{"operation":"document","citation":"CPF 320095002","title":"AMOCO OIL CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2009-03-30","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.406(a)(3), 195.422(b).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-320095002.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-320095002.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-320095002","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/320095002","body":"Notice of Probable Violation involving AMOCO OIL CO. PHMSA's enforcement data identifies the cited regulations as 195.406(a)(3),  195.422(b). The case was opened on 2009-03-30 and is reported as closed as of 2012-04-19. Proposed civil penalty: $52,600. Assessed civil penalty: $16,250. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n320095002_Final Order_04032012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095002/320095002_Final%20Order_04032012.pdf\n\n320095002_Final Order_04032012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095002/320095002_Final%20Order_04032012_text.pdf\n\n320095002_NOPV PCP_03302009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095002/320095002_NOPV%20PCP_03302009.pdf\n\n320095002_NOPV PCP_03302009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095002/320095002_NOPV%20PCP_03302009_text.pdf\n\n320095002_operator response_04302009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095002/320095002_operator%20response_04302009.pdf\n\n320095002_Final Order_04032012_text.pdf\n\nAPR 03 2012\nMr. Steve Pankhurst\nPresident\nBP Pipelines (North America) Inc.\n150 West Warrenville Road\nNaperville, IL 60563\nRe: CPF No. 3-2009-5002\nDear Mr. Pankhurst:\nEnclosed please find the Final Order issued in the above-referenced case. It makes a finding\nof violation and assesses a reduced civil penalty of $16,250. It also withdraws one of the\nalleged violations. The penalty payment terms are set forth in the Final Order. This\nenforcement action closes automatically upon receipt of payment. Service of the Final Order\nby certified mail is effective upon the date of mailing, or as otherwise provided under\n49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS\nMr. David Barrett, Director, Central Region, OPS\nMr. David O. Barnes, Integrity Manager, BP Pipelines (North America), Inc.\n28100 Torch Parkway, Warrenville, IL 60555\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [71791000164203365535]\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n___________________________________\n)\nIn the Matter of )\n)\nBP Pipelines (North America), Inc., ) CPF No. 3-2009-5002\n)\nRespondent. )\n___________________________________ )\nFINAL ORDER\nOn July 9-11 and August 6-9, 2007, pursuant to 49 U.S.C. § 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of the facilities and records of BP\nPipelines (North America), Inc. (BP or Respondent) in Indiana and Michigan. BP operates\napproximately 9,000 miles of pipeline transporting hazardous liquids and natural gas in the\nUnited States.\n1\nAs a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,\nby letter dated March 30, 2009, a Notice of Probable Violation and Proposed Civil Penalty\n(Notice). In accordance with 49 C.F.R. § 190.207, the Notice alleged that BP committed two\nviolations of the hazardous liquid pipeline safety regulations in 49 C.F.R. Part 195 and proposed\na civil penalty of $52,600 for the alleged violations.\nBP responded to the Notice by letter dated April 30, 2009 (Response). Respondent contested the\nalleged violations and requested a hearing. A hearing was held on October 16, 2009, in Kansas\nthe hearing, Respondent provided a post-hearing statement dated November 11, 2009 (Closing).\nCity, Missouri, with an attorney from the Office of Chief Counsel, PHMSA, presiding.2 After\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondent committed two violations of 49 C.F.R. Part 195, as follows:\n1 http://www.bp.com/sectiongenericarticle.do?categoryId=9030201&contentId=7055756 (last accessed Feb. 29,\n2012). See also Pipeline Safety Violation Report at 1 (Mar. 30, 2009) (Violation Report). Pipeline operators must\nreport their pipeline mileage pursuant to 49 C.F.R. § 195.49. BP has reported that the facility at issue in this case is\noperated by one of its subsidiaries, Amoco Oil Company.\n2 The hearing also concerned a second Notice of Probable Violation, CPF No. 3-2009-5009. A Final Order in that\nproceeding was issued by PHMSA on June 14, 2011.