# KINDER MORGAN LIQUID TERMINALS, LLC — Notice of Probable Violation

- **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:** Not available
- **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.

Official case documents:

120185004_Closure Letter_11052019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Closure%20Letter_11052019.pdf

120185004_Closure Letter_11052019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Closure%20Letter_11052019_text.pdf

120185004_Final Order_06272019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Final%20Order_06272019.pdf

120185004_Final Order_06272019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_Final%20Order_06272019_text.pdf

120185004_NOPV PCP PCO_01182018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_NOPV%20PCP%20PCO_01182018_text.pdf

120185004_NOPV-PCP-PCO_01182018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185004/120185004_NOPV-PCP-PCO_01182018.pdf

120185004_NOPV-PCP-PCO_01182018.pdf

U.S. Department
of Transportation
820 Bear Tavern Road, Suite 103
West Trenton, NJ 08628
Pipeline and
609.771.7800
Hazardous Materials
Safety Administration
NOTICE OF PROBABLE VIOLATION
PROPOSED CIVIL PENALTY
and
PROPOSED COMPLIANCE ORDER
OVERNIGHT EXPRESS DELIVERY
January 18, 2018
Joshua Etzel
Vice President - Operations & Engineering
Kinder Morgan Liquid Terminals, LLC
78 Lafayette Street
Carteret, NJ 07008
CPF 1-2018-5004
Dear Mr. Etzel:
From July 27-31, 2015, a representative of the Pipeline and Hazardous Materials Safety
Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United
States Code inspected Kinder Morgan Liquid Terminals, LLC's (KMLT) pipeline terminal in Perth
Amboy, New Jersey.
As a result of the inspection, it is alleged that you have committed probable violations of the
Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the
probable violation(s) are:
1. § 195.310 Records
(a) A record must be made of each pressure test required by this subpart, and the
record of the latest test must be retained as long as the facility tested is in use...
KMLT did not retain a record of each pressure test required by this subpart. Specifically, KMLT
failed to retain pressure test records for 9 breakout tanks at its Perth Amboy, NJ facility, as per
§ 195.310.
In 2007, KMLT constructed 9 new breakout tanks. These tanks, numbered 52 through 60, required
hydrostatic testing, per API Standard 650 "Welded Steel Tanks for Oil Storage" 11th Edition,
incorporated by reference in § 195.3(b)(18).



CPF 1-2018-5004
During the inspection, the PHMSA inspector requested hydrostatic test records for the breakout
tanks. KMLT provided a "Settlement Elevation Plan and Graph" for each breakout tank that
required a hydrostatic test and stated that, "the settlement surveys were the only records relevant
to the 2007 hydrostatic tests of the 9 breakout tanks."
In email correspondence following the inspection, KMT responded to PHMSA's exit interview
questions in an email dated September 10, 2015, stating, "Have aboveground breakout tanks been
pressure tested to their corresponding API or ASME Standard or Specification, and do pressure
test records contain the required information? - BOT pressure test records are missing due to the
devastation caused by Hurricane Sandy (construction, inspection, repair and alteration records
have been lost/destroyed and could not be provided during the inspection)."
Thus, KMLT failed to maintain documentation as required by § 195.310(a).
2. § 195.420 Valve Maintenance
(b) Each operator shall, at intervals not exceeding 7½ months, but at least twice each
calendar year, inspect each mainline valve to determine that it is functioning
properly.
KMLT failed to inspect its mainline valves at intervals not exceeding 7½ months, but at least twice
each calendar year.
During the inspection, the PHMSA inspector reviewed KMLT's mainline valve inspection records
for the Perth Amboy, New Jersey facility. The Mainline Valve Inspection records indicated that
mainline valve inspections for Mainline Valve 001 - MOV at Motiva and Mainline Valve 002 -
MOV at Buckeye Outbound were inspected on:
a. February 21, 2014
b. September 26, 2014
c. July 23, 2015
The interval between
mainline valve inspections conducted on September 26, 2014 and
July 23, 2015, exceeded the 7½ month requirement by 73 days.
Thus, KMLT failed to inspect its mainline valves at intervals not exceeding 7½ months, but at
least twice each calendar year.
3. § 195.573 What must I do to monitor external corrosion control?
(a) Protected pipelines. You must do the following to determine whether cathodie
protection required by this subpart complies with Sec. 195.571:
(1) Conduct tests on the protected pipeline at least once each calendar year, but with
intervals not exceeding 15 months. However, if tests at those intervals are impractical
for separately protected short sections of bare or ineffectively coated pipelines, testing
may be done at least once every 3 calendar years, but with intervals not exceeding
39 months.
KMLT failed to conduct tests on its protected pipeline at least once each calendar year, but with
intervals not exceeding 15 months.
120185004_NOPV-PCP-PCO_01182018 (150080)
Page 2 of 6



