# KINDER MORGAN LIQUID TERMINALS, LLC — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 120115009
- **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:** 2011-10-12
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 195.266, 195.402(a), 195.404(a)(2), 195.404(a)(3), 195.412(b), 195.555, 195.585(a)(1).
- **machine formats:** - **json:** https://regulus.evalyn.ai/document/phmsa-enforcement-120115009.json
- **markdown:** https://regulus.evalyn.ai/document/phmsa-enforcement-120115009.md
- **app url:** https://regulus.evalyn.ai/document/phmsa-enforcement-120115009
- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/120115009
**body:**

Notice of Probable Violation involving KINDER MORGAN LIQUID TERMINALS, LLC. PHMSA's enforcement data identifies the cited regulations as 195.266,  195.402(a),  195.404(a)(2),  195.404(a)(3),  195.412(b),  195.555,  195.585(a)(1). The case was opened on 2011-10-12 and is reported as closed as of 2015-11-19. Proposed civil penalty: $89,800. Assessed civil penalty: $63,100. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

120115009_Closure Letter_11192015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115009/120115009_Closure%20Letter_11192015.pdf

120115009_Closure Letter_11192015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115009/120115009_Closure%20Letter_11192015_text.pdf

120115009_Consent Agreement and Order_07172013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115009/120115009_Consent%20Agreement%20and%20Order_07172013.pdf

120115009_Consent Agreement and Order_07172013_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115009/120115009_Consent%20Agreement%20and%20Order_07172013_text.pdf

120115009_NOPV-PCP-PCO_10122011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115009/120115009_NOPV-PCP-PCO_10122011.pdf

120115009_NOPV-PCP-PCO_10122011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115009/120115009_NOPV-PCP-PCO_10122011_text.pdf

120115009_Operator's_Response_to_NOPV_11112011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120115009/120115009_Operator's_Response_to_NOPV_11112011.pdf

120115009_Consent Agreement and Order_07172013_text.pdf

U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
)
In the Matter of )
)
Kinder Morgan Liquids Terminals, LLC, ) CPF No. 1-2011-5009
)
Respondent. )
)
CONSENT AGREEMENT AND ORDER
On November 15-19, 2010, pursuant to Chapter 601 of 49 United States Code, a representative of the
Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),
conducted an on-site inspection of the pipeline facilities of Kinder Morgan Liquids Terminals, LLC
(KMLT or Respondent), at its terminal facilities in Carteret, New Jersey (Terminal).
As a result of this inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by
letter dated October 12, 2011, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed
Compliance Order (Notice), a copy of which is attached hereto as Appendix A. In accordance with
49 C.F.R. § 190.207, the Notice proposed (1) finding that Respondent had committed various
violations of 49 C.F.R. Part 195, (2) assessing a total civil penalty of $89,800 for five of the alleged
violations, and (3) ordering Respondent to take certain measures to correct the alleged violations.
KMLT responded to the Notice by letter dated November 11, 2011, and requested a hearing, which
was held on August 7, 2012. KMLT has proposed, as part of this proceeding and a related
enforcement action, CPF No. 1-2011-5008, to resolve both matters via administrative consent
agreements.
Having agreed that settlement of this proceeding will avoid further administrative proceedings or
litigation, pursuant to 49 C.F.R. Part 190, without adjudication of any issue of fact or law, and upon
consent and agreement of Respondent and PHMSA (Parties), the Parties agree as follows:
I. General Provisions.
1. For purposes of this Consent Agreement and Order (Agreement), Respondent acknowledges
that as operator of the Terminal, KMLT and it pipeline system located at the Terminal are subject to
the jurisdiction of the Federal pipeline safety laws, 49 U.S.C. 60101, et seq., and the regulations and



