# EASTERN SHORE NATURAL GAS CO — Notice of Probable Violation

- **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:** Not available
- **summary:** CLOSED notice of probable violation citing 192.745(a).
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- **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.

Official case documents:

120171002_Final Order_02092018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_Final%20Order_02092018.pdf

120171002_Final Order_02092018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_Final%20Order_02092018_text.pdf

120171002_NOPV PCP_01172017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_NOPV%20PCP_01172017.pdf

120171002_NOPV PCP_01172017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_NOPV%20PCP_01172017_text.pdf

120171002_Operator Response to Notice_02022017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120171002/120171002_Operator%20Response%20to%20Notice_02022017.pdf

120171002_Final Order_02092018_text.pdf

February 9, 2018
Mr. Stephen C. Thompson
President and CEO
Eastern Shore Natural Gas Company
1110 Forrest Avenue
Suite 201
Dover, DE 19904
Re: CPF No. 1-2017-1002
Dear Mr. Thompson:
Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of
violation and assesses a civil penalty of $37,300. The penalty payment terms are set forth in the
Final Order. This enforcement action closes automatically upon receipt of payment. Service of
the Final Order by certified mail is effective upon the date of mailing as provided under
49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Alan K. Mayberry
Associate Administrator
for Pipeline Safety
Enclosure
cc: Director, Eastern Region, Office of Pipeline Safety, PHMSA
Mr. Eric M. Pearson, Senior Manager, Operations Compliance & Engineering
Eastern Shore Natural Gas Co., 1110 Forrest Avenue, Suite 201, Dover, DE 19904
CERTIFIED MAIL - RETURN RECEIPT REQUESTED



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
________________________________________________
In the Matter of )
Eastern Shore Natural Gas Company, ) CPF No. 1-2017-1002
a subsidiary of Chesapeake Utilities Corporation )
)
)
)
Respondent. )
________________________________________________)
FINAL ORDER
From December 1, 2014, through December 19, 2014, pursuant to 49 U.S.C. § 60117, a
representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office
of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the records of
Eastern Shore Natural Gas Company (ESNG or Respondent) in Dover, Delaware.1 ESNG, a
subsidiary of Chesapeake Utilities Corporation, owns and operates 455 miles of natural gas
transmission pipelines in Delaware, Maryland, and Pennsylvania.2
As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent,
by letter dated January 17, 2017, a Notice of Probable Violation and Proposed Civil Penalty
(Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that ESNG had
violated 49 C.F.R. § 192.745 and proposed assessing a civil penalty of $37,300 for the alleged
violation.
ESNG responded to the Notice by letter dated February 2, 2017 (Response). The company did
not contest the allegation of violation, but provided a supplemental explanation of its actions and
requested that the proposed civil penalty be reduced or eliminated. Respondent did not request a
hearing and therefore has waived its right to one.
FINDING OF VIOLATION
In its Response, ESNG did not contest the allegation in the Notice that it violated 49 C.F.R. Part
192, as follows:
1 The inspection covered ESNG’s Daleville Compressor Station, Bridgeville Compressor Station, Honey Brook
Compressor Station, P140 valve in Dover, DE; P290 valve in Salisbury, MD; and C050 valve in Federalsburg, MD.
(Pipeline Safety Violation Report (Violation Report) (January 17, 2017) (on file with PHMSA), at 2.
2 Eastern Shore Natural Gas Co.’s website, available at http://www.esng.com/ (last accessed November 24, 2017).



CPF No. 1-2017-1002
Page 2
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.745(a), which states:
§ 192.745 Valve maintenance: Transmission lines.
(a) Each transmission line valve that might be required during any
emergency must be inspected and partially operated at intervals not
exceeding 15 months, but at least once each calendar year.
The Notice alleged that Respondent violated 49 C.F.R. § 192.745(a) by failing to partially
operate each transmission line valve that might be required during an emergency at intervals not
exceeding 15 months, but at least one each calendar year. Specifically, the Notice alleged that
there were seven instances in which ESNG failed to operate three separate valves that might be
used in an emergency. During the inspection, a PHMSA representative reviewed ESNG’s
transmission line valve records for 2012, 2013, and 2014, and identified three mainline block
valves that were reported as being inoperable on more than one occasion. Regarding these
valves, the records indicated the following: (1) Valve P140 – “Will not turn…” in 2012, 2013,
and 2014; (2) Valve P290 – “Paved over” in 2013 and 2014; and (3) Valve C050 – “Will not
turn…” in 2013 and 2014. Furthermore, in an email from ESNG to PHMSA on January 7, 2015,
ESNG stated that “[a]s mainline block valves, our procedures state that they are critical valves
and must be inspected and operated each year.”3
In its Response, Respondent stated that it had “elected not to contest the alleged violation….”4
Accordingly, based upon a review of the record and supporting evidence, I find that Respondent
violated 49 C.F.R. § 192.745(a) by failing to partially operate each transmission line valve that
might be required during an emergency at intervals not exceeding 15 months, but at least one
each calendar year. This finding of violation will be considered a prior offense in any
subsequent enforcement action taken against Respondent.
ASSESSMENT OF PENALTY
Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed
$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any
related series of violations.5 In determining the amount of a civil penalty under 49 U.S.C.
§ 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,
circumstances, and gravity of the violation, including adverse impact on the environment; the
degree of Respondent’s culpability; the history of Respondent’s prior offenses; and any effect
that the penalty may have on its ability to continue doing business; and the good faith of
Respondent in attempting to comply with the pipeline safety regulations. In addition, I may
consider the economic benefit gained from the violation without any reduction because of
3 Violation Report, at Exhibit A-03.
4 Response, at 1.
5 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum
Civil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).



