{"operation":"document","citation":"CPF 120185004","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":"2018-01-18","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.310(a), 195.420(b), 195.573(a)(1), 195.575(c), 195.589(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185004.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185004.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185004","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/120185004","body":"Notice of Probable Violation involving KINDER MORGAN LIQUID TERMINALS, LLC. PHMSA's enforcement data identifies the cited regulations as 195.310(a),  195.420(b),  195.573(a)(1),  195.575(c),  195.589(c). The case was opened on 2018-01-18 and is reported as closed as of 2019-11-05. Proposed civil penalty: $208,600. Assessed civil penalty: $208,600. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n120185004_Closure Letter_11052019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Closure%20Letter_11052019.pdf\n\n120185004_Closure Letter_11052019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Closure%20Letter_11052019_text.pdf\n\n120185004_Final Order_06272019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Final%20Order_06272019.pdf\n\n120185004_Final Order_06272019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Final%20Order_06272019_text.pdf\n\n120185004_NOPV PCP PCO_01182018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_NOPV%20PCP%20PCO_01182018_text.pdf\n\n120185004_NOPV-PCP-PCO_01182018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_NOPV-PCP-PCO_01182018.pdf\n\n120185004_NOPV-PCP-PCO_01182018.pdf\n\nU.S. Department\nof Transportation\n820 Bear Tavern Road, Suite 103\nWest Trenton, NJ 08628\nPipeline and\n609.771.7800\nHazardous Materials\nSafety Administration\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nOVERNIGHT EXPRESS DELIVERY\nJanuary 18, 2018\nJoshua Etzel\nVice President - Operations & Engineering\nKinder Morgan Liquid Terminals, LLC\n78 Lafayette Street\nCarteret, NJ 07008\nCPF 1-2018-5004\nDear Mr. Etzel:\nFrom July 27-31, 2015, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United\nStates Code inspected Kinder Morgan Liquid Terminals, LLC's (KMLT) pipeline terminal in Perth\nAmboy, New Jersey.\nAs a result of the inspection, it is alleged that you have committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the\nprobable violation(s) are:\n1. § 195.310 Records\n(a) A record must be made of each pressure test required by this subpart, and the\nrecord of the latest test must be retained as long as the facility tested is in use...\nKMLT did not retain a record of each pressure test required by this subpart. Specifically, KMLT\nfailed to retain pressure test records for 9 breakout tanks at its Perth Amboy, NJ facility, as per\n§ 195.310.\nIn 2007, KMLT constructed 9 new breakout tanks. These tanks, numbered 52 through 60, required\nhydrostatic testing, per API Standard 650 \"Welded Steel Tanks for Oil Storage\" 11th Edition,\nincorporated by reference in § 195.3(b)(18).\n\n\n\nCPF 1-2018-5004\nDuring the inspection, the PHMSA inspector requested hydrostatic test records for the breakout\ntanks. KMLT provided a \"Settlement Elevation Plan and Graph\" for each breakout tank that\nrequired a hydrostatic test and stated that, \"the settlement surveys were the only records relevant\nto the 2007 hydrostatic tests of the 9 breakout tanks.\"\nIn email correspondence following the inspection, KMT responded to PHMSA's exit interview\nquestions in an email dated September 10, 2015, stating, \"Have aboveground breakout tanks been\npressure tested to their corresponding API or ASME Standard or Specification, and do pressure\ntest records contain the required information? - BOT pressure test records are missing due to the\ndevastation caused by Hurricane Sandy (construction, inspection, repair and alteration records\nhave been lost/destroyed and could not be provided during the inspection).\"\nThus, KMLT failed to maintain documentation as required by § 195.310(a).\n2. § 195.420 Valve Maintenance\n(b) Each operator shall, at intervals not exceeding 7½ months, but at least twice each\ncalendar year, inspect each mainline valve to determine that it is functioning\nproperly.\nKMLT failed to inspect its mainline valves at intervals not exceeding 7½ months, but at least twice\neach calendar year.\nDuring the inspection, the PHMSA inspector reviewed KMLT's mainline valve inspection records\nfor the Perth Amboy, New Jersey facility. The Mainline Valve Inspection records indicated that\nmainline valve inspections for Mainline Valve 001 - MOV at Motiva and Mainline Valve 002 -\nMOV at Buckeye Outbound were inspected on:\na. February 21, 2014\nb. September 26, 2014\nc. July 23, 2015\nThe interval between\nmainline valve inspections conducted on September 26, 2014 and\nJuly 23, 2015, exceeded the 7½ month requirement by 73 days.