{"operation":"document","citation":"CPF 120185016","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":"2018-06-07","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.402(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185016.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185016.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-120185016","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/120185016","body":"Notice of Probable Violation involving KINDER MORGAN LIQUID TERMINALS, LLC. PHMSA's enforcement data identifies the cited regulation as 195.402(a). The case was opened on 2018-06-07 and is reported as closed as of 2019-09-05. Proposed civil penalty: $116,800. Assessed civil penalty: $116,800. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n120185016_Final Order_08292019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185016/120185016_Final%20Order_08292019.pdf\n\n120185016_Final Order_08292019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185016/120185016_Final%20Order_08292019_text.pdf\n\n120185016_NOPV-PCP_06072018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185016/120185016_NOPV-PCP_06072018.pdf\n\n120185016_NOPV-PCP_06072018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185016/120185016_NOPV-PCP_06072018_text.pdf\n\n120185016_Operator Response Notice_07162018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/120185016/120185016_Operator%20Response%20Notice_07162018.pdf\n\n120185016_Final Order_08292019_text.pdf\n\nAugust 29, 2019\nMs. Kimberly Allen Dang\nPresident\nKinder Morgan, Inc.\n1001 Louisiana Street, Suite 1000\nHouston, Texas 77002\nRe: CPF No. 1-2018-5016\nDear Ms. Dang:\nEnclosed please find the Final Order issued in the above-referenced case to your subsidiary,\nKinder Morgan Liquids Terminals, LLC. It makes one finding of violation and assesses a civil\npenalty of $116,800. The penalty payment terms are set forth in the Final Order. This\nenforcement action closes automatically upon receipt of payment. Service of the Final Order by\ncertified mail is effective upon the date of mailing 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. Joshua A. Etzel, President – Operations and Engineering, Northeast Region, Kinder\nMorgan Liquids Terminals, 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 Liquids Terminals, LLC, ) a subsidiary of Kinder Morgan, Inc., )\n)\n)\n)\nRespondent. )\n_____________________________________)\nCPF No. 1-2018-5016\nFINAL ORDER\nFrom September 11 through 13, 2017, pursuant to 49 U.S.C. § 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an inspection of Kinder Morgan Liquids Terminals, LLC’s (KMLT or\nRespondent) procedures and records on breakout-tank cathodic protection in Carteret, New\nJersey. KMLT operates approximately 14.6 miles of natural gas transmission pipeline, 88.4\nmiles of hazardous liquid transmission pipeline, and 279 breakout tanks across five different\nstates. The facilities inspected were comprised of 2.28 miles of hazardous liquid transmission\npipeline and two terminal locations in Carteret and Perth Amboy, New Jersey. The terminal\nlocations have 87 total breakout tanks. The commodities transported are refined petroleum\nproducts.1\nAs a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent,\nby letter dated June 7, 2018, a Notice of Probable Violation and Proposed Civil Penalty (Notice).\nIn accordance with 49 C.F.R. § 190.207, the Notice proposed finding that KMLT had violated 49\nC.F.R. § 195.402(a) and proposed assessing a civil penalty of $116,800 for the alleged violation.\nKMLT responded to the Notice by letter dated July 13, 2018 (Response). The company\ncontested the allegation, offered additional information in response to the Notice, and requested\nthat the proposed civil penalty be eliminated. Respondent did not request a hearing and therefore\nhas waived its right to one.\nFINDING OF VIOLATION\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states:\n1 Pipeline Safety Violation Report (Violation Report), (June 7, 2018) (on file with PHMSA), at 1.\n\n\n\nCPF No. 1-2018-5016\nPage 2\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) General. Each operator shall prepare and follow for each pipeline\nsystem a manual of written procedures for conducting normal operations\nand maintenance activities and handling abnormal operations and\nemergencies. This manual shall be reviewed at intervals not exceeding 15\nmonths, but at least once each calendar year, and appropriate changes made\nas necessary to insure that the manual is effective. This manual shall be\nprepared before initial operations of a pipeline system commence, and\nappropriate parts shall be kept at locations where operations and\nmaintenance activities are conducted.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow for each\npipeline system a manual of written procedures for conducting normal operations and\nmaintenance activities and handling abnormal operations and emergencies. Specifically, the\nNotice alleged that KMLT failed to follow its own External Corrosion procedure for taking\ncorrective actions on its cathodic protection (CP) system, per the requirements of 49 C.F.R.