COLONIAL PIPELINE CO — Notice of Probable Violation

party submissionOfficial PDF220095001_operator_response_05112009.pdf#

220095001_nopv notice_04082009_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION and PROPOSED CIVIL PENALTY CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 8, 2009 Timothy Felt President and Chief Executive Officer Colonial Pipeline Company 1185 Sanctuary Parkway, Suite 100 Alpharetta, GA 30009 CPF 2-2009-5001 Dear Mr. Felt: Between November 17 and December 12, 2008, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code conducted an onsite pipeline safety inspection of your pipeline facilities and records in North Carolina, Mississippi, Alabama, and Georgia. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations, Part 195. The items inspected and the probable violations are: §195.573 What must I do to monitor external corrosion control? (e) Corrective action. You must correct any identified deficiency in corrosion control as required by Sec. 195.401(b). However, if the deficiency involves a pipeline in an integrity management program under Sec. 195.452, you must correct the deficiency as required by Sec.195.452(h). §195.401 General requirements. (b) Whenever an operator discovers any condition that could adversely affect the safe operation of its pipeline system, it shall correct it within a reasonable time. However, if the condition is of such a nature that it presents an immediate hazard to persons or property, the operator may not operate the affected part of the system until it has corrected the unsafe condition.#

220095001_nopv notice_04082009_text.pdf, page 2Discovered non-hazardous deficiencies as a result of corrosion control surveys, as required by §195.573(e). Colonial did not correct within a reasonable time. PHMSA generally considers a “reasonable time” to be the maximum time allowed between required annual cathodic protection surveys (15 months maximum from discovery of a deficient survey reading). A. Line 401-01 (Alabama) Milepost 5161+79, Woods Rd. 03/15/2006: -0.800v 05/22/2007: -0.810v 02/16/2008: -0.811v 09/12/2008: -1.224v B . Line 402-01 ( Alabama) Milepost 5553+10, MBV @ Pelham Station. 05/23/2006: -0.608v 05/23/2007: -0.530v Remarks: Ground bed depleted, new ground bed installed in December 2007. 02/11/2008: -0.920v C. Line 403-01 (Alabama) Milepost 10042+11, Co Rd 437. 05/20/2006: -0.432v 05/17/2007: -0.539v 02/13/2008: -2.246v Remarks: Ground bed depleted, corrected in December 2007. Milepost 10061+54, Co Rd. 05/20/2006: -0.832v 05/17/2007: -0.685v 02/13/2008: -1.517v Remarks: Ground bed depleted, corrected in December 2007. Milepost 10062+44, SNG XING 14”. 05/20/2006: -0.520v 05/17/2007: -0.486v 2#

220095001_nopv notice_04082009_text.pdf, page 302/13/2008: -1.176v Remarks: Ground bed depleted, installed a new ground bed in December 2007. Milepost 10064+94, Span TS. Remarks: Ground bed depleted. New bed was installed at the end of 2007. 05/20/2006: -0.632v 05/17/2007: -0.532v 02/13/2008: -1.285v Remarks: Ground bed depleted, corrected in December 2007. D. Line 403-02 (Alabama) Milepost 10021+78, Co Rd 437, Remarks: Ground bed depleted, new ground bed was installed at the end of 2007. 05/20/2006: -0.555v 05/17/2007: -0.637v 02/13/2008: -2.555v Remarks: Ground bed depleted, corrected in December 2007. Milepost 10041+56, SNG XING 12”. Remarks: Ground bed depleted. New bed was installed at the end of 2007. 05/20/2006: -0.537v 05/17/2007: -0.477v 02/13/2008: -2.012v Remarks: Ground bed depleted, corrected in December 2007. Milepost 10042+12, SNG XING 14”. Remarks: Ground bed depleted. New bed was installed at the end of 2007. 05/20/2006: -0.624v 05/17/2007: -0.431v 02/13/2008: -1.650v Remarks: Ground bed depleted, corrected in December 2007. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation and has recommended that you be preliminarily assessed a civil penalty of $22,500 as follows: 3#

220095001_nopv notice_04082009_text.pdf, page 4Item number Penalty 1 $ 22,500 Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 2-2009-5001 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Linda Daugherty Director, Southern Region Pipeline and Hazardous Materials Safety Administration Enclosure: Response Options for Pipeline Operators in Compliance Proceedings 4#

220095001_FinalOrder_11052010_text.pdf, page 1Official PDFNOV 5 2010 Mr. Timothy Felt President and Chief Executive Officer Colonial Pipeline Company 1185 Sanctuary Parkway, Suite 100 Alpharetta, GA 30009 Re: CPF 2-2009-5001 Dear Mr. Felt: Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of violation and assesses a civil penalty of $22,500. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Doug Belden, Vice President and General Manager-Operations, Colonial Pipeline Co. Mr. Wayne Lemoi, Director, Southern Region, PHMSA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 1160 0001 0043 9436]#

