{"operation":"document","citation":"CPF 320095018","title":"EXPLORER PIPELINE CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2009-10-21","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.573(a)(1), 195.573(e).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-320095018.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-320095018.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-320095018","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/320095018","body":"Notice of Probable Violation involving EXPLORER PIPELINE CO. PHMSA's enforcement data identifies the cited regulations as 195.573(a)(1),  195.573(e). The case was opened on 2009-10-21 and is reported as closed as of 2012-03-06. Proposed civil penalty: $78,800. Assessed civil penalty: $78,800. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n320095018_Decision on the Petition_ 01252012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095018/320095018_Decision%20on%20the%20Petition_%2001252012_text.pdf\n\n320095018_Decision on the Petition_01252012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095018/320095018_Decision%20on%20the%20Petition_01252012.pdf\n\n320095018_Final Order_07222011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095018/320095018_Final%20Order_07222011.pdf\n\n320095018_Final Order_07222011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095018/320095018_Final%20Order_07222011_text.pdf\n\n320095018_NOPV PCP_10212009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095018/320095018_NOPV%20PCP_10212009.pdf\n\n320095018_NOPV PCP_10212009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095018/320095018_NOPV%20PCP_10212009_text.pdf\n\n320095018_Opr Request for Hearing_11192009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320095018/320095018_Opr%20Request%20for%20Hearing_11192009.pdf\n\n320095018_Decision on the Petition_01252012.pdf\n\nU.S. Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety\nAdministration\n1200 New Jersey Avenue SE\nWashington. DC 20590\nJAN 2 5 2012\nMr. Rod E. Sands\nPresident and Chief Executive Officer\nExplorer Pipeline Company\nAutumn Oaks Building, Suite 300\n6846 South Canton A venue\nTulsa, OK 74136\nCPF No. 3-2009-5018\nDear Mr. Sands:\nEnclosed is the decision on the Petition for Reconsideration filed by Explorer Pipeline\nCompany, in the above-referenced case. For the reasons specified in the decision, the Petition\nis denied and the Final Order is affirmed without modification. The penalty payment terms are\nset forth in the Final Order. This enforcement action closes automatically upon payment.\nYour receipt ofthis decision constitutes service under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter\nSincerely,\n~; 4&:;.~\nAssociate Administrator\nfor Pipeline Safety\nEnclosure:\ncc: Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS\nMr. Dave Barrett, Director, Central Region, OPS\nMr. Curtis L. Craig, Vice President & General Counsel, Explorer Pipeline\nMr. T.J. \"Tom\" Jensen, Vice President of Operations, Explorer Pipeline\nVIA CERTIFIED MAIL- RETURN RECEIPT REQUESTED( 71791000164203107005]\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\nIn the Matter of\nExplorer Pipeline Company,\nRespondent.\n)\n)\n)\n)\n)\n)\nCPF No. 3-2009-5018\nDECISION ON PETITION FOR RECONSIDERATION\nOn July 22, 2011, pursuant to chapter 601, title 49, of the United States Code, the Associate\nAdministrator for Pipeline Safety (Associate Administrator), Pipeline and Hazardous Materials\nSafety Administration (PHMSA), issued a Final Order (Order) in this case against Explorer\nPipeline Company (Explorer or Petitioner), finding that Petitioner had committed two violations\nof the Pipeline Safety Regulations, codified at 49 C.F .R. Part 195, and assessed a civil penalty in\nthe amount of $78,800 for both external corrosion control violations.\nOn August 16, 2011, Explorer submitted a Petition for Reconsideration (Petition) of the Final\nOrder. In its Petition, Explorer explained that it has completed the corrective cathodic protection\nactions associated with its pipeline and is willing to pay the $78,800 civil penalty. However,\nPetitioner requested reconsideration of the Final Order and additional time to obtain industry\ninput on the exception indentified as 49 C.F.R. 195.l(b)(4). Petitioner also repeated its\narguments that the line segments at issue are not subject to Part 195, arguments made in its\nResponses to the Notice of Probable Violation. 1\nBecause the evidence of record supports the findings in question, I am denying this Petition and\naffirming the Final Order without modification.\nStandard of Review\nA respondent is afforded the right to petition the Associate Administrator for reconsideration of a\nfinal order. However, that right is not an appeal or an opportunity to seek a de novo review of\nthe record. It is a venue for presenting the Associate Administrator with information that was\nnot previously available or requesting that any errors in the final order be corrected. Requests\nfor consideration of additional facts or arguments must be supported by a statement of reasons as\nto why those facts or arguments were not presented prior to the issuance of the final order.