{"operation":"document","citation":"CPF 120115001","title":"KINDER MORGAN LIQUID TERMINALS, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2011-05-11","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.402(c)(3), 195.402(c)(7), 195.402(c)(8), 195.402(c)(9), 195.408(b)(1), 195.428(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-120115001.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-120115001.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-120115001","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/120115001","body":"Notice of Probable Violation involving KINDER MORGAN LIQUID TERMINALS, LLC. PHMSA's enforcement data identifies the cited regulations as 195.402(c)(3),  195.402(c)(7),  195.402(c)(8),  195.402(c)(9),  195.408(b)(1),  195.428(a). The case was opened on 2011-05-11 and is reported as closed as of 2013-05-23. Proposed civil penalty: $425,000. Assessed civil penalty: $425,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n120115001_Closure Letter_05232013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115001/120115001_Closure%20Letter_05232013.pdf\n\n120115001_Closure Letter_05232013_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115001/120115001_Closure%20Letter_05232013_text.pdf\n\n120115001_Final Order_10172012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115001/120115001_Final%20Order_10172012.pdf\n\n120115001_Final Order_10172012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115001/120115001_Final%20Order_10172012_text.pdf\n\n120115001_NOPV_PCP_PCO_05112011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115001/120115001_NOPV_PCP_PCO_05112011.pdf\n\n120115001_NOPV_PCP_PCO_05112011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115001/120115001_NOPV_PCP_PCO_05112011_text.pdf\n\n120115001_Operator_Written_Response_to_NOPV_and_Proposed_Compliance_Order__08092011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115001/120115001_Operator_Written_Response_to_NOPV_and_Proposed_Compliance_Order__08092011.pdf\n\n120115001_Final Order_10172012_text.pdf\n\nOCTOBER 17, 2012\nMr. Carlos Munguia\nRegional Vice President\nKinder Morgan Liquids Terminals LLC\n8500 West 68th Street, #1\nSummit Argo, IL 60501\nRe: CPF No. 1-2011-5001\nDear Mr. Munguia:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a civil penalty of $425,000, and specifies actions that must be taken by Kinder\nMorgan Liquids Terminals LLC to comply with the pipeline safety regulations. The penalty\npayment terms are set forth in the Final Order. When the civil penalty has been paid and the\nterms of the compliance order completed, as determined by the Director, Eastern Region, this\nenforcement action will be closed. Service of the Final Order by certified mail is deemed\neffective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS\nMr. Byron Coy, Director, Eastern Region, OPS\nRobert Hogfoss, Esq., Hunton & Williams, Bank of America Plaza, Suite 4100\n600 Peachtree Street, N.E., Atlanta, GA 30308\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n___________________________________\nIn the Matter of )\nKinder Morgan Liquids Terminals LLC, ) )\n)\n)\nRespondent. )\n___________________________________ )\nCPF No. 1-2011-5001\nFINAL ORDER\nOn May 4, 2010, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous\nMaterials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an\ninvestigation of an accident involving the release of approximately 8,600 gallons (200 barrels) of\nfuel oil at a pipeline terminal facility operated by Kinder Morgan Liquids Terminals LLC\n(KMLT or Respondent) in Perth Amboy, New Jersey. The accident was reported to the National\nResponse Center on October 28, 2009 (NRC Report 921903). The Perth Amboy facility consists\nof 23 breakout tanks and a refined petroleum products pipeline that is 2.28 miles in length.\nKMLT, a subsidiary of Kinder Morgan Energy Partners, L.P., operates approximately 250\nbreakout tanks and 55 miles of pipeline transporting refined petroleum products primarily in\nTexas and New Jersey.\n1\nAs a result of the investigation, the Director, Eastern Region, OPS (Director), issued to\nRespondent, by letter dated May 11, 2011, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the\nNotice alleged that KMLT committed seven violations of the hazardous liquid pipeline safety\nregulations in 49 C.F.R. Part 195. The Notice proposed a civil penalty of $425,000 for the\nalleged violations and proposed corrective measures to remediate the alleged violations.\nBy letter dated June 10, 2011, KMLT requested a hearing and an extension of time to respond to\nthe allegations in the Notice. After receiving an extension of time, Respondent submitted a\nwritten response dated August 9, 2011 (Response). In its Response, KMLT did not contest the\nalleged violations, but requested that the proposed penalty be reduced. Both Respondent and\ncounsel for OPS submitted pre-hearing briefs regarding the proposed penalty on\nNovember 11, 2011. The hearing was held on November 22, 2011, in West Trenton,\nNew Jersey, before the Presiding Official from the Office of Chief Counsel, PHMSA. After the\nhearing, Respondent filed a Post-Hearing Submittal by letter dated January 6, 2012.