administrative orders issued thereunder.1 As used in this Agreement, the terms “pipeline system” and
“pipeline facility” shall be defined as in 49 C.F.R. Part § 195.2. Respondent acknowledges that it
received proper notice of PHMSA’s action in this proceeding and that the Notice states claims upon
which relief may be granted pursuant to 49 U.S.C. 60101, et seq., and the regulations and orders
issued thereunder.
2. Respondent consents to the issuance of this Agreement, and hereby waives any further
procedural requirements with respect to its issuance. Respondent waives all rights to contest the
adequacy of notice or the validity of the Agreement, including all rights to administrative or judicial
hearings or appeals.
3. This Agreement shall apply to and be binding upon PHMSA and upon Respondent, its
officers, directors, and employees, and its successors, assigns, or other entities or persons otherwise
bound by law. Respondent agrees to provide a copy of this Agreement and any incorporated work
plans and schedules to all of KMLT’s officers, employees, and agents whose duties might reasonably
include compliance with this Agreement.
4. For all transfers of ownership or operating responsibility of Respondent’s pipeline system at the
Terminal, KMLT shall provide a copy of this Agreement to the prospective transferee at least 60
business days prior to such transfer and simultaneously provide written notice of the prospective
transfer to the Director and the Associate Administrator for Pipeline Safety, PHMSA, 1200 New Jersey
Avenue, SE, Washington, D.C. 20590.
5. This Agreement constitutes the final, complete and exclusive agreement and understanding
between the Parties with respect to the settlement embodied in this Agreement, and the Parties
acknowledge that there are no representations, agreements or understandings relating to the settlement
other than those expressly contained in this Agreement and its appendices.
6. Nothing in this Agreement affects or relieves KMLT of its responsibility to comply with all
applicable requirements of the Federal pipeline safety laws, 49 U.S.C. § 60101, et seq., and the
regulations and orders issued thereunder. Nothing in this Agreement alters PHMSA’s right of access,
entry, inspection, and information-gathering or its authority to bring any enforcement action against
Respondent pursuant to the Federal pipeline safety laws, the regulations and orders issued thereunder,
or any other provision of Federal or State law.
7. This Agreement does not waive or modify any Federal, State, or local laws or regulations that
are applicable to KMLT or its pipeline systems. This Agreement is not a permit, or a modification of
any permit, under any Federal, State, or local laws or regulations. Respondent remains responsible for
achieving and maintaining compliance with all applicable Federal, State, and local laws, regulations
and permits.
1 For a map showing the jurisdictional components of Respondent’s system at the Terminal, see drawings entitled,
“Kinder Morgan Carteret, NJ, Liquids Terminal, East & West Tank Field P&ID’s,” prepared by STV Incorporated,
consisting of 105 sheets, dated May 6, 2013 (on file with PHMSA Eastern Region).- 2 -



8. This Agreement does not create rights in, or grant any cause of action to, any third party not
party to this Agreement. The U.S. Department of Transportation (DOT) is not liable for any injuries
or damages to persons or property arising from acts or omissions of Respondent or its officers,
employees, or agents carrying out the work required by this Agreement. KMLT agrees to hold
harmless DOT, its officers, employees, agents, and representatives from any and all causes of action
arising from any acts or omissions of Respondent or its contractors in carrying out the work required
by this Agreement.
9. Except as otherwise provided in this Paragraph, the Parties agree that the facts are as
alleged in each item of the Notice and that each item may be considered by PHMSA to be a prior
offense in any future PHMSA enforcement action against KMLT. This Agreement, however, does
not constitute a finding of violation of any Federal law or regulation and may not be used in any civil
proceeding of any kind as evidence or proof of any fact, fault or liability, or as evidence of the
violation of any law, rule, regulation or requirement, except in a proceeding to enforce the provisions
of this Agreement or in future PHMSA enforcement actions.
As for Item 5 of the Notice, PHMSA has reviewed the evidence and determined that the records
submitted by KMLT in response to the alleged violation of 49 C.F.R. § 195.412(b) do, in fact, satisfy
the inspection requirements of that regulation. Therefore, this Item is hereby withdrawn.
10. Respondent agrees to complete the corrective actions specified in Section II (Work to be
Performed) of this Agreement and to pay the civil penalties specified in Section VI (Civil Penalties).
II. Work to be Performed.
11. KMLT agrees to perform all the corrective actions set forth in the proposed Compliance Order,
as included in the Notice and incorporated herein as part of Appendix A, except for Item 2 (see
Paragraph 12 below), Item 5 (see paragraph 13 below), and Item 7 (see Paragraph 14 below).
12. With respect to Item 2 of the proposed Compliance Order, Respondent agrees to perform all
the corrective actions set forth in Appendix B to this Agreement, entitled “Carteret Terminal MOP
Substantiation” (Carteret Project), which is hereby incorporated into this Agreement. The Carteret
Project may be revised to incorporate new information obtained during the evaluations and remedial
activities performed as a part of the Carteret Project. Respondent must submit any proposed Carteret
Project revisions to the Director for approval. The Director may approve proposed revisions in whole
or in part, or may direct KMLT to revise or modify the Carteret Project as necessary, as set forth in
Section III (Review and Approval Process) and Section IV (Dispute Resolution) below.
13. work to be performed for this Item.
As discussed above, Item 5 of the Notice has been withdrawn. Accordingly, there is no
14. With respect to Item 7 of the proposed Compliance Order, Respondent agrees to complete all
corrective actions within 270 days of the Effective Date of this Agreement, as defined below.
- 3 -