\nRepetitious information or arguments will not be considered.\n1 In the Matter of Explorer Pipeline Company, Final Order, dated July 22, 2011, CPF No. 3-2009-5018, Responses\ndated November 19, 2009, February 5, 2010 and March 17, 2010.\n\n\n\n2\nAnalysis\nIn its Petition, Explorer did not submit any new arguments or information but reiterated the\narguments made in its previous Responses. Explorer continued to argue against PHMSA's\nreading of the agency's 1992 interpretation that for the low-stress exception to apply, the entire\npipeline system has to operate at less than 20 percent SMYS. Explorer also recited a PHMSA\nMemorandum dated March 2, 1995 in support of its argument that Part 195 does not define the\nbeginning and end of a pipeline but it does place the burden of compliance on the operator based\non the characteristics of the operator's individual installation.\nIn the Final Order, I found that the low stress definition criteria are clear. I also found that the\ndefinition and methodology used by Explorer with respect to the delivery line segments were\nnarrowly tailored to the exceptions in Section 195.1(b)(4). Petitioner's methodology considered\nthe length and SMYS of the two pipeline segments but failed to factor in the continuation of its\nentire 14-inch pipeline system. I further found that each of the pipeline segments is a part of a\nlarger system, serving either to introduce products into the system or take products from it. If\npart of the line is operated above 20 percent SMYS, then the line does not satisfy the requirement\nthat the pipeline be operated in its entirety at a stress level of20 percent or less of the SMYS.\nExplorer's explanation of industry understanding is not relevant to the configuration and\ncharacteristics of the subject pipeline or the enforcement of pipeline safety regulations. Such a\ncharacterization suggests a one size fits all application of the regulations when each pipeline\nsystem is not the same. Inadequate review and understanding of the regulations by an operator\ncan have significant compliance ramifications. With respect to Explorer's contention that its 14-\ninch pipeline and the two pipeline segments in question are represented as separate line segments\nin its National Pipeline Mapping System (NPMS) and that historically, Petitioner has handled\nthese line segments as low-stress, in the Final Order, I found that there is a distinction between\ncompliance with the NPMS and annual reporting requirements and whether a pipeline is in fact a\nlow stress pipeline. The information from annual reports is used to more effectively compile\nnational statistics on system inventory, analyze accidents, identify safety problems and potential\nsolutions, and target inspections. I also found that instructions to complete forms are guidance,\nnot binding regulation. I found that the annual report instructions provide guidance on how to\nrespond to the questions on the form. As for Explorer's position that the line segments had been\nreported to PHMSA separately in the NPMS, I found that the NPMS is a pipeline data repository\nand the manner in which operators subdivide their systems for submission to NPMS is irrelevant\nto determining whether PHMSA regulates a pipeline.\nConclusion\nBased on a review of the record and the information provided in the Petition, I hereby deny the\nPetition and affirm the Final Order without modification, for the reasons set forth above.\nPayment of the $78,800 civil penalty assessed in the Final Order is now due and must be made\nwithin 20 days of service of this Decision. The payment instructions were set forth in detail in\n\n\n\n3\nthe Final Order. Failure to pay the $78,800 civil penalty will result in accrual of interest at the\ncurrent annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9, and 49 C.F.R.\n§89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum\nwill be charged if payment is not made within 110 days of service. Furthermore, failure to pay\nthe civil penalty may result in referral of the matter to the Attorney General for appropriate\naction in a United States District Court.\nThis Decision on Reconsideration is the final administrative action in this proceeding.\nJAN J 5 2012\nDate Issued\n~·-\n\n320095018_Decision on the Petition_ 01252012_text.pdf\n\nJAN 25 2012\nMr. Rod E. Sands\nPresident and Chief Executive Officer\nExplorer Pipeline Company\nAutumn Oaks Building, Suite 300\n6846 South Canton Avenue\nTulsa, OK 74136\nCPF No. 3-2009-5018\nDear Mr. Sands:\nEnclosed is the decision on the Petition for Reconsideration filed by Explorer Pipeline\nCompany, in the above-referenced case. For the reasons specified in the decision, the Petition\nis denied and the Final Order is affirmed without modification. The penalty payment terms are\nset forth in the Final Order. This enforcement action closes automatically upon payment.