\nThus, KMLT failed to inspect its mainline valves at intervals not exceeding 7½ months, but at\nleast twice each calendar year.\n3. § 195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine whether cathodie\nprotection required by this subpart complies with Sec. 195.571:\n(1) Conduct tests on the protected pipeline at least once each calendar year, but with\nintervals not exceeding 15 months. However, if tests at those intervals are impractical\nfor separately protected short sections of bare or ineffectively coated pipelines, testing\nmay be done at least once every 3 calendar years, but with intervals not exceeding\n39 months.\nKMLT failed to conduct tests on its protected pipeline at least once each calendar year, but with\nintervals not exceeding 15 months.\n120185004_NOPV-PCP-PCO_01182018 (150080)\nPage 2 of 6\n\n\n\nCPF 1-2018-5004\nDuring the inspection, the PHMSA inspector reviewed KMLT's structure pipe to soil inspection\nrecords from 2012 through 2015. The records showed that in 24 instances, KMLT conducted tests\non protected pipelines that were not bare or ineffectively coated, but the interval between structure\npipe to soil inspections conducted on August 27, 2013 and December 15-19, 2014, exceeded\n15 months by 18-22 days. Additionally, in 7 instances, from 2013-2015, KMLT failed to take any\nstructure pipe to soil readings. The PHMSA inspector asked KMLT why there were missing test\nreads and KMLT was unable to provide a reason.\nThus, KMLT failed to conduct tests on the protected pipeline at least once each calendar year, but\nwith intervals not exceeding 15 months.\n4. § 195.575 Which facilities must I electrically isolate and what inspections, tests, and\nsafeguards are required?\n(c) You must inspect and electrically test each electrical isolation to assure the\nisolation is adequate.\nKMLT failed to inspect and electrically test each electrical isolation to assure the isolation is\nadequate.\nDuring the inspection, the PHMSA inspector reviewed KMLT's casing pipe to soil inspection\nrecords from calendar years 2012 through 2015, and KMLT's T-O&M 903 - External Corrosion\nControl for Buried or Submerged Pipelines and Above Ground Tanks, revised 10/05/12. Section\n1.8 of the procedure stated in part, \"Test electrical isolation by comparing the casing-to-soil\npotentials to the matching pipe-to-soil potentials at least once each calendar year, not to exceed\n15 months...\"\nIn subsequent follow-ups to the inspection, PHMSA and KMLT exchanged emails from\nAugust 27, 2015 through September 8, 2015 regarding cathodic protection records. In those\nemails, KMLT stated in part that:\n\"I have attached a spreadsheet to correlate the readings to the alignment sheets. We are missing\nsome casing readings for 2012 and 2014, and are still trying to locate the readings for 2013,\nhowever, have not been able to find them thus far...\"\n\"Yes, it can be confirmed that under the \"CPDM Reading Taken\" column for 2012 to 2014 PANJ\n1201 pipeline, where the rows are blank the Casing Test Lead data is missing...\"\nKMLT was missing 14 casing P/S (casing pipe to soil) test reads from 2013-2014. Additionally,\nthe intervals between 10 casing pipe to soil inspections conducted on August 27, 2013 and\nDecember 15-19, 2014, exceeded 15 months by 18-22 days.\nThus, KMLT failed to inspect and electrically test each electrical isolation to assure the isolation\nis adequate.\n5. §195.589 What corrosion control information do I have to maintain?\n(c) You must maintain a record of each analysis, check, demonstration, examination,\ninspection, investigation, review, survey, and test required by this subpart in\nsufficient detail to demonstrate the adequacy of corrosion control measures or that\ncorrosion requiring control measures does not exist. You must retain these records\nfor at least 5 years, except that records related to Secs. 195.569, 195.573(a) and (b),\n120185004_NOPV-PCP-PCO_01182018 (150080)\nPage 3 of 6\n\n\n\nCPF 1-2018-5004\nand 195.579(b)(3) and (c) must be retained for as long as the pipeline remains in\nservice.\nKMLT failed to maintain a record of each analysis, check, demonstration, examination, inspection,\ninvestigation, review, survey, and test required by this subpart in sufficient detail to demonstrate\nthe adequacy of corrosion control measures or that corrosion requiring control measures does not\nexist.\nSpecifically, KMLT failed to maintain records of inspections of cathodic protection systems used\nto control corrosion on the bottom of 8 aboveground breakout tanks #2, #3, #5, #7, #10, #11, #17,\nand #18, to ensure that operation and maintenance of the system are in accordance with API\nRecommended Practice 651, as per § 195.573(d).