220095001_FinalOrder_11052010_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 _____________________________ ) In the Matter of ) ) Colonial Pipeline Company, ) CPF No. 2-2009-5001 ) Respondent. ) _____________________________) FINAL ORDER Between November 17 and December 12, 2008, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of Colonial Pipeline Company (Colonial or Respondent) in North Carolina, Mississippi, Alabama, and Georgia. Based in Alpharetta, Georgia, Colonial Pipeline delivers gasoline, home heating oil, aviation fuel and other refined petroleum products throughout the Southern and Eastern United States. As a result of the inspection, the Director, Southern Region, OPS (Director), issued to Respondent, by letter dated April 8, 2009, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Respondent had violated 49 C.F.R. §§ 195.573(e) and 195.401(b) and proposed assessing a civil penalty of $22,500 for the alleged violation. Respondent responded to the Notice by letter dated May 11, 2009 (Response). The company did not contest the allegations of violation but provided an explanation of its actions. Respondent did not request a hearing and therefore has waived its right to one. FINDING OF VIOLATION In its Response, Colonial did not contest the allegations in the Notice that it violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. §§ 195.573(e) and 195.401(b), which state:#

220095001_FinalOrder_11052010_text.pdf, page 32 § 195.573 What must I do to monitor external corrosion control? (a) . . . . (e) Corrective action. You must correct any identified deficiency in corrosion control as required by § 195.401(b). However, if the deficiency involves a pipeline in an integrity management program under § 195.452, you must correct the deficiency as required by § 195.452(h). § 195.401 General requirements. (a) . . . . (b) Whenever an operator discovers any condition that could adversely affect the safe operation of its pipeline system, it shall correct it within a reasonable time. However, if the condition is of such a nature that it presents an immediate hazard to persons or property, the operator may not operate the affected part of the system until it has corrected the unsafe condition. The Notice alleged that Respondent violated 49 C.F.R. §§ 195.573(e) and 195.401(b) by failing to take actions within a reasonable time to correct identified deficiencies in corrosion control. Specifically, the Notice alleged that Colonial failed to take corrective actions to resolve cathodic protection (CP) deficiencies reflected in the company’s monitoring records for Alabama Lines 401-01, Line 402-01, Line 403-01, and Line 403-02 for the 2006 to 2008 calendar years. In its Response, Colonial did not contest the allegations of violation but explained that it had an ongoing corrosion control program in place that addressed test readings of CP levels that did not meet one or more of its criteria. Colonial contended that it adhered to the continuing use of successfully applied criteria on its pipeline system, referenced in the National Association of Corrosion Engineers International Standard RP 0169. Respondent explained that following the identification of a large number of deficient areas in Alabama in 2006, it investigated, tested, prioritized and developed corrective actions to address the risks to its pipeline in a timely manner. Respondent also explained that extensive CP upgrade and recoating projects were completed during 2007 and 2008 to address CP deficiencies on its pipelines throughout Alabama, including at locations 401-01, 402-01, 403-01, and 403-02 cited in the Notice. Respondent advised that re-surveys performed in February 2008, after the CP upgrade and recoating projects, confirmed that locations 401-01, 402-01, 403-01, and 403-02 were in fact remediated. Colonial also advised that remediation of location 401-01 was completed and met its criteria for CP by September 2008. Colonial contended that all the remediation work was completed prior to the inspection by PHMSA in November-December of 2008. Colonial stated that many sub-standard CP areas are addressed each year along Colonial’s pipelines, but that the time required to determine if a cathodic protection deficiency exists (discovery of a deficiency) and make repairs varies, based on the conditions at each site and the number of deficiencies discovered in a particular year. Colonial advised that it had increased the number of employees assigned to evaluate CP systems and had realigned its corrosion control employees with the maintenance employees and contractors responsible for making repairs.#

220095001_FinalOrder_11052010_text.pdf, page 43 Respondent did not contest the allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. §§ 195.573(e) and 195.401(b) by failing to take corrective actions within a reasonable time to correct identified deficiencies in corrosion control. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related series of violations. In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $22,500 for the violations cited above. Item 1: The Notice proposed a civil penalty of $22,500 for Respondent’s violation of 49 C.F.R. §§ 195.573(e) and 195.401(b), for failing to take corrective actions within a reasonable time to remedy identified deficiencies in its corrosion control. Corrosion is one of the most threatening conditions to the integrity of pipelines, and, if left uncorrected, can result in pipeline failures. An adequate level of cathodic protection of buried pipelines is required to arrest corrosion and prevent rupture. Respondent did not contest this allegation of violation. While Colonial has presented information regarding the various steps it has taken to implement an effective CP program, it has not provided any basis for reducing the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of $22,500 for violations of 49 C.F.R. §§ 195.573(e) and 195.401(b). Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) 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. Questions concerning wire transfers should be directed to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, OK 73125. The Financial Operations Division telephone number is (405) 954-8893. Failure to pay the $22,500 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. §3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 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 a United States District Court.#

220095001_FinalOrder_11052010_text.pdf, page 54 Under 49 C.F.R. § 190.215, Respondent has the right to submit a Petition for Reconsideration of this Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA will accept petitions received no later than 20 days after receipt of service of the Final Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of any civil penalty assessed but does not stay any other provisions of the Final Order, including any required corrective actions. If Respondent submits payment of the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#