\nYour receipt of this decision constitutes service under 49 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. Dave Barrett, Director, Central Region, OPS\nMr. Curtis L. Craig, Vice President & General Counsel, Explorer Pipeline\nMr. T.J. “Tom” Jensen, Vice President of Operations, Explorer Pipeline\nVIA CERTIFIED MAIL – RETURN RECEIPT REQUESTED[ 71791000164203107005]\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)\nExplorer Pipeline Company , ) CPF No. 3-2009-5018\n)\nRespondent. )\n______________________________)\nDECISION ON PETITION FOR RECONSIDERATION\nOn July 22, 2011, pursuant to chapter 601, title 49, of the United States Code, the Associate\nAdministrator for Pipeline Safety (Associate Administrator), Pipeline and Hazardous Materials\nSafety Administration (PHMSA), issued a Final Order (Order) in this case against Explorer\nPipeline Company (Explorer or Petitioner), finding that Petitioner had committed two violations\nof the Pipeline Safety Regulations, codified at 49 C.F.R. Part 195, and assessed a civil penalty in\nthe amount of $78,800 for both external corrosion control violations.\nOn August 16, 2011, Explorer submitted a Petition for Reconsideration (Petition) of the Final\nOrder. In its Petition, Explorer explained that it has completed the corrective cathodic protection\nactions associated with its pipeline and is willing to pay the $78,800 civil penalty. However,\nPetitioner requested reconsideration of the Final Order and additional time to obtain industry\ninput on the exception indentified as 49 C.F.R. 195.1(b)(4). Petitioner also repeated its\narguments that the line segments at issue are not subject to Part 195, arguments made in its\nResponses to the Notice of Probable Violation.1\nBecause the evidence of record supports the findings in question, I am denying this Petition and\naffirming the Final Order without modification.\nStandard of Review\nA respondent is afforded the right to petition the Associate Administrator for reconsideration of a\nfinal order. However, that right is not an appeal or an opportunity to seek a de novo review of\nthe record. It is a venue for presenting the Associate Administrator with information that was\nnot previously available or requesting that any errors in the final order be corrected. Requests\nfor consideration of additional facts or arguments must be supported by a statement of reasons as\nto why those facts or arguments were not presented prior to the issuance of the final order.\nRepetitious information or arguments will not be considered.\n1 In the Matter of Explorer Pipeline Company, Final Order, dated July 22, 2011, CPF No. 3-2009-5018, Responses\ndated November 19, 2009, February 5, 2010 and March 17, 2010.\n\n\n\n2\nAnalysis\nIn its Petition, Explorer did not submit any new arguments or information but reiterated the\narguments made in its previous Responses. Explorer continued to argue against PHMSA’s\nreading of the agency’s 1992 interpretation that for the low-stress exception to apply, the entire\npipeline system has to operate at less than 20 percent SMYS. Explorer also recited a PHMSA\nMemorandum dated March 2, 1995 in support of its argument that Part 195 does not define the\nbeginning and end of a pipeline but it does place the burden of compliance on the operator based\non the characteristics of the operator’s individual installation.\nIn the Final Order, I found that the low stress definition criteria are clear. I also found that the\ndefinition and methodology used by Explorer with respect to the delivery line segments were\nnarrowly tailored to the exceptions in Section 195.1(b)(4). Petitioner’s methodology considered\nthe length and SMYS of the two pipeline segments but failed to factor in the continuation of its\nentire 14-inch pipeline system. I further found that each of the pipeline segments is a part of a\nlarger system, serving either to introduce products into the system or take products from it. If\npart of the line is operated above 20 percent SMYS, then the line does not satisfy the requirement\nthat the pipeline be operated in its entirety at a stress level of 20 percent or less of the SMYS.