AMOCO OIL CO — Notice of Probable Violation

party submissionOfficial PDF320055030_Petition for Reconsideration_05182006.pdf#

case documentOfficial PDFCPF_NO_3-2005-5030.pdf#

case documentOfficial PDFCPF_NO_3_2005_5030.pdf#

320055030_final order_04262006_text.pdf, page 1Official PDFU. S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 400 Seventh Street, S W. Washington D. C. 20590 APR 26 Z0o Mr. Jim Lamanna President BP Pipeline (North America) Inc. 28100 Torch Pkwy Warrenville, IL 60555-3938 Re: CPF No. 3-2005-5030 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 penalty of $50, 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 under 49 C. F. R. 5 190. 5. Sincerely, James Reynolds Pipeline Compliance Registry Office of Pipeline Safety Enc1o sure CERTIFIED MAIL — RETURN RECEIPT RE UESTED#

320055030_final order_04262006_text.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 In the Matter of BP Pipelines (Worth America) Inc. , Respondent CPF No. 3-2005-5030 FINAL ORDER Pursuant to 49 U. S. C. $ 60117, representatives of the Pipeline and Hazardous Materials Safety Administration's (PHMSA) Office of Pipeline Safety investigated a safety-related condition report filed by Respondent on January 4, 2005 for its Manhattan to O'Hare 8-inch hazardous liquids pipeline. As a result of the inspection, the Director, Central Region, issued to Respondent, by letter dated July 11, 2005, 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 violated 49 C. F. R. $ 195. 452(h)(2) and proposed assessing a civil penalty of $50, 000 for the alleged violation. Respondent responded to the Notice by letter dated August 26, 2005. Respondent contested the allegation of violation and requested a hearing. The hearing was held on January 20, 2006 in Kansas City, Missouri. After the hearing, Respondent provided additional information by letter dated February 16, 2006, including information referenced during the hearing. FINDING OF VIOLATION The Notice alleged Respondent violated 49 C. F. R. $ 195. 452(h)(2) by failing to obtain sufficient information to discover a condition that presented a potential threat to the integrity of the pipeline within 180 days of an integrity assessment. In November 2003, Respondent performed two internal inspections on the Manhattan to O'Hare 8-inch hazardous liquids pipeline. Respondent ran a geometry tool on November 12, 2003, and a metal-loss tool on November 21, 2003. Due to problems with the metal-loss tool, Respondent ran a second metal-loss tool on August 11, 2004. On October 14, 2004, Respondent received the preliminary results for both the November 2003 geometry and August 2004 metal-loss tools. Respondent received the final integrated report for the runs on December 20, 2004 The final report identified a topside dent measuring approximately 10 5% of the nominal pipe diameter, an iminediate repair condition under 49 C. F. R $ 195. 452(h)(4)(i)(D) Respondent submitted a safety-related condition report on January 4, 2005 and completed repairs to the dent on January 21, 2005.#

320055030_final order_04262006_text.pdf, page 3Section 195. 452(h)(2) requires Respondent to promptly, but no later than 180 days after an integrity assessment, obtain sufficient information to discover a condition and determine if the condition presents a potential threat to the integrity of the pipeline. Respondent discovered the condition on December 20, 2004 when Respondent received the final report from the tool vendor, approximately 13 months (404 days) after the November 2003 geometry tool integrity assessment Accordingly, the Notice alleged Respondent failed to identify the condition within 180 days of the November 12, 2003 geometry tool integrity assessment. The Notice also alleged Respondent has previously violated $ 195. 452(h)(2). ' In its responses and at the hearing, Respondent asserted that it complied with $ 195. 452(h)(2) because that regulation required Respondent to discover the topside dent within 180 days of the August 2004 metal loss tool run, not the November 12, 2003 geometry tool run. Respondent explained that it had followed its written integrity management procedures for data integration. Respondent's procedures "specified that discovery of a reportable condition would occur when both the deformation tool and corrosion tool runs were completed and the combined report was received and reviewed by BP personnel. " Accordingly, Respondent instructed the tool vendor to integrate data from both tool runs when reporting results of the integrity assessments. Because the metal loss tool run was delayed, Respondent did not receive the final integrated report identifying the topside dent until December 20, 2004. Respondent explained it was not able to discover the topside dent sooner, because it had not received the necessary information from the tool vendor. Respondent insisted that its data integration practices complied with g 195. 