{"operation":"document","citation":"CPF 12022050NOPV","title":"KIANTONE PIPELINE CORP — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2022-10-06","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.402(a), 195.52(a)(2), 195.54(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-12022050nopv.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-12022050nopv.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-12022050nopv","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/12022050NOPV","body":"Notice of Probable Violation involving KIANTONE PIPELINE CORP. PHMSA's enforcement data identifies the cited regulations as 195.402(a),  195.52(a)(2),  195.54(a). The case was opened on 2022-10-06 and is reported as closed as of 2024-06-06. Proposed civil penalty: $675,402. Assessed civil penalty: $450,268. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Decision%20on%20Petition%20for%20Reconsideration_06032024_(21-217159).pdf\n\n12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Decision%20on%20Petition%20for%20Reconsideration_06032024_(21-217159)_text.pdf\n\n12022050NOPV_Final Order_12262023_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Final%20Order_12262023_(21-217159).pdf\n\n12022050NOPV_Final Order_12262023_(21-217159)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Final%20Order_12262023_(21-217159)_text.pdf\n\n12022050NOPV_Operator Petition for Reconsideration_01162024_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Operator%20Petition%20for%20Reconsideration_01162024_(21-217159).pdf\n\n12022050NOPV_Operator Post-hearing Brief_05222023_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Operator%20Post-hearing%20Brief_05222023_(21-217159).pdf\n\n12022050NOPV_Operator Pre-Hearing Submisson_04102023_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Operator%20Pre-Hearing%20Submisson_04102023_(21-217159).pdf\n\n12022050NOPV_Operator RtN and Request for Hearing_11212022_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_Operator%20RtN%20and%20Request%20for%20Hearing_11212022_(21-217159).pdf\n\n12022050NOPV_PCP_10062022_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_PCP_10062022_(21-217159).pdf\n\n12022050NOPV_PCP_10062022_(21-217159)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_PCP_10062022_(21-217159)_text.pdf\n\n12022050NOPV_PHC Hearing Scheduled_12142022_(21-217159).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_PHC%20Hearing%20Scheduled_12142022_(21-217159).pdf\n\n12022050NOPV_PHC Hearing Scheduled_12142022_(21-217159)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022050NOPV/12022050NOPV_PHC%20Hearing%20Scheduled_12142022_(21-217159)_text.pdf\n\n12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf\n\nJune 3, 2024\nVIA ELECTRONIC MAIL TO: dwortman@urc.com\nMr. Dave Wortman\nVice President, Supply and Transportation\nKiantone Pipeline Corporation\n15 Bradley Street, P.O. Box 780\nWarren, PA 16365\nRe: CPF No. 1-2022-050-NOPV\nDear Mr. Wortman:\nEnclosed please find the Decision on the Petition for Reconsideration issued in the above-\nreferenced case. It denies your Petition for Reconsideration. Service of the Decision by certified\nmail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R.\n§ 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. John Wagner, Vice President, General Counsel and Corporate Secretary, Kiantone\nPipeline Corp., jwagner@urc.com\nMr. George C. Hopkins, Counsel for Kiantone Pipeline Corp., Vinson & Elkins, LLP,\nghopkins@velaw.com\nCONFIRMATION OF 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 )\nKiantone Pipeline Corporation, ) CPF No. 1-2022-050-NOPV\n)\n)\n)\nPetitioner. )\n____________________________________)\nDECISION ON PETITION FOR RECONSIDERATION\nIn a December 26, 2023 Final Order, I found that Kiantone Pipeline Corporation (Kiantone or\nPetitioner) had committed two violations of 49 C.F.R. Part 195 following an on-site pipeline\nsafety inspection by the Office of Pipeline Safety (OPS) of Petitioner’s facilities and records in\nconnection with investigating a release of crude oil at a facility operated by Kiantone in Warren,\nPennsylvania.1\nIn the Final Order, I assessed a civil penalty of $225,134 for Petitioner’s violation of 49 C.F.R.\n§ 195.402(a) for failing to follow Operations, Maintenance, and Emergency (OM&E) Procedure\n11.6.3 – Activities During Receipt of Crude Oil at Tank Farm (Item 1). I also assessed a civil\npenalty of $225,134 for Petitioner’s violation of 49 C.F.R. § 195.402(a) for failing to follow its\nOM&E Procedure Section 5.7.10 – Tank Farm Dike Drain Operations (Item 2). I withdrew one\nallegation of violation (Item 3) after being persuaded by Kiantone’s argument that this allegation\nwas duplicative of Item 1.\n2\nOn January 16, 2024, Kiantone submitted a Petition for Reconsideration (Petition) of the Final\nOrder.\n3 Specifically, the Petition seeks reconsideration of Items 1 and 2 in the Final Order and\nrequests that these two findings of violation and the associated civil penalties be withdrawn.