{"operation":"document","citation":"CPF 120185005","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 195.428(a), 195.573(a)(1), 195.575(c), 195.589(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185005.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185005.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185005","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/120185005","body":"Notice of Probable Violation involving KINDER MORGAN LIQUID TERMINALS, LLC. PHMSA's enforcement data identifies the cited regulations as 195.428(a),  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 2019-10-29. Proposed civil penalty: $217,400. Assessed civil penalty: $217,400. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n120185005_Closure Letter_10292019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185005/120185005_Closure%20Letter_10292019.pdf\n\n120185005_Closure Letter_10292019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185005/120185005_Closure%20Letter_10292019_text.pdf\n\n120185005_Final Order_03082019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185005/120185005_Final%20Order_03082019.pdf\n\n120185005_Final Order_03082019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185005/120185005_Final%20Order_03082019_text.pdf\n\n120185005_NOPV PCP PCO_01182018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185005/120185005_NOPV%20PCP%20PCO_01182018.pdf\n\n120185005_NOPV PCP PCO_01182018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185005/120185005_NOPV%20PCP%20PCO_01182018_text.pdf\n\n120185005_Closure Letter_10292019_text.pdf\n\nOVERNIGHT EXPRESS DELIVERY\nOctober 29, 2019\nJoshua Etzel\nVice President – Operations & Engineering\nKinder Morgan Liquid Terminals, LLC\n78 Lafayette Street\nCarteret, NJ 07008\nCPF 1-2018-5005\nDear Mr. Etzel:\nOn March 8, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued\nto Kinder Morgan Liquid Terminals, LLC (KMLT) a Final Order in the above-referenced case.\nThis Order included a Compliance Order and Civil Penalty assessment. Based on our review of\nthe 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\n120185005_Final Order_03082019_text.pdf\n\nMarch 8, 2019\nMr. Richard D. Kinder\nExecutive Chairman\nKinder Morgan, Inc.\n1001 Louisiana Street, Suite 1000\nHouston, Texas 77002\nRe: CPF No. 1-2018-5005\nDear Mr. Kinder:\nEnclosed is the Final Order issued in the above-referenced case to your subsidiary, Kinder\nMorgan Liquid Terminals, LLC. It makes findings of violation, assesses a civil penalty of\n$217,400, and specifies actions that need to be taken to comply with the pipeline safety\nregulations. The penalty payment terms are set forth in the Final Order. When the civil penalty\nhas been paid and the terms of the compliance order completed, as determined by the Director,\nEastern Region, Office of Pipeline Safety, PHMSA, this enforcement action will be closed.\nService of the Final Order by certified mail is effective upon the date of mailing as provided\nunder 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Robert Burrough, Director, Eastern Region, Office of Pipeline Safety, PHMSA\nMr. Joshua Etzel, President – Operations and Engineering, Kinder Morgan Liquid\nTerminals, LLC, 78 Lafayette Street, Carteret, NJ 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. 1-2018-5005\na subsidiary of Kinder Morgan, Inc., )\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom August 31 through September 3, 2015, pursuant to 49 U.S.C. § 60117, a representative of\nthe Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of the facilities and records of Kinder\nMorgan Liquid Terminals, LLC (KMLT or Respondent), in Carteret, New Jersey. KMLT\noperates approximately 14.6 miles of natural gas transmission pipeline, 88.4 miles of hazardous\nliquid transmission pipeline, and 279 breakout tanks across five different states. The facilities\ninspected were comprised of 2.28 miles of hazardous liquid transmission pipeline, and two\nterminal locations in Carteret and Perth Amboy, New Jersey. The terminal locations have 87\ntotal breakout tanks. The commodities transported are refined petroleum products.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 four violations of 49 C.F.R. Part 195 and proposed\nassessing a civil penalty of $217,400 for the alleged violations. The Notice also proposed\nordering Respondent to take certain measures to correct the alleged violations.