452(h)(2) and PHMSA guidance, specifically, PHMSA Integrity Management Program Frequently Asked Questions (FAQs). Respondent asserted that pursuant to PHMSA FAQ 4. 13, the 180-day period for discovery did not begin until the August 2004 metal loss tool run, because the geometry and metal-loss tool runs were a scheduled series of tool runs. Respondent noted that it discovered the topside dent within 180 days of the August 2004 metal-loss tool run. The FAQ 4. 13 cited by Respondent addresses "baseline assessments" and the requirement at $ 195. 452(d)(1) that operators meet a regulatory deadline for performing a baseline assessment. Under FAQ 4. 13, a baseline assessment is not complete (for purposes of compliance with the deadline) until the last tool run of a scheduled series of runs is completed. Contrary to Respondent's position, the FAQ reminds operators that "Ie)valuation of the assessment results PHMSA's predecessor agency, the Research and Special Programs Administration (RSPA), issued Notice of Probable Violation (NOPV) CPF No 5-2003-5031 on December 15, 2003 allegmg Respondent violated g 195 452(h)(2) Respondent did not contest that allegation and on May 16, 2003, RSPA issued a Final Order finding Respondent violated $ 195 452(h)(2) as alleged in the NOPV Response at p. 1, August 26, 2005. PHMSA publishes answers to frequently asked questions concernmg compliance with the mtegrity management regulations at htt II nmis hmsa dot ovIiim. Answers to FAQs are not rules, but provide informal guidance to the regulated community about how to implement their integrity management programs in accordance with the requirements of 49 C F R $ 195 452.#

320055030_final order_04262006_text.pdf, page 4must still be performed in accordance with the requirements established for these activities" and operators will be expected to evaluate results within 180 days even in those instances in which only a partial assessment is performed. Accordingly, Respondent should have promptly, but within 180 days, obtained information &om the November 12, 2003 geometry tool run notwithstanding the delay in the metal loss tool run. Section 195. 452(h)(2) places the burden on Respondent to obtain sufficient information from the tool vendor. Respondent also cited FAQ 6. 6. That guidance recognizes in some situations an operator may run a deformation tool and a metal-loss tool at different times and integrate the data. The topic of FAQ 6 6 is the effect of a separation in time between two runs when calculating a "reassessment interval, " which is not germane to the issue in the present case. Respondent also quoted the preamble to 49 C. F. R. $ 195. 452(h)(2) to show that "discovery" is flexible. Although PHMSA's predecessor agency, the Research and Special Programs Administration (RSPA), stated in the preamble of the rule that discovery is flexible and varies depending on circumstances, RSPA also stated there is "an upper limit on the length of the discovery process. An operator must promptly obtain the information from an assessment to ensure that remediation of a condition which could threaten a pipeline's integrity occurs soon after an integrity assessment. The discovery process (the process for obtaining the adequate information) will end 180 days after an integrity assessment unless an operator can demonstrate that the 180-day period is impracticable. " Respondent has not demonstrated the 180-day period was impracticable. Accordingly, Respondent should have complied with the 180-day upper limit on the length of the discovery process. The November 12, 2003 geometry tool run constituted an integrity assessment, which obligated Respondent to obtain promptly, but no later than 180 days aAer the assessment, the assessment data and determine whether conditions presented a threat to the pipeline. The data from the geometry tool run would have been sufflicient to identify the topside dent measuring approximately 10. 5% of the nominal pipe diameter had Respondent obtained the assessment data promptly. Accordingly, I find Respondent violated g 195. 452(h)(2) by failing to promptly obtain sufficient information to discover a condition and determine that the condition presented a potential threat to the integrity of the pipeline. 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 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 $50, 000 for violation of $ 195. 452(h)(2). 49 U. S C. $ 60122 and 49 C F. R. $ 190. 225 require that, in determining the amount of the civil penalty, I consider the followmg criteria. nature, circumstances, and gravity of the violation, degree of Respondent's culpability, history of Respondent's prior offenses, Respondent's ability 67 Fed Reg. 16SO, January 14, 2002. Id at 1653#

