{"operation":"document","citation":"CPF 320125004","title":"NUSTAR PIPELINE OPERATING PARTNERSHIP L.P. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2012-02-14","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.412(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-320125004.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-320125004.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-320125004","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/320125004","body":"Notice of Probable Violation involving NUSTAR PIPELINE OPERATING PARTNERSHIP L.P.. PHMSA's enforcement data identifies the cited regulation as 195.412(a). The case was opened on 2012-02-14 and is reported as closed as of 2014-04-08. Proposed civil penalty: $72,500. Assessed civil penalty: $72,500. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n320125004_Final Order_03202014.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320125004/320125004_Final%20Order_03202014.pdf\n\n320125004_Final Order_03202014_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320125004/320125004_Final%20Order_03202014_text.pdf\n\n320125004_NOPV PCP_02142012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320125004/320125004_NOPV%20PCP_02142012.pdf\n\n320125004_NOPV PCP_02142012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320125004/320125004_NOPV%20PCP_02142012_text.pdf\n\n320125004_Operator Response to Notice_03152012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320125004/320125004_Operator%20Response%20to%20Notice_03152012.pdf\n\n320125004_Final Order_03202014_text.pdf\n\nMARCH 20, 2014\nMr. Curt Anastasio\nChief Executive Officer and President\nNuStar Energy, LP\n19003 IH-10 West\nSan Antonio, TX 78257\nRe: CPF No. 3-2012-5004\nDear Mr. Anastasio:\nEnclosed please find the Final Order issued in the above-referenced case to your subsidiary,\nNuStar Pipeline Operating Partnership, LP. It makes a finding of violation and assesses a civil\npenalty of $72,500. 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 by\ncertified mail is deemed 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: Ms. Linda Daugherty, Director, Central Region, OPS\nMr. Gerald Koegeboehn, Vice President and General Manager, NuStar Pipeline\nOperating Partnership, LP\nMr. Michael Dillinger, Counsel, NuStar Pipeline Operating Partnership, LP\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\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 )\nNuStar Pipeline Operating )\nPartnership, LP, ) CPF No. 3-2012-5004\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nOn May 16-20 and July 11-15, 2011, pursuant to 49 U.S.C. § 60117, representatives 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 the NuStar\nPipeline Operating Partnership, LP (NuStar or Respondent) anhydrous ammonia pipeline system\nin Missouri, Iowa, and Nebraska. The system consists of approximately 1,925 miles of pipeline\nand transports product from the Louisiana Gulf Coast to Indiana and Nebraska. NuStar is a\nwholly-owned subsidiary of NuStar Energy, LP.1\nAs a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,\nby letter dated February 14, 2012, 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 NuStar had\nviolated 49 C.F.R. § 195.412(a) and assessing a civil penalty of $72,500 for the alleged violation.\nNuStar responded to the Notice by letter dated March 15, 2012 (Response). The company did\nnot contest the allegations of violation but provided an explanation of its actions and requested\nthat the proposed civil penalty be reduced. Respondent did not request a hearing and therefore\nhas waived its right to one.\nFINDING OF VIOLATION\nThe Notice alleged that Respondent violated 49 C.F.R. Part 192, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.412(a), which states:\n1 NuStar Energy L.P., Annual Report (Form 10-K), at 3 (Mar. 1, 2013).\n\n\n\n2\n§ 195.412 Inspection of rights-of-way and crossings under navigable\nwaters.\n(a) Each operator shall, at intervals not exceeding 3 weeks, but at least\n26 times each calendar year, inspect the surface conditions on or adjacent\nto each pipeline right-of-way. Methods of inspection include walking,\ndriving, flying or other appropriate means of traversing the right-of-way.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.412(a) by failing to inspect the\nsurface conditions on the Company’s right-of-way for its anhydrous ammonia pipeline system.\nSpecifically, the Notice alleged that NuStar’s method of inspecting the right-of-way was aerial\npatrolling, but a section of the right-of-way in Iowa was so overgrown with vegetation that it\nmade aerial patrolling ineffective. The Notice alleged that NuStar had not implemented another\nmethod of inspecting the surface conditions at this location and that the operator had been cited\nfor, and found guilty, of a violation of the same regulation in a previous enforcement action [CPF\nNo. 3-2007-5002].\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.412(a) by failing to inspect the\nsurface conditions on its pipeline right-of-way.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\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. In determining the amount of a civil penalty under\n49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,\ncircumstances, and gravity of the violation, including adverse impact on the environment; the\ndegree of Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s\nability to pay the penalty and any effect that the penalty may have on its ability to continue doing\nbusiness; and the good faith of Respondent in attempting to comply with the pipeline safety\nregulations. In addition, I may consider the economic benefit gained from the violation without\nany reduction because of subsequent damages, and such other matters as justice may require.\nThe Notice proposed a total civil penalty of $72,500 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $72,500 for Respondent’s violation of\n49 C.F.R. § 195.412(a), for failing to inspect the surface conditions on its pipeline right-of-way.\nIn its Response, NuStar requested that the proposed penalty be reduced and argued that the\nproposed penalty was excessive and should be reduced to not more than $47,400.\nFirst, NuStar argued that the penalty was excessive when compared to other penalties assessed\nby PHMSA for similar violations of 49 C.F.R. § 195.412(a). Specifically, NuStar cited seven\nprevious final orders where the penalty for a violation of this regulation had ranged from $0 to\n$47,400.\n\n\n\n3\nFor several reasons, I find this argument unconvincing. As PHMSA has indicated in other\nenforcement proceedings the agency applies the statutory penalty assessment criteria on a case-\nby-case basis that takes into account the unique facts and circumstances of each violation.