\n4\nHaving considered the record and the arguments presented in the Petition, I am denying the\nPetition and affirming the Final Order without modification.\n1 Kiantone Pipeline Corporation, Final Order, CPF No. 1-2022-050-NOPV (Dec. 26, 2023) (Final Order).\n2 OPS alleged a total of six violations including three warning items that required no further action, but warned\nKiantone to correct the alleged probable violations or face possible future enforcement action (Items 4, 5, and 6).\n3 Petition for Reconsideration submitted by Mr. George C. Hopkins, Vinson & Elkins LLP, Counsel for Kiantone\nPipeline Corporation, to Mr. Alan K. Mayberry, Associate Administrator for Pipeline Safety, PHMSA, dated\nJanuary 16, 2024 (Petition).\n4 Id.\n\n\n\nBackground\nFrom July 8, 2021 through July 9, 2021, pursuant to 49 U.S.C. § 60117, representatives of OPS\nconducted an on-site pipeline safety inspection of the facilities and records of Petitioner in\nconnection with investigating a release of crude oil in Warren, Pennsylvania. Kiantone manages\nthe 78-mile-long Kiantone Pipeline from West Seneca, New York to United Refining\nCompany’s facility in Warren, Pennsylvania including a tank farm for storage located on\nCobham Park Road in Warren, Pennsylvania (Cobham Tank Farm).5\nOn July 8, 2021, at approximately 12:20 a.m. Eastern Daylight Time (EDT), Kiantone Pipeline\nexperienced an overflow of Tank 652 at the Cobham Tank Farm. The overflow resulted in a\nrelease of 2,672 barrels (bbl) of crude oil into secondary containment, which exited an open dike\ndrain valve and flowed downhill to a firewater retention pond. Following notification of the\nincident to the National Response Center (NRC), OPS deployed accident investigation personnel\nto the release site, along with the Pennsylvania Public Utility Commission.6\nThe material facts of the incident are not in dispute. A heavy storm caused a loss of power at the\nCobham Tank farm on July 7, 2021, at approximately 6:49 p.m. EDT. The power loss initiated\nthe uninterruptible power supply (UPS) to maintain communications with the facility’s control\ncenter, but all other electrical equipment at the Cobham Tank Farm was inoperable, including\nlights, pumps, and motor-operated valves. Kiantone’s UPS system, which powered the\ncommunications at the facility, operated for about two hours before being depleted at\napproximately 8:36 p.m. EDT. Commercial power was temporarily restored at approximately\n9:22 p.m. EDT for 32 seconds. The restoration of power caused the remotely operated inlet\nvalves to Tanks 650, 651, and 652 to begin to open, but the valve operation ceased when power\nwas subsequently lost again. Tanks 650, 651, and 652 were all connected to the same manifold.\nTank 651 was in the process of receiving product at this time. Because Tank 652 now had a\npartially opened inlet valve, Tank 652 also started to receive product. However, as the UPS was\ndepleted and thus the facility had no communications, Kiantone’s control center failed to detect\nTank 652’s valve operation. Therefore, the receiving of product by Tank 652 and its resulting\noverflow was not detected by Kiantone until approximately 12:50 a.m. EDT on July 8, 2021.\nThe release was discovered when Kiantone’s pump house blender visually noticed oil coming\nfrom the tank vents via illumination from his headlights as he drove within the facility after\nbeing notified of a heavy smell of petroleum in the air by other personnel at the facility.7\nAs a result of the inspection and investigation, the Director, Eastern Region, OPS (Director),\nissued to Petitioner, by letter dated October 6, 2022, a Notice of Probable Violation and\nProposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed\nfinding that Kiantone had committed three violations of 49 C.F.R. Part 195 and proposed\n5 Kiantone’s parent company, United Refining Company, is an independent refiner and marketer of petroleum\nproducts in Pennsylvania and portions of New York and Ohio. United Refining Company website, Pipeline\nOperations, available at https://www.urc.com/pipelines (last accessed Nov. 5, 2023).\n6 Failure Investigation Report – Kiantone Pipeline Corporation – Incorrect Operation Aboveground Storage Tank\nOverflow (Dec. 21, 2021), Executive Summary.\n7 Recommendation, at 2-3.\n\n\n\nassessing a total civil penalty of $675,402 for the alleged violations. The Notice also included an\nadditional three warning items pursuant to 49 C.F.R. § 190.205, which warned the operator to\ncorrect these alleged probable violations or face possible future enforcement action.\nKiantone contested the allegations in the Notice and requested an informal hearing. A hearing\nwas subsequently held on April 20, 2023, in West Trenton, New Jersey, before a Presiding\nOfficial from the Office of Chief Counsel, PHMSA. At the hearing, Petitioner was represented\nby counsel. On December 26, 2023, I issued a Final Order in this case.