CPF 1-2018-5004
During the inspection, the PHMSA inspector reviewed KMLT's structure pipe to soil inspection
records from 2012 through 2015. The records showed that in 24 instances, KMLT conducted tests
on protected pipelines that were not bare or ineffectively coated, but the interval between structure
pipe to soil inspections conducted on August 27, 2013 and December 15-19, 2014, exceeded
15 months by 18-22 days. Additionally, in 7 instances, from 2013-2015, KMLT failed to take any
structure pipe to soil readings. The PHMSA inspector asked KMLT why there were missing test
reads and KMLT was unable to provide a reason.
Thus, KMLT failed to conduct tests on the protected pipeline at least once each calendar year, but
with intervals not exceeding 15 months.
4. § 195.575 Which facilities must I electrically isolate and what inspections, tests, and
safeguards are required?
(c) You must inspect and electrically test each electrical isolation to assure the
isolation is adequate.
KMLT failed to inspect and electrically test each electrical isolation to assure the isolation is
adequate.
During the inspection, the PHMSA inspector reviewed KMLT's casing pipe to soil inspection
records from calendar years 2012 through 2015, and KMLT's T-O&M 903 - External Corrosion
Control for Buried or Submerged Pipelines and Above Ground Tanks, revised 10/05/12. Section
1.8 of the procedure stated in part, "Test electrical isolation by comparing the casing-to-soil
potentials to the matching pipe-to-soil potentials at least once each calendar year, not to exceed
15 months..."
In subsequent follow-ups to the inspection, PHMSA and KMLT exchanged emails from
August 27, 2015 through September 8, 2015 regarding cathodic protection records. In those
emails, KMLT stated in part that:
"I have attached a spreadsheet to correlate the readings to the alignment sheets. We are missing
some casing readings for 2012 and 2014, and are still trying to locate the readings for 2013,
however, have not been able to find them thus far..."
"Yes, it can be confirmed that under the "CPDM Reading Taken" column for 2012 to 2014 PANJ
1201 pipeline, where the rows are blank the Casing Test Lead data is missing..."
KMLT was missing 14 casing P/S (casing pipe to soil) test reads from 2013-2014. Additionally,
the intervals between 10 casing pipe to soil inspections conducted on August 27, 2013 and
December 15-19, 2014, exceeded 15 months by 18-22 days.
Thus, KMLT failed to inspect and electrically test each electrical isolation to assure the isolation
is adequate.
5. §195.589 What corrosion control information do I have to maintain?
(c) You must maintain a record of each analysis, check, demonstration, examination,
inspection, investigation, review, survey, and test required by this subpart in
sufficient detail to demonstrate the adequacy of corrosion control measures or that
corrosion requiring control measures does not exist. You must retain these records
for at least 5 years, except that records related to Secs. 195.569, 195.573(a) and (b),
120185004_NOPV-PCP-PCO_01182018 (150080)
Page 3 of 6