\n1 System information for calendar year 2011 is reported pursuant to 49 C.F.R. § 195.49.\n\n\n\n2\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondent committed seven violations of 49 C.F.R. Part 195 as\nfollows:\nItem 1: The Notice alleged that Respondent violated § 195.402(c)(7), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) General. Each operator shall prepare and follow for each pipeline\nsystem a manual of written procedures for conducting normal operations\nand maintenance activities and handling abnormal operations and\nemergencies . . . .\n(c) Maintenance and normal operations. The manual required by\nparagraph (a) of this section must include procedures for the following to\nprovide safety during maintenance and normal operations:\n(7) Starting up and shutting down any part of the pipeline system in a\nmanner designed to assure operation within the limits prescribed by\n§ 195.406, consider the hazardous liquid or carbon dioxide in\ntransportation, variations in altitude along the pipeline, and pressure\nmonitoring and control devices.\nThe Notice alleged that Respondent violated § 195.402(c)(7) by failing to have and follow\nwritten procedures for starting up and shutting down the pipeline at the Perth Amboy terminal\nfacility. Specifically, the Notice alleged that on October 28, 2009, while a third-party pipeline\ncompany was delivering fuel oil into Tank #57, the valve on the tank closed prematurely,\ncausing a pressure surge in the piping. Surge pressures normally would relieve into Surge Tank\n#42, but the Notice alleged that the isolation valve on Tank #42 had been left closed, preventing\nsurge pressure relief. This resulted in an overpressure and failure of the piping and release of\napproximately 8,600 gallons of fuel oil into the breakout tank’s dike containment area.\nDuring an investigation of the accident, the OPS inspector observed that Respondent did not\nhave startup and shutdown procedures that included “line-up procedures” designed to ensure\nvalves were in the correct position for unimpeded tank loading and unloading operations and\nappropriate pressure relief. Additional evidence in the record supporting the allegation included\nKMLT’s accident investigation report, which lists under “immediate/direct causes” of the\naccident that “there was no written SOP or SSP that was used or followed to perform and check\nthe lineup associated with this pipeline move.”2 The report also listed under “basic/root causes”\nthat “there is no written SOP or SSP that is followed for the lineup and operations activity\nassociated with pipeline inbound movements to tank 57 and the new tank field. This would\ninclude verification of high pressure/surge tank valves being open as appropriate.”3\n2 OPS Pipeline Safety Violation Report, Exhibit A-3 at 5 (May 10, 2011).\n3 Violation Report, Exhibit A-3 at 6.\n\n\n\n3\nIn its Response and at the hearing, KMLT did not contest the alleged violation and\nacknowledged that the isolation valve to Tank 42 was inadvertently left in a closed position after\nmaintenance activities. Respondent stated that it has revised its manual of written procedures to\ninclude more specific startup and shutdown procedures in regard to valve lineup, as well as\nconducting additional activities intended to prevent recurrence of such an incident.\nAccordingly, after considering the evidence, I find that Respondent violated § 195.402(c)(7) by\nfailing to have and follow written procedures for starting up and shutting down its pipeline at the\nPerth Amboy terminal facility.\nItem 2: The Notice alleged that Respondent violated § 195.402(c)(8), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) . . . .\n(c) Maintenance and normal operations. The manual required by\nparagraph (a) of this section must include procedures for the following to\nprovide safety during maintenance and normal operations:\n(8) In the case of a pipeline that is not equipped to fail safe, monitoring\nfrom an attended location pipeline pressure during startup until steady\nstate pressure and flow conditions are reached and during shut-in to assure\noperation within limits prescribed by § 195.406.\nThe Notice alleged that Respondent violated § 195.402(c)(8) by failing to have and follow\nwritten procedures for monitoring pressure on the pipeline from an attended location to assure\noperation within limits prescribed by § 195.406 during startup and shut-in.