320055030_final order_04262006_text.pdf, page 5to 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. During the hearing, Respondent explained it did not intentionally neglect to analyze the integrity assessment data, but followed its procedures for data integration believing the procedures met PHMSA regulations and guidance. Respondent has since modified its procedures to establish a time frame wherein Respondent would not allow any completed single tool run data to remain at a vendor more than 90 days without Respondent having access to the final report. Respondent also contested the assertion in the Notice that this is a repeat offense, explaining that the violation of $ 195. 452(h)(2) in Final Order CPF No. 5-2003-5031, issued May 16, 2005, is not related to the present case. Respondent pointed to Item 3 in that case as supportive evidence. However, it was Item 5 in that case that found Respondent did not have procedures requiring ILI reports to be received in sufficient time to allow discovery within 180 days. That is closely related to the violation in the present case based on Respondent's failure to obtain ILI report data within 180 days of an integrity assessment. Although Final Order CPF No. 5-2003-5031 found Respondent had corrected the procedural inadequacy identified in that case, that finding does not preclude the present case because Respondent did not comply with the regulatory requirement at $ 195. 452(11)(2). The topside dent condition discovered on Respondent's Manhattan to O'Hare 8-inch hazardous liquids pipeline was an "immediate repair condition" pursuant to 49 C. F. R. $ 195452(h)(4)(i)(D). The dent was located approximately 7 miles from Chicago O'Hare International Airport next to a highway, an area defined as a high consequence area pursuant to g 195. 450. The pipeline was operated with an immediate repair condition for more than eight months beyond the 180-day limit for discovery. Although operating pressure at the location of the dent was a low percentage of the pipe's specified minimum yield strength (SMYS), a dent measuring approximately 10. 5% of the nominal pipe diameter can result in a pipeline rupture causing harm to the high consequence populated area. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of $50, 000. Respondent has the ability to pay this penalty without adversely affecting its ability to continue in business. 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-300), Federal Aviation Administration, Mike Monroney Aeronautical Center, P. O. Box 25082, Oklahoma City, OK 73125; (405) 954-8893. Failure to pay the $50, 000 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#

320055030_final order_04262006_text.pdf, page 6States District Court. Under 49 C. F. R. $ 190. 215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be received within 20 days of Respondent's receipt of this Final Order and must contain a brief 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 action and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective on receipt. Sta As &PR 26 Zoo™ Date Issued e Gerard ciate Administrator r Pipeline Safety#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 1Official PDFU.S.Department 400 Seventh Street, S.W. Washington, D.C. 20590 of Transportation Pipeline and Hazardous Materials Safety Administration SEP - 6 20% Mr. Jim Lamanna President BP Pipelines (North America) Inc. 28 100 Torch Parkway Warrenville, IL 60555-3938 RE: CPF No. 3-2005-5030 Petition for Reconsideration Dear Mr. Lamanna: Enclosed is the Decision on the Petition for Reconsideration issued in the above-referenced case. The Acting Associate Administrator for Pipeline Safety has denied the relief sought by Respondent. On April 26,2006, the Associate Administrator for the Office of Pipeline Safety issued a Final Order to BP Pipelines (North America) Inc. It made findings of violation and assessed a civil penalty of $50,000. Payment of the $50,000 penalty assessed is due. This enforcement action closes automatically upon payment. Your receipt of this Decision on the Petition for Reconsideration constitutes service under 49 C.F.R. $j190.5. Sincerely, '4 James Reynolds Pipeline Compliance Registry Office of Pipeline Safety Enclosure cc: G.E. Schau, Manager, HSSE & Integrity, BP Pipelines (North America) Inc. CERTIFIED MAIL - RETURN RECEIPT REOUESTED#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 ) In the Matter of 1 BP Pipelines (North America) Inc., ) ) CPF NO. 3-2005-5030 1 Respondent ? DECISION ON PETITION FOR RECONSIDERATION On April 26,2006 pursuant to 49 U.S.C. 9 60112, a Final Order was issued in this case, assessing Respondent a civil penalty of $50,000 for violating 49 C.F.R. §195.452(h)(2). On May 22,2006, Respondent filed a petition requesting reconsideration (Petition) of that Final Order. The Petition automatically stayed payment of the civil penalty pending a decision on the Petition. The Petition raised issues including, whether discovery should have been declared earlier based on the geometry tool run as alleged in Final Order; whether the changes to Frequently Asked Questions (FAQ) 4.13 were in effect at the time that determinations were made by Respondent regarding the integration of the data; whether CPF No. 5-2003-5031 is used as evidence of prior violation