CPF 1-2018-5004
and 195.579(b)(3) and (c) must be retained for as long as the pipeline remains in
service.
KMLT failed to maintain a record of each analysis, check, demonstration, examination, inspection,
investigation, review, survey, and test required by this subpart in sufficient detail to demonstrate
the adequacy of corrosion control measures or that corrosion requiring control measures does not
exist.
Specifically, KMLT failed to maintain records of inspections of cathodic protection systems used
to control corrosion on the bottom of 8 aboveground breakout tanks #2, #3, #5, #7, #10, #11, #17,
and #18, to ensure that operation and maintenance of the system are in accordance with API
Recommended Practice 651, as per § 195.573(d).
During for 2012-204. The PHIM inspector reviesed aboris protection jaspe in er ion"
cathodic protection systems. KMLT could not provide 2013 inspection records.
Therefore, KMLT failed to maintain records of inspections of the cathodic protection system for
8 breakout tanks for 2013.
Proposed Civil Penalty
Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed
$209,002 per violation per day the violation persists, up to a maximum of $2,090,022 for a related
series of violations. For violations occurring prior to November 2, 2015, the maximum penalty
may not exceed $200,000 per violation per day, with a maximum penalty not to exceed $2,000,000
for a related series of violations. The Compliance Officer has reviewed the circumstances and
supporting documentation involved in the above probable violation(s) and has recommended that
you be preliminarily assessed a civil penalty of $208,600 as follows:
Item number
PENALTY
2
3
$33,300
$74,700
$72,800
5
$27,800
Proposed Compliance Order
With respect to item 1, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous
Materials Safety Administration proposes to issue a Compliance Order to Kinder Morgan Liquid
Terminals, LLC. Please refer to the Proposed Compliance Order, which is enclosed and made a
part of this Notice.
Response to this Notice
Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in
Compliance Proceedings. Please refer to this document and note the response options. All material
submit in response to this enforcement action may be made publicly available. If you believe that
any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b),
along with the complete original document you must provide a second copy of the document with
120185004_NOPV-PCP-PCO_01182018 (150080)
Page 4 of 6



CPF 1-2018-5004
the portions you believe qualify for confidential treatment redacted and an explanation of why you
believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you
do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to
contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety
to find facts as alleged in this Notice without further notice to you and to issue a Final Order.
Please submit all correspondence in this matter to Robert Burrough, Director, PHMSA Eastern
Region, 820 Bear Tavern Road, Suite 103, West Trenton, New Jersey 08628. Please refer to
CPF 1-2018-5004 on each document you submit, and whenever possible provide a signed PDF
copy in electronic format. Smaller files may be emailed to robert.burrough@dot.gov. Larger files
should be sent on a CD accompanied by the original paper copy to the Eastern Region Office.
Additionally, if you choose to respond to this (or any other case), please ensure that any response
letter pertains solely to one CPF case number
Sincerely,
Nut Bunk
Robert Burrough
Director, Eastern Region
Pipeline and Hazardous Materials Safety Administration
Enclosure: Proposed Compliance Order
Response Options for Pipeline Operators in Compliance Proceedings
120185004_NOPV-PCP-PCO_01182018 (150080)
Page 5 of 6



CPF 1-2018-5004
PROPOSED COMPLIANCE ORDER
Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety
Administration (PHMSA) proposes to issue to Kinder Morgan Liquid Terminals, LLC (KMLT) a
Compliance Order incorporating the following remedial requirements to ensure the compliance of
KMLT with the pipeline safety regulations:
1. In regard to Item 1 of the Notice, pertaining to KMLT's failure to retain a record of each
pressure test as per § 195.310(b), KMLT must:
a. Assemble existing hydrostatic test records for breakout tanks #52-60. The records
must be held as surrogate records for missing hydrostatic test records. The surrogate
records must include specific info about the hurricane event, impact to site, and
efforts to recover the damaged records.
b. All documentation demonstrating compliance with PCO item la above must be
submitted to the Director, Eastern Region, Pipeline and Hazardous Materials Safety
Administration, 820 Bear Tavern Road, Suite 103, West Trenton, NJ 08628 for
review within 60 days of receipt of the Final Order.
2. It is requested (not mandated) that KMT maintains documentation of the safety
improvement costs associated with fulfilling this Compliance Order and submit the total to
Robert Burrough, Director, Eastern Region, Pipeline and Hazardous Materials Safety
Administration. It is requested that these costs be reported in two categories: 1) total cost
associated with preparation/revision of plans, procedures, studies and analyses, and 2) total
cost associated with replacements, additions, and other changes to pipeline infrastructure.
120185004_NOPV-PCP-PCO_01182018 (150080)
Page 6 of 6

