SOUTHERN STAR CENTRAL GAS PIPELINE, INC — Notice of Probable Violation

case documentOfficial PDFCPF_NO_3_2005_1015.pdf#

320051015_final order_04262006_text.pdf, page 1Official PDFU S oepartment of Transportation Pipeline and Hazardous Materials Satety Administration sag seventh siieei s w Washington, D C 20590 APB 2 6 i Mr Bob Bahnick Senior Vice-President Southern Star Central Gas Pipeline, Inc 4700 Highway 56 Owensboro, KY 42301 RE CPF No 3-2005-1015 Dear Mr Bahnick Enclosed is the Final Order issued by the Associate Admmistrator for Pipeline Safety in the above-referenced case It makes findings of violation and assesses a civil penalty of $295, 000 The penalty payment terms are set forth in the Final Order This enforcement action closes automatically upon payment Your receipt of the Final Order constitutes service of that document under 49 C F R I't 190 5 James Reynolds Pipehne Compliance Registry Office of Pipeline Safety Enclosure cc Nicholas Hetman, Counsel for Southern Star Ivan Huntoon, Director, Central Region, OPS CERTIFIEO MAIL - RETIJRN RECEIPT RE UESTEII#

320051015_final order_04262006_text.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON) D. C 20590 In the Matter of Southern Star Central Gas Pipehne, Inc, Respondent. ) ) ) ) ) CPF No 3-2005-1015 FINAL ORDER On September 16, 2003, pursuant to 49 U S C 5 60117, a representative of the Pipeline and Hazardous Materials Safety Administration(PHMSA) initiated an investigation of a report by the State of Kansas of an August 5, 2003 incident The incident involved a release of natural gas from Respondent's pipehne system As a result of the investigation, the Director, Central Region, OPS, issued to Respondent, by letter dated August 8, 2005, a Notice of Probable Violation and Proposed Civil Penalty (Notice) In accordance with 49 C F R tl 190 207, the Notice proposed finding that Respondent had violated 49 C F R $192 and proposed assessing a civil penalty of $394, 000 for the alleged violations Respondent responded to the Notice by letter dated, September 8, 2005 (Response) Respondent did not contest the allegations of violation, but offered an explanation and requested that the proposed civil penalty be reduced or eliminated Respondent requested a hearing The heanng was held on February 2, 2006 in Kansas City, Missouri FINDINGS OF VIOLATION Uncontested Respondent did not contest the alleged violations of 549 C F R $192 in Items 1, 2 and 3 of the Notice Accordingly, I find that Respondent violated 49 C F R Part 195, as more fully described in the Notice 49 C F R 5192 605(a) — failure to follow the procedural manual for conducting operations and maintenance activities and for emergency response at the Kechi High Pressure Station 49 C F R $192 619(a)(1) — failure to operate pipehne components at a pressure that does not exceed the design pressure of the weakest element in a pipeline segment that formed the basis for the established MAOP The Instromet Rotary#

320051015_final order_04262006_text.pdf, page 3meter was operated at approximately 350 psig, well in excess of 110% of the MAOP 49 C F R $192 739 (a-d) — 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 determine that the regulators were in good mechanical condition rehable, and set at the correct pressures The monitor regulator failed on June 14, 2003, as a result of a foreign oblect in the line These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent ASSESSMENT OF PENALTY Under 49 U S C 5 60122, Respondent is sublect 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 senes of violations The Notice proposed a $394, 000 civil penalty for violations of 49 C F R Part 192 49 U S C 5 60122 and 49 C F R 5 190 225 require that, in determining the amount of the civil penalty, I consider the following criteria nature, circumstances, and gravity of the violation, degree of Respondent's culpabdity, 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 Item I of the Notice proposed a civil penalty of $94, 000 for violation of 49 C F R 5 192 605, as Respondent failed to follow procedures for responding to, investigating, and correcting the cause of each abnormal operation, including the operation of any safety device, as required by 5192 605(c)(1) Respondent did not contest the allegation of violation Respondent acknowledged that during the penod from November 18, 2002 until June 14, 2003 its personnel responsible for correcting abnormal operating conditions on regulating facilities, inspected the facihties but failed to follow procedures However, Respondent explained that additional overpressure protection equipment was in place downstream of the failed regulators Respondent submitted additional documentation to demonstrate that its facihty serves two distinct distnbution systems Respondent showed that the overpressure protection eqmpment in place downstream was rated for a pressure sufficient to safeguard the facihties from over pressunzation Although the equipment is not owned or maintained by Respondent, it is rated for a pressure sufficient to safeguard the Wichita Heights High School facihty from over pressunzation The pnmary oh)ective of the Federal pipeline safety standards is safe operation of pipeline systems Failure to conduct inspections to find and correct deficiencies could adversely affect pubhc safety Based upon the testimony and documentation presented by Respondent at the hearing, that additional overpressure protection equipment was downstream of the failed regulators, it is determined that the proposed civil penalty be reduced from $94, 000 to $70, 000#

