized by operating personnel. Proposed Civil Penalty Under 49 United States Code $ 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $ I ,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting docume,lrtation involved in the above probable violation and has recommended that you be preliminarily assessed a civil penalty of $ 150,000 as follows: Itemnumhp.t la 1b PENALTY $100,000 $50.000 Response to this Notice Enclosed as part of this Notice is a document entitled Response OTttions for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you beliwe quali$r for confidential ffeatnent redactd and an explanation of why you believe the redacted infonnation qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your rigtrt to contest the allegations in this J#

120075001_notice letter_05152007.pdf, page 4Notice and authorizes the Associate Administrator for Pipeline Safety to fi.nd facts as alleged in this Notice without furlter notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 1-2007-5001 and for each document you submi! please provide a copy in electronic format whenever possible' Sincerely, / e,.. Vat\- L-v\>'t t/ II LY Bfron Coy, Jr. Director, Eastern Region Pipetine and Hazardous Materials Safety Administration Enclosures: Resynnse Optiowfor Pipeline Operators in Compliance Proceedings 4#

120075001_Decision on the Petition for Reconsideration_10222009_text.pdf, page 1Official PDFOCT 22 2009 VIA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7004 2510 0003 6895 8778] Mr. David Justin Vice President, Operations Sunoco Logistics Partners, L.P. 1735 Market Street Ste LL Philadelphia, PA 19103-7538 RE: CPF No. 1-2007-5001 Dear Mr. Justin: Enclosed is this agency’s decision on the Petition for Reconsideration filed by your company in the above-referenced case. For the reasons stated in the decision, the Petition is denied. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment. Service of this decision by certified mail is complete upon mailing 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#

120075001_Decision on the Petition for Reconsideration_10222009_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 ) ) Sunoco Pipeline L.P., ) CPF No. 1-2007-5001 ) Petitioner. ) ______________________________) DECISION ON PETITION FOR RECONSIDERATION In a September 2, 2009 Final Order, I found that Sunoco Pipeline L.P. (Sunoco or Petitioner) had failed in two respects to “follow” its “manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. ”1 I assessed the company a total civil penalty of $150,000 for those violations. 2 On September 15, 2009, Sunoco filed a Petition for Reconsideration of that Final Order.3 In its Petition, Sunoco asked for permission to review the presiding official’s recommendation for final action in this matter. Sunoco also offered three substantive arguments in support of its request for reconsideration of the Final Order, namely, that the Order imposed a separate and distinct duty upon Petitioner to ensure that its employees actually follow the company’s written procedures, a duty that has no basis in the pipeline safety regulations; that the imposition of a civil penalty is not supported by the facts of this case or the law; and that certain mitigating factors warrant reduction in the amount of the civil penalty assessed in the Final Order. 4 For the reasons stated below, I am denying Sunoco’s request to review the presiding official’s recommendation for final action in this case, rejecting its substantive arguments as repetitious and unpersuasive, and affirming the September 2, 2009 Final Order without modification. 1 49 C.F.R. § 195.402(a). 2 49 C.F.R. § 190.213 (authorizing issuance of Final Orders by Associate Administrator). 3 49 C.F.R. § 190.215 (filing of Petitions for Reconsideration). 4 Sunoco also requested that the Final Order be stayed pending the disposition of its request for the presiding official’s recommendation. As the timely filing of a Petition automatically stays the payment of a civil penalty under 49 C.F.R. 190.215(d) and given that I am denying the aforementioned request, no further action on its request for a stay is required.#