\nAfter requesting and receiving an extension of time to respond, KMLT responded to the Notice\nby letter dated February 28, 2018 (Response). Respondent did not contest the allegations of\nviolations but provided an explanation of its actions and requested that Item 4 of the Notice be\nreduced to a Warning Item, with no associated penalty, and that the remaining proposed civil\npenalties be reduced. KMLT also requested additional time to comply with the Proposed\nCompliance Order. Respondent did not request a hearing and therefore has waived its right to\none.\n1 Pipeline Safety Violation Report (Violation Report), (January 18, 2018) (on file with PHMSA), at 1.\n\n\n\nCPF No. 1-2018-5005\nPage 2\nFINDINGS OF VIOLATION\nIn its Response KMLT did not contest the allegations in the Notice that it violated 49 C.F.R. Part\n195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a), which states:\n§ 195.428 Overpressure of safety devices and overfill protection systems.\n(a) Except as provided in paragraph (b) of this section, each operator shall,\nat intervals not exceeding 15 months, but at least once each calendar year, or\nin the case of pipelines used to carry highly volatile liquids, at intervals not to\nexceed 7½ months, but at least twice each calendar year, inspect and test each\npressure limiting device, relief valve, pressure regulator, or other item of\npressure control equipment to determine that it is functioning properly, is in\ngood mechanical condition, and is adequate from the standpoint of capacity\nand reliability of operation for the service in which it is used.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and\ntest, at the required intervals, the relief devices located on surge tanks ST-3, ST-4, ST-5, ST-6,\nand 150-1 to determine that they were adequate from the standpoint of capacity. Specifically,\nthe Notice alleged that KMLT’s records of capacity calculations for the referenced relief devices\ndid not identify the tanks, were not dated, and did not include any information related to the\ncapacity of the devices.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and\ntest, at the required intervals, the relief devices located on surge tanks ST-3, ST-4, ST-5, ST-6,\nand 150-1 to determine that they were adequate from the standpoint of capacity.\nItem 2: 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 impracticable 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\ncorrosion-control monitoring tests at least once per calendar year, but with intervals not\nexceeding 15 months. Specifically, the Notice alleged that KMLT’s records from January 1,\n2012, through December 31, 2014, showed that KMLT failed to take 25 structure pipe-to-soil\nreadings from 2013 through 2014.\n\n\n\nCPF No. 1-2018-5005\nPage 3\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.573(a)(1) by failing to conduct\ncorrosion-control monitoring tests at least once per calendar year, but with intervals not\nexceeding 15 months.\nItem 3: 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’s records from January 1, 2012, through December 31, 2014, showed\nthat KMLT failed to take seven casing pipe-to-soil readings from 2013 through 2014.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.575(c) by failing to inspect and\nelectrically test each electrical isolation to assure the isolation is adequate.\nItem 4: 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 of 49 C.F.R. Part 195 in sufficient detail to demonstrate\nthe adequacy of corrosion-control measures or that corrosion requiring control measures did not\nexist. Specifically, the Notice alleged that KMLT failed to maintain records of annual\ninspections of cathodic-protection systems used to control corrosion on the bottom of\naboveground breakout tanks 100-6, 100-7, 100-9, and 120 to ensure that operation and\nmaintenance of the system were in accordance with API Recommended Practice 651, pursuant to\n§ 195.573(d).\nRespondent did not contest this allegation of violation, but did request that it be reduced to a\nWarning Item with no associated civil penalty. While KMLT admitted that it had failed to\nmaintain records of inspections of the cathodic-protection systems for four breakout tanks for\n\n\n\nCPF No. 1-2018-5005\nPage 4\n2013, it argued that extenuating circumstances weighed in favor of reducing this Item to a\nWarning Item, with no penalty.2 Specifically, Respondent identified steps it had taken since the\ninspection to improve its document-retention procedures and noted that PHMSA’s own Violation\nReport indicated that pipeline safety was minimally affected by this alleged violation.