of 49 C.F.R. §195.452(h)(2); and reconsideration of the paragraph in the Final Order regarding FAQ 6.6. In accordance with 49 C.F.R. $1 90.2 13, in the event the Associate Administrator, OPS reconsiders a final order, a final decision on reconsideration may be issued without further proceedings. Respondent's Petition did not request that the civil penalty be withdrawn or reduced waiving further right to appeal. Although, 49 C.F.R. $ 190.215(b) and (c) clearly states that if the respondent requests the consideration of additional facts or arguments, the respondent must submit the reasons they were not presented prior to the issuance of the final order. Respondent failed to submit herein the reasons why additional facts or arguments were not presented prior to the issuance of the final order. In furtherance, 190.21 5(c) states that the Associate Administrator, OPS does not consider repetitious information, arguments, or petitions. While Respondent's failure to satisfy 49 C.F.R. 5 190.2 15(b) and (c) justifies a determination that this Petition not be considered, in PHMSA's interest to provide interpretive assistance about compliance with pipeline safety regulations and to clarify uncertainty about the meaning and extent of regulatory requirements, I have decided to consider Respondent's Petition.#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 3BACKGROUND The Final Order found that Respondent violated 49 C.F.R. § 195.452(h) (2) by failing to obtain sufficient informationto discover a top side dent measuring approximately 10.5%of the nominal pipe diameter on its Manhattan to O'Hare Airport 8-inch hazardous 1i.quidspipeline within 180 days of an integrity assessment despite the availability of this information. This condition presented a potential threat to the integrity of the pipe, as a topside dent measuringapproximately 10.5% of the nominal pipe diameter can result in a rupture increasingthe risk of harm to people, property and the environment in a High Consequence Area. The timeline was as follows: November 12,2003, Respondent ran a geometry tool. November 21,2003, Respondent ran a metal loss tool but experienced problems. August 11,2004, Respondent ran another metal loss tool. October 14,2004, Respondent received preliminary results from both tool runs. December 20,2004, Respondent received final integrated report for both runs. December 20, 2004, final integrated report identified a topside dent measuring approximately 10.5%of the nominal pipe diameter,an immediaterepair condition. January 4,2005, Respondent submitted a safety-related condition report. January 21,2005, Respondent completed repairs to the dent. The Final Order determined that Respondent should have promptly, but within 180 days, obtained sufficient information to discover the top side dent based on the November 12,2003 geometry tool run. Respondent should have obtained sufficientinformationfrom the geometrytool rundespitethe delay in the metal loss tool run. The Final Order further determined that the geometry tool run constituted an integrity assessment. This integrity assessment required Respondentto obtain, within 180 days, the assessment data and determine whether conditions presented a threat to the pipeline. The Final Order found that data from the November 12,2003 geometry tool runprovided sufficient information to discover the topside dent and determine it presented a potential threat. 1. 49 C.F.R. 5 195.452(h)(2) - Whether "discovery" of a condition that presented a potential threat to the integritv of the pipeline occurred with the geometry tool run. Respondent petitionsthat it has not violated federal pipeline safety regulations. Respondent repeats its position. "As stated in previous correspondence, BPPL was followingits existing written integrity management proceduresfor data integrationand, consistentwith those procedures,utilized the "Final Report" information from a valid metal loss tool run to then integrate the data and make a determination as to whether or not there was a discovery of a condition pursuant to the integrity management rules". (Petition, p. 1) Respondent repeated the argument in its Petition that there was not adequate information based upon the geometry tool results alone and that it was necessary and appropriate to wait for the metal loss tool data to determinethe date of "discovery of condition". (Id)#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 4Additionally, Respondent repeated its position that the tool run assessment obligations in Frequently Asked Questions (FAQ) 4.13 dated 10/12/02 contemplates the integration of data when both the corrosion and deformation tool information are integrated and used in the assessment and repair. (Id) First, PHMSA publishes answers to FAQs concerning compliance with the integrity management regulations. Answers to FAQs are neither rules, regulations nor laws, but informal guidance to the regulated community about how to implement their integrity management