15. The Director may grant an extension of time for completion of any of the work to be
performed under this Section II upon Respondent’s timely, written request that demonstrates both
good cause for an extension and provides sufficient detail to enable the Director to evaluate
Respondent’s request.
III. Review and Approval Process.
16. With respect to any submission under Section II (Work to be Performed) of this Agreement
that requires the approval of the Director, the Director may: (a) approve, in whole or in part, the
submission; (b) disapprove the submission on specified conditions; (c) disapprove, in whole or in part,
the submission; or (d) any combination of the foregoing. In the event of approval in whole, in part, or
upon conditions, KMLT will proceed to take all actions required by the submission as modified by the
Director, subject to Respondent’s right to invoke the procedures in Section IV (Dispute Resolution)
with respect to any conditions identified by the Director. In the event that the Director does not
approve all or any portion of the submission, the Director will provide KMLT with a written notice of
the deficiencies. Respondent will correct all deficiencies within the time specified by the Director and
resubmit it for acceptance. If Respondent fails to correct the specified deficiencies, the Director may
invoke the dispute resolution process provided in Section IV below.
IV. Dispute Resolution.
17. The Director and Respondent will informally attempt to resolve any disputes arising under
this Agreement. If KMLT and the Director are unable to informally resolve the dispute within 15
business days, Respondent may request in writing, within 10 business days, a written determination
resolving the dispute by the Associate Administrator for Pipeline Safety, PHMSA. Along with its
request, Respondent will provide the Associate Administrator with all information KMLT believes
is relevant to the dispute. If the request is submitted as provided herein, the Associate Administrator
will issue a written determination that shall be final. The existence of a dispute and PHMSA’s
consideration of matters placed in dispute shall not excuse, toll, or suspend any term or timeframe for
completion of any work to be performed under this Agreement during the pendency of the dispute
resolution process, except as agreed by the Regional Director or the Associate Administrator in
writing.
V. Enforcement of Agreement and Order.
18. This Agreement, including all plans and schedules incorporated by reference, is subject to all
enforcement authorities available to PHMSA under 49 U.S.C. § 60101, et seq., and 49 C.F.R. Part
190, including administrative civil penalties under 49 U.S.C. § 60122, of up to $200,000 per violation
for each day the violation continues and referral of the case to the Attorney General for judicial
enforcement, if PHMSA determines that Respondent is not complying with the terms of this
Agreement in accordance with determinations made by the Director, or if appealed, in accordance
with decisions of the Associate Administrator. The Carteret Project and all other work plans and
associated schedules developed under Section II shall be automatically incorporated into this
Agreement and are enforceable in the same manner.- 4 -



VI. Civil Penalties.
19. As discussed above, Item 5 of the Notice has been withdrawn. Therefore, the proposed civil
penalty of $26,700 for such Item is also withdrawn.
20. Within 15 days from the execution of this Agreement, Respondent agrees to pay to the
United States a total civil penalty in the amount of Sixty-three Thousand One-Hundred Dollars
($63,100.00), said amount being assessed by PHMSA for the following alleged violations set forth in
the Notice:
a. $30,500, as proposed for Item 3 in the Notice, for the alleged violation of
49 C.F.R. § 195.402(a);
b. $10,500, as proposed for Item 4 in the Notice, for the alleged violation of
49 C.F.R.§ 195.266;
c. $10,500, as proposed for Item 6 in the Notice, for the alleged violation of
49 C.F.R. § 195.555; and
d. $ 11,600, as proposed for Item 7 in the Notice, for alleged violation of
49 C.F.R. § 195.585(a)(1).
21. Payment of the $63,100 must be made within 15 days of the Effective Date, as defined below.
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.” 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 telephone number of the Division is (405) 954-8893.
22. Failure to pay the penalty set forth above within 15 days of the Effective Date will result in
the 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 of a
Notice of Late Payment. 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.
VII. Miscellaneous.
23. PHMSA will have the right to inspect the records and facilities of KMLT or any contractor
or agent thereof upon reasonable notice, to confirm that the Carteret Project and other compliance
terms of this Agreement are being undertaken in conformity with the terms of this Agreement.
24. Except as otherwise provided herein, this Agreement may be modified only by the mutual
agreement of the Parties and set forth in writing and signed by both Parties.- 5 -