\nExplorer’s explanation of industry understanding is not relevant to the configuration and\ncharacteristics of the subject pipeline or the enforcement of pipeline safety regulations. Such a\ncharacterization suggests a one size fits all application of the regulations when each pipeline\nsystem is not the same. Inadequate review and understanding of the regulations by an operator\ncan have significant compliance ramifications. With respect to Explorer’s contention that its 14-\ninch pipeline and the two pipeline segments in question are represented as separate line segments\nin its National Pipeline Mapping System (NPMS) and that historically, Petitioner has handled\nthese line segments as low-stress, in the Final Order, I found that there is a distinction between\ncompliance with the NPMS and annual reporting requirements and whether a pipeline is in fact a\nlow stress pipeline. The information from annual reports is used to more effectively compile\nnational statistics on system inventory, analyze accidents, identify safety problems and potential\nsolutions, and target inspections. I also found that instructions to complete forms are guidance,\nnot binding regulation. I found that the annual report instructions provide guidance on how to\nrespond to the questions on the form. As for Explorer’s position that the line segments had been\nreported to PHMSA separately in the NPMS, I found that the NPMS is a pipeline data repository\nand the manner in which operators subdivide their systems for submission to NPMS is irrelevant\nto determining whether PHMSA regulates a pipeline.\nConclusion\nBased on a review of the record and the information provided in the Petition, I hereby deny the\nPetition and affirm the Final Order without modification, for the reasons set forth above.\nPayment of the $78,800 civil penalty assessed in the Final Order is now due and must be made\nwithin 20 days of service of this Decision. The payment instructions were set forth in detail in\n\n\n\n3\nthe Final Order. Failure to pay the $78,800 civil penalty will result in accrual of interest at the\ncurrent annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9, and 49 C.F.R.\n§89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum\nwill be charged if payment is not made within 110 days of service. Furthermore, failure to pay\nthe civil penalty may result in referral of the matter to the Attorney General for appropriate\naction in a United States District Court.\nThis Decision on Reconsideration is the final administrative action in this proceeding.\n___________________________________ ____________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n320095018_Final Order_07222011_text.pdf\n\nJUL 22 2011\nMr. Rod E. Sands\nPresident and Chief Executive Officer\nExplorer Pipeline Company\nAutumn Oaks Building, Suite 300\n6846 South Canton Avenue\nTulsa, OK 74136\nCPF# 3-2009-5018\nDear Mr. Sands:\nEnclosed is the Final Order issued in the above-referenced case. It makes findings of violation\nand assesses a civil penalty of $78,800. The penalty payment terms are set forth in the Final\nOrder. This enforcement action closes automatically upon payment. Your receipt of the Final\nOrder constitutes service of that document under 49 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, Pipeline Safety\nMr. Dave Barrett, Director, Central Region, PHMSA\nMr. Curtis L. Craig, Vice President & General Counsel, Explorer Pipeline\nMr. T.J. “Tom” Jensen, Vice President of Operations, Explorer Pipeline\nMr. Larry White, Counsel, PHMSA\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED[7005 1160 0001 0075 9701]\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n___________________________________\nIn the Matter of )\n)\nExplorer Pipeline Company, ) CPF No. 3-2009-5018\n)\nRespondent. )\n___________________________________ )\nFINAL ORDER\nFrom May 19-23, June 2-6, 2008, and June 9-12, 2008, pursuant to 49 U.S.C. § 60117, a\nrepresentative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office\nof Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of Explorer Pipeline\nCompany’s (Respondent or Explorer) records and facilities in Missouri, Illinois, and Indiana.\nExplorer Pipeline transports gasoline, fuel oil and jet fuel to 70 population centers in 16 states.\n1\nAs a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,\nby letter dated October 21, 2009, a Notice of Probable Violation and Proposed Civil Penalty\n(Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Respondent\ncommitted violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $78,800 for\nthe alleged violations.\nRespondent responded to the Notice by letter dated November 19, 2009 and February 5, 2010\n(Response). The company contested the allegations, offered additional information regarding\nmitigation of the proposed penalty, and requested a hearing. A hearing was subsequently held on\nFebruary 18, 2010, in Kansas City, Missouri with an attorney from the Office of Chief Counsel,\nPHMSA, presiding. After the hearing, Respondent provided a post-hearing statement for the\nrecord, by letter dated March 17, 2010 (Closing).\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. §195.573(a) (1), which states:\n1 http://www.expl.com/Company.aspx (last visited 5/7/2011).