120075001_Decision on the Petition for Reconsideration_10222009_text.pdf, page 32 I. Discussion A. Sunoco’s Request for the Presiding Official’s Recommendation for Final Action An operator who receives a notice of probable violation is afforded certain rights under the pipeline safety regulations. Those rights include the right to submit a written response to the notice; to request an informal hearing; to ask for and receive the material in the case file prior to that hearing; to offer relevant information and evidence, and to examine the information and evidence offered by PHMSA, at such a hearing; and to request an opportunity to submit additional, relevant material for the record within a reasonable time after a hearing. 5 Moreover, the pipeline safety regulations also impose certain obligations on those tasked with adjudicating a notice. For example, though “conducted informally without strict adherence to the rules of evidence[,]” an attorney from the Office of Chief Counsel serves as the presiding official at a hearing. In that capacity, he or she is responsible for conducting the proceeding, considering all of the material of record, and “prepar[ing] a written recommendation as to final action in the case.” That recommendation is then forwarded, along with the other material in the case file, to the Associate Administrator for “final administrative action. ”6 In most cases, such action comes by way of a final order that contains “[a] statement of findings and determinations on all material issues, including a determination as to whether each alleged violation has been proved” and, “[i]f a civil penalty is assessed, the amount of the penalty and the procedures for payment of the penalty[.]”7 The presiding official’s recommendation for final action serves a vital role in the adjudicatory process, and that is why I carefully consider these recommendations in each and every case. However, those recommendations are privileged, intra-agency communications, the confidentiality of which must be protected to encourage open and frank discussions between the Associate Administrator and the presiding official. Moreover, a presiding official’s recommendation is also a deliberative and pre-decisional document, i.e., the final decisionmaking authority in a case lies with the Associate Administrator, not the presiding official. Accordingly, the disclosure of the latter’s recommendation—a recommendation which might not be adopted in the final order—is not required to avoid the disruption and public confusion that would result from the release of such advisory opinions. 5 49 C.F.R. §§ 190.209-190.211. 6 49 C.F.R. § 190.211 7 49 C.F.R. § 190.213(c)(1)-(2).#

120075001_Decision on the Petition for Reconsideration_10222009_text.pdf, page 43 Furthermore, the Associate Administrator is not required by the pipeline safety laws to provide an operator with a presiding official’s recommendation. Rather, PHMSA is only obliged to disclose the material in the case file prior to a hearing, and a presiding official’s recommendation, completed after that hearing occurs, does not fall within the scope of that requirement. For these reasons, I am denying Sunoco’s request for the presiding official’s recommendation for final action in this case. B. Sunoco’s Substantive Arguments for Reconsideration of the Final Order Sunoco’s first substantive argument on reconsideration is that it has no duty under the pipeline safety regulations to ensure that its employees actually follow its written procedures. The merits of that argument—already considered and rejected in the Final Order—need not be reconsidered here.8 Regardless, the law on this issue is unequivocal: an operator has an affirmative duty to ensure that its written procedures are followed and is responsible for any acts of non-compliance by its employees or contractors.9 With regard to Sunoco’s second argument, the factual and legal support for imposing a civil penalty in this case is well stated in the Final Order. That includes Petitioner’s culpability for failing to ensure that its employees actually followed the company’s written procedures and the magnitude of the spill—some 10,000 barrels of crude oil from a breakout tank—that occurred as a result of those failures. Finally, the post-hoc measures and other mitigating factors identified by Sunoco do not warrant a reduction in the civil penalty. As noted in the Final Order, all of those factors were carefully considered by OPS in calculating the amount proposed in the original notice.10 Having examined all of the evidence and arguments relevant to that determination again on reconsideration, I find that no grounds exist for reducing the civil penalty amount assessed in this case. 8 49 C.F.R. § 190.215(c) (stating that the Associate Administrator does not consider repetitious arguments). 9 In the Matter of AGL Resources, Inc., CPF No. 2-2006-3003, Final Order (Jul. 7, 2009) (noting that “it is well settled that pipeline operators are ultimately responsible for the acts and omissions of their employees, contractors, and agents in complying with the pipeline safety regulations[,]” that “such a policy conforms to the traditional doctrine of respondeat superior under which [an employer] is legally responsible for the acts of its employees and agents acting within the scope of their employment[,]” and that under any contrary interpretation, “no pipeline operator that had adopted adequate safety procedures but then failed to monitor or supervise its personnel in carrying them out would ever be held liable for its own regulatory violations.”). 10 In the Matter of Sunoco Pipeline L.P., CPF No. 1-2007-5001, Final Order, p. 5, fn. 16 (Sep. 2, 2009) (discussing the information and analysis provided in the “Civil Penalty Assessment Considerations” portion of the Violation Report).#

120075001_Decision on the Petition for Reconsideration_10222009_text.pdf, page 54 Accordingly, I am denying Sunoco’s September 15, 2009 Petition in its entirety and affirming the September 2, 2009 Final Order without modification. This decision on reconsideration is the final administrative action in this proceeding. _____________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#