25. Each undersigned representative of the Parties certifies that he is fully authorized by the party
represented to enter into the terms and conditions hereof and to execute and legally bind that party to
it.
VIII. Effective Date and Term.
26. The “Effective Date” as used herein is the date on which this Agreement is signed by both
KMLT and PHMSA. Unless specified to the contrary, all deadlines for actions required by the
Agreement run from the Effective Date of the Agreement.
IX. Termination.
27. This Agreement will terminate upon payment of the full penalty amount set forth in Section
VI (Civil Penalties) and the completion of all terms set forth in Section II (Work to Be Performed), as
determined by the Director. Respondent may request, and PHMSA will provide, written confirmation
when this Agreement is terminated. Nothing in this Agreement prevents Respondent from completing any
of the obligations earlier than the deadlines provided for herein.
The Parties hereby agree to all conditions and terms of this Agreement:
For PHMSA: For Kinder Morgan Liquids Terminals, LLC:
_______________________________ __________________________________
Jeffrey D. Wiese Carlos Munguia
Associate Administrator for Vice-President
Pipeline Safety, PHMSA Kinder Morgan Liquids Terminals, LLC
- 6 -



APPENDIX A
[INSERT COPY OF NOPV]



Kinder Morgan Liquids Terminals, LLC
TERMINALS PROCEDURE
Substantiation of Terminal Piping Maximum
Operating Pressure (MOP)
Carteret Terminal, Carteret, NJ



1.0 APPLICABILITY
Refined Products/Natural Gasoline.
2.0 PURPOSE AND SCOPE
This document provides Kinder Morgan Liquids Terminals, LLC (KMLT) North East
Region procedures for establishing and documenting MOP for each DOT jurisdictional
segment of pipe at its terminal facility located in Carteret, New Jersey (the Carteret Project
or Project), as required pursuant to the Consent Agreement and Order between PHMSA
and KMLT regarding CPF No. 1-2011-5009, dated
The Project includes 100 piping segments, and will involve pressure testing each
jurisdictional segment in order to substantiate MOP in accordance with the pipeline
safety regulations, found at 49 C.F.R. Part 195. The Carteret Terminal operates under an
established MOP of 285 psi, based on maximum pressure rating of installed flanges. The
following procedures and schedule is designed to substantiate the established MOP in
accordance with 49 C.F.R. Part 195. This procedure follows existing KMLT O&M
Procedure T-O&M 1600 (Strength and Leak Testing) (attached), as applicable.
3.0 TESTING PROCEDURES
KMLT will implement the following methods for executing the Project:
3.1 Identify line segments and internal design pressure
3.1.1 Using Piping and Instrumentation Diagrams (P&ID’s), break down
piping systems or segment details, number of flanges, appurtenances,
measurements, etc.
3.1.2 Identify line segments for manageable testing.
3.1.3 Research and document to ensure that all pipe components of the line
segment are capable of the target test pressures. (Refer to test pressures in 3.3.1)
3.2 Testing Preparation
3.2.1 Develop an air elimination procedure to mitigate risk of air being injected
into tanks and potentially causing floating roof damage and/or sinking of
roofs.
3.2.2 Assemble and issue specifications for piping, valves, blinds, fittings,
flanges, gaskets, studs, and nuts, etc.
Secure and/or have on stand-by replacements for piping, valves, fittings,
3.2.3