120185004_Closure Letter_11052019_text.pdf

OVERNIGHT EXPRESS DELIVERY
November 5, 2019
Joshua Etzel
Vice President – Operations & Engineering
Kinder Morgan Liquid Terminals, LLC
78 Lafayette Street
Carteret, NJ 07008
CPF 1-2018-5004
Dear Mr. Etzel:
On June 27, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued
to Kinder Morgan Liquid Terminals, LLC (KMLT) a Final Order (Order) in the above-referenced
case. This Order included a Compliance Order and Civil Penalty assessment. Based on our review
of the documentation you provided and confirmation of payment of the civil penalty, it has been
determined that you have complied with the terms of this Order.
Accordingly, this case is now closed and no further action is contemplated with respect to the
matters involved in this case. Thank you for your cooperation in this matter.
Sincerely,
Robert Burrough
Director, Eastern Region
Pipeline and Hazardous Materials Safety Administration

120185004_Final Order_06272019_text.pdf

June 27, 2019
Ms. Kimberly Allen Dang
President
Kinder Morgan, Inc.
1001 Louisiana Street, Suite 1000
Houston, Texas 77002
Re: CPF No. 1-2018-5004
Dear Ms. Dang:
Enclosed please find the Final Order issued in the above-referenced case to your subsidiary,
Kinder Morgan Liquid Terminals, LLC. It makes findings of violation, assesses a civil penalty
of $208,600, and specifies actions that need to be taken by Kinder Morgan to comply with the
pipeline safety regulations. The penalty payment terms are set forth in the Final Order. When
the civil penalty has been paid and the terms of the modified compliance order completed, as
determined by the Director, Eastern Region, this enforcement action will be closed. 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. Steven Kean, Chief Executive Officer, Kinder Morgan, Inc.
Mr. Joshua Etzel, Vice President – Operations, Northeast Region, Kinder Morgan Liquid
Terminals, LLC, 78 Lafayette Street, Carteret, New Jersey 07008
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 )
Kinder Morgan Liquid Terminals, LLC, ) CPF No. 1-2018-5004
a subsidiary of Kinder Morgan, Inc., )
)
)
)
Respondent. )
____________________________________)
FINAL ORDER
From July 27 through 31, 2015, 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 Kinder Morgan
Liquid Terminals, LLC (KMLT or Respondent), a subsidiary of Kinder Morgan, Inc., in Perth
Amboy, New Jersey. The Perth Amboy Terminal includes 113 tanks, with a total storage
capacity of more than 3.5 million barrels.1
As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent,
by letter dated January 18, 2018, a Notice of Probable Violation, Proposed Civil Penalty, and
Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice
proposed finding that KMLT had committed five violations of 49 C.F.R. Part 195 and proposed
assessing a civil penalty of $208,600 for the alleged violations. The Notice also proposed
ordering Respondent to take certain measures to correct one of the alleged violations.
After requesting and receiving an extension of time, KMLT responded to the Notice by letter
dated February 28, 2018 (Response). The company contested one of the allegations, requested
that two items be changed to warning items, that it be granted additional time to complete the
proposed compliance order, and that the proposed civil penalty be reduced. Respondent did not
request a hearing and therefore has waived its right to one.
The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.310(a), which states:
FINDINGS OF VIOLATION
1 https://www kindermorgan.com/content/docs/terminalbrochures/ne_PerthAmboy.pdf (last accessed September 27,
2018).



