{"operation":"document","citation":"CPF 120181013","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":"2018-07-13","effective_on":null,"summary":"CLOSED notice of probable violation citing 192.736(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-120181013.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-120181013.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-120181013","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/120181013","body":"Notice of Probable Violation involving EASTERN SHORE NATURAL GAS CO. PHMSA's enforcement data identifies the cited regulation as 192.736(c). The case was opened on 2018-07-13 and is reported as closed as of 2019-10-08. Proposed civil penalty: $24,100. Assessed civil penalty: $24,100. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n120181013_Final Order_09262019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_Final%20Order_09262019.pdf\n\n120181013_Final Order_09262019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_Final%20Order_09262019_text.pdf\n\n120181013_NOPV-PCP_07132018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_NOPV-PCP_07132018.pdf\n\n120181013_NOPV-PCP_07132018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_NOPV-PCP_07132018_text.pdf\n\n120181013_Operator Response to Notice_07262018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_Operator%20Response%20to%20Notice_07262018.pdf\n\n120181013_Final Order_09262019_text.pdf\n\nSeptember 26, 2019\nMr. Jeffry Householder\nPresident, Chief Executive Officer and Director\nChesapeake Utilities Corporation\n909 Silver Lake Boulevard\nDover, Delaware 19904\nRe: CPF No. 1-2018-1013\nDear Mr. Householder:\nEnclosed please find the Final Order issued in the above-referenced case to your subsidiary,\nEastern Shore Natural Gas Company. It makes a finding of violation and assesses a civil penalty\nof $24,100. The penalty payment terms are set forth in the Final Order. This enforcement action\ncloses automatically upon receipt of payment. Service of the Final Order is effective as provided\nunder 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Robert Burrough, Director, Eastern Region, Office of Pipeline Safety, PHMSA\nMr. Eric Pearson, Senior Manager, Eastern Shore Natural Gas Company, 500 Energy\nLane, Suite 200, Dover, Delaware 19901\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. 1-2018-1013\na subsidiary of Chesapeake Utilities Corporation, )\n)\n)\n)\nRespondent. )\nFINAL ORDER\nFrom May 15 through June 22, 2017, pursuant to 49 U.S.C. § 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of the facilities and records of Eastern\nShore Natural Gas Company (ESNG or Respondent), a subsidiary of Chesapeake Utilities\nCorporation. ESNG owns and operates a 448-mile interstate pipeline system that transports\nnatural gas from various points in Pennsylvania to consumers in Delaware, Maryland and\nPennsylvania.1\nAs a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent\ntwo enforcement actions. First, by letter dated May 14, 2018, PHMSA issued a Notice of\nAmendment (NOA), alleging that certain ESNG procedures were inadequate, including ones\ninvolving the performance testing of gas-detection and alarm systems. Second, by letter dated\nJuly 13, 2018, and in accordance with 49 C.F.R. § 190.207, it issued a Notice of Probable\nViolation and Proposed Civil Penalty (Notice), alleging that ESNG had violated 49 C.F.R.\n§ 192.736 by failing to conduct required testing of gas-detection units at two compressor\nstations, as discussed more fully below, and proposed assessing a civil penalty of $24,100 for the\nalleged violation. ESNG responded to the NOA with revised procedures on June 12, 2018, and\nPHMSA concurred by letter on July 31, 2018, indicating that the procedural deficiencies had\nbeen corrected.\nRespondent responded to the Notice by letter dated July 26, 2018 (Response). The company did\nnot contest the allegation of violation but provided an explanation of its actions and requested\nthat the proposed civil penalty be reduced or eliminated. Respondent did not request a hearing\nand therefore has waived its right to one.\nFINDING OF VIOLATION\nIn its Response, Respondent did not contest the allegation in the Notice that it violated 49 C.F.R.\n1 See www.esng.com (last accessed February 7, 2019).\n\n\n\nCPF No. 1-2018-1013\nPage 2\nPart 192, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.736(c), which states:\n§ 192.736 Compressor stations: Gas detection.\n(a) . . . .\n(b) Except when shutdown of the system is necessary for maintenance\nunder paragraph (c) of this section, each gas detection and alarm system\nrequired by this section must–\n(1) Continuously monitor the compressor building for a concentration of\ngas in air of not more than 25 percent of the lower explosive limit; and...\n(c) Each gas detection and alarm system required by this section must be\nmaintained to function properly. The maintenance must include performance\ntests.\nThe Notice alleged that Respondent violated 49 C.F.R. § 192.736(c) by failing to maintain\nproper function of each gas-detection and alarm system required by § 192.736, including the\ncompletion of performance tests in 2014, 2015, and 2016. Specifically, the Notice alleged that\nESNG failed to conduct performance tests of the fixed gas-detection units at the company’s\nBridgeville and Delaware City compressor stations, to verify that alarms would be actuated at a\ngas concentration of not more than 25 percent of the lower explosive limit (LEL), in accordance\nwith the requirements in § 192.736(b)(1). The Notice further alleged, on the contrary, that the\ntesting of the fixed gas detectors was conducted at a concentration of 50 percent LEL.