\nDuring the investigation, the OPS inspector observed that Respondent did not have procedures\nfor monitoring pressure on the terminal facility pipeline from an attended location. Additional\nevidence in the record supporting the allegation included KMLT’s accident investigation report,\nwhich lists under “basic/root causes” of the accident that “there is no requirement or policy for\nan operator [to] oversee the entire [pipeline] inbound operation in the control room.”4\nIn its Response and at the hearing, KMLT did not contest the alleged violation and stated that it\nhas revised its manual of written procedures to address this concern.\nAccordingly, after considering the evidence, I find that Respondent violated § 195.402(c)(8) by\nfailing to have and follow written procedures for monitoring pressure on the pipeline from an\nattended location.\nItem 3: The Notice alleged that Respondent violated § 195.402(c)(9), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n4 Violation Report, Exhibit A-3 at 6.\n\n\n\n4\n(a) . . . .\n(c) Maintenance and normal operations. The manual required by\nparagraph (a) of this section must include procedures for the following to\nprovide safety during maintenance and normal operations:\n(9) In the case of facilities not equipped to fail safe that are identified\nunder paragraph 195.402(c)(4) or that control receipt and delivery of the\nhazardous liquid or carbon dioxide, detecting abnormal operating\nconditions by monitoring pressure, temperature, flow or other appropriate\noperational data and transmitting this data to an attended location.\nThe Notice alleged that Respondent violated § 195.402(c)(9) by failing to have and follow\nwritten procedures for detecting abnormal operating conditions by monitoring pressure,\ntemperature, flow or other appropriate operational data on the pipeline and transmitting this data\nto an attended location.\nDuring the investigation, the OPS inspector observed that Respondent did not have procedures\nfor monitoring pressure, temperature, flow and other appropriate operational data and\ntransmitting the data to an attended location.\nIn its Response and at the hearing, KMLT did not contest the alleged violation and stated that it\nhas revised its manual of written procedures to address this concern.\nAccordingly, after considering the evidence, I find that Respondent violated § 195.402(c)(9) by\nfailing to have and follow written procedures for detecting abnormal operating conditions by\nmonitoring pressure, temperature, flow or other appropriate operational data and transmitting the\ndata to an attended location.\nItem 4: The Notice alleged that Respondent violated § 195.402(c)(3), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) . . . .\n(c) Maintenance and normal operations. The manual required by\nparagraph (a) of this section must include procedures for the following to\nprovide safety during maintenance and normal operations:\n(3) Operating, maintaining, and repairing the pipeline system in\naccordance with each of the requirements of this subpart [F] and subpart H\nof this part.\nThe Notice alleged that Respondent violated § 195.402(c)(3) by failing to have procedures for\noperating, maintaining, and repairing the pipeline system’s overpressure safety devices and\noverfill protection systems in accordance with the requirements of § 195.428 of subpart F.\nSection 195.428 establishes requirements for regularly inspecting and testing overpressure safety\ndevices and overfill protection systems to verify they are functioning properly, in good\nmechanical condition, and adequate from the standpoint of capacity and reliability of operation\nfor the service in which they are used.\n\n\n\n5\nThe evidence in the record supporting the allegation included documentation by the OPS\ninspector of his observation during the investigation that KMLT did not have procedures for\noperating, maintaining, and repairing the pipeline system’s overpressure safety devices and\noverfill protection systems.\nIn its Response and at the hearing, Respondent did not contest the alleged violation and stated\nthat it has revised its manual of written procedures to address this concern.\nAccordingly, after considering the evidence, I find that Respondent violated § 195.402(c)(3) by\nfailing to have procedures for operating, maintaining, and repairing the pipeline system’s\noverpressure safety devices and overfill protection systems in accordance with the requirements\nof § 195.428 of subpart F.\nItem 5: The Notice alleged that Respondent violated § 195.402(c)(3), quoted above, by failing to\nhave procedures for maintaining pipeline system valves in accordance with the requirements of\n§ 195.420 of subpart F. Section 195.420 establishes requirements for maintaining mainline\nvalves in good working order at all times and for regularly inspecting mainline valves to verify\nthey are functioning properly. Specifically, the Notice alleged that KMLT did not have written\nprocedures for maintaining the automated shell gate valve located on Tank #57 or the gate valve\non the 8-inch tank line to Surge Tank #42. As previously alleged, the valve on Tank #57 closed\nprematurely during the fuel oil transfer, causing a surge in pressure, and the isolation valve at\nSurge Tank #42 was closed preventing surge relief. This resulted in the overpressure and failure\nof the piping.