programs in accordance with the requirements in 49 C.F.R. 3 195.452. The intent is for FAQs to provide clarification of rules, regulations and requirements. The October 12,2002 version of FAQ 4.13' addresses the following questions: 1) whether multiple tool runs are needed to constitute an assessment under 49 C.F.R. 3 195.452(c)(l)(i), and 2) whether the date of the assessment is the day when the tool run is complete, when the preliminary data is received, or when the evaluation of the in-line inspection results is complete. FAQ 4.13 also provides examples of assessments, which are subject to change with technological developments and regulatory changes, as demonstrated by the inclusion of addition language in December 2005. The December 16,2005 revision introduced "direct assessment" as an acceptable assessment method. Language on "direct assessment" was added because 49 C.F.R. 3 195.452 had been changed to add that method. The second change, to add language on "ILI tool runs," is for clarity. More importantly, the last paragraph of FAQ 4.13 never changed, was in effect at the time of the January 4, 2005 inspection and has been the same since October 2002. The last paragraph of FAQ 4.13 reads, "In those rare instances in which only a partial assessment is performed (e.g., in-line inspection system loss of power results in loss of data near the end of a pig run) operators will be expected to evaluate the results that were obtained within 180 days of the early termination, in accordance with 195.452(h)(2). If however, the quality of the partial data is suspect and an entire rerun is to be performed, then the evaluation will be expected within 180 days after the successful rerun." This sentence addresses a partial assessment. ' FAQ 4.13 For purposes of meeting the deadlines for completing baseline assessments, is the date of the assessment considered to be the day when the tool run is complete, when the preliminary data is received, or when the evaluation of the in-line inspection results is complete? The date on which an assessment is considered complete will be the 'date on which final field activities related to that assessment are performed, not including repair activities. That will be when a hydrostatic test is completed, when the last in-line inspection tool run of a scheduled series of tool runs is performed, or the date on which "other technology" for which an operator has provided timely notification is conducted. Evaluation of the assessment results, integration of other information, and repair of anomalies must still be performed in accordance with the requirements established for these activities in the rule. These activities are considered to occur after the completion of the "assessment". In those rare instances in which only a partial assessment is performed (e.g., in-line inspection system loss of power results in loss of data near the end of a pig run)operators will be expected to evaluate the results that were obtained within 180 days of the early termination, in accordance with 195.452(h)(2). If however, the quality of the partial data is suspect and an entire rerun is to be performed, then the evaluation will be expected within 180 days after the successful rerun. Last Revision: 10/12/02#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 5Respondent is correct that the tool run assessment obligations in FAQ 4.13 dated Octoberl2,2002 contemplates the integration of data when both the corrosion and deformation tool information are integrated and used in the assessment and repair. However, Respondent must place this guidance in the appropriate context. As there is no suggestion that an operator wait to obtain the assessment results from one completed tool run until the other tool run is completed. A deformation tool run is an integrity assessment. A metal loss tool run is an integrity assessment. An assessment is complete on the date in which final field activities related to that assessment are performed. An operator must evaluate the assessment results in accordance with 49 C.F.R. § 195.452. These evaluation activities occur after the completion of the "assessment". On November 12,2003, the geometry tool run was successfully completed, which constituted an integrity assessment. At this point, Respondent had many opportunities to evaluate the assessment results. An operator must promptly obtain the information from an assessment to ensure that remediation of a condition which could threaten a pipeline's integrity occurs soon after an integrity assessment. No additional information was needed, beyond the geometry tool results, to identifjr as an immediate repair condition a dent on the top of a pipeline (8 o'clock to 4 o'clock) that is greater in depth than 6% of pipeline diameter. Discovery of a condition occurs when an operator has adequate information about the condition to determine that the condition presents a potential threat to the integrity of the pipeline. An operator must promptly, but