\nWith respect to Item 1, I found that Petitioner violated 49 C.F.R. § 195.402(a) by failing to\nfollow OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm and\nassessed a civil penalty of $225,134. In assessing the civil penalty for this item, I applied the\nstatutory civil penalty assessment factors including the nature, circumstances, gravity, and\nculpability of this violation.8 I noted that properly monitoring oil storage tank levels connected\nto the same manifold during product delivery is a critical part of safe operations and must be\naccomplished locally in the event of power or communications failures. Accordingly, I found\nthat the proposed civil penalty of $225,134 was supported by the record.\nWith respect to Item 2, I found that Petitioner violated 49 C.F.R. § 195.402(a) by failing to\nfollow its OM&E Procedure Section 5.7.10 – Tank Farm Dike Drain Operations and assessed a\ncivil penalty of $225,134. In assessing the civil penalty for this item, I applied the statutory civil\npenalty assessment factors including the nature, circumstances, gravity, and culpability of this\nviolation. I noted that properly logging and monitoring a dike drain water discharge for oil after\na drain valve is opened is a critical part of safe operations. Accordingly, I found that a civil\npenalty of $225,134 for the violation was supported by the record.\nWith respect to Item 3, I found that although Petitioner was required to identify and correct the\ndeficiencies that caused a prior abnormal operation event on June 30, 2021, involving a power\nloss and had not done so by the time of the July 8, 2021 incident, its procedures did not specify a\ntime deadline to do so and it was not reasonable for OPS to expect that the process of identifying\nand correcting the deficiencies that caused the June 30, 2021 incident to be resolved within this\ntime period. Accordingly, I withdrew this allegation.\nOn January 16, 2024, Kiantone submitted a petition requesting reconsideration of Items 1 and 2\nin the Final Order.\nStandard of Review\nUnder 49 C.F.R. § 190.243, Kiantone has the right to petition the Associate Administrator for\nreconsideration of the Final Order. However, that right is not an appeal or an opportunity to seek\na de novo review of the record.9 It is a venue for presenting the Associate Administrator with\ninformation that was not previously available or requesting that any errors in the Final Order be\ncorrected. Requests for consideration of additional facts or arguments must be supported by a\n8 49 U.S.C. § 60122(b).\n9 49 C.F.R. § 190.243(a)-(d).\n\n\n\nstatement of reasons as to why those facts or arguments were not presented prior to the issuance\nof the Final Order. Repetitious information or arguments will not be considered.\nItem 1\nThroughout this proceeding, and again in its Petition, Kiantone argues that OPS’s allegation that\nit failed to follow Product Receipt Procedure 11.6.3 was flawed because it was based on the\nwrong OM&E procedure and as a result OPS was enforcing requirements that did not apply.10\nWhile Item 1 in the Notice was based on an alleged failure to follow Product Receipt Procedure\n11.6.3, Petitioner contended that during an unplanned communications failure such as the power\noutage that occurred during the incident, its personnel were not required to follow the Product\nReceipt Procedure. Petitioner continues to argue that instead, its Control Room Management\n(CRM) Procedure 2.3.4 – Unplanned Communications Failure-Tank Farm (CRM 2.3.4) applied\nto the exclusion of Product Receipt Procedure 11.6.3.11\nIn evaluating Kiantone’s argument, I noted in the Final Order that Product Receipt Procedure\n11.6.3 includes a Table that defines a “Category 1” situation as occurring when power is lost,\ncommunications are lost, or radar/laser on an active tank is lost. The plain meaning of the word\n“or” in this procedure indicates that if any of those three conditions applied, that the hourly\nreading and tank monitoring and facility attendance requirements of this procedure applied.\nThus, the existence of Category 1 in the Table of this procedure meant that Product Receipt\nProcedure 11.6.3 encompassed either a loss of power scenario or a loss of communication\nscenario such as occurred in this incident.\nI found that OPS met its burden of establishing that the facility was in a “Category 1” situation\non the night of the incident and the tank monitoring and reading procedures set forth in the\nProduct Receipt Procedure 11.6.3 and its included table clearly applied. When the back-up\npower failed at approximately 8:36 p.m. EDT, the facility was then without communications.