# EASTERN SHORE NATURAL GAS CO — Notice of Probable Violation

- **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:** Not available
- **summary:** CLOSED notice of probable violation citing 192.736(c).
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- **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.

Official case documents:

120181013_Final Order_09262019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_Final%20Order_09262019.pdf

120181013_Final Order_09262019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_Final%20Order_09262019_text.pdf

120181013_NOPV-PCP_07132018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_NOPV-PCP_07132018.pdf

120181013_NOPV-PCP_07132018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_NOPV-PCP_07132018_text.pdf

120181013_Operator Response to Notice_07262018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120181013/120181013_Operator%20Response%20to%20Notice_07262018.pdf

120181013_Final Order_09262019_text.pdf

September 26, 2019
Mr. Jeffry Householder
President, Chief Executive Officer and Director
Chesapeake Utilities Corporation
909 Silver Lake Boulevard
Dover, Delaware 19904
Re: CPF No. 1-2018-1013
Dear Mr. Householder:
Enclosed please find the Final Order issued in the above-referenced case to your subsidiary,
Eastern Shore Natural Gas Company. It makes a finding of violation and assesses a civil penalty
of $24,100. 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 is effective 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: Mr. Robert Burrough, Director, Eastern Region, Office of Pipeline Safety, PHMSA
Mr. Eric Pearson, Senior Manager, Eastern Shore Natural Gas Company, 500 Energy
Lane, Suite 200, Dover, Delaware 19901
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. 1-2018-1013
a subsidiary of Chesapeake Utilities Corporation, )
)
)
)
Respondent. )
FINAL ORDER
From May 15 through June 22, 2017, 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 facilities and records of Eastern
Shore Natural Gas Company (ESNG or Respondent), a subsidiary of Chesapeake Utilities
Corporation. ESNG owns and operates a 448-mile interstate pipeline system that transports
natural gas from various points in Pennsylvania to consumers in Delaware, Maryland and
Pennsylvania.1
As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent
two enforcement actions. First, by letter dated May 14, 2018, PHMSA issued a Notice of
Amendment (NOA), alleging that certain ESNG procedures were inadequate, including ones
involving the performance testing of gas-detection and alarm systems. Second, by letter dated
July 13, 2018, and in accordance with 49 C.F.R. § 190.207, it issued a Notice of Probable
Violation and Proposed Civil Penalty (Notice), alleging that ESNG had violated 49 C.F.R.
§ 192.736 by failing to conduct required testing of gas-detection units at two compressor
stations, as discussed more fully below, and proposed assessing a civil penalty of $24,100 for the
alleged violation. ESNG responded to the NOA with revised procedures on June 12, 2018, and
PHMSA concurred by letter on July 31, 2018, indicating that the procedural deficiencies had
been corrected.
Respondent responded to the Notice by letter dated July 26, 2018 (Response). The company did
not contest the allegation of violation but provided an 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, Respondent did not contest the allegation in the Notice that it violated 49 C.F.R.
1 See www.esng.com (last accessed February 7, 2019).



CPF No. 1-2018-1013
Page 2
Part 192, as follows:
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.736(c), which states:
§ 192.736 Compressor stations: Gas detection.
(a) . . . .
(b) Except when shutdown of the system is necessary for maintenance
under paragraph (c) of this section, each gas detection and alarm system
required by this section must–
(1) Continuously monitor the compressor building for a concentration of
gas in air of not more than 25 percent of the lower explosive limit; and...
(c) Each gas detection and alarm system required by this section must be
maintained to function properly. The maintenance must include performance
tests.
The Notice alleged that Respondent violated 49 C.F.R. § 192.736(c) by failing to maintain
proper function of each gas-detection and alarm system required by § 192.736, including the
completion of performance tests in 2014, 2015, and 2016. Specifically, the Notice alleged that
ESNG failed to conduct performance tests of the fixed gas-detection units at the company’s
Bridgeville and Delaware City compressor stations, to verify that alarms would be actuated at a
gas concentration of not more than 25 percent of the lower explosive limit (LEL), in accordance
with the requirements in § 192.736(b)(1). The Notice further alleged, on the contrary, that the
testing of the fixed gas detectors was conducted at a concentration of 50 percent LEL.
Respondent did not contest this allegation of violation. Accordingly, based upon a review of all
of the evidence, I find that Respondent violated 49 C.F.R. § 192.736(c) by failing to maintain
proper function of each gas detection and alarm system required by § 192.736, including the
completion of performance tests.
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.2 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; 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 subsequent
damages, and such other matters as justice may require. The Notice proposed a total civil
2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223; Revisions to Civil Penalty Amounts,
83 Fed. Reg. 60732, 60744 (Nov. 27, 2018).