\n\n\n\n2\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.406(a)(3), which states:\n§ 195.406 Maximum operating pressure.\n(a) Except for surge pressures and other variations from normal\noperations, no operator may operate a pipeline at a pressure that exceeds\nany of the following . . .\n(3) Eighty percent of the test pressure for any part of the pipeline\nwhich has been pressure tested under subpart E of this part . . . .\n(b) No operator may permit the pressure in a pipeline during surges or\nother variations from normal operations to exceed 110 percent of the\noperating pressure limit established under paragraph (a) of this section.\nEach operator must provide adequate controls and protective equipment to\ncontrol the pressure within this limit.\nThe Notice alleged that BP violated § 195.406(a)(3) by operating a part of its pipeline at a\npressure that exceeded 80% of the test pressure. Specifically, the Notice alleged that the\nmaximum operating pressure (MOP) of Respondent’s Whiting-to-River Rouge pipeline was\n1440 psig. On August 26, 2005, the company replaced an eight-foot section of the pipeline with\nnew pipe that had an MOP of only 1136 psig, which was 80% of its pre-installation test pressure.\nSeveral days later, on August 31, 2005, pressure on the pipeline in the area of the new pipe\nexceeded 1136 psig. Respondent discovered this issue in May 2007 and reduced pressure on the\npipeline for approximately two months until the new section could be replaced with pipe that had\nan MOP of 1440 psig.\nIn its Response, BP acknowledged that pressure on the new section of pipe exceeded the MOP of\n1136 psig on August 31, 2005, as alleged, but explained that the excursion was merely a surge\npressure, which is permitted under § 195.406(a). Respondent noted that a different regulation,\n§ 195.406(b), establishes the pressure limit for surge pressures and other variations from normal\noperations. BP contended that the pressure never exceeded the limit mandated by § 195.406(b).\nAt the hearing and in its Closing, BP explained that on August 31, 2005, the pipeline was in the\nprocess of shutting down when a transient pressure deviation resulted in pressure exceeding 1136\npsig at the location of the new section. The excursion lasted for less than one minute and\nreached only 1192 psig based on calculations from upstream and downstream pressure data and\nelevation change. In response to remarks by OPS at the hearing that the company never changed\ndischarge pressure settings at the upstream station when it installed the new pipe with lower\nMOP, BP stated that was not a problem because the hydraulic gradient resulted in greatly\nreduced pressure at the location of the new pipe versus that observed at the origin pump station.\nThe regulation at § 195.406 establishes the maximum operating pressure for pipelines\ntransporting hazardous liquids. Under § 195.406(a)(3), pipelines may not be operated at any\npressure that exceeds, among other things, 80% of its test pressure. This limitation on pressure\napplies at all times, “[e]xcept for surge pressures and other variations from normal operations.\n”3\n3 § 195.406(a)(3).\n\n\n\n3\nThe pipeline safety regulations define a surge pressure as the “pressure produced by a change in\nvelocity of the moving stream that results from shutting down a pump station or pumping unit,\nexcursion on August 31, 2005, was produced by a change in velocity resulting from the shutting\ndown of Respondent’s pipeline and the excursion lasted for less than one minute. Therefore, this\npressure excursion fell within the definition of a surge pressure. Surge pressures are not subject\nto the pressure limit specified in § 195.406(a)(3), but rather are subject to the limit in\nclosure of a valve, or any other blockage of the moving stream.”4 Respondent’s pressure\n§ 195.406(b), which Respondent showed was not exceeded.\nAt the hearing, OPS alleged that Respondent also violated § 195.406(a)(3) by failing to adjust\nthe pipeline’s pressure controls to account for installation of the new eight-foot section of pipe\nwith a lower MOP. After reviewing § 195.406(a)(3), I find that evidence of the pressure control\nsettings alone is not sufficient to make a finding of violation under this regulation because\npressure on the pipeline never actually exceeded the limits established by the regulation. In other\nwords, Respondent did not “operate a pipeline at a pressure that exceeds . . . eighty percent of the\ntest pressure” except for the surge pressure deviation.