320051015_final order_04262006_text.pdf, page 43 Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $70, 000 for violation of 49 C F R 5 192 605 Item 2 of the Notice proposed a civil penalty of $200, 000 for violation of 49 C F R 5192 619(a)(1), as Respondent failed to operate pipehne components at a pressure that does not exceed the design pressure of the weakest element in a pipeline segment that formed the basis for the estabh shed MAOP The Instromet Rotary meter was operated at approximately 350 psig, well in excess of 110'/o of the MAOP Respondent did not dispute the fact that it failed to hmit the school's maximum allowable operating pressure of its pipehne However, Respondent presented mitigating evidence at the heanng to show that the gravity of the release did not extend to possible over pres sunzation of the Wichita Heights facilities Therefore, it is determined that the proposed civil penalty be reduced from $200, 000 to $150, 000 The pnmary obl ective of the Federal pipehne safety standards is public safety Failure to operate pipehne components at a pressure that does not exceed the design pressure of the weakest element in a pipehne segment could adversely affect the safety of the pipehne Accordingly, having reviewed the record and considered the assessment critena, I assess Respondent a civil penalty of $150, 000 for violation of 49 C F R $192 619(a)(1) Item 3 of the Notice proposed a civil penalty of $100 000 for violation of 49 C F R 5192 739 (a- d), as Respondent failed to inspect and test each pressure hmiting station, rehef device, and pressure regulating station and its eqmpment at intervals not exceeding 15 months, but at least once each calendar year Respondent acknowledged that it failed to perform an adequate inspection of its regulating and overpressure protection eqmpment to determme several factors as required by federal regulations Respondent's failure to perform an adequate inspection resulted in an unintended release of gas, damage to Respondent's gas facihties, and a service outage involving inherent safety nsks Dunng the hearing, Respondent presented mitigating evidence to show that the gravity of the release did not extend to possible over pressunzation of the Wicluta Heights school's facthttes and that the actual consequences and threats were primanly limited to Respondent's facihties Therefore, it is determined that the proposed civil penalty be reduced from $100, 000 to $75, 000 Accordingly, having reviewed the record and considered the assessment cntena, I assess Respondent a civil penalty of $75, 000 for violation of 49 C F R 5192 739 Accordmgly, having reviewed the record and considered the assessment cntena, I assess Respondent a total civil penalty of $295, 000 A determination has been made that Respondent has the ability to pay this penalty without adversely affecting its abihty to continue business Payment of the civil penalty must be made wtthtn 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 (Feawtre), to tne 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-300), Federal Aviation Administration, Mike Monroney Aeronautical Center, P 0 Box 25082, Oklahoma City, OK 73125, (405) 954-8893#

320051015_final order_04262006_text.pdf, page 54 Failure to pay the $295, 000 civil penalty will result in accrual of interest at the current annual rate inaccordance with31U S C ) 3717, 31C FR ) 901 9and49C F R $ 8923 Pursuanttothose same authonties, 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 appropnate action in a United States Distnct Court Failure to comply with this Final Order may result in the assessment of civil penalties of up to $100, 000 per violation per day, or in the referral of the case for ludicial enforcement Under 49 C F R 11 '190 215, Respondent has a nght to submit a Petition for Reconsideration of tins Final Order The petition must be received within 20 days of Respondent's receipt of tins Final Order and must contain a bnef statement of the issue(s) The filing of the petition automatically stays the payment of any civil penalty assessed However if Respondent submits payment for the civil penalty, the Final Order becomes the final administrative decision and the nght to petition for reconsideration is waived The terms and conditions of this Final Order are eff ve on receipt APR 2 8 Z08 ace sso Ge d ate Administrator ipeline Safety Date Issued#

320051015_final order_04262006_text.pdf, page 6ADDENDUM C INSTRUCTIONS FOR ELECTRONIC FUNDS TRANSFER TO THE FEDERAL AVIATION ADMINISTRATION U S DEPARTMENT OF TRANSPORTATION 1 RECEIVER'S ABA NO 021030004 3 SENDING BANK ARB NO (Provided by sending bank) 5 AMOUNT 7 RECEIVER NAME TREAS NYC 9 BENEFICIARY BF - AGENCY LOCATION CODE BNF=/ ALC 69-14-0001 2 TYPE SUBTYPE (prov&ded by sendmg bank) 4 SENDING BANK REF NO (Prov&ded by send&ng bank) 6 SENDING BANK NAME (Prov&ded by send&ng bank) 8 PRODUCTCODK (Normally CTR, or as prov&ded by sendmg bank) 10 REASONS FOR PAYMENT Example PHMSA - Case /// Ticket Number/P&pelme Assessment number INSTRUCTIONS. You, as sender of the wire transfer, must provide the sending bank with the &nformat&on for Block (1), (5), (7), (9), and (10) The mformat&on prov&ded &n blocks (I), (7), and (9) are constant and rem&un the same for all wire transfers to P&pelme and Hazardous Mater&als Safety Adm&n&strat&on, Department of Transportat&on Block ¹I - RECEIVER ABA NO. - 021030004". Ensure the send&ng bank enters this nme-d&git identification number, &t represents the rout&ng symbol for the U S Treasury at the Federal Reserve Bank in New York Block ¹5 — AMOUNT — You as the sender prov&de the amount of the transfer Please be sure the transfer amount is punctuated w&th commas and a decimal pomt EXAMPLE, $10, 000 00 Block ¹7 - RECEIVER NAME - "TREAS NYC " Ensure the sendmg bank enters th&s abbrev&at&on, &t must be used for all w&re transfer to the Treasury Department Block ¹9 — BENEFICIARY- AGENCY LOCATION CODE -"BFN=/ALC69140001" Ensures the sendmg bank enters th&s mformation This &s the Agency Location Code for P&peline and Hazardous Mater&als Safety Admmistration, Department of Transportat&on Block ¹10 - REASON FOR PAYMENT - "AC-payment for PHMSA Case ¹ / To ensure your w&re transfer is credited properly, enter the case number/t&cket number or P&pehne Assessment number, and country " Note. — A wire transfer must comply w&th the format and mstract&ons or the Department cannot accept the w&re transfer You, as the sender, can assist th&s process by notifying, at the time you seno the wire transrer to the General Account&ng D&vision (405) 954-8893#