\nThus, the tank monitoring and hourly readings and manning requirements described in 11.6.3\napplied, to include the “Facility Category” table requirement in a “Category 1” situation. Under\nthe procedure, these readings may be taken remotely under 11.6.3 (when a facility has power and\nthe control center systems are working properly), or “locally” per the “current Facility Category”\nlisted in the table in 11.6.3. Per that table, during a “Category 1” situation, the facility must be\nfully attended and the tanks at the facility must be monitored to ensure they do not show\nunexpected loss or gain of inventory, and hourly tank readings must be taken. Based on the\nmanner in which Product Receipt Procedure 11.6.3 and the included table expressly apply to\neither a loss of power scenario or a loss of communications scenario, Kiantone’s argument that\nits procedures called for following CRM 2.3.4 to the exclusion of the Product Receipt Procedure\n11.6.3 is flatly contradicted by the plain language of its written procedures.\n10 Pre-hearing submission, at 2.\n11 Under CRM 2.3.4, as it was written then, that procedure required that if the active tank lost power,\ncommunications, or radar/ laser, that the facility must be fully attended, that the tank must be attended during first\nand last hour of receipt, and that readings must be obtained from the tank gauge each hour during receipt.\n\n\n\nPetitioner questioned whether I understood that both of these procedures used the same table and\ncontinued to insist that CRM 2.3.4 operates to the exclusion of Product Receipt Procedure\n11.6.3, arguing in its Petition that applying both procedures could be redundant.12 I continue to\nfind Kiantone’s argument unpersuasive. Section 11.6.3 as it existed at the time of the Accident\nreferences CRM 2.3.4, and instructs that the pump house blender must “[f]ollow additional\nmanning requirements as listed in the table below for situations where the facility or tank may\nchange from Category 3 to a Category 1 or 2 (see Control Room Management procedures CRM\n2.3.4, & CRM 2.3.5 for communications failures)”. Not only do the procedures omit any\ninstruction that Product Receipt Procedure 11.6.3 may be disregarded when communications are\nlost, in fact, the procedures instruct the opposite, that “additional manning requirements” are to\nbe followed in situations where the facility or tank farm may change to a Category 1 situation.13\nPetitioner stated that in its past practice, it had only applied CRM 2.3.4 during unplanned\ncommunications failures and questioned whether I failed to consider a statement by a company\nemployee during the hearing to this effect.14 That is incorrect. In determining the\npreponderance of the evidence, I weighed this statement against the evidence in its totality\nincluding the plain black letter language of Petitioner’s written OM&E procedures. OM&E\nprocedures are put in writing for a reason. The procedures in effect at the time of the incident\nmust be followed by personnel in the field. Otherwise ad hoc practices that deviate from the\nprocedures could result in further risks to safety. An attempt to justify a failure to follow written\nprocedures by expressing someone’s opinion after the fact that the procedures mean something\nother than what they actually say does not overcome the facts and the record in this case.\nPetitioner went on to argue that although it deviated from CRM 2.3.4 in this instance, the\ndeviation occurred with respect to Tank 651 and had no impact on the release from Tank 652.15\nHowever, OPS did not allege a failure to follow CRM 2.3.4 or that Product Receipt Procedure\n11.6.3 applied exclusively. There is no suggestion that even if CRM 2.3.4 had been followed\nwith or without any deviation, it would have been impossible for Kiantone to follow Product\nReceipt Procedure 11.6.3. Written procedures often interact with and contain internal references\nto other procedures. It is not uncommon that more than one procedure may apply during an\nincident and even if some of the same actions would be triggered, there is nothing unlawful\nabout OPS making the choice about which procedure it would cite to bring the allegation as long\nas it meets its burden of proof with respect to cited procedure. Having fully reconsidered all\ninformation in the record, I find that nothing in the Petition warrants any change in the findings\nmade in Item 1 of the Final Order.\nHaving considered Petitioner’s arguments, the preponderance of the evidence in this proceeding\nsupports the finding in the Final Order that Petitioner violated 49 C.F.R. § 195.402(a) by failing\nto follow OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm.\n12 Petition, at 3.\n13 Recommendation, at 7. It should also be noted that even if Petitioner had taken actions fully consistent with\nCRM 2.3.4, doing so would not have made following Product Receipt Procedure 11.6.3 an impossibility.\n14 Petition, at 4.\n15 Petition, at 5.\n\n\n\nItem 2\nThroughout this proceeding, and again in its Petition, Kiantone argues that it met the\nrequirements of its procedures to periodically monitor the dike drain discharge for Tank 652\nwhen the Pump House Operator drove through the facility at approximately 12:50 a.m. EDT.