CPF No. 1-2018-1013
Page 3
penalty of $24,100 for the violation cited above.
Item 1: The Notice proposed a civil penalty of $24,100 for Respondent’s violation of 49 C.F.R.
§ 192.736(c), for failing to maintain proper function of each gas-detection and alarm system
required by § 192.736, including the completion of proper performance tests. In its Response,
ESNG requested that PHMSA eliminate or reduce the proposed civil penalty for several
reasons.3 First, the company argued that PHMSA had conducted an inspection of ESNG’s gas
transmission system in May-June, 2017, and had issued both an NOA and a Notice. The
company asserted that it had “proactively implemented” amended interim procedures, “pending
any further comment from PHMSA,”4 and implied that such corrective action warranted
elimination or mitigation of the proposed penalty.
Second, the company argued that the penalty should be withdrawn or reduced because it had
always conducted annual performance testing, but that its procedures needed to be updated in
order to “effectively document its compliance” with the performance-testing requirements.5
Third, Respondent argued that it had taken immediate corrective actions to address the
“procedural deficiency that led to the documentation issue” that was the subject the Notice.6
Finally, ESNG argued the penalty should be withdrawn or reduced because there had been no
incident, abnormal operation, or impact to the community as a result of the violation.
I have reviewed the record and considered the assessment criteria, and find that Respondent’s
arguments do not warrant a reduction or elimination of the proposed civil penalty. With respect
to the nature, circumstances and gravity of the violation, the Violation Report alleged that
PHMSA, rather than the operator, had discovered the violation, that the violation concerned a
failure to perform an activity and not merely a failure to keep records, and that pipeline safety
had been “minimally affected.”7 Upon review of the record, I find that OPS appropriately
classified the nature of the violation to be an activities, rather than a records, violation since
performance tests of fixed gas detectors were not conducted in accordance with the code. The
Violation Report also appropriately classified the gravity of the violation as having minimally
impacted safety, even though a failure to conduct such testing presented a serious potential safety
hazard. Accordingly, I find that a change to the assessment criteria for the nature, circumstances
and gravity of the violation is not warranted.
With respect to culpability, the Violation Report alleged that Respondent failed to take
appropriate action to comply with a requirement that was clearly applicable.8 While
Respondent’s post-inspection corrective actions are duly noted and commendable, they do not
3 Response, at 3.
4 Id., at 2.
5 Id. However, there is no evidence in the record showing that the company inspected and tested the gas detectors at
a 25 percent LEL gas concentration for the years 2014-16.
6 Id.
7 Pipeline Safety Violation Report (Violation Report), (July 13, 2018) (on file with PHMSA), at 7-9.
8 Id., at 10.



CPF No. 1-2018-1013
Page 4
constitute grounds to reduce or eliminate the penalty because they were taken after OPS had
already identified the violation.
Finally, PHMSA recognizes Respondent’s argument that it did not gain financially from the
violation. The Violation Report does not designate an increase in the proposed penalty based on
an alleged economic benefit, so no reduction is warranted based on this factor.9
Based upon the foregoing, I find a reduction in the proposed penalty is not warranted and I assess
Respondent a total civil penalty of $24,100 for violation of 49 C.F.R. § 192.736(c).
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 $24,100 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.
September 26, 2019
___________________________________ __________________________
Alan K. Mayberry Date Issued
Associate Administrator
for Pipeline Safety
9 Id., at 11.
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