\nRespondent’s request for a reduction of this Item to a Warning Item is based on corrective\nactions the company took after PHMSA discovered the violation. Corrective actions taken after\na violation is discovered, while commendable, do not serve as a basis to reduce a finding of\nviolation to a Warning Item. KMLT admitted the violation for this Item and reduction to a\nWarning Item is not warranted. As for Respondent’s alternative argument that the proposed civil\npenalty be reduced because pipeline safety was minimally affected, this argument is more\nappropriately addressed below in the Assessment of Penalty section. Accordingly, based upon a\nreview of all the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by failing to\nmaintain a record of each analysis, check, demonstration, examination, inspection, investigation,\nreview, survey, and test required by Subpart H of Part 195 in sufficient detail to demonstrate the\nadequacy of corrosion-control measures or that corrosion requiring control measures did not\nexist.\nThese findings of violations 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.3 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 $217,400 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $60,100 for Respondent’s violation of 49 C.F.R.\n§ 195.428(a), for failing to inspect and test, at the required intervals, the relief devices located on\n2 Response, at 4.\n3 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum\nCivil Penalties, 82 Fed. Reg. 19325 (Apr. 27, 2017).\n\n\n\nCPF No. 1-2018-5005\nPage 5\nsurge tanks ST-3, ST-4, ST-5, ST-6, and 150-1 to determine that they were adequate from the\nstandpoint of capacity. As noted above, I found that KMLT’s records of capacity calculations\nfor the referenced relief devices did not identify the tanks, were not dated, and did not include\nany information related to the capacity of the devices.\nIn its Response, KMLT requested that the proposed civil penalty be reduced because the\nviolation was a “missing records violation,” pipeline safety was minimally affected, the impacts\nof Hurricane Sandy had affected KMLT’s ability to comply with the regulation, and KMLT had\ntaken steps to ensure compliance going forward.4 For the reasons detailed below, I am not\npersuaded that any reduction of the proposed penalty for Item 1 is warranted.\nRegarding the nature criterion in the Violation Report, PHMSA noted in the Violation Report\nthat the alleged violation related to a failure to perform a required activity. Respondent asserted\nthat the alleged violation was merely a records violation, not a failure to perform a required\nactivity, and the civil penalty should be reduced accordingly.5 KMLT noted that the “records\nregarding engineering calculations of the PV [Pressure Vacuum] devices were lost and/or\ndestroyed” due to the impacts of Hurricane Sandy.6 However, KMLT failed to present any\nevidence that the company had conducted the inspection and tests required by the regulation.\nKMLT could have provided an affidavit or other credible evidence to support its claim that the\ncalculations were performed but that the records had been lost or destroyed because of a natural\ndisaster. KMLT failed to do so and the record before me contains nothing more than a mere\nunsupported statement that the required inspections and calculations were performed, and an\nadmission that the records do not exist. The only records provided by KMLT showing that the\nrequired inspections and tests were performed on the relevant facilities are dated October 9,\n2015, May 28, 2016, and May 30, 2017. All of these inspections and tests occurred after the\ndate of the PHMSA inspection, August 31 through September 3, 2015, and are therefore\nimmaterial to the civil penalty associated with this violation.\nRegarding the gravity criterion, PHMSA noted in the Violation Report that the alleged violation\ncompromised pipeline safety or integrity in a High Consequence Area (HCA). Respondent\nasserted, again without supporting evidence, that pipeline safety was minimally affected, and the\ncivil penalty should therefore be reduced.7 As noted above, KMLT failed to inspect and test\nrelief devices located on five surge tanks in calendar years 2013 and 2014. As noted in the\nViolation Report, “the entire pipeline and terminal facility is located in an HCA.”8 A failure to\ninspect and test relief devices on surge tanks located in an HCA for a period of two years\nnecessarily compromises the integrity of such facilities by increasing the likelihood of a release\nin an environmentally sensitive area. The absence of an actual incident during this period may\nbe evidence of good fortune, but it is not evidence sufficient to preclude a finding that the\n4 Response, at 2.