\nPetitioner argues that the finding of violation in the Final Order for this item was erroneous\nbecause it was based on an inference that when Petitioner’s Pump House Operator drove through\nthe facility and observed Tank 652 to be overflowing from the tank vents, the purpose of the\ndrive through the facility was not to investigate a heavy odor of petroleum that has been reported\nand therefore satisfied the requirement for periodic monitoring of the dike drain discharge.\nSpecifically, the Petition stated:\nThe Final Order contends that “the pump house blender’s\ndrive through the facility occurred approximately 20 minutes\nafter a call to him from the personnel ‘sitting at 651 tank’\nindicating there was a strong smell in the air” and that from\nthat point in time the Pump House Operator “[w]ent back to\nthe Farm around 12:50 AM to check on [ ] sitting at 651\ntank.”48 In other words, the Final Order presumes that the\nPump House Operator was not at the Tank Farm to monitor\ndraining water, but rather to investigate the smell of odor, a\npotential sign of release. This contention, however, is belied\nby the signed witness statements.\nIn his witness statement, the Tank Gauger stated that at\n“12:30AM” he “gauged 651 tank and called West Seneca.\nShortly after this the light flickered twice. I let Carl\nAnderson and Ted know that this happened. I also let Ted\nknow there was a heavy smell.” The next time entry in the\nstatement is not until “1:30AM” because the entries are\nmostly hourly.49 The Final Order appears to infer that all of\nthe events listed by the Tank Gauger for 12:30am occurred\nat or around that time (as opposed to anywhere between\n12:30am and 1:30am), including the gauging of Tank 651,\nthe call to West Seneca, the flickering of the lights, and the\ncommunication of the smell of crude oil to the Pump House\nOperator. But this disregards the clear sequencing of\nmultiple events over the span of an hour and the use of a\nphrase like “[s]hortly after this” to indicate a lapse in time.\nFurthermore, it conflates the forms of communication. The\nTank Gauger “called” the control room at West Seneca, 50\nwhereas he “let Ted know there was a heavy smell.”51 The\nFinal Order presumes the Tank Gauger “let” the Pump\nHouse Operator know about the smell via phone call, but\nother witness statements would contradict that inference. For\n\n\n\ninstance, the Pump House Operator’s witness statement\nnowhere says that the Tank Gauger called him to alert him\nto the smell of oil, particularly not between 12:30am and\n12:50am. Rather, the witness statements from both the Pump\nHouse Operator and the incoming Operations Shift\nSupervisor show that they arrived at the Tank Farm at\napproximately 12:50am. These statements show that it was\nafter their arrival when they had a brief conversation with\nthe Tank Gauger at Tank 651 regarding the smell of crude\noil.52 This finding thus rests on a single inference from one\nof three statements and is not a firm basis to suggest that the\nPump House Operator’s return to the Tank Farm (or\nsubsequent monitoring of Tank 651 dike) was directly\nprompted by a phone call from the Tank Gauger about the\nsmell of oil. That is a premise that is unsupported by a careful\nconsideration of the record. In other words, they did not\ncome to the Tank Farm because of the reported odor of oil,\nbut learned of it when they arrived as part of their\nmonitoring.16\nPetitioner argued that the Final Order inaccurately inferred that the Tank Gauger reported the\nheavy crude oil smell and that the statement prepared by its employee for the informal hearing\nproved that the Pump House Operator’s drive through the facility at 12:50 a.m. EDT was not\ndone for the purpose of investigating the crude oil smell. Kiantone stated that the path of the\nvehicle happened to result in the Pump House Operator’s observation of the crude oil overflow\nfrom Tank 652 before he could reach the dike drain valve.17\nWhile this employee statement appears to be somewhat at odds with the contemporaneous\nevidence that a strong odor of petroleum had been reported and was being investigated, even\nconceding that the purpose of the drive through the facility was for purposes other than\ninvestigating the odor, the evidence in the record shows that Kiantone still failed to complete\ndocumented periodic monitoring of the dike drain valve discharge. First, there is no dispute that\nthe dike drain valve was not logged open (nor later logged closed) as required under Kiantone’s\nDike Drain Procedure.18 The evidence shows those logs being updated days after the incident\n(July 9, 2021) rather than when those actions were conducted as required by Kiantone’s\nprocedures.19 Second, while Kiantone may not have defined “periodically” in its procedures,\nPetitioner never refuted the allegation that monitoring of the type required by the procedure (i.e.,\nat the drain discharge) was not conducted at all. Petitioner’s argument is, at best, an attempt at\nexplaining why its employee did not perform the monitoring, even at 12:50 a.m. EDT.