CPF No. 1-2018-5004
Page 2
§ 195.310 Records.
(a) A record must be made of each pressure test required by this subpart,
and the record of the latest test must be retained as long as the facility tested
is in use.
The Notice alleged that Respondent violated 49 C.F.R. § 195.310(a) by failing to make a record
of each pressure test required by Subpart E of Part 195 and to retain such records as long as the
facility tested is in use. Specifically, the Notice alleged that KMLT failed to retain pressure-test
records for nine breakout tanks located at KMLT’s Perth Amboy facility.
In its Response, KMLT stated that Item 1 should be withdrawn because the hydrostatic tank-
testing documentation provided to PHMSA met the testing and recordkeeping requirements in
place at the time the tanks were constructed in 2007. KMLT stated that certain “Settlement
Elevation Plan and Graph” documents provided to PHMSA during the inspection show that
KMLT complied with the requirements in the 10th edition of [American Petroleum Institute
(API)] Standard 650, which KMLT correctly noted is the applicable edition of the API Standard
in this case since the 10th edition was incorporated into the pipeline safety regulations at the time
the tanks were constructed. KMLT also contended that the documents provided to PHMSA
during the inspection showed that the company had completed hydrostatic testing requirements
pursuant to Part 195, Subpart E, and § 195.307. Finally, KMLT stated that additional
documentation associated with the construction and hydrostatic testing of these tanks had been
lost due to the destruction caused by Hurricane Sandy in 2012.
Section 195.310(a) requires operators to make a record of all pressure tests required by Subpart E
and to retain such records as long as the facility tested is in use. Section 195.307(c) in Subpart E
contains the requirements for hydrostatic testing of aboveground breakout tanks. During the
PHMSA inspection, KMLT provided certain “Settlement Elevation Plan and Graph” documents
for each breakout tank to show compliance with the recordkeeping requirement of § 195.310;
however, a review of these documents shows that they do not reflect information supporting the
performance of hydrostatic tests conducted in accordance with § 195.307. On the contrary, the
documents provide only certain measurements of elevation and tank settlement. Further, KMLT
did not provide new or relevant records with its Response supporting the performance of
hydrostatic tests on the nine subject tanks, as required by § 195.307(c).
It is clear that KMLT was unable to provide records of the pressure tests required by Subpart E
or at least to retain them as long as the Perth Amboy facility is in use, as required by
§ 195.310(a). Respondent’s contention that the documentation was lost due to Hurricane Sandy
does not abrogate or eliminate the violation, but is relevant to the terms of the proposed
compliance order. Therefore, this issue is addressed more fully in the “Compliance Order”
section below.
Accordingly, after considering all of the evidence and the issues presented, I find that
Respondent violated 49 C.F.R. § 195.310(a) by failing to make a record of each pressure test
required by Subpart E of Part 195 and to retain such records as long as the facility tested is in
use.
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.420(b), which states:



CPF No. 1-2018-5004
Page 3
§ 195.420 Valve maintenance.
(a) . . . .
(b) Each operator shall, at intervals not exceeding 7½ months, but at
least twice each calendar year, inspect each mainline valve to determine that
it is functioning properly.
The Notice alleged that Respondent violated 49 C.F.R. § 195.420(b) by failing to inspect, at
intervals not exceeding 7½ months but at least twice each calendar year, each mainline valve to
determine that it is functioning properly. Specifically, the Notice alleged that KMLT performed
mainline-valve inspections on its “Mainline Valve 001 – MOV” at Motiva and its “Mainline
Valve 002 – MOV” at Buckeye on February 21, 2014, September 26, 2014, and July 23, 2015.
According to the Notice, the interval between the September 26, 2014 and July 23, 2015
inspections exceeded the maximum allowable inspection interval by 73 days.
In its Response, KMLT did not contest this allegation of violation, but requested that the Item be
converted to a warning item. KMLT admitted that the valve inspections were not performed on
a timely basis, but stated that the inspections revealed the valves were in working order and that
there were no unsafe conditions. Because § 195.420(b) specifically requires mainline valve
inspections to occur at least twice a year but not exceeding 7½ months, and because the evidence
demonstrates that the valve inspections were not performed according to that schedule, I find this
Item should remain a violation and not converted to a warning item. Since KMLT’s argument
for this Item also pertains to potential mitigation of the proposed penalty, this argument is
addressed specifically in the section below, “Assessment of Penalty.”
Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49
C.F.R. § 195.420(b) by failing to inspect, at intervals not exceeding 7½ months but at least twice
each calendar year, each mainline valve to determine that it is functioning properly.
Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1), which states:
§ 195.573 What must I do to monitor external corrosion control?
(a) Protected pipelines. You must do the following to determine
whether cathodic protection required by this subpart complies with
§ 195.571:
(1) Conduct tests on the protected pipeline at least once each calendar
year, but with intervals not exceeding 15 months. However, if tests at those
intervals are impractical for separately protected short sections of bare or
ineffectively coated pipelines, testing may be done at least once every 3
calendar years, but with intervals not exceeding 39 months.
The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1) by failing to conduct
tests on a protected pipeline at least once each calendar year, but with intervals not exceeding 15
months. Specifically, the Notice alleged that KMLT conducted tests on certain pipe at the Perth
Amboy facility that was not bare or ineffectively coated, at intervals exceeding 15 months by up
to 22 days on 24 separate occasions. The Notice also alleged that KMLT did not perform any
pipe-to-soil readings from 2013 to 2015 on seven separate occasions.