3.2.3 3.2.4 3.2.5 3.2.6 gauges, gaskets, etc.
Evacuate line segments to appropriate storage tank.
Drain line segments of any residual products to vacuum trucks and into
storage tanks.
Remove and plug all appurtenances on line segments, except for 1-2 low
point drains.
Install slip blinds for segments to be tested. Employ Lock-Out Tag-Out.
3.2.7 Review contractor pressure test equipment calibration and verify
equipment records.
3.3 Conduct pressure tests2
3.3.1 Conduct pressure tests at 1.25 x 285 psi or 357 psi for four hours for above-
ground pipe and an additional four hours at 1.10 x 285 psi or 314 psi for
underground pipe. Pressure test must be conducted in accordance with
§195.304.
Use water as a test medium for each line segment.
Commence pressure test by slowly ramping up pressure in increments until
the test pressure is met. Four hours at 357 psi and an additional four hours
at 314 psi, depending on line segment. (Refer to calculations in 3.3.1)
Record pressure, ambient temperature and pipe temperature and monitor
pressure changes.
Inspect line segment for leakage for the duration of the test.
If a leak and/or failure occur, then that line segment must be retested.
Evaluate chart recorder and check that the test meets 49 C.F.R. Part 195
requirements.
3.4 Completion
3.4.1 3.3.2 3.3.3 3.3.4 3.3.5 3.3.6. 3.3.7 Upon completion, begin system drain of test medium to vacuum trucks.
2 For a map showing the jurisdictional components of Respondent’s system, see drawings entitled, “Kinder Morgan
Carteret, NJ, Liquids Terminal, East & West Tank Field P&ID’s,” prepared by STV Incorporated, consisting of 105
sheets, dated May 6, 2013 (on file with PHMSA Eastern Region).



3.4.2 3.4.3 3.4.4 3.4.5 Place test medium in Baker style tanks for reuse in other pipe segments.
De-water with nitrogen to remove as much water as possible from low
point drains.
Re-install appurtenances on pipe segments, utilizing new Flexitallic
gaskets and new nuts and bolts.
Remove Lock-Out Tag–Out controls and isolation blinds and returns
segment back to service.
4.0 TESTING SAFETY
4.1 4.2 4.3 4.4 4.5 Testing procedures should be in place to protect all employees, contractors, and
members of the public, including “essential personnel” who are or might be in
proximity to the facilities undergoing testing.
Maintaining a safe distance for everyone, or providing adequate barriers or other
protections, if necessary to have personnel in the vicinity of the facilities being
tested.
Everyone on site during the test must be informed of the procedures and a pre-
start up safety review must be conducted.
The testing team should also be asked to survey the site to identify and remove, as
appropriate, any loose material that might present a hazard in the event of failure.
Do not use swell plugs or plumber’s plugs/night caps for performing pressure
tests.
5.0 PROJECT SCHEDULE
KMLT has developed a schedule to complete all jurisdictional segment testing on the
Carteret Terminal by May 31, 2015. This schedule will best accommodate KMLT’s
efforts to conduct the work safely and with minimal fuel-supply disruption to local
markets. The following table reflects KMLT’s projected schedule for segment testing,
which will resume in the spring of 2013. Designation and sequencing of specific
segments for testing during a given season will be at KMLT’s discretion and guided by risk
assessment principles. As outlined further below, KMLT will provide periodic progress
reports to PHMSA so that the agency may track implementation of the Carteret Project.
In the first progress report, KMLT will also include documentation of the segments tested
in 2012 for PHMSA’s review.



Proposed Carteret Project Execution Plan
Total
2012
2013
2014
2015
Segments
Segments
Segments
Segments
Segments
100 Total:
3
Total:
45
Total:
43
Total:
9
6.0 TRAINING
Personnel performing the Project must meet the requirements of the KM Operator
Qualification program.
7.0 DOCUMENTATION
Specific records identified in this section are to be retained in accordance with T-O&M
Procedure 1404, Maps and Records and 49 C.F.R. Part 195.310.
7.1 Test Reporting
Prepare a test report for every pressure test using T-OM1600-01, Pressure Test Report.
This report will be a permanent record and may be used to satisfy regulatory agencies.
Retain the test report for as long as the facility is in use. Be sure that the data is
complete, self-explanatory, and in accordance with 49 C.F.R. 195.310. Attach the
following to the test report:
7.1.1 Pressure recording chart signed by the person responsible for making the
test.
7.1.2 Temperature recording chart signed by the person responsible for making
the test.
7.1.3 Dead weight gauges and pressure recorder calibration certification.
7.1.4 Where elevation difference in the section under test exceeds 100 feet, a
profile of the pipeline that shows the elevation and test sites over the entire
length of the test section.