\n§ 195.573(e).2 The Notice alleged that Respondent’s procedures required corrective action to be\ntaken when any deficiency in CP is discovered “before the next monitoring period,” but if\ncorrective action cannot be completed, “a corrective action plan must be established with\njustification . . . .” The “next monitoring period” is identified by KMLT’s procedures as the next\ncalendar year. The Notice alleged that KMLT failed to perform any corrective actions on five\nbreakout tanks during calendar years 2015 and 2016 after low CP readings had been identified.\nIn its Response, KMLT requested that the proposed civil penalty and probable violation be\nwithdrawn because “the inspection documentation previously provided to PHMSA demonstrates\ncompliance with KMLT’s T-O&M Procedure 903, External Corrosion Control for Buried or\nSubmerged Pipelines” (Procedure 903).3 KMLT relies on section 3.7.7 of Procedure 903, which\nstates: “Corrective action must be taken when any deficiencies in cathodic protection are\ndiscovered during cathodic protection monitoring before the next monitoring period . . . . If\ncorrective actions cannot be completed before the next monitoring period, a corrective action\nplan must be established with justification.”4\nKMLT argues that it complied with its own procedures by identifying low CP readings on Tanks\n63, 120, 100-6, 100-7, and 100-9, and then taking appropriate action to address the low\nreadings.5 Namely, KMLT argues that it prepared a corrective action plan in response to the low\nCP readings on the identified tanks that “provides guidance on the corrective actions to be taken\n2 Sections 195.401(b) and 195.573(e) require an operator to correct any identified deficiency in corrosion control\nwithin a reasonable time.\n3 Response, at 1 (emphasis added).\n4 Id. at 2.\n5 Id.\n\n\n\nCPF No. 1-2018-5016\nPage 3\nin the event deficiencies are found.”6 Finally, KMLT states that it “determined that the low CP\nreadings did not adversely impact the safe operation of the tanks . . . and ensured the corrective\nactions implemented . . . were appropriate to last until the next ANSI/API 653 OOS [out of\nservice] inspection, at which time KMLT will determine the path forward.”7\nI am not persuaded by KMLT’s position. I find that the evidence fails to demonstrate KMLT\nprepared a corrective action plan detailing what had to be done in response to the low CP\nreadings prior to the next monitoring period for the five tanks identified in the Notice. First,\nthere is no dispute that KMLT failed to take and complete corrective action to remedy the\ndeficiencies in cathodic protection in tanks 63, 100-6, 100-7, 100-9, and 120 before the next\nmonitoring period from 2015-2016, as provided in Section 3.7.7 of Procedure 903. Rather,\nKMLT asserts that it complied with § 195.402(a) and Procedure 903 because it had prepared a\ncorrective action plan that it developed and completed by 2017 and because “the low CP\nreadings did not adversely impact the safe operation of the tanks….”8\nI reject this assertion. The “corrective action plan” upon which KMLT relies was not an actual\ncorrective action plan, as required by Procedure 903, because it did not detail what actions had\nto be taken to remediate the low CP readings on each of the five breakout tanks. In addition, the\nevidence shows that the so-called “corrective action plan” did not contain any sort of analysis or\njustification as to why it would take longer than a year to correct the deficiencies. Significantly,\nthis “plan” was revised on October 23, 2017, after the next CP monitoring period (2016) had\noccurred, and therefore cannot be used to demonstrate compliance. The evidence demonstrates\nthat KMLT failed to follow Procedure 903 in this regard.\nFinally, I find that the corrosion growth rate (CGR) analysis performed by KMLT fails to serve\nas a substitute for a corrective action plan that met the requirements of Procedure 903. There is\nno evidence to demonstrate that the CGR analysis was performed before corrective actions were\ndue (2016 – the next monitoring period), or to demonstrate how the analysis was performed. In\naddition, the evidence does not show that the CGR analysis was performed as part of a\n“corrective action” to address the low CP readings on the five tanks before the next monitoring\nperiod, or that the CGR analysis was included in a corrective action plan prepared specifically to\nremediate the low readings.\nAccordingly, after considering all of the evidence I find that Respondent violated 49 C.F.R.\n§ 195.402(a) by failing to follow its own written procedures for addressing deficiencies in its CP\n6 Id.\n7 Id., at 3. In its Response, KMLT also argued that after extensive troubleshooting, it had taken more than a year to\nimplement its corrective action plan but that the repairs were performed in accordance with 49 C.F.R. §§ 195.573(e)\nand 195.401(b), which require that non-integrity repairs be made to correct any CP deficiency “within a reasonable\ntime.” However, in this case, the length of time that was actually taken to complete the repairs is not the issue.