\n\n\n\n2\n§195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine whether\ncathodic protection required by this subpart complies with §195.571:\n(1) Conduct tests on the protected pipeline at least once each calendar year,\nbut with intervals not exceeding 15 months. . . .\nThe Notice alleged that Respondent failed to conduct tests on cathodically protected pipeline\nsegments to monitor external corrosion control at least once each calendar year, but with\nintervals not exceeding 15 months. PHMSA asserted that a review of Explorer’s cathodic\nwithin the required intervals on the St. Louis Meter Station to J.D. Streett West Line for 4 years\n(2004, 2005, 2006, and 2007) for test station 5+45 and 6 years (2002, 2003, 2004, 2005, 2006,\nprotection survey records2 showed tests were not conducted to monitor external corrosion control\nand 2007) for test stations 9+53. The agency also asserted that Explorer’s records showed that\ntests were not conducted to monitor external corrosion control on the St. Louis Meter Station to\nJD Streett East Line for 3 years (2004, 2005, and 2006) for test station 5+45.\nIn its Response, Explorer did not dispute that it failed to perform the required testing to monitor\nexternal corrosion control but contended that this regulation did not apply because the two\npipeline segments are exempt from 49 C.F.R. Part 195. First, it argued that the two pipeline\ndisputed PHMSA’s interpretation that the entire pipeline must be a low stress line for the\nexception to apply. Third, the company contended that PHMSA’s interpretation is not consistent\nwith annual reporting requirements and the pipeline industry’s interpretation of the exception.\nsegments3 satisfy the 49 C.F.R. §195.1(b)(4) 4 low-stress exception from Part 195. Second, it\nAs for Explorer’s first argument that the two pipeline segments satisfy the low-stress exception\nin 49 C.F.R. §195.1(b)(4), the company argued that the two pipeline segments are each 1,362\nfeet long, less than one-mile long, and the maximum operating pressure (MOP) of the “St. Louis\nMeter Station to JD Streett” segments is 275 psig which is less than 20 percent of the specified\nminimum yield strength (SMYS) of the pipeline.\n5\nRespondent explained that its 14-inch\npipeline originates at Explorer’s Wood River, Illinois Tank Farm and terminates at Explorer’s St.\nLouis, Missouri Meter Station. Respondent described the station as equipped with a receiver and\na control valve that isolates the meter station’s in-plant piping from the 14-inch pipeline.\n2 Violation Report, Exhibit A: E-mail with Explorer’s cathodic protection records from Kevin Brown, dated July 18,\n2008.\n3 The two 14-inch diameter pipeline segments are each 1,362 feet long and are identified by Explorer as the “St.\nLouis Meter Station to JD Streett” delivery lines, Response dated November 19, 2009.\n4 49 C.F.R. §195.1(b) (4) Excepted. This part does not apply to any of the following:\n…(4) A low-stress pipeline that serves refining, manufacturing, or truck, rail, or vessel terminal facilities, if the\npipeline is less than one mile long (measured outside facility grounds) and does not cross an offshore area or a\nwaterway currently used for commercial navigation.\n5 20% SMYS is 371 psig as calculated by Explorer. Respondent submitted a chart to support its contention that\nthese line segments satisfy all the criteria of §195.1(b)(4) and are excepted from regulation by PHMSA. Explorer\nresponses dated November 19, 2009 and February 5, 2010.\n\n\n\n3\nRespondent further explained that the two pipeline segments are separate, low-stress, delivery\nlines that serve a truck facility at the J.D. Streett Products Terminal. Respondent proffered that\nin the absence of any established regulatory definition of a beginning and end of a pipeline, it\nestablished a definition: The 14-inch pipeline facility from the Wood River Tank Farm to the St.\nLouis Meter Station can operate independently of the St. Louis Meter Station to the J.D. Streett\nProducts Terminal.\nIn response to Respondent’s argument, PHMSA asserted that a pipeline is “low stress” if it is\nsegments are simply a continuation of a greater than 20 percent SMYS pipeline owned and\noperated by Explorer that is regulated by PHMSA. The agency explained that the greater than\n20 percent SMYS portion of Explorer’s14-inch diameter pipeline system begins at Wood River\nTank Farm (regulated breakout tankage) in Illinois, traverses south along the East side of the\nMississippi River, crosses the Mississippi River to where the St. Louis Meter Station is located\nin Missouri; then using pressure control equipment at the St. Louis Meter Station (a metering\n275 psig for ultimate delivery of product to the JD Streett terminal facility.