7.1.5 Complete all sections of T-OM1600-01, Pressure Test Report. If a part of
the form is not applicable, insert N/A (not applicable) so every section is
completed. A company representative must sign all reports.
7.1.6 The “Pressure Test Report” shall contain the following information:
• Kinder Morgan’s Business Unit’s name.
• The name of the person responsible for making the test (Test Supervisor).
• The name of the test company used, if any (Test Contractor).
• The date and time of the test.
• The minimum test pressure.
• The test medium.
• A description of the facility tested and the test apparatus.
• A description of any pressure discontinuities, including test failures and
temperature deviations that appear on the pressure recording charts.
7.2 Additional Testing Reports
In addition to the strength test report, complete the following if applicable when
testing pipeline facilities:
7.2.1 T-OM200-02, Pipeline Inspection/Repair Report distribute as stated on
form.
7.2.2 Retain Survey Notes: Include all pressure test report numbers in the
survey notes. Forward completed notes to the project management group.
7.3 PHMSA Reporting
PHMSA has requested that KMLT provide progress reports and other
opportunities for information-sharing during implementation of the Project.
7.3.1 Commencing no more than 90 days after the Effective Date of
the Agreement and continuing every 90 days thereafter, until the
Carteret Project Completion Report, as described below, has been filed
and accepted by PHMSA, KMLT will submit quarterly progress reports to
PHMSA, describing all work performed during the preceding quarter
and the safety impacts and implications of the Carteret Project to date.



7.3.2 7.3.3 The quarterly reports will include a segment completion inventory
spreadsheet, attached as Attachment A.
Within 90 days after completion of the Carteret Project. KMLT will file a
Carteret Project Completion Report with the Director. Said report will
contain, at minimum, the following information:
• A detailed description of the work performed, as implemented;
• The total itemized costs of the work performed; and
• Certification that the works has been implemented pursuant to the
provisions of the Project plan.
• Verification that all jurisdictional assets have been pressure tested.
All reports, including the Carteret Project Completion Report, shall be
submitted to the Director. As the person responsible for monitoring
Respondent’s compliance with the terms of this Agreement, the Director
may request any additional documentation, studies, or reports reasonably
necessary to verify compliance with the terms of the Project plan.
* * * *



ATTACHMENT A
QUARTERLY PROGRESS
REPORT
[DATE]
Kinder Morgan Liquids Terminals,
LLC
Terminal Maximum Operating Pressure (MOP) Substantiation Project
CARTERET TERMINAL, CARTERET, NJ
Segment
P&ID
Name
Numbers
Test Date Pass / Fail Test Pressure
(psi) Test Medium



ATTACHMENT B
[ INSERT COPY OF KMLT O&M PROCEDURE
T-O&M 1600 (STRENGTH AND LEAK TESTING) ]

120115009_NOPV-PCP-PCO_10122011_text.pdf

U.S. Department 820 Bear Tavern Road, Suite 103
Of Transportation West Trenton, NJ 08628
Pipeline and 609.989.2171
Hazardous Materials Safety Administration
NOTICE OF PROBABLE VIOLATION
PROPOSED CIVIL PENALTY
and
PROPOSED COMPLIANCE ORDER
Express Overnight Mail
October 12, 2011
Mr. David Vattimo
Regional Vice President
Kinder Morgan Liquid Terminals, LLC
8500 West 68th Street
Argo, IL 60501
CPF 1-2011-5009
Dear Mr. Vattimo:
On November 15-19, 2010, a representative of the Pipeline and Hazardous Materials Safety
Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected the
facility of Kinder Morgan Liquid Terminal LLC (KM) in Carteret, New Jersey.
As a result of the inspection, it appears that you have committed probable violations of the
Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the
probable violations are:
1. §195.404 Maps and Records.
(a) Each operator shall maintain current maps and records of its pipeline
systems that include at least the following information;