CPF No. 1-2018-5004
Page 4
In its Response, KMLT 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. § 195.573(a)(1) by
failing to conduct tests on a protected pipeline at least once each calendar year, but with intervals
not exceeding 15 months. PHMSA alleged that its inspector had asked KMLT why there were
missing test records and KMLT was unable to provide a reason.
Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.575(c), which states:
§ 195.575 Which facilities must I electrically isolate and what
inspections, tests, and safeguards are required?
(a) . . . .
(c) You must inspect and electrically test each electrical isolation to
assure the isolation is adequate.
The Notice alleged that Respondent violated 49 C.F.R. § 195.575(c) by failing to inspect and
electrically test each electrical isolation to assure the isolation is adequate. Specifically, the
Notice alleged that KMLT could not produce records of 14 casing pipe-to-soil test readings that
should have occurred in 2013 and 2014 at the Perth Amboy facility to ensure electrical isolations
were adequate.
In its Response, KMLT 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. § 195.575(c) by failing to
inspect and electrically test each electrical isolation to assure the isolation is adequate.
Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.589(c), which states:
§ 195.589 What corrosion control information do I have to maintain?
(a) . . . .
(c) You must maintain a record of each analysis, check, demonstration,
examination, inspection, investigation, review, survey, and test required by
this subpart in sufficient detail to demonstrate the adequacy of corrosion
control measures or that corrosion requiring control measures does not
exist. You must retain these records for at least 5 years, except that records
related to §§ 195.569, 195.573(a) and (b), and 195.579(b)(3) and (c) must
be retained for as long as the pipeline remains in service.
The Notice alleged that Respondent violated 49 C.F.R. § 195.589(c) by failing to maintain a
record of each analysis, check, demonstration, examination, inspection, investigation, review,
survey, and test required by Subpart H in sufficient detail to demonstrate the adequacy of
corrosion-control measures or that corrosion requiring control measures does not exist.
Specifically, the Notice alleged that KMLT did not maintain records of inspections required by
§ 195.573(d), under Subpart H, for at least five years. Section 195.573(d) states: “You must
inspect each cathodic protection system used to control corrosion on the bottom of an
aboveground breakout tank to ensure that operation and maintenance of the system are in
accordance with API RP 651.” The Notice alleged KMLT did not maintain 2013 inspection
records of the cathodic-protection system used to control corrosion on the bottom of eight