\n16 Petition, at 8-9.\n17 Petition, at 7.\n18 See, e.g., Tr. at 96-104 and Kiantone Post-Hearing Brief, at 8.\n19 Tr. at 109: 23-35; 110 1-10. See also Exhibit 21-217159 B-2 and Kiantone Exhibit No. 4 (labeled in Kiantone’s\nPre-Hearing Brief electronic exhibits as ((#24) 652 Dike Drain Log).\n\n\n\nPetitioner’s argument that the required monitoring did not even need to begin until over three\nhours had elapsed since the dike drain began discharging is also inconsistent with the purpose of\nthe monitoring required by the procedure which is to monitor the water discharge from the dike\ndrain for Tank 652 for oil. The purpose of monitoring a dike drain is to identify the escape of\ncrude oil into the containment area if and when it begins to take place. In other words, if the\noperator doesn’t identify the escape of crude oil until it can be seen heavily flowing out of the\ntank vents that happen to be visible from a passing vehicle’s headlamps at night, the operator is\nnot periodically monitoring the dike drain in an effective manner that has any possibility of\nachieving the purpose of dike drain water monitoring down in the containment area. Kiantone’s\nargument that its requirement to perform periodic monitoring of the water flowing from a dike\ndrain valve down in the containment area was met when a passing vehicle could see oil flowing\nout of the tank vents lacks any merit even if it were true that the Pump House Operator was not\ninvestigating the reported heavy crude oil smell as the purpose of his drive through the facility.\nThe failure to complete a written log of the valve opening/closure which would have been done\nif the procedure were being followed is further evidence of this violation. Having fully\nreconsidered all information in the record, I find that nothing in the Petition warrants any change\nin the findings made in Item 2 of the Final Order.\nHaving considered Petitioner’s arguments, the preponderance of the evidence in this proceeding\nsupports the finding in the Final Order that Petitioner violated 49 C.F.R. § 195.402(a) by failing\nto follow its OM&E Procedure Section 5.7.10 – Tank Farm Dike Drain Operations.\nAssessment of Penalty\nWith respect to Item 1, Petitioner contends that rather than being assessed a civil penalty for\nfailure to follow OM&E Procedure 11.6.3 with respect to Tank 652, it should have been assessed\na de minimis penalty for failing to follow CRM 2.3.4 with respect to Tank 651.20 With respect\nto Item 2, Petitioner contends that rather than being assessed a civil penalty for failure to follow\nOM&E Procedure 5.7.10, it should receive a significantly reduced penalty for “a short delay in\nfilling out the logbook.”21 With respect to both items, Petitioner contends that the civil penalties\nassessed in the Final Order were arbitrary and had misapplied the gravity factor because it had\nengaged in cleanup and recovery efforts of the crude oil that was released and the Final Order\nerred in considering any environmental impact in assessing the penalty.\nWith respect to Item 1, I have discussed at length above why Kiantone’s argument that rather\nthan being assessed a civil penalty for failure to follow OM&E Procedure 11.6.3 with respect to\nTank 652, it should have been assessed a de minimis penalty for failing to follow CRM 2.3.4\nwith respect to Tank 651 is unpersuasive. With respect to Item 2, I have also discussed above\nwhy Petitioner’s failure to follow OM&E Procedure 5.7.10 is much more than a mere\nrecordkeeping violation.\n20 Petition, at 2.\n21 Petition, at 10.\n\n\n\nWith regard to whether the Final Order erred in considering any environmental impact in\nassessing the penalty and misapplied the gravity factor because Kiantone had engaged in cleanup\nand recovery efforts, I find Petitioner’s arguments unpersuasive. Under PHMSA’s statutory civil\npenalty framework, the gravity of a violation, which includes its consequences, is required to be\nconsidered by PHMSA. In assessing the civil penalties, the Final Order found that Kiantone’s\nfailure to follow OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank\nFarm (Item 1) was a causal factor in the crude oil spill and the failure to periodically monitor the\ndike drain discharge for Tank 652 on the night of the incident (Item 2) increased the severity\n(i.e., the volume) of the spill.\nWith respect to Item 1, the civil penalty and the gravity factor in particular reflect the fact that\nthis accident was preventable. If Petitioner had followed the applicable procedure and not\nallowed Tank 652 to receive the unplanned delivery of oil, the spill would not have occurred.