no later than 180 days after an integrity assessment, obtain sufficient information about a condition to make that determination, unless the operator can demonstrate that the 180-day period is impracticable. The metal loss tool run on November 21, 2003 was problematic. Due to unexpected difficulties, Respondent was unable to obtain anticipated data from the metal loss tool run. Nevertheless, Respondent had adequate information from the geometry tool run available for evaluation to discover the condition. In those rare instances in which only a partial assessment is performed (e.g., in-line inspection system loss of power results in loss of data near the end of a pig run) operators will be expected to evaluate the results that were obtained within 180 days of the early termination, in accordance with 195.452(h)(2). Due to Respondent's data integration practices and instructions to its tool vendor to integrate data from both tool runs, the geometry tool run data was unevaluated until completion of the metal loss tool run. Respondent did not complete the metal loss tool run until August 1 1,2004 and received the final integrated report that identified the dent on December 20, 2004. During the months that elapsed between the deformation tool run and the metal loss tool run, a condition that presented a potential threat to the integrity of the pipeline was unimpeded. Operators are to act promptly to obtain sufficient information to evaluate assessment results. Operators should act on the available information. Sufficient information was available on November 12,2003. Respondent has provided no information or argument that the 180-day period was impracticable. The framework for operators to follow is set forth in 49 C.F.R. § 195.452 and provides some flexibility in achieving compliance. For the above stated reasons, I affirm the finding that "discovery" occurred on November 12,2003, as Respondent had sufficient information from the#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 6November 12, 2003 geometry tool run about the topside dent to determine that the condition presented a potential threat to the integrity of the pipeline. 2. Reconsideration of the paragraph in the Final Order regarding FAQ 6.6 Respondent petitions reconsideration of the paragraph in the Final Order that addresses FAQ 6.6. (Final Order, p.3). While Respondent raises concerns about the discussions on FAQ 6.6, Respondent cited FAQ 6.6 in defense of its position about the significant period between the geometry tool run and the metal loss tool run. It is Respondent's position that the value in citing FAQ 6.6 is that it is the only place in the IMP regulations where the terms "Separated in Time" and "Assessment" are defined and that PHMSA recently revised or incorporated similar language by referencing FAQ 6.6 in FAQ 4.13. Respondent's interpretation is that the assessment is not complete until the last in-line inspection tool run of an integrated set of tool runs is performed or when the last direct examination associated with external corrosion direct assessment is made, or the date on which filed activities for other technology is conducted. Respondent concluded that its assessment was not complete until the August 11,2004 metal loss tool run. Contrary to Respondent's position, since October 2002, FAQ 4.13 explained that operators are to act to evaluate partial assessment results if they do not have a completed assessment. Although FAQs 4.13 and 6.6 explains completion of an assessment, Respondent must read carefully the question that the FAQ answers and place the answer in the appropriate context. It is inaccurate to state or interpret FAQ 4.13 as having incorporated language or referencing language from FAQ 6.6. FAQ 4.13 was published because operators asked if both tool runs have to be complete to meet the rules compliance deadlines. FAQ 6.6 does not address the question of discovery. FAQ 6.6 addresses another question, the need for two tool runs and how close in proximity the geometry and metal loss tool run should occur. There is nothing in either FAQ 4.13 or 6.6 that tells an operator they do not need to promptly review geometry tool results if they have a completed geometry tool run. In furtherance, API- 1 160 Managing System Integrity for Hazardous Liquid Pipelines published in November 2001, establishes the need for operators to obtain preliminary tool run reports and to review them for serious defects. While the standard does not explicitly call out top-side dents as in the IM rule, it explains that operators should act on information they have in hand to be sure there are not any serious anomalies that require immediate attenti~n.