DESTIN PIPELINE COMPANY, LLC — Notice of Probable Violation

220051002_Final Order_12092005.pdf, page 1Official PDF@ U.S. Deportmenl of Tronsportotion Plpellne qnd Hozoldous moteriols sofety Admlnlrlrqtlon DEC - I m05 400 Seventh Street. S.W. Washington, D.C. 20590 Mr. Jim Lamanna BP Pipelines (North America), Inc. 2800 Torch Parkway Warrenville,IL 60555 Dear Mr. Lamanna: Enclosed is the Final Order issued by the Associate Administrator for Pipeline Safety in the above-referenced case. It makes a finding of violation and assesses a civil penalfy of $3 8,250. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment. Your receipt ofthe Final Order constitutes service of that document under 49 C.F.R. $ 190.5. Sincerely, \ / (f* / w-* James Reynolds Pipeline Compliance Registry Office of Pipeline Safety Enclosure cc: Mr. Gerald E Schau. HSSE & Integrity Manager, BP Pipelines (North America). Inc. Ms. Linda Daugherty, Director, Southem Region, OPS CERTIFIED MAIL - RETURN RECEIPT REOUESTED#

220051002_Final Order_12092005.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND IIAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAT'ETY WASHINGTON, D.C. 20590 In the Matter of ) ) BP Pipelines (North America), Inc., Destin Pipelines ) CPr No. 2-2005-1002 ) _J FINAL ORDER On October 25'28,z}}4,pursuant to 49 U.S.C. $ 60117, a representative of the Office of pipeline Safety (OPS), Southem Region conducted an on-site pipeline safety inspection of Destin Pipeline Company facilities and records in Mississippi, operated by BP Pipelines (North America), Inc.. As a result ofthe inspection, the Director, Southem Region, OPS, issued to Respondent, by letter dated January6,2005,aNoticeofProbableViolationandProposedCivilPenalty(Notice)t. Inaccordance with 49 C.F.R. $190.207, the Notice proposed finding that Respondent had violated 49 C.F.R. Purtlgz and proposed assessing a civil penalty of$45,250 for the alleged violations. Respondent responded to the Notice by letter dated January 15, 2005(Response). Respondent did not contest the allegations ofviolation, but offered an explanation to explain the allegations and provided information concerning the conective actions it has taken. Respondent also requested that the proposed civil penalty be eliminated. Respondent did not request a hearing, and therefore has waived the right to one. FINDINGS OF VIOLATION (Uncontested) In its Response, Respondent did not contest the alleged violations in the Notice. Accordingly, I find that Respondent violated 49 c.F.R. Partl92, as more fully described in the Notice: 49 C.F.R. $ 192.705(a)- failure to have a patrol program to observe surface conditions on and adjacent to the kansmission line right-of-way for indications of leaks, construction activity, and other factors afrecting safety and operation, as Respondent's 2002 and 2003 Aerial Leak and Right-of-way Reports were missing or incomolete. lThis cas", however, is no longer before RSPA for decision. Effective February 20, 2005, the Pipeline and Hazardous Materials Safety Administration (PHMSA) was created to further the highest degree of safety in pipeline transportation and hazardous materials transportation. See, section 108 ofthe Norman Y. Mineta Research and Special Programs Improvement Act (Public Law 108-426, 1 l8 Stat. 2423-2429 (November 30, 2004)). See also, 70 Fed. Reg. 8299 (February 18, 2005) redelegating the pipeline safety functions to the Administraror, PHMSA.#

220051002_Final Order_12092005.pdf, page 349 C.F.R. $ 192.706(a) and (b)- failure to provide records to veriflr that leakage surveys were conducted at intervals not exceeding 15 months, but at least once each calendar year. Respondent did not provide the 2002 records for its Class 1 and Class 2 locations or its Class 3 highway and railroad crossings for the first half of 2003 and2002, and some of the leakage survey work orders (Maximo) were incomplete. 49 C,F.R. $ 192.739(a) (1-4) - failure to test and inspect once each calendar year, at intervals not exceeding 15 months, each pressure limiting station, relief device (except rupture discs), and pressure regulating station and its equipment. Respondent failed to provide records to verifu that the pressure transmitters on the discharge headers at the Pascagoula Compressor Station(CS) were inspected in 2C02 and 2003 and the Sandhill CS in 2002, 2003 and 2004. These transmitters are the primary over pressure protection sensors for the pipeline. 49 C.F.R. $ 192.739(a) (l-4) - failure to test and inspect once each calendar year, at intervals not exceeding l5 months, each pressure limiting station, relief device (except rupture discs), and pressure regulating station and its equipment. Respondent failed to provide inspection records for the Plant Daniel in 2002 and 2003. 49 C.F.R. $ 192.745(a) and (b) - failure to show that each transmission line valve that might be required during any emergency was inspected and partially operated at intervals not exceeding fifteen months, but at least once each calendar year. Respondent's valve list was inconsistent from 2002to 2003 to 2N4. Tlre inconsistencyresulted in fourteen (14) missed inspections in 2003 and twenty-one (21) in 2004. Respondent also had incomplete and insufficient records to demonstrate the completion of sixty (60) valve inspections in 2003 and thirteen (13) in 2004. These findings ofviolation will be considered prior offenses in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. S 60122, Respondent is subject to a civil penalty not to exceed $100,000 per violation for each day of the violation up to a maximum of $ 1,000,000 for any related series of violations. The Notice proposed a total civil penalty of $45,250 for violations of 49 C.F.R. Part 1 92. 49 U'S.C. S 6ll22and 49 C.F.R. $ 1g0.225require that, in determining the amount of the civil penalty, I consider the following criteria: nature, circumstances, and gravity ofthe violation, degree of Respondent's culpability, history of Respondent's prior offenses, Respondent's ability to pay the penalty, good faith by Respondent in attempting to achieve compliance, the effect on Respondent's ability to continue in business, and such other matters as justice may require.#