\noperated in its entirety at less than 20 percent SMYS.6 PHMSA further asserted that the two line\nfacility and part of the pipeline system per §195.2) the operating pressure is reduced to a MOP of\naddressed similar facts and the regulatory status of two pipelines operating at less than 20\npercent SMYS that were delivery lines. The 1992 interpretation described one of the pipelines\nas, “…a 12-inch delivery line that operates at less than 20% SMYS, transports gasoline from an\nOlympic pipeline, which runs between Washington State and Portland, to a Unocal facility in\nPortland.” The 1992 interpretation concluded that “[n]either pipeline you asked about is a\nunique system. Each one is merely a part of a larger system, serving either to introduce products\nPHMSA submitted an agency interpretation7 dated August 24, 1992 (1992 interpretation), which\ninto the system or take products from it. Therefore, each pipeline is subject to Part 195.”\nPHMSA maintained that the same is true in the instant case. Explorer’s two delivery lines are\nmerely a part of a larger system. The agency added that while PHMSA has not defined the\nbeginning and end of pipelines, Respondent’s attempt to create a new definition is misplaced.\nAs for Respondent’s argument that the two pipeline segments satisfy the low-stress exception in\n49 C.F.R. §195.1(b)(4) as being less than one-mile long, serving a terminal facility, and not\ncrossing a waterway used for commercial navigation, the segments must first satisfy the\nelements of the low-stress pipeline definition i.e., that it is a hazardous liquid pipeline that is\noperated in its entirety at a stress level of 20 percent or less of the SMYS of the line pipe. I find\nthat Explorer’s 14-inch pipeline system includes the two pipeline segments at issue in the Notice;\nand those two pipeline segments are less than one-mile long and serve a truck facility. I also find\nthat Respondent’s 14-inch regulated pipeline system carries product from Explorer’s Wood\nRiver, Illinois Tank Farm, across the Mississippi River, and through the St. Louis Meter Station\nto the JD Streett Terminal where the company reduces the operating pressure to less than 20\npercent SMYS for ultimate delivery of product to the two pipeline segments in question in order\nto serve a truck facility I also find that each of the pipeline segments are a part of a larger\n6 “Low-stress pipeline” is defined as “a hazardous liquid pipeline that is operated in its entirety at a stress level of 20\npercent or less of the specified minimum yield strength of the line pipe, 49 C.F.R. §195.2.\n7 PHMSA Violation Report Exhibit E.\n\n\n\n4\nsystem, serving either to introduce products into the system or take products from it. If part of\nthe line is operated above 20 percent SMYS, then the line does not satisfy the requirement that\nthe pipeline be operated in its entirety at a stress level of 20 percent or less of the SMYS.\nSecond, the company disputed PHMSA’s reading of the agency’s 1992 interpretation that for the\nexception to apply the entire pipeline system has to operate at less than 20 percent SMYS.\n8\nExplorer advised that its understanding of the agency’s reading of the interpretation is for the\nexception to apply, “a stand-alone pipeline operator would need to operate its low-stress\ninterstate pipeline for less than one-mile and not cross navigable waters.\n”9 The company also\ncited a PHMSA Memorandum dated March 2, 1995,\nPart 195 does not define the beginning and end of pipelines, it does place the burden of\ncompliance with the regulation on persons who own or operate pipelines.”\n10 which states in relevant part, “Although\nPHMSA maintained that the context of the interpretation in the memorandum was a question\nregarding a previous version of Part 195 that applied to low stress pipelines. Part 195 has since\nbeen amended (Amdt. 195-53, effective August 11, 1994).11 Prior to the amendment, with a\nlimited exception, many low stress pipelines were not subject to regulation.\nhearing, PHMSA noted that Explorer focused on a single sentence within the memorandum and\nreasoned that while PHMSA may not have defined the beginning and end of a pipeline, “placing\nthe burden of compliance on persons who operate…” does not assign the operator as the final\narbiter of what the rules mean. PHMSA asserted that the company’s definition for the beginning\nand end of a pipeline is misplaced. PHMSA maintained that it regulates the safety of\ntransportation by pipeline from the point of gathering to the point of delivery including breakout\ntanks. The exemptions to this broad authority are well defined and narrow. PHMSA further\nmaintained that exemptions cannot be over-interpreted in a manner that would undermine\nPHMSA’s broad authority to regulate pipeline safety.\n12 During the\n8 Explorer referenced, “Unregulated Low-Stress Hazardous Liquid Pipelines,” by Mike Israni & John Gale dated\nAugust 5, 2009.\n9 Response dated March 17, 2010 at page1.\n10 Closing.\n11 Prior to 1992 the agency’s hazardous liquid pipeline safety regulations did not apply to pipelines operating at a\nstress level of 20 percent or less of SMYS (hereafter “low-stress pipelines”') (see 49 CFR 195.1(b)(3)). DOT\nexcluded such pipelines from Part 195 when it first issued the regulations (34 FR 15473; October 4, 1969).