\nWith respect to Item 2, the civil penalty and the gravity factor in particular reflect the fact that\nthe amount of oil spilled was more severe than it otherwise would have been. If Petitioner had\nproperly monitored the dike drain discharge for Tank 652, it would likely have detected and been\nable to stop the overflow after a few hundred or even a few thousand gallons of oil had spilled.\nInstead, approximately 112,000 gallons of oil were spilled. With respect to Petitioner’s\nargument that the fact a spill occurred should have been irrelevant to the gravity factor because\nthe oil was cleaned up before it could spread beyond the firewater pond, the fact that Kiantone\nhad to clean up its own spill after it occurred is not a mitigating factor. Nothing in the history of\nPHMSA’s civil penalty assessments requires that a spill must spread to further environmental\nareas such as wildlife areas, or other property owners’ land before it can be considered as part of\nthe gravity factor. Moreover, there is nothing unlawful about PHMSA considering the sheer size\nor volume of a given spill in assessing a civil penalty because even if oil-soaked soil is removed\nand taken elsewhere, for example, some environmental impact is involved.\nHaving considered Petitioner’s arguments and the record in this case, I find that the civil penalty\nassessments in this matter, in both the amounts and the factors to be considered in formulating\nsuch, comply with the governing statute at 49 U.S.C. § 60122 and 49 C.F.R. § 190.223.\nAccordingly, I find that nothing in the Petition warrants a reduction in the civil penalties assessed\nin the Final Order for these violations.\nWarning Items\nThe Final Order included three items, Items 4, 5 and 6, that were identified as warning items\npursuant to § 190.205. The warnings were for Petitioner’s alleged failure to follow its Abnormal\nOperation Procedure 18.1.2 and associated form for reporting of abnormal operations;\nPetitioner’s alleged failure to give notice of a September 15, 2018 tank fire to the National\nResponse Center; and Petitioner’s alleged failure to file an accident report on DOT Form 7000-1\nafter discovery of the September 15, 2018 tank fire.\nIn its response to the Notice and again in its Petition, Kiantone took issue with the OPS practice\nof issuing warnings. Petitioner argued that the three warning items were unjustified because they\ncreated the impression of non-compliance without the opportunity for any objection by the\npipeline operator.\n\n\n\nThe authority for OPS to issue warnings comes from 49 C.F.R. § 190.205 which states:\n§ 190.205 Warnings.\nUpon determining that a probable violation of 49\nU.S.C. 60101 et seq., 33 U.S.C. 1321(j), or any regulation or\norder issued thereunder has occurred, the Associate\nAdministrator or a Regional Director may issue a written\nwarning notifying the operator of the probable violation and\nadvising the operator to correct it or be subject to potential\nenforcement action in the future. The operator may submit a\nresponse to a warning, but is not required to. An adjudication\nunder this subpart to determine whether a violation occurred\nis not conducted for warnings.\nOPS has issued warnings to pipeline operators under this authority for decades. The Final Order\nstated that if OPS finds a violation of any of these warning items in a subsequent inspection,\n“Respondent may be subject to future enforcement action.” Thus, a warning item is not a finding\nof violation, is not a prior offense, and involves no penalty. It is perplexing that Petitioner took\nissue with these three items because if they were not mere warnings, the case may have ended up\ninvolving three additional violations and associated civil penalties. To the extent Petitioner is\nconcerned that warnings allege noncompliance without any adjudication, it should be noted that\nthe phrase “Respondent may be subject to future enforcement action” does not mean that the\nevidence of the past conduct referenced in the Notice will be the basis for another Notice.\nAgain, it is not a prior offense. The allegations in a future enforcement action, if any, would\nhave to be based on new evidence that the issue remained present after the Final Order is issued\nand the operator would have a full opportunity to contest such allegations. In short, unless 49\nC.F.R. § 190.205 is repealed, there is nothing stopping OPS from issuing warnings where\nappropriate.\nDue Process Arguments\nThroughout this proceeding, Kiantone has contended that OPS continually deviated from the\nlegal theories initially proposed in the Notice, argued that OPS’ claims were entirely without\nmerit, and questioned whether it could receive fair treatment in an administrative agency\nadjudication as opposed to a judicial proceeding.22 I disagree with these arguments. First, OPS\nhas held to the original allegations in the Notice. Nothing about the allegations in the Notice, or\nthe evidentiary basis put forward by OPS at the time the Notice was issued changed during the\ncourse of this proceeding. The purpose of this proceeding was simply to apply the facts to the\nenforceable requirements, nothing more, nothing less. Petitioner had ample opportunities to\npresent its arguments for all three items at every stage of this proceeding including: (1) in\nresponse to the Notice; (2) during the hearing; (3) following the hearing; and (4) in its Petition.