\nDuring for 2012-204. The PHIM inspector reviesed aboris protection jaspe in er ion\"\ncathodic protection systems. KMLT could not provide 2013 inspection records.\nTherefore, KMLT failed to maintain records of inspections of the cathodic protection system for\n8 breakout tanks for 2013.\nProposed Civil Penalty\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed\n$209,002 per violation per day the violation persists, up to a maximum of $2,090,022 for a related\nseries of violations. For violations occurring prior to November 2, 2015, the maximum penalty\nmay not exceed $200,000 per violation per day, with a maximum penalty not to exceed $2,000,000\nfor a related series of violations. The Compliance Officer has reviewed the circumstances and\nsupporting documentation involved in the above probable violation(s) and has recommended that\nyou be preliminarily assessed a civil penalty of $208,600 as follows:\nItem number\nPENALTY\n2\n3\n$33,300\n$74,700\n$72,800\n5\n$27,800\nProposed Compliance Order\nWith respect to item 1, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous\nMaterials Safety Administration proposes to issue a Compliance Order to Kinder Morgan Liquid\nTerminals, LLC. Please refer to the Proposed Compliance Order, which is enclosed and made a\npart of this Notice.\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in\nCompliance Proceedings. Please refer to this document and note the response options. All material\nsubmit in response to this enforcement action may be made publicly available. If you believe that\nany portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b),\nalong with the complete original document you must provide a second copy of the document with\n120185004_NOPV-PCP-PCO_01182018 (150080)\nPage 4 of 6\n\n\n\nCPF 1-2018-5004\nthe portions you believe qualify for confidential treatment redacted and an explanation of why you\nbelieve the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you\ndo not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to\ncontest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety\nto find facts as alleged in this Notice without further notice to you and to issue a Final Order.\nPlease submit all correspondence in this matter to Robert Burrough, Director, PHMSA Eastern\nRegion, 820 Bear Tavern Road, Suite 103, West Trenton, New Jersey 08628. Please refer to\nCPF 1-2018-5004 on each document you submit, and whenever possible provide a signed PDF\ncopy in electronic format. Smaller files may be emailed to robert.burrough@dot.gov. Larger files\nshould be sent on a CD accompanied by the original paper copy to the Eastern Region Office.\nAdditionally, if you choose to respond to this (or any other case), please ensure that any response\nletter pertains solely to one CPF case number\nSincerely,\nNut Bunk\nRobert Burrough\nDirector, Eastern Region\nPipeline and Hazardous Materials Safety Administration\nEnclosure: Proposed Compliance Order\nResponse Options for Pipeline Operators in Compliance Proceedings\n120185004_NOPV-PCP-PCO_01182018 (150080)\nPage 5 of 6\n\n\n\nCPF 1-2018-5004\nPROPOSED COMPLIANCE ORDER\nPursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) proposes to issue to Kinder Morgan Liquid Terminals, LLC (KMLT) a\nCompliance Order incorporating the following remedial requirements to ensure the compliance of\nKMLT with the pipeline safety regulations:\n1. In regard to Item 1 of the Notice, pertaining to KMLT's failure to retain a record of each\npressure test as per § 195.310(b), KMLT must:\na. Assemble existing hydrostatic test records for breakout tanks #52-60. The records\nmust be held as surrogate records for missing hydrostatic test records. The surrogate\nrecords must include specific info about the hurricane event, impact to site, and\nefforts to recover the damaged records.\nb. All documentation demonstrating compliance with PCO item la above must be\nsubmitted to the Director, Eastern Region, Pipeline and Hazardous Materials Safety\nAdministration, 820 Bear Tavern Road, Suite 103, West Trenton, NJ 08628 for\nreview within 60 days of receipt of the Final Order.\n2. It is requested (not mandated) that KMT maintains documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit the total to\nRobert Burrough, Director, Eastern Region, Pipeline and Hazardous Materials Safety\nAdministration. It is requested that these costs be reported in two categories: 1) total cost\nassociated with preparation/revision of plans, procedures, studies and analyses, and 2) total\ncost associated with replacements, additions, and other changes to pipeline infrastructure.