220051002_Final Order_12092005.pdf, page 4J The Notice in Item I proposed a civil penalty of$7,500, as Respondent failed to have a patrol program to observe surface conditions on and adjacent to the transmission line rlght-of-*iy io. indications ofleaks, construction activity, and other factors affecting safety and operation. At the time of the inspection, Respondent's zooz and,2003 Aerial reak an"tl Right-of-way Reports were missing or incomplete. In its response, Respondent stated that its aerial patrol procedures were amended on January 5, 2004 and, submitted a copy of its new procedures. Respondent contended that the civil penalty should be mitigated because the proceduris address the issue in Itern I of the Notice and demonstrate the corrective measures taken. The aerial patrol violations alleged in the Notice stem from occrurences in 2002and 2003. Respondent's procedures were not amended until January 5,2004. ops was made aware of Respondent'sprocedures during an inspection andnoted the improvements inpatrol reports in2004. Patrolling reduces the risk ofdamage toproperty, peruons and thi environment. without the required documentation an operator carurot adequately demonstrate that it patrolled its pipelines to observe surface conditions on and a-djacent to the transmission line right-of-way for indications of leaks, construction activity, and other factors affecting safety and opeiation. wi'thout this history of patrol records, an operator will have difficulfly detenn'ining areas wirere there are problems that need to be addressed' Respondent's amended procedures fail Io demonstrat" fro-pt corrective measures for the2002 and2003 deficiencies and fail to justifumitigation ofthe civil p"*rty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $7,500, for violation of 49 C.F.R. $ 192.705(a). The Notice in rtem 2 proposed a civil penalty of $10,000, as Respondent failed to provide records to demonstrate that leakage surveys were conducted at intervals noi exceeding I 5 months, but at least once.each calendar year. Respondent did not provide the 2002records for its class 1 and class 2 locations or its Class 3 highway and railroad crirsing* for the first half of2003 and,2002,and some of the leakage survey work orders (Maximo) were incomplete. In itsresponse' Respondent advised that the class 1 and class 2leakagesurveys for 2003 were completed hard copy, and filed at the sand Hill facility instead of pascagoulq MS office. Therefore, the records were not available for review. First' the Notice alleges violations for class 3 locations in 2003. The allegation of violation is unrelated to class 1 *9 9?t: 2 l^earlage surveys for 2003, as stated in Respondent,s response. Second, the allegation ofviolation for itstlass t ana class z locations were in 2002 and not in 2003, as Respondent's response suggested. Therefore, Respondent,s response to ltem 2 ofthe Notice does not address issue' Respondent has not providei any evidence that would justity elimination of the proposed civil penalty. Accordingly, having reviewed the record and cJnsidered the assessment criteria, IassessRespondentaciviipenaltyo-f$l0,000,forviolationof49c.F.R. srgz.706(a)and (b).#