~ When a pipeline is inspected by an in-line inspection tool, the final results of the inspection should be provided to the operator within six months. However, certain types of potential defects should be brought to the operator's attention through a preliminary report. The following could present an immediate concern and should be reported by the in-line inspection vendor as soon as possible, but within thirty days. Metal loss greater than 80% of nominal wall regardless of dimensions. These anomalies can be temporarily mitigated by on-site monitoring, leak test, pressure reduction, or other mitigative actions until the anomaly has been excavated, assessed, and repaired, ifnecessary. Remaining strength ofthe pipe results in a predicted burst pressure that is less than the MOP at the location of the anomaly using a suitable remaining strength calculation method. Temporary mitigative actions include reduction in operating pressure with concurrent resetting of pressure relief device setpoints, or other mitigative actions until the anomaly can be excavated, assessed and repaired if necessary. As for top of the line dents (above four and eight o'clock positions) with any indicated metal loss, temporary mitigative actions include reduction in operating pressure with concurrent resetting of#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 7When a partial assessment is performed operators are expected to evaluate the results that were obtained within 180 days of the early termination, in accordance with 195.452(h)(2). When a significant amount of time elapses between the deformation tool run and the metal loss tool run an operators are expected to act on the information it has available. For the above stated reasons, I find that Respondent presented no new information upon which to reconsider the original finding. 3. Whether "discoverv" of a condition is tied solely to the date of the tool run It is Respondent' position that findings in the Final Order that "discovery" of a condition is tied solely to the date of the tool runs and that "tools runs should be reviewed independently are vague and not define specifically till much later in the revisions of the FAQ's. Respondent argued that the Agency's position that discovery of a condition is tied solely to the date of tool runs is a 12/16/05 change to FAQ 4.13 and was not in effect during the time in question. (Petition, pgs. 1 & 2) Respondent also repeats its contention that it discovered the topside dent within 180 days of the August 2004 metal loss tool run. Respondent also posed that previous inspection teams never elevated as an area of concern its practice of declaring "discovery" after successful completion of both tool runs. (Petition, pg. 1) Contrary to Respondent's position, discovery is not tied solely to the date of the tool run but to the fact that at the completion of a tool run there are assessment results from which an operator can obtain sufficient information about the condition to determine that condition presents a potential threat to the integrity of the pipeline. Since October 12,2002, FAQ 4.13 has informed operators that, "Evaluation of the assessment results.. .must still be performed in accordance with the requirements established for these activities in the rule. These activities are considered to occur after the completion of the "assessment"." There is no suggestion or guidance directing an operator to wait until both the deformation tool run and the corrosion tool runs are complete to evaluate the assessment results to obtain information, as an operator must promptly, but no later than 180 days after an integrity assessment, obtain sufficient information about a condition, which could threaten a pipeline's integrity. Again, On November 12, 2003, the geometry tool run was successfully completed. At this point, Respondent had many opportunities to evaluate the assessment results. An operator must promptly obtain the information from an assessment to ensure that remediation of a condition which could threaten a pipeline's integrity occurs soon after an integrity assessment. No additional information was needed, beyond the geometry tool results, to identifj as an immediate repair condition a dent on the top of a pipeline (8 o'clock to 4 o'clock) that is greater in depth than 6% of pipeline diameter. The November 12,2003 geometry tool run provided sufficient information to discover the topside dent and determine it presented a potential threat. -- pressure relief device setpoints, or other mitigative actions until the anomaly can be excavated, assessed, and repaired if necessary.#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 8When faced with uncertainty about the meaning and extent of the regulatory requirements, the Respondent failed to request from OPS an interpretation of the regulation. In furtherance, 49 C.F.R. 190.11 provides for informal guidance and interpretive assistance about compliance with pipeline safety regulations, 49 CFR parts 190- 199. If Respondent needs clarification, information on, and advice about compliance with pipeline safety regulations, then Respondent should take advantage of s190.11 to resolve any questions or concerns regarding compliance. 