CPF No. 1-2017-1002
Page 3
subsequent damages, and such other matters as justice may require. The Notice proposed a total
civil penalty of $37,300 for the violation cited above.
Item 1: The Notice proposed a civil penalty of $37,300 for Respondent’s violation of 49 C.F.R.
§ 192.745(a), for failing to partially operate on seven occasions three separate mainline block
valves that had been deemed critical valves, pursuant to ESNG’s procedures, at intervals not
exceeding 15 months, but at least once each calendar year. In its Response, ESNG requested
mitigation or elimination of the proposed civil penalty based on several factors addressed in the
Violation Report.
With respect to the nature, circumstances, and gravity of the violation, the Violation Report
alleged that PHMSA had discovered the violation, that the violation concerned a failure to
perform an activity, and that pipeline safety was “minimally affected.”6 Respondent argued that
the violation did not cause any incident, abnormal operation, or impact to the community, which
may contribute to the gravity of the violation. I have reviewed the Violation Report and find that
it appropriately classified the gravity of the violation as minimally impacting safety. Therefore,
no further reduction is warranted based on the information Respondent provided.
With respect to culpability, the Violation Report alleged that Respondent failed to take
appropriate action to comply with a requirement that was clearly applicable.7 Respondent argued
that it had taken prompt remedial action to address the violation, and that the valves were no
longer critical. Respondent’s post-inspection corrective actions are duly noted, but do not
constitute grounds to reduce the penalty because they were taken after PHMSA had already
identified the violation.8
With respect to good faith, the Violation Report alleged that ESNG was not entitled to a good
faith “credit” on the proposed penalty. Respondent argued that it attempted in good faith to
comply,9 but, having reviewed the record, I find that Respondent’s actions do not qualify for a
good-faith credit because the company lacked “a credible justification” for its failure to perform
the required valve operations.10 The regulation establishes clear timing requirements for valve
inspections and there was no other reasonable interpretation held by ESNG that justified a failure
to comply.
Finally, with respect to economic benefit and ESNG’s enforcement history, the Violation Report
made no allegation that either factor was considered in arriving at the proposed penalty.
Respondent argued that it did not financially gain from the alleged violation and that its
6 Violation Report, at 7-9.
7 Id., at 10.
8 See, e.g., Enbridge Pipelines LLC, Final Order, CPF No. 3-2007-5022, at 3, 2009 WL 2336996 (Jun. 2, 2009)
(finding corrective action taken after an accident had already occurred did not warrant mitigation of the proposed
penalty).
9 Response, at 4.
10 Violation Report, at 11.



CPF No. 1-2017-1002
Page 4
enforcement history reflected only one Notice of Probable Violation and two Notices of
Amendment over the past 15 years.11 Since neither factor was considered in the proposed
penalty amount, the information provided by Respondent does not affect the amount of the
penalty.
Accordingly, having reviewed the record and considered the assessment criteria, I assess
Respondent a civil penalty of $37,300 for violation of 49 C.F.R. § 192.745(a).
In summary, having reviewed the record and considered the assessment criteria for each Item
cited above, I assess Respondent a total civil penalty of $37,300.
Payment of the civil penalty must be made within 20 days of service. Federal regulations
(49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal
Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed
instructions are contained in the enclosure. Questions concerning wire transfers should be
directed to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike
Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.
The Financial Operations Division telephone number is (405) 954-8845.
Failure to pay the $37,300 civil penalty will result in accrual of interest at the current annual rate
in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to
those same authorities, a late penalty charge of six percent (6%) per annum will be charged if
payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty
may result in referral of the matter to the Attorney General for appropriate action in a district
court of the United States.
Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final
Order to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey
Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of
Chief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the
Final Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)
and meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically
stays the payment of any civil penalty assessed. The other terms of the order, including any
corrective action, remain in effect unless the Associate Administrator, upon request, grants a
stay. If Respondent submits payment of the civil penalty, the Final Order becomes the final
administrative decision and the right to petition for reconsideration is waived. The terms and
conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5.
February 9, 2018
___________________________________ __________________________
Alan K. Mayberry Date Issued
Associate Administrator
for Pipeline Safety
11 Response, at 4.
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