\n120185004_NOPV-PCP-PCO_01182018 (150080)\nPage 6 of 6\n\n120185004_Closure Letter_11052019_text.pdf\n\nOVERNIGHT EXPRESS DELIVERY\nNovember 5, 2019\nJoshua Etzel\nVice President – Operations & Engineering\nKinder Morgan Liquid Terminals, LLC\n78 Lafayette Street\nCarteret, NJ 07008\nCPF 1-2018-5004\nDear Mr. Etzel:\nOn June 27, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued\nto Kinder Morgan Liquid Terminals, LLC (KMLT) a Final Order (Order) in the above-referenced\ncase. This Order included a Compliance Order and Civil Penalty assessment. Based on our review\nof the documentation you provided and confirmation of payment of the civil penalty, it has been\ndetermined that you have complied with the terms of this Order.\nAccordingly, this case is now closed and no further action is contemplated with respect to the\nmatters involved in this case. Thank you for your cooperation in this matter.\nSincerely,\nRobert Burrough\nDirector, Eastern Region\nPipeline and Hazardous Materials Safety Administration\n\n120185004_Final Order_06272019_text.pdf\n\nJune 27, 2019\nMs. Kimberly Allen Dang\nPresident\nKinder Morgan, Inc.\n1001 Louisiana Street, Suite 1000\nHouston, Texas 77002\nRe: CPF No. 1-2018-5004\nDear Ms. Dang:\nEnclosed please find the Final Order issued in the above-referenced case to your subsidiary,\nKinder Morgan Liquid Terminals, LLC. It makes findings of violation, assesses a civil penalty\nof $208,600, and specifies actions that need to be taken by Kinder Morgan to comply with the\npipeline safety regulations. The penalty payment terms are set forth in the Final Order. When\nthe civil penalty has been paid and the terms of the modified compliance order completed, as\ndetermined by the Director, Eastern Region, this enforcement action will be closed. Service of\nthe Final Order is effective as provided under 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. Steven Kean, Chief Executive Officer, Kinder Morgan, Inc.\nMr. Joshua Etzel, Vice President – Operations, Northeast Region, Kinder Morgan Liquid\nTerminals, LLC, 78 Lafayette Street, Carteret, New Jersey 07008\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 )\nKinder Morgan Liquid Terminals, LLC, ) CPF No. 1-2018-5004\na subsidiary of Kinder Morgan, Inc., )\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom July 27 through 31, 2015, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline\nand Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nconducted an on-site pipeline safety inspection of the facilities and records of Kinder Morgan\nLiquid Terminals, LLC (KMLT or Respondent), a subsidiary of Kinder Morgan, Inc., in Perth\nAmboy, New Jersey. The Perth Amboy Terminal includes 113 tanks, with a total storage\ncapacity of more than 3.5 million barrels.1\nAs a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent,\nby letter dated January 18, 2018, a Notice of Probable Violation, Proposed Civil Penalty, and\nProposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice\nproposed finding that KMLT had committed five violations of 49 C.F.R. Part 195 and proposed\nassessing a civil penalty of $208,600 for the alleged violations. The Notice also proposed\nordering Respondent to take certain measures to correct one of the alleged violations.\nAfter requesting and receiving an extension of time, KMLT responded to the Notice by letter\ndated February 28, 2018 (Response). The company contested one of the allegations, requested\nthat two items be changed to warning items, that it be granted additional time to complete the\nproposed compliance order, and that the proposed civil penalty be reduced. Respondent did not\nrequest a hearing and therefore has waived its right to one.\nThe Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.310(a), which states:\nFINDINGS OF VIOLATION\n1 https://www kindermorgan.com/content/docs/terminalbrochures/ne_PerthAmboy.pdf (last accessed September 27,\n2018).\n\n\n\nCPF No. 1-2018-5004\nPage 2\n§ 195.310 Records.\n(a) A record must be made of each pressure test required by this subpart,\nand the record of the latest test must be retained as long as the facility tested\nis in use.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.310(a) by failing to make a record\nof each pressure test required by Subpart E of Part 195 and to retain such records as long as the\nfacility tested is in use. Specifically, the Notice alleged that KMLT failed to retain pressure-test\nrecords for nine breakout tanks located at KMLT’s Perth Amboy facility.