\nThe evidence in the record supporting the allegation included documentation by the OPS\ninspector of his observation during the investigation that KMLT did not have procedures for\nmaintaining the valves. The OPS inspector also noted that company records documented the\nvalve on Surge Tank #42 had been closed for maintenance, but never reopened. Also included in\nevidence was KMLT’s accident investigation report, which documented there had been\n“previous examples of tank valves closing during marine and related tank activity operations”\nand that the company planned to look into the cause of those occurrences to determine if they\nwere related to the premature closure of the valve on October 28, 2009. KMLT’s accident report\nlisted under causes, “Inadequate Maintenance,” and noted that the valve at Tank #42 had been\nclosed for maintenance after a nitrogen leak was discovered during the summer of 2009, but the\nvalve had never been repaired or reopened and that “many individuals/operators in the terminal\nwere unaware that this valve was closed.”5\nIn its Response and at the hearing, KMLT did not contest the alleged violation and stated that it\nhas revised its manual of written procedures to address this concern.\nAccordingly, after considering the evidence, I find that Respondent violated § 195.402(c)(3) by\nfailing to have procedures for maintaining the pipeline system’s valves in accordance with the\nrequirements of § 195.420.\n5 Violation Report, Exhibit A-3 at 6.\n\n\n\n6\nItem 6: The Notice alleged that Respondent violated § 195.428(a), which states:\n§ 195.428 Overpressure safety devices and overfill protection\nsystems.\n(a) Except as provided in paragraph (b) of this section, each operator\nshall, at intervals not exceeding 15 months, but at least once each calendar\nyear, or in the case of pipelines used to carry highly volatile liquids, at\nintervals not to exceed 7 1/2 months, but at least twice each calendar year,\ninspect and test each pressure limiting device, relief valve, pressure\nregulator, or other item of pressure control equipment to determine that it\nis functioning properly, is in good mechanical condition, and is adequate\nfrom the standpoint of capacity and reliability of operation for the service\nin which it is used.\nThe Notice alleged that Respondent violated § 195.428(a) by failing to inspect and test the relief\ndevice on Surge Tank #42 at intervals not exceeding 15 months, but at least once each calendar\nyear, to verify its capacity was adequate.\nDuring the investigation, the OPS inspector observed that Respondent did not have any records\nshowing the relief device had been inspected and tested to determine that capacity was adequate\nto relieve anticipated pressure and flow rates in the event of an overpressure situation.\nAdditional evidence in the record supporting the allegation included KMLT’s Pipeline\nHydraulics Analysis performed after the accident, which found that for normal operating\nconditions, the maximum flow rate of 4,650 gallons per minute (USGPM) could be run in the\ncurrent piping system at Perth Amboy Terminal using a relief set point at Surge Tank #42 of 80\npsig.6 The set point of the relief device at the time of the accident, however, was 90 psig.\nIn its Response and at the hearing, Respondent did not contest the allegation of violation, and\nstated it has taken action to confirm that its inspection and testing schedule will ensure future\ncompliance with this regulation.\nAccordingly, after considering the evidence, I find that Respondent violated § 195.428(a) by\nfailing to inspect and test the relief device on Surge Tank #42 at intervals not exceeding 15\nmonths, but at least once each calendar year, to verify that its capacity was adequate.\nItem 7: The Notice alleged that Respondent violated § 195.408(b)(1), which states:\n§ 195.408 Communications.\n(a) Each operator must have a communication system to provide for\nthe transmission of information needed for the safe operation of its\npipeline system.\n(b) The communication system required by paragraph (a) of this\nsection must, as a minimum, include means for:\n(1) Monitoring operational data as required by § 195.402(c)(9);\n6 Violation Report, Exhibit A-4.\n\n\n\n7\nThe Notice alleged that Respondent violated § 195.408(b)(1) by failing to have a communication\nsystem that provided for the transmission of information needed for the safe operation of the\npipeline. Specifically, the Notice alleged that the communication system in place at the time of\nthe accident did not transmit information about the inbound product movement, such as pressure,\ntemperature, flow and other operational data, specified in § 195.402(c)(9), for detecting\nabnormal operating conditions. In addition, the Notice alleged the communication system failed\nto transmit level alarm information from Tank #57 to the control room of the third-party pipeline\ncompany delivering product to the tank.