\n5 Id. at 2-3.\n6 Id. at 3.\n7 Id.\n8 Violation Report, at 9.\n\n\n\nCPF No. 1-2018-5005\nPage 6\nintegrity of a pipeline or pipeline facility was compromised by a failure to comply with a\nregulation. The evidence in the record supports PHMSA’ assertion that pipeline safety or\nintegrity was compromised in an HCA.\nRegarding the culpability and good faith criteria, PHMSA noted in the Violation Report that\nKMLT had failed to comply with a requirement that was “clearly applicable,” and that KMLT\ndid not have a credible justification for its non-compliance. Respondent argued for a reduced\ncivil penalty because it claimed to have improved its document-management system by\nimplementing training and procedural revisions to its processes, as well as having created an\nelectronic records-management system to ensure compliance going forward.9 Further, KMLT\nasserted, without any evidence, that the impacts of Hurricane Sandy prevented it from complying\nwith a clearly applicable regulation.10 Corrective actions taken subsequent to the identification\nof a probable violation do not weigh in favor of a reduced penalty.11\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $60,100 for violation of 49 C.F.R. § 195.428(a).\nItem 2: The Notice proposed a civil penalty of $73,000 for Respondent’s violation of 49 C.F.R.\n§ 195.573(a)(1), for failing to conduct corrosion-control monitoring tests at least once per\ncalendar year, but not exceeding 15 months. As noted above, I found that KMLT’s records from\nJanuary 1, 2012, through December 31, 2014, show that KMLT failed to take 25 structure pipe-\nto-soil readings from 2013 through 2014.\nIn its Response, KMLT requested that the proposed civil penalty be reduced because “at most\nthis is a records violation,” and KMLT’s newly-implemented testing procedures exceeded\nPHMSA’s regulations regarding the number of test stations required.12 Specifically, KMLT\nasserted “that these readings [the identified 25 missing monitoring tests in 2013 and 2014] were\ntaken….” However, as noted above, KMLT failed to provide any credible evidence to support\nthe conclusory statement that the tests were performed.\nRegarding nature and gravity, PHMSA noted in the Violation Report that the alleged violation\nrelated to a failure to perform a required activity, and that pipeline safety or integrity was\ncompromised in an HCA. Respondent asserted that the missing readings identified in the Notice\nwere taken, and this violation is, at most, a records violation with no impact on pipeline safety.13\nAs discussed above for Item 1, I am not persuaded by Respondent’s arguments because there is\n9 Id.\n10 Id.\n11 See e.g., In the Matter of Texas Eastern Transmission, LP, a subsidiary of Spectra Energy Corp. (Texas Eastern),\nFinal Order, CPF No. 1-2015-1003, 2016 WL 1426021, at 4 (Feb. 26, 2016) (“Respondent's assertion of a general\ngood-faith effort to continuously improve is based on corrective actions taken after PHMSA learned of the violation,\nand therefore does not warrant a reduction in the proposed penalty.”).\n12 Response, at 4.\n13 Id. at 4-5.\n\n\n\nCPF No. 1-2018-5005\nPage 7\nno evidence in the record that KMLT actually performed the required readings, and the violation\ncompromised pipeline safety or integrity in an HCA.\nRegarding culpability and good faith, PHMSA noted in the Violation Report that KMLT failed\nto comply with a requirement that was clearly applicable and KMLT did not have a credible\njustification for its failure to comply. Although Respondent did not direct its arguments in\nsupport of a reduced penalty for this Item to these specific factors, Respondent’s arguments\nrelate to its culpability and good faith. Respondent argued for a reduced civil penalty because\n“the personnel previously responsible for cathodic protection (“CP”) are no longer with KMLT,\nand the new CP lead is fully versed in the regulatory requirements for casing inspections,\nincluding documentation requirements.”14\nI am unaware that PHMSA has ever reduced a proposed civil penalty because a former employee\nor employees possibly involved in the violation have subsequently been replaced by competent\npersonnel. On the contrary, pipeline operators are expected to use competent, qualified\npersonnel to perform safety-related tasks at all times. Finally, KMLT contended that it had\nimplemented new procedures that exceeded PHMSA’s regulatory requirements regarding test\nstations.15 As noted above, actions taken subsequent to an inspection, no matter how\ncommendable or proactive, do not demonstrate compliance with the regulations at the time of the\ninspection, nor do they weigh in favor of a reduced penalty.16\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $73,000 for violation of 49 C.F.R. § 195.573(a)(1).