\nIn its Response, KMLT stated that Item 1 should be withdrawn because the hydrostatic tank-\ntesting documentation provided to PHMSA met the testing and recordkeeping requirements in\nplace at the time the tanks were constructed in 2007. KMLT stated that certain “Settlement\nElevation Plan and Graph” documents provided to PHMSA during the inspection show that\nKMLT complied with the requirements in the 10th edition of [American Petroleum Institute\n(API)] Standard 650, which KMLT correctly noted is the applicable edition of the API Standard\nin this case since the 10th edition was incorporated into the pipeline safety regulations at the time\nthe tanks were constructed. KMLT also contended that the documents provided to PHMSA\nduring the inspection showed that the company had completed hydrostatic testing requirements\npursuant to Part 195, Subpart E, and § 195.307. Finally, KMLT stated that additional\ndocumentation associated with the construction and hydrostatic testing of these tanks had been\nlost due to the destruction caused by Hurricane Sandy in 2012.\nSection 195.310(a) requires operators to make a record of all pressure tests required by Subpart E\nand to retain such records as long as the facility tested is in use. Section 195.307(c) in Subpart E\ncontains the requirements for hydrostatic testing of aboveground breakout tanks. During the\nPHMSA inspection, KMLT provided certain “Settlement Elevation Plan and Graph” documents\nfor each breakout tank to show compliance with the recordkeeping requirement of § 195.310;\nhowever, a review of these documents shows that they do not reflect information supporting the\nperformance of hydrostatic tests conducted in accordance with § 195.307. On the contrary, the\ndocuments provide only certain measurements of elevation and tank settlement. Further, KMLT\ndid not provide new or relevant records with its Response supporting the performance of\nhydrostatic tests on the nine subject tanks, as required by § 195.307(c).\nIt is clear that KMLT was unable to provide records of the pressure tests required by Subpart E\nor at least to retain them as long as the Perth Amboy facility is in use, as required by\n§ 195.310(a). Respondent’s contention that the documentation was lost due to Hurricane Sandy\ndoes not abrogate or eliminate the violation, but is relevant to the terms of the proposed\ncompliance order. Therefore, this issue is addressed more fully in the “Compliance Order”\nsection below.\nAccordingly, after considering all of the evidence and the issues presented, I find that\nRespondent violated 49 C.F.R. § 195.310(a) by failing to make a record of each pressure test\nrequired by Subpart E of Part 195 and to retain such records as long as the facility tested is in\nuse.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.420(b), which states:\n\n\n\nCPF No. 1-2018-5004\nPage 3\n§ 195.420 Valve maintenance.\n(a) . . . .\n(b) Each operator shall, at intervals not exceeding 7½ months, but at\nleast twice each calendar year, inspect each mainline valve to determine that\nit is functioning properly.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.420(b) by failing to inspect, at\nintervals not exceeding 7½ months but at least twice each calendar year, each mainline valve to\ndetermine that it is functioning properly. Specifically, the Notice alleged that KMLT performed\nmainline-valve inspections on its “Mainline Valve 001 – MOV” at Motiva and its “Mainline\nValve 002 – MOV” at Buckeye on February 21, 2014, September 26, 2014, and July 23, 2015.\nAccording to the Notice, the interval between the September 26, 2014 and July 23, 2015\ninspections exceeded the maximum allowable inspection interval by 73 days.\nIn its Response, KMLT did not contest this allegation of violation, but requested that the Item be\nconverted to a warning item. KMLT admitted that the valve inspections were not performed on\na timely basis, but stated that the inspections revealed the valves were in working order and that\nthere were no unsafe conditions. Because § 195.420(b) specifically requires mainline valve\ninspections to occur at least twice a year but not exceeding 7½ months, and because the evidence\ndemonstrates that the valve inspections were not performed according to that schedule, I find this\nItem should remain a violation and not converted to a warning item. Since KMLT’s argument\nfor this Item also pertains to potential mitigation of the proposed penalty, this argument is\naddressed specifically in the section below, “Assessment of Penalty.”\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49\nC.F.R. § 195.420(b) by failing to inspect, at intervals not exceeding 7½ months but at least twice\neach calendar year, each mainline valve to determine that it is functioning properly.