\nDuring the investigation, the OPS inspector noted that when the valve on Tank #57 closed\nprematurely, causing a pressure surge in the piping system, the third-party control system could\nnot detect any pressure increase. It was not until the failure occurred that the third party’s leak\ndetection system detected a pressure loss triggering an automatic shutdown of the pumping\noperations. Additional evidence in the record supporting the allegation included KMLT’s\naccident investigation report, which lists under “basic/root causes” that “there is no\ncommunication link between tank 57 High-high alarm” and the third party’s control room to alert\nthe third party of a potential overfill situation.7\nIn its Response and at the hearing, Respondent did not contest the allegation of violation, and\nstated that it has taken action to revise its communication plan in response to PHMSA’s\nconcerns.\nAccordingly, after considering the evidence, I find that Respondent violated § 195.408(b)(1) by\nfailing to have a communication system that provided for the transmission of information needed\nfor the safe operation of the pipeline.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any\nrelated series of violations.8 The Notice proposed a total civil penalty of $425,000 for the\nviolations cited above.\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I\nmust consider the following criteria: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent’s culpability; the history\nof Respondent’s prior offenses; any effect that the penalty may have on Respondent’s ability to\n7 Violation Report, Exhibit A-3 at 6.\n8 Subsequent to the Notice issued in this case, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of\n2011, Pub. L. No. 112-90, § 2(a), 125 Stat. 1905, increased the civil penalty liability for violating a pipeline safety\nstandard to $200,000 per violation for each day up to a maximum of $2,000,000 for any related series of violations.\n\n\n\n8\ncontinue doing business; and the good faith of Respondent in attempting to comply. In addition,\nI may consider the economic benefit gained from the violation without any reduction because of\nsubsequent damages, and such other matters as justice may require.\nIn its written submissions and at the hearing, Respondent contended that the proposed penalty\nshould be reduced for four primary reasons: (1) the penalty proposed for Item 1 exceeded the\nstatutory limit of $100,000; (2) multiple and duplicative penalties were proposed for essentially\nthe same regulatory violations; (3) the statutory assessment criteria warrant reducing the penalty;\nand (4) the proposed penalty is higher than other penalties assessed by PHMSA for similar\nviolations. Each of these arguments is addressed below.\nItem 1: The Notice proposed a civil penalty of $122,500 for Respondent’s violation of 49 C.F.R.\n§ 195.402(c)(7). With regard to the nature, circumstances, and gravity of the violation,\nRespondent’s failure to have startup and shutdown procedures that included “line-up procedures”\nled to valves being in an incorrect position for tank loading and unloading operations and\nappropriate pressure relief. The pipeline accident that occurred on October 28, 2009, was\ndirectly attributable to this failure to have and follow line-up procedures. At the hearing, OPS\nexplained that an elevated penalty had been proposed for this violation because it was a causal\nfactor in the accident.\nRespondent argued that the proposed penalty for Item 1 exceeds the statutory limit of $100,000\nfor a single-day violation. Respondent argued further that no multiple-day violation had been\nalleged in the Notice or in the supporting materials, nor would it be appropriate to allow OPS to\nadvance an allegation of a multiple-day violation given the facts.9\nKMLT is correct that the Notice did not include a statement concerning the duration of the\nviolation, but the Violation Report, which contained all of the evidence and other supporting\nmaterials, stated that the violation began in January 2007.10 At the hearing, OPS also explained\nthat the period of alleged noncompliance lasted approximately 720 days from the date operations\nfirst began at the facility until the date of the accident.11 Respondent had an opportunity to\nrespond to these statements at the hearing and in its Post-Hearing Submittal, but did not rebut the\nalleged duration of the violation. Since the evidence demonstrates the violation extended for\nmultiple days, I find the proposed penalty does not exceed the applicable statutory limit of\n$1,000,000.\nRespondent also contended that six of the seven violations (Items 1-5 and 7) “should be\nconsolidated for proposed penalty purposes, and kept within the statutory maximum,” because\nthey all concern Respondent’s manual of written procedures and invoke a single regulation,\n§ 195.402(c).12\n9 KMLT Pre-Hearing Brief at 2.