\nItem 3: The Notice proposed a civil penalty of $56,800 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. As noted above, I find that KMLT’s records from January 1, 2012, through\nDecember 31, 2014, show that KMLT failed to take seven casing pipe-to-soil readings from\n2013 through 2014.\nIn its Response, KMLT requested that this proposed penalty also be reduced because the\nviolation is merely a missing records violation, pipeline safety was minimally affected, and\nKMLT had implemented a new “process to ensure compliance with inspection intervals and\nmaintenance of associated documentation.”17 For the reasons detailed below, I find that\nKMLT’s arguments in support of a reduced penalty for Item 3 are unpersuasive.\nRegarding nature and gravity, PHMSA noted in the Violation Report that the alleged violation\nrelated to a failure to perform a required activity, and that pipeline safety or integrity was\ncompromised in an HCA. Respondent acknowledged that inspections of the seven casings\n14 Id.\n15 Id. at 5.\n16 Texas Eastern, supra note 11.\n17 Response, at 5.\n\n\n\nCPF No. 1-2018-5005\nPage 8\nidentified in the Notice “exceeded the required interval of once per calendar year not to exceed\n15-months,” but contended that this was still “a records violation only.”18 KMLT’s admission\ndirectly contradicts its assertion that the violation is not properly identified as a failure to\nperform a required activity. Further, KMLT asserted that subsequent annual-inspection records\ndemonstrate that pipeline safety was minimally affected.19 However, as noted above, the records\non which KMLT relies to assert that pipeline safety was minimally affected relate to inspections\nthat took place after the date of the PHMSA inspection. Subsequent annual inspections do not\nserve to mitigate the threat to pipeline safety posed by an earlier failure to comply.20\nRegarding culpability and good faith, PHMSA noted in the Violation Report that KMLT failed\nto comply with a requirement that was clearly applicable, and that KMLT did not have a credible\njustification for its compliance failure. Although Respondent did not direct its arguments in\nsupport of a reduced penalty for this Item to these specific factors, Respondent’s arguments\nrelate to its culpability and good faith. Respondent argued for a reduced civil penalty for this\nItem for the same reasons noted above in Item 2 under these factors.21 Having previously\nrejected KMLT’s arguments on this basis, I am not persuaded by KMLT’s arguments for a\nreduced penalty here.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $56,800 for violation of 49 C.F.R. § 195.575(c).\nItem 4: The Notice proposed a civil penalty of $27,500 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 of 49\nC.F.R. Part 195 in sufficient detail to demonstrate the adequacy of corrosion-control measures or\nthat corrosion requiring control measures did not exist. As noted above, I find that KMLT failed\nto maintain records of annual inspections of cathodic protection systems used to control\ncorrosion on the bottom of aboveground breakout tanks 100-6, 100-7, 100-9, and 120 to ensure\nthat operation and maintenance of the system were in accordance with API Recommended\nPractice 651, pursuant to § 195.573(d).\nIn its Response, KMLT requested that this Item be withdrawn and reduced to a Warning Item\nwith no associated civil penalty.22 As noted above, I previously rejected KMLT’s arguments and\nfound Respondent in violation of the regulation.23 KMLT admitted in its Response that it failed\n18 Id.\n19 Id.\n20 See e.g., In the Matter of Coffeyville Resources Crude Transportation, LLC, a subsidiary of CVR Refining, LP,\nFinal Order, CPF No. 3-2016-5006, 2017 WL 7049530, at 11 (Oct. 31, 2017) (rejecting Respondent’s argument that\nthe gravity of the violation should be reduced to a characterization that pipeline safety was minimally affected\nbecause subsequent inspection reports did not identify any imminent threats to the integrity of the pipeline facility).\n21 Id. at 5-6.\n22 Id. at 6.\n23 Supra at 3-4.