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1), which states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine\nwhether cathodic protection required by this subpart complies with\n§ 195.571:\n(1) Conduct tests on the protected pipeline at least once each calendar\nyear, but with intervals not exceeding 15 months. However, if tests at those\nintervals are impractical for separately protected short sections of bare or\nineffectively coated pipelines, testing may be done at least once every 3\ncalendar years, but with intervals not exceeding 39 months.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1) by failing to conduct\ntests on a protected pipeline at least once each calendar year, but with intervals not exceeding 15\nmonths. Specifically, the Notice alleged that KMLT conducted tests on certain pipe at the Perth\nAmboy facility that was not bare or ineffectively coated, at intervals exceeding 15 months by up\nto 22 days on 24 separate occasions. The Notice also alleged that KMLT did not perform any\npipe-to-soil readings from 2013 to 2015 on seven separate occasions.\n\n\n\nCPF No. 1-2018-5004\nPage 4\nIn its Response, KMLT did not contest this allegation of violation. Accordingly, based upon a\nreview of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(a)(1) by\nfailing to conduct tests on a protected pipeline at least once each calendar year, but with intervals\nnot exceeding 15 months. PHMSA alleged that its inspector had asked KMLT why there were\nmissing test records and KMLT was unable to provide a reason.\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.575(c), which states:\n§ 195.575 Which facilities must I electrically isolate and what\ninspections, tests, and safeguards are required?\n(a) . . . .\n(c) You must inspect and electrically test each electrical isolation to\nassure the isolation is adequate.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.575(c) by failing to inspect and\nelectrically test each electrical isolation to assure the isolation is adequate. Specifically, the\nNotice alleged that KMLT could not produce records of 14 casing pipe-to-soil test readings that\nshould have occurred in 2013 and 2014 at the Perth Amboy facility to ensure electrical isolations\nwere adequate.\nIn its Response, KMLT did not contest this allegation of violation. Accordingly, based upon a\nreview of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.575(c) by failing to\ninspect and electrically test each electrical isolation to assure the isolation is adequate.\nItem 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.589(c), which states:\n§ 195.589 What corrosion control information do I have to maintain?\n(a) . . . .\n(c) You must maintain a record of each analysis, check, demonstration,\nexamination, inspection, investigation, review, survey, and test required by\nthis subpart in sufficient detail to demonstrate the adequacy of corrosion\ncontrol measures or that corrosion requiring control measures does not\nexist. You must retain these records for at least 5 years, except that records\nrelated to §§ 195.569, 195.573(a) and (b), and 195.579(b)(3) and (c) must\nbe retained for as long as the pipeline remains in service.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.589(c) by failing to maintain a\nrecord of each analysis, check, demonstration, examination, inspection, investigation, review,\nsurvey, and test required by Subpart H in sufficient detail to demonstrate the adequacy of\ncorrosion-control measures or that corrosion requiring control measures does not exist.\nSpecifically, the Notice alleged that KMLT did not maintain records of inspections required by\n§ 195.573(d), under Subpart H, for at least five years. Section 195.573(d) states: “You must\ninspect each cathodic protection system used to control corrosion on the bottom of an\naboveground breakout tank to ensure that operation and maintenance of the system are in\naccordance with API RP 651.” The Notice alleged KMLT did not maintain 2013 inspection\nrecords of the cathodic-protection system used to control corrosion on the bottom of eight\n\n\n\nCPF No. 1-2018-5004\nPage 5\naboveground breakout tanks.\nIn its Response, KMLT did not contest this allegation of violation, but requested that the Item be\nreduced to a warning item. KMLT argued that pipeline safety was minimally affected by the\nviolation, that new corrosion control personnel had been hired since the time of the violation, and\nthat new training was being implemented to train employees on achieving compliance.\nRespondent also stated that it now utilizes a new electronic document-management system to\nbetter maintain documents. Since these arguments relate to the severity of the violation and\npotential mitigation of the proposed penalty, they will be addressed in the section below,\n“Assessment of Penalty.”