120115009
(2) All crossings of public roads, railroads, rivers, buried utilities, and
foreign pipelines.
KM failed to maintain maps and records of the Carteret facility that included all
crossings of public roads, railroads, rivers, buried utilities and foreign pipelines.
During the field review of Carteret Terminal, a PHMSA representative requested
KM personnel to provide documentation of the location of each pipeline within
the Carteret facility. KM did not have any maps, records or documentation
depicting the crossings of any public roads, railroads, rivers, buried utilities, or
foreign pipelines within the KM Carteret facility.
2. §195.404 Maps and Records.
(a) Each operator shall maintain current maps and records of its pipeline
systems that include at least the following information;
(3) The maximum operating pressure of each pipeline.
KM failed to maintain maps and records of the Carteret facility that included the
maximum operating pressure (MOP) of each pipeline.
During the field review of Carteret Terminal, a PHMSA representative requested
KM personnel to provide documentation of the MOP of each pipeline at the
Carteret facility. KM did not have any records or documentation demonstrating
the established MOP of each pipeline at its Carteret facility.
3. §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. This manual shall be reviewed at intervals not exceeding 15
months, but at least once each calendar year, and appropriate changes made
as necessary to insure that the manual is effective. This manual shall be
prepared before initial operations of a pipeline commence, and appropriate
parts shall be kept at locations where operations and maintenance activities
are conducted.
KM failed to follow its procedure, T-O&M 406-Welding Inspection and Testing
dated 3/24/2009 Item 3 page 1, that states a “qualified welding inspector must
inspect each weld being made to ensure that the proper welding procedure was
followed and the finished weld meets applicable standards and codes.”
During the field review, a PHMSA representative observed ongoing construction
work involving the pipe replacement of Tank 120 line from Dock 2 Header to
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Tank 120, near the Pit 44 area. KM personnel indicated that construction
commenced in August 2010 and that no qualified welding inspector was on-site or
available to ensure that the finished weld met applicable standards and codes.
4. §195.266 Construction records.
A complete record that shows the following must be maintained by the
operator involved for the life of each pipeline facility:
(a) The total number of girth welds and the number nondestructively tested,
including the number rejected and the disposition of each rejected weld.
(b) The amount, location, and cover of each size of pipe installed.
(c) The location of each crossing of another pipeline.
(d) The location of each buried utility crossing.
(e) The location of each overhead crossing.
(f) The location of each valve and corrosion test station.
At the time of the inspection, KM did not produce any records or documentation
concerning piping construction to Tank 100-4 and Tank 100-5 that was completed
in August 2010. KM failed to maintain records as prescribed in §195.266 for this
construction project.
5. §195.412 Inspection of rights-of-way and crossings under navigable waters.
(b) Except for offshore pipelines, each operator shall, at intervals not
exceeding 5 years, inspect each crossing under a navigable waterway to
determine the condition of the crossing.
KM failed to adequately inspect Line 1206 which runs under the Rahway River, a navigable
waterway, to determine the condition of the crossing. The crossing was inspected in the year
2003 and in the year 2008; however, KM could not determine the depth of cover on the line at
the time of the 2008 inspection due to an inoperable pipe locator transmitter. As of the date of
the inspection, KM had not scheduled a subsequent inspection to determine the condition of the
crossing, as required by § 195.412(b).
6. §195.555 What are the qualifications for supervisors?
You must require and verify that supervisors maintain a thorough
knowledge of that portion of the corrosion control procedures established
under Sec. §195.402(c)(3) for which they are responsible for insuring
compliance.
KM failed to verify that the supervisor maintained thorough knowledge of that portion of
the corrosion control procedure established under Sec. §195.402(c)(3) for which they are
responsible.
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An interview with KM’s supervisor during the inspection of its corrosion control records
demonstrated that KM’s supervisor had no knowledge of its corrosion control procedures.
KM’s supervisor depended on a third party contractor to perform corrosion control
inspections and then filed the records without ensuring compliance with 49 CFR Part 195
Subpart H. KM had no documentation that showed that the supervisor received formal or
technical training commensurate with the supervisor’s responsibilities. In addition, KM
did not have another qualified supervisor interpret the corrosion control records.
7. §195.585 What must I do to correct corroded pipe?
(a) General corrosion. If you find pipe so generally corroded that the remaining