\nHowever, serious accidents occurred on low-stress pipelines, which led to a determination that the blanket exclusion\nwas no longer in the interest of public safety. Section 206 of the Pipeline Safety Act of 1992 (PSA) (Pub. L. 102-\n508; October 24, 1992), amended Sec. 203(b) of the Hazardous Liquid Pipeline Safety Act of 1979 (HLPSA) (49\nApp. U.S.C. 2002(b)) to provide that “[i]n exercising any discretion under this Act, the Secretary shall not provide\nan exception to regulation under this Act for any pipeline facility solely on the basis of the fact that such pipeline\nfacility operates at low internal stress”\n.\n12 See preamble for Amdt. 195-53.\n\n\n\n5\nAs for Respondent’s dispute of PHMSA’s reading of the 1992 interpretation, I find that the low\nstress definition criteria are clear and that the March 2, 1995 memorandum submitted by\nExplorer to support its argument is obsolete. I also find that the definition and methodology used\nby Explorer were narrowly tailored to exclusively compare the delivery line segments to the\nexceptions in Section195.1(b)(4), considering the length and SYMS of the two pipeline segments\nwithout factoring their continuation of its entire 14-inch pipeline system.\nThird, the company argued that PHMSA’s reading of the interpretation is not consistent with the\nintent of the legislature, risk measurement, or the annual reporting requirements and industry\ninterpretation of the exception.”13 Explorer contended that PHMSA’s annual report (and\nassociated instructions) does not provide definitions or instructions that contradict Explorer’s\nunderstanding of the §195.1(b)(4) exception. Respondent also contended that its understanding\nof the low-stress exception is common among other operators and provided a table from API\nlisting anonymous operators with the number of miles that are excepted per §195.1(b)(4).14\nRespondent added that the 14-inch pipeline and the two pipeline segments in question are\nrepresented as separate line segments in its National Pipeline Mapping System (NPMS); and that\nhistorically, Respondent has handled these line segments as low-stress.15\nAs for industry interpretation of the exception and the annual report, PHMSA asserted that the\ndata submitted by Explorer provided no description of the pipelines and that the pipelines may or\nmay not be continuations of regulated pipelines. PHMSA also contended that its annual\nreporting forms are not interpretations of the regulations and the instructions are simply provided\nto assist operators in filling out the form properly. As for Explorer reporting the two pipeline\nsegments to PHMSA as separate line segments in the NPMS, the agency advised that the NPMS\nis a pipeline data repository and the manner in which operators subdivide their systems for\nsubmission to NPMS is immaterial to determining whether pipe is regulated or not.\nConsidering the arguments and evidence, I find that there is a distinction between compliance\nwith the NPMS and annual reporting requirements and whether a pipeline is in fact a low stress\npipeline. The information from annual reports is used to more effectively compile national\nstatistics on system inventory; analyze accidents; identify safety problems and potential\nsolutions; and target inspections. I also find that instructions to complete forms are guidance, not\nbinding regulation. I find that the annual report instructions provide guidance on how to respond\nto the questions on the form. As for Explorer’s position that the line segments had been reported\nto PHMSA separately in the NPMS, I find that the NPMS is a pipeline data repository and the\nmanner in which operators subdivide their systems for submission to NPMS is irrelevant to\ndetermining whether PHMSA regulates a pipeline.\n13 Response dated March 17, 2010 at page 2.\n14 Closing at 3.\n15 The company suggested that the reason for the Part 195 exception is that the particular type of pipeline operation\ndoes not present a significant risk for regulatory oversight based on a 2008 Federal Register Notice. Federal Register\nVol. 73, No. 107, pg. 31640. (6/3/08).\n\n\n\n6\nAfter considering all of the evidence and legal arguments presented, I find that the two pipeline\nsegments were not excepted from 49 C.F.R. Part 195, as low stress pipelines excepted under\n§195.1(b)(4). I also find that each of the pipeline segments are a part of a larger system, serving\neither to introduce products into the system or take products from it. Low-stress pipeline means\na hazardous liquid pipeline that is operated in its entirety at a stress level of 20 percent or less of\nthe SMYS of the line pipe, 49 C.F.R. §195.2. I find that at least some parts of Respondent’s 14-\ninch pipeline system operated at a stress level in excess of 20 percent SMYS and therefore, the\ntwo delivery pipeline segments are not a “low stress pipeline” as defined in 49 C.F.R. §195.2.