\n\n\n\nCPF No. 1-2018-5005\nPage 9\nto maintain records of inspections of the cathodic protection systems for four breakout tanks in\n2013.24 Whether pipeline safety is minimally affected is relevant to the gravity of the violation,\nwhich was discussed more fully in Item 1 above. I find that PHMSA properly identified the\nviolation as minimally affecting pipeline safety, and calculated the proposed civil penalty for this\nItem properly.25\nRegarding culpability and good faith, PHMSA noted in the Violation Report that KMLT failed\nto comply with a requirement that was clearly applicable and that KMLT did not have a credible\njustification for its noncompliance. Although Respondent did not direct its arguments in support\nof a reduced penalty for this Item to these specific factors, Respondent’s arguments relate to its\nculpability and good faith. Respondent argued for a reduced civil penalty for this Item for the\nsame reasons noted above in Items 2 and 3 under these factors.26 Having previously rejected\nKMLT’s arguments on this basis, I am not persuaded by KMLT’s argument for a reduced\npenalty for this Item.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $27,500 for violation of 49 C.F.R. § 195.589(c).\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a total civil penalty of $217,400.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations (49\nC.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.\nThe Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $217,400 civil penalty will result in accrual of interest at the current annual\nrate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Item 1 in the Notice for violation of 49\n24 Response, at 6.\n25 Violation Report, at 30.\n26 Id. at 5 - 6.\n\n\n\nCPF No. 1-2018-5005\nPage 10\nC.F.R. § 195.428(a). Under 49 U.S.C. § 60118(a), each person who engages in the\ntransportation of hazardous liquids or who owns or operates a pipeline facility is required to\ncomply with the applicable safety standards established under chapter 601. Pursuant to the\nauthority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the\nfollowing actions to ensure compliance with the pipeline safety regulations applicable to its\noperations:\n1. With respect to the violation of § 195.428(a) (Item 1), Respondent must:\na. Provide an analysis (or perform one if none exists) of the capacity\nrequirements of the relief devices on surge tanks ST-3, ST-4, ST-5, ST-6, and\n150-1 within 120 days of receipt of the Final Order.\nb. Remediate / adjust / replace devices that were determined to be inadequate by\nthe related analysis within 240 days of receipt of the Final Order.\nc. All documentation demonstrating compliance with items 1a and 1b above\nmust be submitted to the Director, Eastern Region, Pipeline and Hazardous\nSafety Materials Administration, 820 Bear Tavern Road, Suite 103, West\nTrenton, NJ 08628, for review within 270 days of receipt of the Final Order.\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nIt is requested that Respondent maintain documentation of the safety improvement costs\nassociated with fulfilling this Compliance Order and submit the total to the Director. It is\nrequested that these costs be reported in two categories: (1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses; and (2) total cost associated with\nreplacements, additions and other changes to pipeline infrastructure.\nFailure to comply with this Order may result in the administrative assessment of civil penalties\nnot to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), for each violation for\neach day the violation continues or in referral to the Attorney General for appropriate relief in a\ndistrict court of the United States.\nUnder 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final\nOrder to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey\nAvenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of\nChief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of this\nFinal Order by Respondent. Any petition submitted must contain a statement of the issue(s) and\nmeet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays\nthe payment of any civil penalty assessed. The other terms of the order, including corrective\naction, remain in effect unless the Associate Administrator, upon request, grants a stay.