wall thickness is less than that required for the maximum operating pressure of the
pipeline, you must replace the pipe. However, you need not replace the pipe if you--
(1) Reduce the maximum operating pressure commensurate with the strength of the
pipe needed for serviceability based on actual remaining wall thickness…
During a review of its records, a PHMSA representative discovered that, according to an
atmospheric corrosion survey performed in 2009, some pipelines had thickness data
showing greater than 50% wall loss. KM had twenty-one (21) indications on its
aboveground pipelines that measured above 50% wall loss. KM was unable to produce a
remedial report indicating that it replaced these pipes associated with the twenty one (21)
indications or reduced MOP commensurate with the strength of the pipe. Furthermore,
KM could not calculate the remaining strength of the pipe segment based on actual
remaining wall thickness because KM did not have any documentation or knowledge of
the actual MOP of the pipelines.
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 $1,000,000 for any
related series of violations. The Compliance Officer has reviewed the circumstances and
supporting documentation involved in the above probable violations and has recommended that
you be preliminarily assessed a civil penalty of $89,800 as follows:
Item number PENALTY
3 $30,500
4 $10,500
5 $26,700
6 $10,500
7 $11,600
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Proposed Compliance Order
With respect to items numbers 1-7 pursuant to 49 United States Code § 60118, the Pipeline and
Hazardous Materials Safety Administration proposes to issue a Compliance Order to KM.
Please refer to the Proposed Compliance Order, which is enclosed and made a part of this
Notice.
Response to this Notice
Enclosed as part of this Notice is a document entitled Response Options 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 believe qualify for
confidential treatment redacted and an explanation of why you believe the redacted information
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 right to contest the allegations in this
Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in
this Notice without further notice to you and to issue a Final Order.
Please address your correspondence to Byron Coy, PE, Director, PHMSA Eastern, 820 Bear
Tavern Rd, Suite 103, Bear Tavern Rd, W. Trenton, NJ 08628. Please refer to CPF 1-2011-5009
and for each document you submit, please provide a copy in electronic format whenever
possible.
Sincerely,
Byron Coy, PE
Director, Eastern Region
Pipeline and Hazardous Materials Safety Administration
Enclosures: Proposed Compliance Order
Response Options for Pipeline Operators in Compliance Proceedings
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PROPOSED COMPLIANCE ORDER
Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety
Administration (PHMSA) proposes to issue to Kinder Morgan Terminal, LLC (KM) a
Compliance Order incorporating the following remedial requirements to ensure the compliance
of KM with the pipeline safety regulations:
1. Regarding Item Number 1 of the Notice pertaining to §195.404(a)(2), KM must update set
of alignment maps to illustrate all current crossings of public roads, railroads, rivers, buried
utilities and foreign pipelines within 120 days of receipt of the Final Order.
2. Regarding Item Number 2 of the Notice pertaining to §195.404 (a)(3), KM must submit
adequate related historical records of the maximum operating pressure (MOP) of all its
jurisdictional pipeline system in or affiliated with the Carteret facility within the timeframe
prescribed in Item 8 of this Compliance Order. If, KM is unable to produce those records,
KM must complete a pressure test pursuant to 49 CFR, Part 195, Subpart E to establish the
MOP of its pipeline facility, or reduce the presumed maximum operating pressure to 80
percent of the operating pressure to which each pipeline segment was subjected for 4 or
more continuous hours that can be demonstrated by the methods prescribed in
§195.406(a)(5) within 150 days of receipt of the Final Order.
3. Regarding Item Number 3 of the Notice pertaining to §195.402(c)(3), KM must conduct a
non-destructive test (NDT) on all welds associated with Tank 120 near Pit 44 in accordance
with §195.234. Then, KM must commission a third-party that is qualified by the American
Society of Non-Destructive Testing to examine the results, analyze the integrity of the
welds and prepare a final report. KM must have a final report from this third-party analysis
within 180 days of receipt of the Final Order.
4. Regarding Item Number 4 of the Notice pertaining to §195.266, KM must have completed
records of piping construction to Tank 100-4 and Tank 100-5 in accordance with §195.266
within 90 days of receipt of the Final Order.
5. Regarding Item Number 5 of the Notice pertaining to §195.412(b), KM must conduct a
thorough inspection of the crossing under the Rahway River. KM must have the results of
the inspection within 90 days of receipt of the Final Order.
6. Regarding Item Number 6 of the Notice pertaining to §195.555, KM must have
documentation demonstrating that the supervisor, who is responsible for corrosion control,
has undergone training sufficient to acquire adequ
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