{"operation":"document","citation":"CPF 120171002","title":"EASTERN SHORE NATURAL GAS CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2017-01-17","effective_on":null,"summary":"CLOSED notice of probable violation citing 192.745(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-120171002.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-120171002.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-120171002","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/120171002","body":"Notice of Probable Violation involving EASTERN SHORE NATURAL GAS CO. PHMSA's enforcement data identifies the cited regulation as 192.745(a). The case was opened on 2017-01-17 and is reported as closed as of 2018-02-28. Proposed civil penalty: $37,300. Assessed civil penalty: $37,300. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n120171002_Final Order_02092018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_Final%20Order_02092018.pdf\n\n120171002_Final Order_02092018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_Final%20Order_02092018_text.pdf\n\n120171002_NOPV PCP_01172017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_NOPV%20PCP_01172017.pdf\n\n120171002_NOPV PCP_01172017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_NOPV%20PCP_01172017_text.pdf\n\n120171002_Operator Response to Notice_02022017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_Operator%20Response%20to%20Notice_02022017.pdf\n\n120171002_Final Order_02092018_text.pdf\n\nFebruary 9, 2018\nMr. Stephen C. Thompson\nPresident and CEO\nEastern Shore Natural Gas Company\n1110 Forrest Avenue\nSuite 201\nDover, DE 19904\nRe: CPF No. 1-2017-1002\nDear Mr. Thompson:\nEnclosed please find the Final Order issued in the above-referenced case. It makes a finding of\nviolation and assesses a civil penalty of $37,300. The penalty payment terms are set forth in the\nFinal Order. This enforcement action closes automatically upon receipt of payment. Service of\nthe Final Order by certified mail is effective upon the date of mailing as provided under\n49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Director, Eastern Region, Office of Pipeline Safety, PHMSA\nMr. Eric M. Pearson, Senior Manager, Operations Compliance & Engineering\nEastern Shore Natural Gas Co., 1110 Forrest Avenue, Suite 201, Dover, DE 19904\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 )\nEastern Shore Natural Gas Company, ) CPF No. 1-2017-1002\na subsidiary of Chesapeake Utilities Corporation )\n)\n)\n)\nRespondent. )\n________________________________________________)\nFINAL ORDER\nFrom December 1, 2014, through December 19, 2014, pursuant to 49 U.S.C. § 60117, a\nrepresentative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office\nof Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the records of\nEastern Shore Natural Gas Company (ESNG or Respondent) in Dover, Delaware.1 ESNG, a\nsubsidiary of Chesapeake Utilities Corporation, owns and operates 455 miles of natural gas\ntransmission pipelines in Delaware, Maryland, and Pennsylvania.2\nAs a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent,\nby letter dated January 17, 2017, a Notice of Probable Violation and Proposed Civil Penalty\n(Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that ESNG had\nviolated 49 C.F.R. § 192.745 and proposed assessing a civil penalty of $37,300 for the alleged\nviolation.\nESNG responded to the Notice by letter dated February 2, 2017 (Response). The company did\nnot contest the allegation of violation, but provided a supplemental explanation of its actions and\nrequested that the proposed civil penalty be reduced or eliminated. Respondent did not request a\nhearing and therefore has waived its right to one.\nFINDING OF VIOLATION\nIn its Response, ESNG did not contest the allegation in the Notice that it violated 49 C.F.R. Part\n192, as follows:\n1 The inspection covered ESNG’s Daleville Compressor Station, Bridgeville Compressor Station, Honey Brook\nCompressor Station, P140 valve in Dover, DE; P290 valve in Salisbury, MD; and C050 valve in Federalsburg, MD.\n(Pipeline Safety Violation Report (Violation Report) (January 17, 2017) (on file with PHMSA), at 2.\n2 Eastern Shore Natural Gas Co.’s website, available at http://www.esng.com/ (last accessed November 24, 2017).\n\n\n\nCPF No. 1-2017-1002\nPage 2\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.745(a), which states:\n§ 192.745 Valve maintenance: Transmission lines.\n(a) Each transmission line valve that might be required during any\nemergency must be inspected and partially operated at intervals not\nexceeding 15 months, but at least once each calendar year.\nThe Notice alleged that Respondent violated 49 C.F.R. § 192.745(a) by failing to partially\noperate each transmission line valve that might be required during an emergency at intervals not\nexceeding 15 months, but at least one each calendar year. Specifically, the Notice alleged that\nthere were seven instances in which ESNG failed to operate three separate valves that might be\nused in an emergency. During the inspection, a PHMSA representative reviewed ESNG’s\ntransmission line valve records for 2012, 2013, and 2014, and identified three mainline block\nvalves that were reported as being inoperable on more than one occasion. Regarding these\nvalves, the records indicated the following: (1) Valve P140 – “Will not turn…” in 2012, 2013,\nand 2014; (2) Valve P290 – “Paved over” in 2013 and 2014; and (3) Valve C050 – “Will not\nturn…” in 2013 and 2014. Furthermore, in an email from ESNG to PHMSA on January 7, 2015,\nESNG stated that “[a]s mainline block valves, our procedures state that they are critical valves\nand must be inspected and operated each year.”3\nIn its Response, Respondent stated that it had “elected not to contest the alleged violation….”4\nAccordingly, based upon a review of the record and supporting evidence, I find that Respondent\nviolated 49 C.F.R. § 192.745(a) by failing to partially operate each transmission line valve that\nmight be required during an emergency at intervals not exceeding 15 months, but at least one\neach calendar year. This finding of violation will be considered a prior offense in any\nsubsequent enforcement action taken against Respondent.