\nInstead, it is whether KMLT followed its own procedure for preparing a corrective action plan within one calendar\nyear after discovery of CP deficiencies and whether it included a justification for taking more than a year to address\nknown CP problems. KMLT failed to prepare such a plan. Furthermore, the “reasonable time” standard is not\napplicable here since the tanks at issue are located in a High Consequence Area (HCA) and therefore must be\nrepaired more quickly.\n8 Id.\n\n\n\nCPF No. 1-2018-5016\nPage 4\nsystem.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any\nrelated series of violations.9 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 $116,800 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $116,800 for Respondent’s violation of 49\nC.F.R. § 195.402(a), for failing to follow for each pipeline system a manual of written\nprocedures for conducting normal operations and maintenance activities and handling abnormal\noperations and emergencies.\nIn its Response, KMLT requested that the proposed civil penalty be withdrawn in its entirety. In\nsupport of its request, KMLT argued that it followed its procedures and did not violate\n§ 195.402(a). KMLT did not request that the proposed civil penalty be reduced as an alternative\nto complete withdrawal, nor did it present arguments specific to the calculation of the proposed\ncivil penalty. As I found above, KMLT violated § 195.402(a). Thus, I reject KMLT’s request\nfor a complete withdrawal of the proposed civil penalty. For the reasons detailed below, I find\nthat a civil penalty in the amount of $116,800 is warranted.\nRegarding the nature criterion in the Violation Report, PHMSA noted that the violation was\nrelated to a failure to perform a required activity.10 KMLT asserted that it did perform the\nrequired activity. For the reasons identified above, I reject this assertion and find that KMLT\nfailed to perform a required activity.\nRegarding the circumstances criterion in the Violation Report, PHMSA noted that it discovered\nthe violation, as opposed to the operator.11 KMLT does not dispute that PHMSA discovered the\n9 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223; Revisions to Civil Penalty Amounts,\n83 Fed. Reg. 60732, 60744 (Nov. 27, 2018).\n10 Violation Report, at 7.\n11 Id. at 8.\n\n\n\nCPF No. 1-2018-5016\nPage 5\nviolation; KMLT disputes that a violation occurred at all. Having already found KMLT in\nviolation of § 195.402(a), I find that PHMSA properly included the fact that it discovered the\nviolation in its calculation of the proposed civil penalty.\nRegarding the gravity criterion, PHMSA noted in the Violation Report that the alleged violation\ncompromised pipeline safety or integrity in an HCA. As noted above, KMLT failed to complete\ncorrective actions to remediate low CP readings on five tanks over a two-year period, and failed\nto prepare a corrective action plan with justification for why corrective actions could not be\ntaken prior to the next monitoring period. As noted in the Violation Report, “the entire pipeline\nand terminal is in an HCA.”12 A failure to correct deficiencies on five breakout tanks for a\nperiod of two years necessarily compromises the integrity of such facilities by increasing the\nlikelihood of a release in an HCA. The absence of an actual incident during this period is not\nevidence sufficient to preclude a finding that the integrity of a pipeline or pipeline facility was\ncompromised by a failure to comply with a regulation. The evidence in the record supports\nPHMSA’s assertion that pipeline safety or integrity 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.13 KMLT does not dispute that the\nregulation was clearly applicable, but rather argues that it complied. As noted above, this\nargument is rejected.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $116,800 for violation of 49 C.F.R. § 195.402(a).\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 $116,800 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.\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\n12 Id. at 9.\n13 Id. at 10.\n\n\n\nCPF No. 1-2018-5016\nPage 6\nChief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the\nFinal Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)\nand meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically\nstays the payment of any civil penalty assessed. The other terms of the order, including any\ncorrective action, remain in effect unless the Associate Administrator, upon request, grants a\nstay. If KMLT submits payment of the civil penalty, the Final Order becomes the final\nadministrative decision and the right to petition for reconsideration is waived.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nAugust 29, 2019\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":18016}