CPF No. 1-2018-5004
Page 5
aboveground breakout tanks.
In its Response, KMLT did not contest this allegation of violation, but requested that the Item be
reduced to a warning item. KMLT argued that pipeline safety was minimally affected by the
violation, that new corrosion control personnel had been hired since the time of the violation, and
that new training was being implemented to train employees on achieving compliance.
Respondent also stated that it now utilizes a new electronic document-management system to
better maintain documents. Since these arguments relate to the severity of the violation and
potential mitigation of the proposed penalty, they will be addressed in the section below,
“Assessment of Penalty.”
Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49
C.F.R. § 195.589(c) by failing to maintain a record of each analysis, check, demonstration,
examination, inspection, investigation, review, survey, and test required by Subpart H in
sufficient detail to demonstrate the adequacy of corrosion-control measures or that corrosion
requiring control measures does not exist.
These findings of violation will be considered prior offenses 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
penalty of $208,600 for the violations cited above.
Item 2: The Notice proposed a civil penalty of $33,300 for Respondent’s violation of 49 C.F.R.
§ 195.420(b), for failing to inspect each mainline valve at intervals not exceeding 7½ months,
but at least twice each calendar year, to determine that it is functioning properly. Respondent
argued that if this Item were not converted to a warning item, then the penalty should be
withdrawn or reduced. Respondent admitted the valve inspections were not timely performed,
but argued that when the inspections were eventually performed, the valves were in good
working order and that there were no safety or integrity conditions present. Respondent also
stated that the company subsequently re-trained company personnel on the proper inspection
intervals.
2 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).



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With respect to the nature, circumstances and gravity of the violation, the Violation Report
alleged that PHMSA (and not KMLT) discovered the violation, that the violation concerned a
failure to perform an activity, but that pipeline safety was “minimally affected.”3 KMLT argued
that the valves were in good working order and there were no safety or integrity issues present. I
have reviewed the Violation Report and find that it appropriately classified the gravity of the
violation as minimally impacting safety and therefore the proposed penalty had already taken the
account the lowest level of gravity. Accordingly, no reduction is warranted based on the
information Respondent provided.
With respect to culpability, the Violation Report alleged that KMLT failed to take appropriate
action to comply with a requirement that was clearly applicable.
4 Respondent argued that it re-
trained personnel on the inspection-interval requirements after the PHMSA inspection. KMLT’s
post-inspection corrective actions are commendable and duly noted, but do not constitute
grounds to reduce the penalty because they were taken after PHMSA had already identified the
violation.
Accordingly, having reviewed the record and considered the assessment criteria, I assess
Respondent a civil penalty of $33,300 for violation of 49 C.F.R. § 195.420(b).
Item 3: The Notice proposed a civil penalty of $74,700 for Respondent’s violation of 49 C.F.R.
§ 195.573(a)(1), for failing to conduct tests on a protected pipeline at least once each calendar
year, but with intervals not exceeding 15 months. KMLT did not contest this violation, but
argued that the penalty should be withdrawn or reduced because once its inspections were
performed, no unsafe conditions were discovered and that the violation was “akin to a missing
records violation.” Respondent also argued that the penalty should be reduced because the
company had since hired a new cathodic-protection team lead who were fully versed in the
regulatory requirements. Further, KMLT argued that the company had placed test sites more
closely together than was required by its procedures. Finally, Respondent contended that three
of the test stations had actually been removed from service prior to 2013, which explained why
those readings were not included in the company’s records.5
With respect to the nature, circumstances and gravity of the violation, the Violation Report
alleged that PHMSA had discovered the violation, that the violation involved a failure to perform
an activity, and that pipeline safety or integrity was compromised in a High Consequence Area
(HCA),6 or in an HCA “could affect” segment.7 KMLT argued that the penalty should be
withdrawn or reduced because once the inspections were performed, no unsafe conditions were
3 Violation Report, at 14-16.
4 Id., at 17.
5 Response, at 7-8.
6 See 49 C.F.R. § 195.450 for a definition of “High Consequence Area.”
7 Violation Report, at 21-23.