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any\nrelated series of violations.5 In determining the amount of a civil penalty under 49 U.S.C.\n§ 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,\ncircumstances, and gravity of the violation, including adverse impact on the environment; the\ndegree of Respondent’s culpability; the history of Respondent’s prior offenses; and any effect\nthat the penalty may have on its ability to continue doing business; and the good faith of\nRespondent in attempting to comply with the pipeline safety regulations. In addition, I may\nconsider the economic benefit gained from the violation without any reduction because of\n3 Violation Report, at Exhibit A-03.\n4 Response, at 1.\n5 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum\nCivil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).\n\n\n\nCPF No. 1-2017-1002\nPage 3\nsubsequent damages, and such other matters as justice may require. The Notice proposed a total\ncivil penalty of $37,300 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $37,300 for Respondent’s violation of 49 C.F.R.\n§ 192.745(a), for failing to partially operate on seven occasions three separate mainline block\nvalves that had been deemed critical valves, pursuant to ESNG’s procedures, at intervals not\nexceeding 15 months, but at least once each calendar year. In its Response, ESNG requested\nmitigation or elimination of the proposed civil penalty based on several factors addressed in the\nViolation Report.\nWith respect to the nature, circumstances, and gravity of the violation, the Violation Report\nalleged that PHMSA had discovered the violation, that the violation concerned a failure to\nperform an activity, and that pipeline safety was “minimally affected.”6 Respondent argued that\nthe violation did not cause any incident, abnormal operation, or impact to the community, which\nmay contribute to the gravity of the violation. I have reviewed the Violation Report and find that\nit appropriately classified the gravity of the violation as minimally impacting safety. Therefore,\nno further reduction is warranted based on the information Respondent provided.\nWith respect to culpability, the Violation Report alleged that Respondent failed to take\nappropriate action to comply with a requirement that was clearly applicable.7 Respondent argued\nthat it had taken prompt remedial action to address the violation, and that the valves were no\nlonger critical. Respondent’s post-inspection corrective actions are duly noted, but do not\nconstitute grounds to reduce the penalty because they were taken after PHMSA had already\nidentified the violation.8\nWith respect to good faith, the Violation Report alleged that ESNG was not entitled to a good\nfaith “credit” on the proposed penalty. Respondent argued that it attempted in good faith to\ncomply,9 but, having reviewed the record, I find that Respondent’s actions do not qualify for a\ngood-faith credit because the company lacked “a credible justification” for its failure to perform\nthe required valve operations.10 The regulation establishes clear timing requirements for valve\ninspections and there was no other reasonable interpretation held by ESNG that justified a failure\nto comply.\nFinally, with respect to economic benefit and ESNG’s enforcement history, the Violation Report\nmade no allegation that either factor was considered in arriving at the proposed penalty.\nRespondent argued that it did not financially gain from the alleged violation and that its\n6 Violation Report, at 7-9.\n7 Id., at 10.\n8 See, e.g., Enbridge Pipelines LLC, Final Order, CPF No. 3-2007-5022, at 3, 2009 WL 2336996 (Jun. 2, 2009)\n(finding corrective action taken after an accident had already occurred did not warrant mitigation of the proposed\npenalty).\n9 Response, at 4.\n10 Violation Report, at 11.\n\n\n\nCPF No. 1-2017-1002\nPage 4\nenforcement history reflected only one Notice of Probable Violation and two Notices of\nAmendment over the past 15 years.11 Since neither factor was considered in the proposed\npenalty amount, the information provided by Respondent does not affect the amount of the\npenalty.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $37,300 for violation of 49 C.F.R. § 192.745(a).\nIn summary, having reviewed the record and considered the assessment criteria for each Item\ncited above, I assess Respondent a total civil penalty of $37,300.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.\nThe Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $37,300 civil penalty will result in accrual of interest at the current annual rate\nin accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nUnder 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final\nOrder to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey\nAvenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of\nChief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the\nFinal Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)\nand meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically\nstays the payment of any civil penalty assessed. The other terms of the order, including any\ncorrective action, remain in effect unless the Associate Administrator, upon request, grants a\nstay. If Respondent submits payment of the civil penalty, the Final Order becomes the final\nadministrative decision and the right to petition for reconsideration is waived. The terms and\nconditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5.\nFebruary 9, 2018\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n11 Response, at 4.","truncated":false,"body_characters":13297}