220051002_Final Order_12092005.pdf, page 54 The Notice in Item 3 proposed a civil penalty of $14,000, as Respondent failed to provide records to verifu that the pressure transmitters on the discharge headers at the Pascagoula and the Sandhill compressor stations were inspectedin2002 and 2003. These transmitters are the primary over pressure protection sensors for the pipelines. Along with its response, Respondent submitted documentation demonstrating that the two pressure transmitters for the Pascagoula Compressor Station (CS) were inspected in April 2004. Respondent also submitted documentation that two pressure transmitters for the Sandhill CS were inspected in January 2005. Although Respondent's submission addressed the2004 inspection at the Pascagoula CS, it failed to provide records to demonstrate that it inspected the Pascagoula CS in 2002 and 2003. Respondent also failed to prcvide records to show the Sandhill CS was inspected in2002,2003 and 2004. It is unciear why Respondent submitted January 2005 inspection records, which was not included in the Notice. The primary objective of the Federal pipeline safety standards is safe operation of pipeline systems. Failure to conduct inspections at the specified intervals to find and to correct any deficiencies could adversely affect public safety. Based upon the documentation submitted by Respondent demonstrating thatthe two pressure hansmitters forthe Pascagoula Compressor Station (CS) were inspected in April 2004, it is determined that the proposed civil penalty is reduced proportionately from $ 14,000 to $ 1 0,000. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $ 10,000 for failure to demonstrate that it inspected the Pascagoula CS in 2002 and 2003 and the Sandhill CS in 2002, 2003 and 2004, as required by 49 C.F.R. $192.739 (a). The Notice in Item 4 proposed a civil penalty of$5,000, as Respondent failed to provide records to demonstrate that it inspected its Gulf South Interchange in 2002, Trursco Interchange in 2002, Tennessee Gas Interchan ge in2002 and Plant Daniel in 2002 and 2003, as required by 49 C.F.R. $ te2.73e(a) Q-\. Respondent did not contest the allegations ofviolation, but offered an explanation to explain the allegations and provided information. Along with the Response, Respondent submitted regulator station inspection records for the Plant Daniel Interchange in2004, which are not at issue. The violation applied to the 2002 and 2003 inspection records for the Plant Daniel Interchange. Respondent also submitted records to show inspections for the Gulf South (Kuch) and Tennessee Gas Interchange in 2002, and Williams' station 80 in 2002. Respondent contended that the Williams' records affirm the Transco Interchange inspection for 2002. Based upon the documentation submitted, it is determined that Respondent inspected the Gulf South, Transco and Tennessee Gas Interchanges in 2002, it is determined that the proposed civil penalty is reduced proportionately from $5,000 to $2,000. The primary objective of the Federal pipeline safety standards is safe operation of pipeline systems. Failure to conduct inspections at the specified intervals to find and to correct any deficiencies could adversely affect public safety. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $2,000 for failure to provide records to demonstrate that it inspected the Plant Daniel in 2002 and2003, as required by 49 C.F.R, 5192.739(a) 0-D.#

220051002_Final Order_12092005.pdf, page 65 The Notice in ltem 5 proposed a civil penalty of $8,750, as Respondent failed to show that each transmission line valve that might be required during any emergency was inspected and partially operated at intervals not exceeding fifteen months, but at least once each calendar year. Respondent's valve list was inconsistent from 2002to 2003 to 2004, which included fourteen (14) missed inspections in 2003 and twenty-one Ql) in 2004. Respondent also had incomplete and insufficient (Maximo) records to demonstrate the inspection of sixty (60) valves in 2003 and thirteen (13) valves in2004. In its response, Respondent posed that its Maximo records are pennanently archived upon closure and historical changes cannot be made to the status. Respondent explained that 8 ofthe fourteen (14) missing valve inspections in 2003 had incorrect job plans in it's Maximo work orders and that these work orders were conected by September 1,2004. Respondent further explained that the remaining 6 missing valve inspections for 2003 w-ere corrected as of January 19, 2005. Although Respondent stated that factors whichresulted in 8 missing valve inspections for 2003 were correct by September 1,2004, Respondent failed to explain why this information was not provided at the time of the inspection in late October 2004. Respondent also failed to provide a sufficient explanation for the 2l missing valve inspections in 2004. The failure to complete inspections and tests of valves that may be required during an emergency could lead to valve failure and the inability to shut-in the pipeline should a failure occur. This could result in harm to people and/or property along right-of-way. Respondent has not provided any evidence that would justifr elimination or reduction ofthe proposed civil penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $8,750, for violation of 49 C.F.R. $192.745(a) and (b). Accordingly, having reviewedtherecord and consideredthe assessment criteria,I assess Respondent a total civil penalty of $3 8,250. A determination has been made that Respondent has the ability to pay this penalty without adversely affecting its ability to continue business. Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. S 89.21(bX3)) require this payment be made by wire transfer, through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are contained in the enclosure. After completing the wire transfer, send a copy ofthe electronic funds transfer receipt to the Office of the Chief Counsel (DCC-I), Pipeline and Hazardous Materials Administration, Room 8417, U.S. Department ofTransportation, 400 Seventh Street, SW, Washington, DC 20590-0001. Questions concerning wire transfers should be directed to: Financial Operations Division (AMZ- 120), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 25082, Oklahorna City, OK 73125'. (405) 954-8893. Failure to pay the $38,250 civil penalty will result in accrual ofinterest at the current annual rate in accordancewith3lU,S.C.S37l7,31C.F.R.'901.9and49C,F.R.S89.23. Pursuanttothosesame#

220051002_Final Order_12092005.pdf, page 76 authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within I l0 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in an United States District Court. WARNING ITEM The Notice did not propose a civil penalty or corrective action for Items 6, 7, and 8 in the Notice; therefore, these are considered waming item. Respondent is wamed that if it does not take appropriate action to correct these items, enforcement action will be taken if a subsequent inspection reveals a violation. Under 49 C.F.R. $ 190.215, Respondent has a right to Petition for Reconsideration of this Final Order. The petitioir must be received within 20 days of RespcnCent's receipt of this Final Order and must contain a brief statement of the issue(s). The filing of a petition automatically stays the payment of any civil penalty assessed. However, if Respondent submits pal.rnent for the civil penalty, the Final Order becomes the final administrative decision and the right to Petition for ideration is waived. The terms and conditions ofthis Final Order are effective upon receipt. DEC - I mos b q^for Pipeline Safety Administrator Date Issued#