\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49\nC.F.R. § 195.589(c) by failing to maintain a record of each analysis, check, demonstration,\nexamination, inspection, investigation, review, survey, and test required by Subpart H in\nsufficient detail to demonstrate the adequacy of corrosion-control measures or that corrosion\nrequiring control measures does not exist.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction 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.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\npenalty of $208,600 for the violations cited above.\nItem 2: The Notice proposed a civil penalty of $33,300 for Respondent’s violation of 49 C.F.R.\n§ 195.420(b), for failing to inspect each mainline valve at intervals not exceeding 7½ months,\nbut at least twice each calendar year, to determine that it is functioning properly. Respondent\nargued that if this Item were not converted to a warning item, then the penalty should be\nwithdrawn or reduced. Respondent admitted the valve inspections were not timely performed,\nbut argued that when the inspections were eventually performed, the valves were in good\nworking order and that there were no safety or integrity conditions present. Respondent also\nstated that the company subsequently re-trained company personnel on the proper inspection\nintervals.\n2 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. 1-2018-5004\nPage 6\nWith respect to the nature, circumstances and gravity of the violation, the Violation Report\nalleged that PHMSA (and not KMLT) discovered the violation, that the violation concerned a\nfailure to perform an activity, but that pipeline safety was “minimally affected.”3 KMLT argued\nthat the valves were in good working order and there were no safety or integrity issues present. I\nhave reviewed the Violation Report and find that it appropriately classified the gravity of the\nviolation as minimally impacting safety and therefore the proposed penalty had already taken the\naccount the lowest level of gravity. Accordingly, no reduction is warranted based on the\ninformation Respondent provided.\nWith respect to culpability, the Violation Report alleged that KMLT failed to take appropriate\naction to comply with a requirement that was clearly applicable.\n4 Respondent argued that it re-\ntrained personnel on the inspection-interval requirements after the PHMSA inspection. KMLT’s\npost-inspection corrective actions are commendable and duly noted, but do not constitute\ngrounds to reduce the penalty because they were taken after PHMSA had already identified the\nviolation.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $33,300 for violation of 49 C.F.R. § 195.420(b).\nItem 3: The Notice proposed a civil penalty of $74,700 for Respondent’s violation of 49 C.F.R.\n§ 195.573(a)(1), for failing to conduct tests on a protected pipeline at least once each calendar\nyear, but with intervals not exceeding 15 months. KMLT did not contest this violation, but\nargued that the penalty should be withdrawn or reduced because once its inspections were\nperformed, no unsafe conditions were discovered and that the violation was “akin to a missing\nrecords violation.” Respondent also argued that the penalty should be reduced because the\ncompany had since hired a new cathodic-protection team lead who were fully versed in the\nregulatory requirements. Further, KMLT argued that the company had placed test sites more\nclosely together than was required by its procedures. Finally, Respondent contended that three\nof the test stations had actually been removed from service prior to 2013, which explained why\nthose readings were not included in the company’s records.5\nWith respect to the nature, circumstances and gravity of the violation, the Violation Report\nalleged that PHMSA had discovered the violation, that the violation involved a failure to perform\nan activity, and that pipeline safety or integrity was compromised in a High Consequence Area\n(HCA),6 or in an HCA “could affect” segment.7 KMLT argued that the penalty should be\nwithdrawn or reduced because once the inspections were performed, no unsafe conditions were\n3 Violation Report, at 14-16.\n4 Id., at 17.\n5 Response, at 7-8.\n6 See 49 C.F.R. § 195.450 for a definition of “High Consequence Area.”\n7 Violation Report, at 21-23.\n\n\n\nCPF No. 1-2018-5004\nPage 7\ndiscovered and that the violation was akin to a records violation.\nI disagree. Monitoring of cathodic-protection systems is an important component of pipeline\nsafety. Missed or delayed testing is not akin to a records violation. Rather, the company’s\nrecords show that various tests were conducted late or not at all, which is a failure to conduct\nactivities necessary to ensure the integrity of a pipeline facility. With respect to gravity, the\nallegation that pipeline safety or integrity was compromised in an HCA is supported by the\nrecord. Respondent’s failure to test protected pipelines compromised safety because corrosion\nwas not being monitored in environmentally sensitive HCAs, for periods up to two years.