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discovered and that the violation was akin to a records violation.
I disagree. Monitoring of cathodic-protection systems is an important component of pipeline
safety. Missed or delayed testing is not akin to a records violation. Rather, the company’s
records show that various tests were conducted late or not at all, which is a failure to conduct
activities necessary to ensure the integrity of a pipeline facility. With respect to gravity, the
allegation that pipeline safety or integrity was compromised in an HCA is supported by the
record. Respondent’s failure to test protected pipelines compromised safety because corrosion
was not being monitored in environmentally sensitive HCAs, for periods up to two years.
With respect to culpability, the Violation Report alleged that KMLT failed to take appropriate
action to comply with a requirement that was clearly applicable.
8 While it is prudent to hire
experienced personnel who are well-versed in the pipeline-safety regulations, such actions do not
constitute grounds to reduce the penalty since they were taken after PHMSA had already
identified the violation.
Further, the distance between test sites is not at issue in this case; rather, the frequency of the
tests performed is the central requirement of § 195.573(a)(1). Even if there were test sites that
went beyond those that were required, the record does not show that tests were run in additional
locations on a schedule that would show corrosion was being monitored at the frequency
required by the regulation. Additionally, Respondent has not provided evidence that any test-site
locations were actually removed from service during the relevant inspection period. Therefore, I
do not find there is any basis for withdrawing or reducing the penalty based on the gravity of the
violation, KMLT’s culpability, prior offenses, or good faith in attempting to comply.
Accordingly, having reviewed the record and considered the assessment criteria, I assess
Respondent a civil penalty of $74,700 for violation of 49 C.F.R. § 195.573(a)(1).
Item 4: The Notice proposed a civil penalty of $72,800 for Respondent’s violation of 49 C.F.R.
§ 195.575(c), for failing to inspect and electrically test each electrical isolation to assure the
isolation is adequate. KMLT did not contest this violation, but argued that the penalty should be
reduced because pipeline safety was minimally affected and because Respondent had
subsequently hired new personnel and revised its procedures.
With respect to the nature, circumstances and gravity of the violation, the Violation Report
alleged that PHMSA had discovered the violation, that the violation involved a failure to perform
an activity, and that pipeline safety or integrity was compromised in an HCA or in an HCA
“could affect” segment.9 KMLT argued that the penalty should be withdrawn or reduced
because safety was minimally affected. I do not agree. Electrical isolation is an essential
component of effective cathodic protection. Shorted casings can lead to pipeline failures, and the
record shows that Respondent either conducted its testing late or not at all to ensure there were
no shorted casings.
8 Id., at 24.
9 Id., at 28-30.



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KMLT’s post-inspection corrective actions are commendable and duly noted, but do not
constitute grounds to reduce the penalty because they were taken after PHMSA had already
identified the violation. While it was necessary and prudent for KMLT to amend its procedures
to comply with the regulations and to hire and train employees fully versed in the pipeline safety
regulations, such actions do not warrant a penalty reduction for a violation that occurred before
such changes were implemented. Therefore, I do not find there is any basis for withdrawing or
reducing the penalty based on the gravity of the violation, Respondent’s culpability, prior
offenses, or good faith in attempting to comply.
Accordingly, having reviewed the record and considered the assessment criteria, I assess
Respondent a civil penalty of $72,800 for violation of 49 C.F.R. § 195.575(c).
Item 5: The Notice proposed a civil penalty of $27,800 for Respondent’s violation of 49 C.F.R.
§ 195.589(c), for failing to maintain a record of each analysis, check, demonstration,
examination, inspection, investigation, review, survey, and test required by Subpart H in
sufficient detail to demonstrate the adequacy of corrosion-control measures or that corrosion
requiring control measures does not exist. KMLT argued that if Item 5 were not reduced to a
warning item, then the penalty for the Item should be reduced or withdrawn. Respondent did not
contest the violation, but argued that pipeline safety was minimally affected. KMLT also stated
that new corrosion-control personnel had been hired since the violation occurred and that new
training was being implemented to train employees on achieving compliance going forward.
Respondent also stated it now utilized a new electronic document-management system to better
maintain its documents.
With respect to the nature, circumstances and gravity of the violation, the Violation Report
alleged that PHMSA discovered the violation, that the violation concerned missing, inaccurate or
incomplete records, but that pipeline sa
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