\n5\nAccordingly, for the above reasons, I find the evidence in the record does not support finding\nthat Respondent violated § 195.406(a)(3). This item is withdrawn.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.422(b), which states:\n§ 195.422 Pipeline repairs.\n(a) . . . .\n(b) No operator may use any pipe, valve, or fitting, for replacement in\nrepairing pipeline facilities, unless it is designed and constructed as\nrequired by this part.\nThe Notice alleged that BP violated § 195.422(b) by failing to repair its pipeline facility using\nreplacement pipe that had been designed and constructed in accordance with the regulations in\n49 C.F.R. Part 195. Specifically, the Notice alleged that Respondent installed pipe to replace a\nportion of the Whiting-to-River Rouge pipeline on August 26, 2005, but the pipe had not been\ntested to the MOP of the pipeline.\nBP acknowledged the new pipe had been tested to a level below the MOP of the pipeline, but\nargued that was not a violation because the pipe had been “designed and constructed” in\naccordance with the applicable requirements in Part 195. Specifically, the pipe had been\ndesigned and constructed as a 12-inch diameter, 0.375-inch wall thickness, X-52 grade, API\nSpecification 5L pipe with a design pressure of 2202 psig. BP indicated that the internal design\npressure had been determined as specified in the code, welding had been performed in\naccordance with the code, and operator qualification requirements had been followed.\n4 § 195.2.\n5 § 195.406(a)(3).\n\n\n\n4\nBP argued that the reference to design and construction in § 195.422(b) does not include a\nrequirement to perform pressure testing to the same level as the rest of the pipeline. Although\ntest pressure contributes to the determination of MOP, Respondent contended that it does not by\nitself determine whether new pipe is designed and constructed as required. Respondent stated\nthere was never a safety issue, because the hydraulic gradient of the pipeline system resulted in\nthe new section of pipe being operated below its tested MOP, except for the variation in\noperating pressure that occurred on August 31, 2005.\nThe regulation at § 195.422(b) requires that a pipeline operator use pipe that is “designed and\nconstructed in accordance with this part” when replacing and repairing a pipeline. Among the\napplicable construction requirements in Part 195, § 195.202 requires the pipeline replacement to\n“be constructed in accordance with comprehensive written specifications or standards that are\nconsistent with the requirements of this part.”\nWhen performing a pipeline replacement, therefore, an operator must ensure the replacement is\nconstructed in a manner consistent with the requirements in Part 195. The construction process\nmust ensure the new pipe being installed is tested prior to operation at a pressure equal to 125\npercent or more of MOP to ensure compliance with §§ 195.302 and 195.304. The construction\nprocess must also ensure that MOP is properly determined under § 195.406(a). Failure to test the\npipe or to determine MOP in accordance with these regulations during the pipe replacement\nproject prior to operation is a violation of § 195.422 because the replacement would not be\nconsistent with the requirements of Part 195.\nPrior to August 26, 2005, the MOP of Respondent’s pipeline system was 1440 psig. Respondent\ninstalled new pipe as part of a replacement but did not conduct a post-installation test of the pipe\nin accordance with § 195.302. Instead, Respondent selected pipe that had been pre-tested to a\nlevel that would permit an MOP of 1136 psig. The pipe had not been tested to 125 percent of the\npipeline’s MOP of 1440 psig. Respondent did not take further action during the construction\nconsistent with §§ 195.302, 195.304 and 195.406(a), such as retesting the new pipe to the\nappropriate level or by reducing the MOP of the pipeline system to accommodate the new pipe.\nFor these reasons, the pipe used in the replacement was not constructed in a manner consistent\nwith the requirements in Part 195.\nAt the hearing, the parties offered their opinions about whether Respondent’s conduct caused a\nrisk to pipeline safety. While arguments concerning the relative safety risk of the conduct may\ninfluence the appropriate level of any penalty, I find they do not otherwise affect my\ndetermination as to whether the operator’s conduct was permissible under the regulation.