\n\n\n\nCPF No. 1-2018-5005\nPage 11\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nMarch 8, 2019\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n120185005_NOPV PCP PCO_01182018_text.pdf\n\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 1-2018-5005\nDear Mr. Etzel:\nFrom August 31 to September 3, 2015, a representative of the Pipeline and Hazardous Materials\nSafety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of\n49 United States Code inspected Kinder Morgan Liquid Terminals, LLC (KMLT) pipeline\nterminal in Carteret, 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. §195.428(a) Overpressure safety devices and overfill protection systems\n(a) Except as provided in paragraph (b) of this section, each operator shall, at\nintervals not exceeding 15 months, but at least once each calendar year, or in the case\nof pipelines used to carry highly volatile liquids, at intervals not to exceed 7½ months,\nbut at least twice each calendar year, inspect and test each pressure limiting device,\nrelief valve, pressure regulator, or other item of pressure control equipment to\ndetermine that it is functioning properly, is in good mechanical condition, and is\nadequate from the standpoint of capacity and reliability of operation for the service\nin which it is used.\n\n\n\nCPF 1-2018-5005\nKMLT failed to inspect and test the relief devices located on surge tanks ST-3, ST-4, ST-5, ST-6,\nand 150-1 to determine that they were adequate from the standpoint of capacity, at the intervals\nrequired under §195.428(a).\nDuring the inspection, the PHMSA inspector requested records for capacity calculations. KMLT\nprovided a document titled Valve Concepts, Inc. Sizing Report and a P&ID for ST-3 and ST-4.\nThe PHMSA inspector reviewed the records available since January 1, 2012, and noted that they\ndid not identify the tanks, were not dated, and did not include any information related to the\ncapacity of the relief devices. The PHMSA inspector requested additional information and KMLT\nstated that, “The only relevant data to breakout tank venting records is found on the Sizing Report,\nand Surge Tanks P&ID.”\nThus, KMLT did not provide documentation demonstrating that the capacities of the relief devices\nwere adequate to relieve the anticipated pressure and flow rates in the piping system in the event\nof overpressure situation.\n2. §195.573(a)(1) What must I do to monitor external corrosion control\n(a) Protected pipelines. You must do the following to determine whether cathodic\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 39\nmonths.\nKMLT failed to conduct corrosion control monitoring tests at least once per calendar year, but not\nexceeding 15 months. During the inspection, the PHMSA inspector reviewed cathodic protection\nrecords from January 1, 2012, through December 31, 2014. The records show that KMLT failed\nto take 25 structure pipe-to-soil readings from 2013 through 2014. The PHMSA inspector asked\nKMLT why there were missing test reads in the records. 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.\n3. § 195.575(c) 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. During the inspection, the PHMSA inspector reviewed cathodic protection records from\nJanuary 1, 2012 through December 31, 2014. The records show that KMLT failed to take 7 casing\npipe-to-soil readings from 2013 through 2014. The PHMSA inspector asked KMLT why there\nwere missing test reads in the records. KMLT was unable to provide a reason.\nThus, KMLT failed to inspect and electrically test each electrical isolation to assure the isolation\nis adequate.\n120185005_NOPV PCP PCO_01182018_text Page 2 of 5\n\n\n\nCPF 1-2018-5005\n4. §195.589(c) 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),\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 annual inspections of cathodic protection\nsystems used to control corrosion on the bottom of aboveground breakout tanks 100-6, 100-7, 100-\n9, and 120, to ensure that operation and maintenance of the system are in accordance with API\nRecommended Practice 651, as per §195.573(d).\nDuring the inspection, the PHMSA inspector requested cathodic protection tanks inspection\nrecords for 2012-2014 for the four tanks referenced above. KMLT was unable to provide records\nwhich documented cathodic protection inspections for 2013. KMLT stated that tank construction\nrecords were missing due to the devastation caused by Hurricane Sandy and that construction,\ninspection, repair and alteration records were lost/destroyed) and could not be provided during the\ninspection.\nSuperstorm Sandy occurred in October 2012. Inspections conducted in 2013 could not have been\nmissing due to the storm. KMLT could not provide 2013 inspection records.\nTherefore, KMLT failed to maintain records of inspections of the cathodic protection system for\nbreakout tanks 100-6, 100-7, 100-9, and 120 in 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 ","truncated":true,"body_characters":44642}