\nPetitioner had a full and fair opportunity to present its arguments. While Items 1 and 2 were not\nwithdrawn as Item 3 was, the reason is that OPS met its burden of proving these two allegations,\nnot any lack of fairness in the process.\n22 Post-hearing submission, at 15.\n\n\n\nPetitioner is correct that the Part 190 administrative adjudication process, which has been in\nplace for decades, does not have all of the same procedures as a jury trial. However, the Part 190\nadministrative adjudication process is consistent with basic constitutional due process including\nthe right to notice of the proceeding, the right to appear and contest the evidence, the right to\ncounsel, and the opportunity for judicial review. With respect to Petitioner’s arguments\nregarding the constitutionality of PHMSA’s governing statutes and underlying enforcement\nregulations, the pipeline safety standards were mandated by Congress and do not arise from\ncommon law predating the relevant statutes at 49 U.S.C. Chapter 601, nor are they predicated on\ntorts.23 Moreover, the Part 190 administrative process and the agency’s authority to assess civil\npenalties for non-compliance was mandated by Congress and is codified at 49 U.S.C. 60122.\nNotably, the U.S. Court of Appeals for the Sixth Circuit recently issued a decision on June 2,\n2023, denying a pipeline operator’s petition for review of a PHMSA pipeline safety enforcement\ncivil penalty matter.24 In that case, the Court upheld PHMSA’s assessment of civil penalties in a\ncontested pipeline safety enforcement case, in which an administrative hearing was also held,\nunder the same procedural statutes and regulations which governed here.25\nPHMSA takes its enforcement responsibilities very seriously and recognizes that its\nadministrative authority must be used judiciously and in a fair manner. At the same time, the\ntransportation of large volumes of flammable and toxic hazardous products by pipeline through\npopulated and environmentally sensitive areas has inherent risks and pipeline operators,\nincluding large, sophisticated companies like Petitioner, are aware that they have chosen to\nengage in a regulated industry that calls for prompt and efficient safety and compliance\nproceedings.\nRELIEF DENIED\nBased on the information provided in the Petition, a review of the record, and for the reasons\nstated above, I am affirming the Final Order without modification.\nThis Decision is the final administrative action in this proceeding.\nJune 3, 2024\n_____________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n23 See Jarkesy v. Sec. & Exch. Comm'n, 34 F.4th 446, 453 (5th Cir. 2022) (citing Atlas Roofing Co. v. Occupational\nSafety & Health Rev. Comm'n, 430 U.S. 442, 458 (1977)). See also American Power & Light Co. v. SEC, 329 U.S.\n90 (1946).\n24 See Wolverine Pipe Line Company v. DOT, PHMSA, Case No. 21-3405 (6th Cir., June 2, 2023); available online\nat: https://www.govinfo.gov/content/pkg/USCOURTS-ca6-21-03405/pdf/USCOURTS-ca6-21-03405-0.pdf.\n25 Id.\n\n12022050NOPV_PHC Hearing Scheduled_12142022_(21-217159)_text.pdf\n\nDecember 14, 2022\nVIA ELECTRONIC MAIL TO: ghopkins@velaw.com and robert.burrough@dot.gov\nMr. George C. Hopkins, Esq.\nCounsel for Kiantone Pipeline Corporation\nVinson & Elkins LLP\n2200 Pennsylvania Avenue, NW, Suite 500\nWashington, DC 20037\nMr. Robert Burrough\nDirector, Eastern Region\nPipeline and Hazardous Materials Safety Administration\n820 Bear Tavern Road, Suite 300\nWest Trenton, NJ 08628\nRe: Notice of Hearing, Kiantone Pipeline Corporation\nCPF No. 1-2022-050-NOPV\nDear Mr. Hopkins and Mr. Burrough:\nIn accordance with 49 C.F.R. § 190.211, an informal hearing will be held regarding the Notice of\nProbable Violation and Proposed Civil Penalty issued by the Pipeline and Hazardous Materials\nSafety Administration in the above-referenced case. The hearing will take place on April 20,\n2023, beginning at 8:30 a.m. Eastern Time.\nThe hearing will be held at the PHMSA Eastern Region office, 820 Bear Tavern Road, Suite\n103, West Trenton, NJ 08628. Upon arrival at the building, attendees will be required to present\nphoto identification to security personnel. A contact phone number for the day of the hearing is\n(609) 989-2171.\nAt least 10 calendar days prior to the hearing (or by April 10, 2023), both parties must submit\nand exchange any additional written materials they intend to present at the hearing and the name\nand email address of each attendee. This information should be provided electronically.\nMaterials not submitted by this date may be excluded. If you have any questions, please","truncated":true,"body_characters":76804}