\n10 Violation Report at 5. In fact, the Violation Report noted that each of the violations began in January 2007.\n11 See also OPS Pre-Hearing Brief at 3.\n12 Cover letter to Response at 2.\n\n\n\n9\nRespondent claimed the Pipeline Safety Act (PSA) “expressly prohibits the assessment of\nmultiple penalties for the violation of a single regulation under the Act if the violations are based\non the same act,” 13 but Respondent has misinterpreted 49 U.S.C. § 60122(f), which applies only\nin situations where a single act by an operator constitutes both a violation of a regulation and a\nviolation of an order.14 The current proceeding does not involve the violation of an order,\ntherefore § 60122(f) is not applicable.\nRespondent also claimed the APA “more generally prohibits federal agencies from seeking\nduplicate penalties for alleged violations based on the same underlying facts, or for claims that\nseek same substantially similar relief.” Respondent cited 5 U.S.C. § 706, but I fail to find any\nlanguage in that section that suggests such a specific prohibition. The APA does authorize a\nreviewing court to set aside agency action found to be “arbitrary, capricious, an abuse of\ndiscretion, or otherwise not in accordance with law,” but for the reasons set forth in this Final\nOrder, a reviewing court should not find reason to set aside the penalty assessments.\nRespondent further stated that it has been PHMSA’s “ordinary practice” to assess a single\npenalty not exceeding $100,000 for related violations that concern an operator’s manual of\nwritten procedures under § 195.402. To support this assertion, Respondent cited a prior PHMSA\nenforcement decision.15\nSection 195.402 is a regulation containing multiple requirements separated into paragraphs and\nsubparagraphs. A review of 49 C.F.R. Part 195 will show this is a common method of\norganizing the pipeline safety regulations. For example, the integrity management rule in\n§ 195.452 is divided into more than 50 paragraphs containing distinct requirements. Even a\nsingle paragraph may actually constitute multiple requirements for which the operator is\nresponsible for compliance, such as § 195.402(c)(3), a paragraph that requires procedures for\n“operating, maintaining, and repairing the pipeline system in accordance with each of the\nrequirements of this subpart and subpart H of this part.” It would be contrary to the intent of the\nregulations for PHMSA to limit enforcement to only one requirement of § 195.402(c). As\nexplained in another prior enforcement decision, the pipeline safety regulations are performance-\nbased and allow an operator to develop written procedures tailored to its system, “but each\nsection of those procedures is enforceable by PHMSA in the same manner as a code section. If\nPHMSA were unable to hold operators accountable for following all of their procedures in a\ngiven subject area of the manual because they were in some sense related, public safety would\nsuffer and the intent of Congress in enacting the pipeline safety laws would be frustrated.”16\nThe prior enforcement decision cited by Respondent is factually different than the current\nproceeding.17 In that case, PHMSA alleged a single violation of § 195.402(a) and (d) for failing\nto follow written procedures for abnormal operations. (The operator ultimately proved it did not\n13 KMLT Pre-Hearing Brief at 1.\n14 See Florida Gas Transmission Co., CPF No. 45102, at 7-9, 2006 WL 3825342 (Jan. 3, 2006).\n15 KMLT Pre-Hearing Brief at 3.\n16 Colorado Interstate Gas Co., CPF No. 5-2008-1005, at 11, 2009 WL 5538649 (Nov. 23, 2009).\n17 See Alyeska Pipeline Service Co., CPF No. 5-2010-5001, 2011 WL 4351595 (Jul. 29, 2011).\n\n\n\n10\nviolate the regulation, and PHMSA withdrew the allegation.) In the current proceeding, OPS has\nalleged multiple violations for failing to have and follow various procedures required by\ndifferent paragraphs of the code. It is not unusual for PHMSA to allege multiple violations of\nprocedural requirements and propose separate penalties for each violation. For example, in one\ncase, PHMSA assessed civil penalties totaling $1,200,000 for multiple violations of requirements\nto have and follow written procedures (combined with other violations, the total penalty was\n$2,405,000).18 In another case, PHMSA assessed civil penalties of $2,335,000 for multiple\nviolations of requirements to have and follow written procedures.19\nFor the above reasons, I reject Respondent’s assertion that Items 1-5 and 7 must be consolidated\ninto a single violation. Moreover, I note the combined penalties in this case do not exceed the\nstatutory limit of $1,000,000 for a related series of violations.