\nI also find that Explorer did not contest the allegations that it failed to perform the required\ntesting and take corrective actions related to the corrosion control requirements. After\nconsidering all the evidence, I find Respondent violated 49 C.F.R. §195.573(a)(1) by failing to\nconduct tests to monitor external corrosion control at least once each calendar year, but with\nintervals not exceeding 15 months at the following locations: St. Louis Meter Station to J.D.\nStreett West Line for 4 years (2004, 2005, 2006, and 2007) for test station 5+45 and 6 years\n(2002, 2003, 2004, 2005, 2006 and 2007) for test stations 9+53; and on the St. Louis Meter\nStation to JD Streett East Line 3 years (2004, 2005, and 2006) at test station 5+45.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. §195.573(e), which states:\n§195.573 What must I do to monitor external corrosion control?\n. . . (e) Corrective action. You must correct any identified deficiency in corrosion\ncontrol as required by §195.401(b). However, if the deficiency involves a\npipeline in an integrity management program under §195.452, you must correct\nthe deficiency as required by §195.452(h).\nThe Notice alleged that Respondent did not correct identified deficiencies during Explorer’s\nannual monitoring of external corrosion control. PHMSA maintained that Explorer’s records16\nindicated that Respondent did not take corrective action for deficient cathodic protections\nreadings that did not meet acceptance criteria, as indicated below:\nThe St. Louis Meter Station to J.D. Streett West Line for test stations 5+45 and 10+12:\n• Test Station 5+45 had “0” readings, which indicates no readings were taken\nfor 4 years (2004, 2005, 2006, and 2007). In addition, at test station 5+45,\nthere were readings below the NACE acceptance criteria of -0.850 volts for 2\nyears (2002 and 2003). The records show that the West Line at test station\n5+45 was deficient for 5 consecutive years after the deficiencies were\nidentified.\n• Test Station 10+12 had readings below the NACE acceptance criteria of\n-0.850 volts for 6 years (2002, 2003, 2004, 2005, 2006, and 2007).\n16 Violation Report, Exhibit A: E-mail with Explorer’s cathodic protection records from Kevin Brown, dated July\n18, 2008; Exhibit B: E-mail from Kevin Brown, dated January 8, 2009; Exhibit C: E-mail from Kevin Brown, dated\nMarch 9, 2009; Exhibit D: E-mail from Kevin Brown, dated April 1, 2009.\n\n\n\n7\nThe St Louis Meter Station to J.D. Streett East Line for test stations 5+45, 9+53,\nand 10+12:\n• Test Station 5+45 had “0” readings which indicate no readings were taken for\n3 years (2004, 2005, and 2006). In addition, at test station 5+45, there were\nreadings below the NACE acceptance criteria of -0.850 volts for 3 years\n(2002, 2003 and 2007). The records show that the East Line at test station\n5+45 was deficient for 5 consecutive years after the deficiencies were\nidentified.\n• Test Station 9+53 and 10+12 on the East Line had readings below the NACE\nacceptance criteria of -0.850 volts for 6 years (2002, 2003, 2004, 2005, 2006,\nand 2007).\nIn its Response and during the hearing, the company proffered that the regulation did not apply\nbecause the two pipeline segments at issue are excepted from Part 195 and satisfy the low-stress\nexception in 49 C.F.R. §195.1(b)(4).\nI found in Item 1 of this Order that PHMSA regulates the two line segments in question and that\nthe line segments were not excepted from Part 195. Accordingly, after considering all of the\nevidence, I find that Respondent failed to take corrective action for deficient cathodic protections\nreadings on its St. Louis Meter Station to JD Streett pipeline segments during Explorer’s annual\nmonitoring of external corrosion control. I find Respondent violated 49 C.F.R. §195.573(a)(1)\nby failing to correct identified corrosion control deficiencies.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to a civil penalty not to exceed $100,000 per\nviolation for each day of the violation up to a maximum of $1,000,000 for any related series of\nviolations.\n49 U.S.C. § 60122 and 49 C.F.R. § 190.225 require that, in determining the amount of a civil\npenalty, I 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; the Respondent’s ability to pay the penalty and any effect that\nthe penalty may have on its ability to continue doing business; and the good faith of Respondent\nin attempting to comply with the pipeline safety regulations. In addition, I may consider the\neconomic benefit gained from the violation without any reduction because of subsequent\ndamages, and such other matters as justice may require. The Notice proposed a total civil\npenalty of $78,800 for the violations cited above.\nThe Notice in Item 1 p","truncated":true,"body_characters":45495}