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 192.736(c) by failing to maintain\nproper function of each gas detection and alarm system required by § 192.736, including the\ncompletion of performance tests.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken 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.2 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; any effect that\nthe penalty may have on its ability to continue doing business; and the good faith of Respondent\nin attempting to comply with the pipeline safety regulations. In addition, I may consider the\neconomic benefit gained from the violation without any reduction because of subsequent\ndamages, and such other matters as justice may require. The Notice proposed a total civil\n2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223; Revisions to Civil Penalty Amounts,\n83 Fed. Reg. 60732, 60744 (Nov. 27, 2018).\n\n\n\nCPF No. 1-2018-1013\nPage 3\npenalty of $24,100 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $24,100 for Respondent’s violation of 49 C.F.R.\n§ 192.736(c), for failing to maintain proper function of each gas-detection and alarm system\nrequired by § 192.736, including the completion of proper performance tests. In its Response,\nESNG requested that PHMSA eliminate or reduce the proposed civil penalty for several\nreasons.3 First, the company argued that PHMSA had conducted an inspection of ESNG’s gas\ntransmission system in May-June, 2017, and had issued both an NOA and a Notice. The\ncompany asserted that it had “proactively implemented” amended interim procedures, “pending\nany further comment from PHMSA,”4 and implied that such corrective action warranted\nelimination or mitigation of the proposed penalty.\nSecond, the company argued that the penalty should be withdrawn or reduced because it had\nalways conducted annual performance testing, but that its procedures needed to be updated in\norder to “effectively document its compliance” with the performance-testing requirements.5\nThird, Respondent argued that it had taken immediate corrective actions to address the\n“procedural deficiency that led to the documentation issue” that was the subject the Notice.6\nFinally, ESNG argued the penalty should be withdrawn or reduced because there had been no\nincident, abnormal operation, or impact to the community as a result of the violation.\nI have reviewed the record and considered the assessment criteria, and find that Respondent’s\narguments do not warrant a reduction or elimination of the proposed civil penalty. With respect\nto the nature, circumstances and gravity of the violation, the Violation Report alleged that\nPHMSA, rather than the operator, had discovered the violation, that the violation concerned a\nfailure to perform an activity and not merely a failure to keep records, and that pipeline safety\nhad been “minimally affected.”7 Upon review of the record, I find that OPS appropriately\nclassified the nature of the violation to be an activities, rather than a records, violation since\nperformance tests of fixed gas detectors were not conducted in accordance with the code. The\nViolation Report also appropriately classified the gravity of the violation as having minimally\nimpacted safety, even though a failure to conduct such testing presented a serious potential safety\nhazard. Accordingly, I find that a change to the assessment criteria for the nature, circumstances\nand gravity of the violation is not warranted.\nWith respect to culpability, the Violation Report alleged that Respondent failed to take\nappropriate action to comply with a requirement that was clearly applicable.8 While\nRespondent’s post-inspection corrective actions are duly noted and commendable, they do not\n3 Response, at 3.\n4 Id., at 2.\n5 Id. However, there is no evidence in the record showing that the company inspected and tested the gas detectors at\na 25 percent LEL gas concentration for the years 2014-16.\n6 Id.\n7 Pipeline Safety Violation Report (Violation Report), (July 13, 2018) (on file with PHMSA), at 7-9.\n8 Id., at 10.\n\n\n\nCPF No. 1-2018-1013\nPage 4\nconstitute grounds to reduce or eliminate the penalty because they were taken after OPS had\nalready identified the violation.\nFinally, PHMSA recognizes Respondent’s argument that it did not gain financially from the\nviolation. The Violation Report does not designate an increase in the proposed penalty based on\nan alleged economic benefit, so no reduction is warranted based on this factor.9\nBased upon the foregoing, I find a reduction in the proposed penalty is not warranted and I assess\nRespondent a total civil penalty of $24,100 for violation of 49 C.F.R. § 192.736(c).\nPayment of the civil penalty must be made within 20 days of service. Federal regulations (49\nC.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 $24,100 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.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nSeptember 26, 2019\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n9 Id., at 11.","truncated":false,"body_characters":13546}