\nRespondent also argued the civil penalty should be reduced under the statutory assessment\ncriteria. In particular, KMLT contended that the penalty should be reduced because the accident\nwas an isolated error and did not have severe consequences. Respondent noted that the release\nwas contained in a diked area and confined to terminal property. There were no injuries or\nreleases to the environment and Respondent timely reported the accident and conducted all\nappropriate response, cleanup, and corrective action.\nDespite Respondent’s contention that the accident did not result in severe consequences,\nPHMSA still considers it a matter of significant concern when the violation of a regulatory\nrequirement causes a pipeline failure and the release of hazardous liquid, especially when the\nquantity of the product released exceeds the threshold for immediate reporting to the National\nResponse Center. As noted in the Violation Report, approximately 8,600 gallons of number 2\nfuel oil (i.e., home heating oil) was released into a containment dike as a result of this violation.\nFuel oil is toxic and flammable and the safety of persons and property was at risk. The fumes are\nhazardous to individuals, there is a risk of ignition, and the product is harmful to the\nenvironment. Approximately 20 gallons splashed over the containment dike onto a road within\nthe terminal property, which required soil remediation. For these reasons, I find the nature,\ncircumstances and gravity of the violation justify the proposed civil penalty.\nWith regard to culpability, Respondent contested the allegation in the Violation Report that “KM\nfailed to take any action to comply” with the regulatory requirement. This statement was\nincluded in the Violation Report for each of the seven violations.20 Respondent argued that it\nwas inaccurate to allege that the company failed to take any action to comply with § 195.402\nbecause the company did in fact maintain a written operations and maintenance manual.\nIn each instance this statement appears in the Violation Report, there is an explanation\nimmediately following it to qualify the statement. For example in Item 1, the explanation notes\nthat KMLT did not have line-up procedures for the terminal facility. Taken together, these\nstatements appear to be merely a comment on KMLT’s conduct that resulted in the cited\n18 Enbridge Energy Partners, CPF No. 3-2008-5011, 2010 WL 6531629 (Aug. 17, 2010).\n19 Colorado Interstate Gas Co., CPF No. 5-2008-1005, 2009 WL 5538649 (Nov. 23, 2009).\n20 See Violation Report at 7, 12, 18, 23, 28, 34 and 40.\n\n\n\n11\nviolation, in this instance, the failure to establish and follow start up and shutdown procedures\nthat included line-up procedures.21 As the operator of the facility, Respondent is responsible for\ncompliance with the regulations and is therefore culpable for its failure to have and follow such\nprocedures. The civil penalty is not based on any broad assertions concerning Respondent’s\ncompliance with other regulatory requirements not cited in the Notice.\nWith regard to good faith in attempting to achieve compliance, Respondent argued in its written\nsubmissions and at the hearing that it cooperated fully with PHMSA and has taken efforts to\nimplement the actions in the proposed compliance order, beginning even before the Notice was\nissued. In addition, Respondent noted that it has completed virtually all of the actions in the\nproposed compliance order and plans to have all corrective actions completed by the dates set\nforth in the order.\nAt the hearing, OPS stated that Respondent’s actions taken after the OPS inspection should not\nbe considered evidence of a good faith attempt to comply. This position is generally consistent\nwith the manner in which PHMSA has applied this statutory assessment factor in previous final\norders.22 PHMSA does not generally find cause to reduce a civil penalty for corrective action\ntaken after the operator has already been notified of the deficiency through a compliance\ninspection by OPS, because operators are expected to bring their facilities into compliance with\nthe regulations, particularly when an issue has been brought to the operator’s attention by the\nagency. Rather, PHMSA generally considers evidence of good faith to be those actions taken by\nan operator as a deliberate attempt to comply with the regulation prior to when the violation\noccurred. For the above reasons, I find the statutory assessment criteria do not warrant reducing\nthe proposed penalty.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $122,500 for violation of 49 C.F.R. § 195.402(c)(7).\nItem 2: The Notice proposed a civil penalty of $85,000 for Respondent’s violation of 49 C.F.R.\n§ 195.402(c)(8). Respondent failed to have and follow written procedures for monitoring\npressure on the pipeline from an attended location to assure operation within prescribed pressure\nlimits during startup and shut-in.