\nWith respect to culpability, the Violation Report alleged that KMLT failed to take appropriate\naction to comply with a requirement that was clearly applicable.\n8 While it is prudent to hire\nexperienced personnel who are well-versed in the pipeline-safety regulations, such actions do not\nconstitute grounds to reduce the penalty since they were taken after PHMSA had already\nidentified the violation.\nFurther, the distance between test sites is not at issue in this case; rather, the frequency of the\ntests performed is the central requirement of § 195.573(a)(1). Even if there were test sites that\nwent beyond those that were required, the record does not show that tests were run in additional\nlocations on a schedule that would show corrosion was being monitored at the frequency\nrequired by the regulation. Additionally, Respondent has not provided evidence that any test-site\nlocations were actually removed from service during the relevant inspection period. Therefore, I\ndo not find there is any basis for withdrawing or reducing the penalty based on the gravity of the\nviolation, KMLT’s culpability, prior offenses, or good faith in attempting to comply.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $74,700 for violation of 49 C.F.R. § 195.573(a)(1).\nItem 4: The Notice proposed a civil penalty of $72,800 for Respondent’s violation of 49 C.F.R.\n§ 195.575(c), for failing to inspect and electrically test each electrical isolation to assure the\nisolation is adequate. KMLT did not contest this violation, but argued that the penalty should be\nreduced because pipeline safety was minimally affected and because Respondent had\nsubsequently hired new personnel and revised its procedures.\nWith respect to the nature, circumstances and gravity of the violation, the Violation Report\nalleged that PHMSA had discovered the violation, that the violation involved a failure to perform\nan activity, and that pipeline safety or integrity was compromised in an HCA or in an HCA\n“could affect” segment.9 KMLT argued that the penalty should be withdrawn or reduced\nbecause safety was minimally affected. I do not agree. Electrical isolation is an essential\ncomponent of effective cathodic protection. Shorted casings can lead to pipeline failures, and the\nrecord shows that Respondent either conducted its testing late or not at all to ensure there were\nno shorted casings.\n8 Id., at 24.\n9 Id., at 28-30.\n\n\n\nCPF No. 1-2018-5004\nPage 8\nKMLT’s post-inspection corrective actions are commendable and duly noted, but do not\nconstitute grounds to reduce the penalty because they were taken after PHMSA had already\nidentified the violation. While it was necessary and prudent for KMLT to amend its procedures\nto comply with the regulations and to hire and train employees fully versed in the pipeline safety\nregulations, such actions do not warrant a penalty reduction for a violation that occurred before\nsuch changes were implemented. Therefore, I do not find there is any basis for withdrawing or\nreducing the penalty based on the gravity of the violation, Respondent’s culpability, prior\noffenses, or good faith in attempting to comply.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $72,800 for violation of 49 C.F.R. § 195.575(c).\nItem 5: The Notice proposed a civil penalty of $27,800 for Respondent’s violation of 49 C.F.R.\n§ 195.589(c), for failing to maintain a record of each analysis, check, demonstration,\nexamination, inspection, investigation, review, survey, and test required by Subpart H in\nsufficient detail to demonstrate the adequacy of corrosion-control measures or that corrosion\nrequiring control measures does not exist. KMLT argued that if Item 5 were not reduced to a\nwarning item, then the penalty for the Item should be reduced or withdrawn. Respondent did not\ncontest the violation, but argued that pipeline safety was minimally affected. KMLT also stated\nthat new corrosion-control personnel had been hired since the violation occurred and that new\ntraining was being implemented to train employees on achieving compliance going forward.\nRespondent also stated it now utilized a new electronic document-management system to better\nmaintain its documents.\nWith respect to the nature, circumstances and gravity of the violation, the Violation Report\nalleged that PHMSA discovered the violation, that the violation concerned missing, inaccurate or\nincomplete records, but that pipeline sa","truncated":true,"body_characters":58936}