4. Whether CPF No. 5-2003-5031 is used as evidence of prior violation of 49 C.F.R. s195.452(h)(2); Whether previous inspection teams demonstrated concern about Respondent's practice of declaring "discoverv" after completion of both tool runs. During March 10- 14 and March 3 1 -April 4,2003, representatives of the Office of Pipeline Safety (OPS), Western, Central, Southern and Southwest Regions and the Washington Utilities and Transportation Commission conducted an Integrity Management (IM) inspection of Respondent's integrity management program in Lisle, Illinois. The purpose of the inspection was to determine whether Respondent had developed and implemented an integrity management program (IMP) as required in 31 95.452. At the conclusion of the inspection and during the exit interview, Respondent was informed of probable violations. OPS issued to Respondent a Notice of Probable Violation, Proposed Civil Penalty, Proposed Compliance Order and Notice of Amendment (Notice CPF#5- 2003-503 1), alleging various violations of 49 C.F.R. Part 195. Respondent responded to the Notice by letter dated February 5,2004. Respondent did not contest the allegations of violation but offered information to explain the allegations and provided information concerning the corrective actions it had taken. As a result, on May 16,2005, the Associate Administrator for OPS issued a Final Order (CPF No. 5- 2003-503 1) finding Respondent committed violations of 49 C.F.R. Part 195 and assessed a civil penalty in the amount of $1 5,500. The relevant findings in the Final Order are as follows: 1) Failure to have procedures that include discovery requirements and failure to schedule remediation within 180 days of discovery of the condition; 2) Failure to have contract language that requires ILI reports be received from the vendor in a time frame that will permit the discovery of anomalies within 180 days; and 3) Four instances in which the interval between the assessment and Respondent's discovery exceed 180 days prescribed in the IM rules. All of these items from (CPF No. 5-2003- 5031) demonstrate the OPS inspection teams' concerns about Respondent's practice of declaring "discovery" after completion of both tool runs. Respondent petitions that if in fact CPF No. 5-2003-5031 is being used as evidence of prior violations of 49 C.F.R § 195.452(h)(2), it was not formally notified of PHMSA's ruling until it received the May 16,2005 Final Order which was well after the events that Respondent was cited for this case. Thus at the time of the alleged violation Respondent was operating under the premise that its procedures were in compliance with 49 C.F.R § 195.452(h)(2).#

320055030_Decision on Petition for Reconsideration_09062006.pdf, page 9Respondent is not totally unfamiliar or lacking of knowledge with PHMSA's processes and procedures, as this is not the first Final Order issued to Respondent. When an enforcement action(s) occurs and findings are made in an order, those findings are a respondent's history of prior offenses. It is standard language, particularly in orders with uncontested findings of violation, to notify respondent(s) that the findings of violation are considered prior offenses in any subsequent enforcement action taken against respondent(s). Attached to the Notice were Respondent's response options. After proper notice and opportunity to be heard, Respondent did not contest the allegations of violation but offered information to explain the allegations and provided information concerning the corrective actions it had taken. Because of Respondent's failure to controvert PHMSA's allegations of violation, all uncontested allegations to which Respondent had an opportunity to respond are taken as true. Also, 49 C.F.R § 190.225(c), Assessment Considerations, provides that assessment of a civil penalty considers, "The respondent's history of prior offenses." In the instant case, after receipt of a Safety-Related Condition Report (SRCR #2005-0001) regarding Respondent's Manhattan to O'Hare 8" line, OPS returned on January 4, 2005 to initiate an investigation. OPS inspectors found repeated instances of noncompliance, which are the subject of this Petition. Specifically, the inspection found Respondent still in violation of 49 C.F.R. § 195.452(h)(2). For the above stated reasons, I reject Respondent's argument that the OPS inspection team did not demonstrate concerns about Respondent's practice of declaring "discovery" after completion of both tool runs. I find that Respondent presents no new information upon which to reconsider the original finding. Therefore, I affirm the finding that Respondent violated 49 C.F.R. §195.452(h)(2). Relief Denied I have considered Respondent's request for reconsideration. I do not find Respondent's assertions warrant amendment of the terms of the Final Order. This decision denies the relief sought by Respondent in its Petition. This decision on reconsideration is the final administrative action in this proceeding. Date Issued Acting Associate Administrator for Pipeline Safety#