\nWith regard to the nature, circumstances, and gravity of the violation, Respondent’s failure to\nmonitor pressure on the pipeline from an attended location contributed to the cause of the\naccident. Had pressure been appropriately monitored, the operator would have been able to\nmake an informed decision to timely shut down the transfer operations before the system became\nover-pressurized. Accordingly, the nature, circumstances and gravity of the violation justify the\nproposed civil penalty. For the same reasons discussed above, I find culpability and good faith\nconsiderations do not result in reducing the penalty.\n21 Even OPS referred only to “Respondent’s failure to have written startup and shutdown procedures” in responding\nto KMLT’s argument on this issue. OPS Pre-Hearing Brief at 3.\n22 See, e.g., Air Products and Chemicals, Inc., CPF No. 4-2009-1008, at 3, 2009 WL 5538650 (Dec. 1, 2009);\nChevron Pipe Line Co., CPF No. 4-2005-8008, at 4, 2008 WL 902913 (Mar. 19, 2008).\n\n\n\n12\nIn addition to arguing that Items 1-5 and 7 should be consolidated, which I rejected, Respondent\nargued that several pairs of violations should have been brought as single violations because they\ninvolve similar duties. Respondent maintained that “[u]nder established administrative law\nprecepts, such duplication is impermissible.”23\nKMLT argued one of the pairs, Items 2 and 3, involve substantially similar duties because both\npertain to procedures for monitoring pressure and other parameters from an attended location.\nKMLT stated that resolution of either one would necessarily result in resolution of the other.\nTherefore, Respondent argued these two violations are improperly duplicative and should have\nbeen brought as a single count with only one penalty.\nItem 2 concerns the requirement under § 195.402(c)(8) that operators have and follow\nprocedures for monitoring pipeline pressure during startup and shut-in to ensure compliance with\nmaximum operating pressure limits. Item 3 concerns the requirement under § 195.402(c)(9) that\noperators have and follow procedures for detecting abnormal operating conditions through\nmonitoring of operational data including pipeline pressure, temperature, flow or other\nappropriate data. Even though both regulations concern the monitoring of certain operational\ndata, one is concerned only with monitoring pressure during startup and shut-in to avoid\noverpressure, while the other is concerned with monitoring more operational data at all times to\ndetect abnormal operating conditions. These are separate and distinct requirements. They also\nrequire separate evidence to prove a violation (i.e., procedures for monitoring pressure during\nstartup vs. procedures for detecting abnormal operating conditions at all stages of operations).\nContrary to Respondent’s assertion, compliance with one regulation does not necessarily result\nin compliance with the other. For example, an operator may have the means to monitor pressure,\nbut not the means to detect abnormal operating conditions by monitoring other parameters. For\nthese reasons, Items 2 and 3 are appropriately brought as separate violations with individual\npenalties. The proposed penalties for Items 2 and 3 do not exceed the statutory limit for each\nviolation.\nThe cases cited by Respondent do not require a different conclusion. In Blockburger, the\nSupreme Court held that a single act by a criminal defendant was appropriately brought as\nseparate violations of two different statutes because each statute required proof of an additional\nfact the other did not.24 While this was a criminal law decision, PHMSA has found the rationale\nin Blockburger to be relevant to determining whether multiple violations of the pipeline safety\nregulations are “a related series of violations” subject to the statutory limit of $1,000,000 under\n49 U.S.C. § 60122. For example, in Colorado Interstate Gas Co., PHMSA applied “the idea that\nseparate evidence constitutes separate violations” to determine whether any two or more\nviolations were “so closely related (i.e., same evidentiary basis) that they are not separate and\nshould be considered one violation for purposes of applying the $1,000,000 cap for an individual\nviolation exceeding 10 days in duration.”25 Using this rationale, Items 2 and 3 of the current\n23 KMLT Pre-hearing Brief at 3, citing Blockburger v. United States, 284 U.S. 299 (1932) and Burkes Mechanical,\nInc., OSHRC Docket No. 04-475, 2007 WL 2046814 (July 12, 2007).\n24 284 U.S. 299, 304 (1932).\n25 CPF No. 5-2008-1005, at 12, 2009 WL 5538649 (Nov. 23, 2009).\n\n\n\n13\nproceeding are separate violations of two different regulations because they involve separate\nfacts and evidence to prove a violation.\nRespondent also cited Burkes Mechanical, Inc., an administrative decision by the Occupational\nSafety Health Review Commission. In that case, the Commission examined whether two\nviolations were duplicative by determining whether “the standards cited require the same\nabatement measures, or whether abatement of one citation","truncated":true,"body_characters":62139}