\nAccordingly, these arguments are addressed below in the Civil Penalty section.\nAfter considering all of the evidence, I find BP violated § 195.422(b) by failing to repair its\npipeline facility using replacement pipe that was constructed in a manner consistent with the\nregulations in 49 C.F.R. Part 195.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\n\n\n\n5\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any\nrelated series of violations.\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I\nmust consider the following criteria: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent’s culpability; the history\nof Respondent’s prior offenses; any effect that the penalty may have on its ability to continue\ndoing business; and the good faith of Respondent in attempting to comply with the pipeline\nsafety regulations. In addition, I may consider the economic benefit gained from the violation\nwithout any reduction because of subsequent damages, and such other matters as justice may\nrequire.\nThe Notice proposed a total civil penalty of $52,600 for the violations in Items 1 and 2. Since\nItem 1 has been withdrawn, a penalty is not assessed for this item.\nItem 2: The Notice proposed a civil penalty of $26,300 for Respondent’s violation of\n49 C.F.R. § 195.422(b). Respondent failed to repair its pipeline facility using replacement pipe\nconstructed in accordance with the regulations in 49 C.F.R. Part 195. Specifically, the company\ninstalled pipe in a manner that did not ensure compliance with the testing and MOP requirements\nin §§ 195.302, 195.304 and 195.406(a).\nInstalling pipe that has a lower verified maximum operating pressure than the MOP of the\npipeline system may present a significant risk to pipeline safety and could lead to a failure\ncaused by overpressure. Both parties seem to acknowledge, however, that the actual safety risk\npresented in this case was relatively low. Respondent argued that the hydraulic gradient of the\npipeline system would prevent pressure on the new pipe from exceeding 1136 psig. OPS noted\nin its Violation Report that there was little likelihood that the pipe would have failed under this\ncondition.\nMOP of the pipeline system. I also find that Respondent discovered this issue on its own and\nhad already taken good faith action to remediate the issue prior to the inspection by OPS.\n6 The record shows the design pressure for the new pipe was 2202 psig, well above\nOf course, the fact remains that the new pipe had not been pressure tested to 1800 psig to\nconfirm MOP at 1440 psig, which means, as OPS noted, Respondent operated with a smaller\nmargin of safety than provided for in the regulations. The noncompliance lasted for an extended\nperiod of time, well over a year. BP’s history of prior offenses, as noted in the Violation Report,\nalso supports the assessment of a civil penalty. Accordingly, a civil penalty is warranted, but I\nfind that the lower gravity of the violation warrants reducing the amount proposed.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a reduced civil penalty of $16,250 for violation of 49 C.F.R. § 195.422(b).\n6 Violation Report at 6.\n\n\n\n6\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require payment to be made by wire transfer through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The\nFinancial Operations Division telephone number is (405) 954-8893.\nFailure to pay the $16,250 civil penalty will result in accrual of interest at the current annual rate\nin accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nUnder 49 C.F.R. § 190.215, Respondent may submit a petition for reconsideration of this Final\nOrder to the Associate Administrator for Pipeline Safety, PHMSA, 1200 New Jersey Avenue,\nSE, East Building, 2nd Floor, Washington, D.C. 20590, no later than 20 days after receipt of the\nFinal Order by the Respondent. Any petition submitted must contain a brief statement of the\nissue(s) and meet all other requirements of 49 C.F.R. § 190.215. The filing of a petition\nautomatically stays the payment of any civil penalty assessed. If Respondent submits payment\nof the civil penalty, the Final Order becomes the final administrative decision and the right to\npetition for reconsideration is waived. The terms and conditions of this Final Order are effective\nupon service in accordance with 49 C.F.R. § 190.5.\n___________________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":19001}