\n2 Such\nan analysis may include how a particular violation was discovered, its duration, whether the\noperator made a good-faith effort to comply with the regulation prior to the inspection or\naccident, and the operator’s history of prior violations. It is therefore not uncommon for there to\nbe some variance in the penalties assessed for different operators' violations of the same code\nsection.\nI would note that there is no legal requirement that a regulatory agency impose uniform penalties\nor identical remedies for violations of the same regulation, nor is there any requirement to\ncompare the factual circumstances of every past finding of violation when proposing and\nassessing penalties. On the other hand, PHMSA strives to use a penalty assessment process\ndesigned to maximize consistency and fairness in the imposition of civil penalties throughout the\ncountry and to impose substantially similar penalties for comparable levels of gravity,\nculpability, compliance history, and the other assessment factors enumerated in 49 C.F.R. §\n190.225.\nNuStar has specifically pointed to seven prior cases where PHMSA assessed either no penalty at\nall or lower penalties for violations of 49 C.F.R. § 195.412(a) than what has been proposed here.\nRespondent compared the circumstances of this case to those in the seven cited cases and\nproposed that PHMSA impose a penalty no greater than $47,400, the amount assessed against\nEnterprise Products Operating, LLC, in a final order issued October 22, 2012.\nNuStar is correct that the penalty proposed here is larger than any of the ones assessed in the\nseven cited cases. We have carefully reviewed the case file in this proceeding and compared the\npenalty proposed here with the ones assessed in the ones cited by Respondent. The principal\ndifference, and the greatest aggravating factor in the present case, is that NuStar’s violation of\n49 C.F.R. § 195.412(a) involves a repeat violation of the same regulation for which NuStar had\nbeen previously cited and that had been finally adjudicated prior to the inspection upon which\nthe present case was based. On February 5, 2009, in a case with facts remarkably similar to\nthose of the present case, NuStar was found guilty of violating § 195.412(a) for failure to\nconduct proper aerial inspections of its right-of-way.\nIn the previous case, NuStar had relied upon aerial patrolling but had allowed vegetation to grow\nup over the right-of-way in four locations on the same anhydrous ammonia pipeline system. The\nfinal order imposed a civil penalty of $38,000, and required NuStar to develop and implement a\nplan for clearing its right-of-way and to use an alternative means of patrolling the right-of-way\nuntil it had been properly cleared. Therefore, NuStar was clearly aware of the regulatory\nrequirement in § 195.412(a), had been penalized for failing to conduct basic surveillance of its\nright-of-way, and yet still failed to properly implement a compliant inspection program by the\ndate of the new PHMSA inspection in May-July 2011, more than two years after first being\nordered to do so.\n2 See, e.g., In the Matter of Belle Fourche Pipeline Company, CPF No. 5-2009-5042 (Nov. 21, 2011), and In the\nMatter of BP Pipelines (North America), Inc., CPF No. 3-2010-5007 (Dec. 27, 2012).\n\n\n\n4\nSecond, NuStar argued that in two of the seven cases, the operators had also committed prior\nviolations but were assessed either no penalty at all or one much smaller than the one proposed\nhere. However, these two cases are inapposite because those operators had not been found guilty\nof a prior violation of the same regulation, in a final adjudication, prior to the date of the\nsubsequent offense. PHMSA does not impose enhanced penalties for repeat offenses unless an\noperator has already been found guilty of the prior offense, in a final agency action, prior to the\ndate of the subsequent inspection/accident.\nThird, NuStar argued that the proposed penalty was excessive considering the assessment criteria\nset forth in 49 C.F.R. § 190.225. NuStar presented several arguments why the penalty should be\nreduced, two of which had been raised in CPF No. 3-2007-5002.3 In addition, the company\nargued that the gravity of the violation was minimal because no accident was involved and there\nhad been no adverse impact to the environment. The fact that no accident resulted from the\nviolation was already considered in arriving at the proposed assessment, as noted in the Violation\nReport. In fact, the penalty would have been significantly higher had an accident occurred as a\nresult of the violation. Furthermore, the potential existed for damage to the pipeline or an\naccident due to inadequate patrolling.\nFinally, NuStar argued that the violation was “not intentional” and that the company had\nincreased its budget for clearing the right-of-way. Again, the proposed penalty would have been\nhigher or a criminal penalty sought if the violation had been knowing and willful. It also would\nappear that if the company had undertaken major efforts prior to the 2011 inspection to improve\nits aerial patrolling system, it would have cleared this particular area. Regardless, PHMSA\nexpects any reasonable and prudent operator to spend the funds necessary to protect its right-of-\nway and the public from encroachments and hazardous conditions that may jeopardize its\nfacilities. Such safety measures to meet the pipeline safety standards do not entitle an operator to\na reduced penalty.\nIn summary, it was Respondent’s repeat violation of 49 C.F.R. § 195.412(a) and the risks\nassociated with its failure to adequately patrol its right-of-way that justify the proposed penalty\namount in this case. Accordingly, having reviewed the record and considered the assessment\ncriteria, I assess Respondent a civil penalty of $72,500 for violation of 49 C.F.R. § 195.412(a).\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a total civil penalty of $72,500.\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 such 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\n3 In both CPF No. 3-2007-5002 and the present case, NuStar argued that due to the unique nature of anhydrous\nammonia, the presence of dense vegetation in the right-of-way does not inhibit leak detection and therefore the\npresence of such vegetation should not be considered a serious violation. In addition, the company argued that\nNuStar was entitled to credit for its post-inspection efforts to correct the violation. Both arguments, however, were\nconsidered and rejected in CPF No. 3-2007-5002 and I see no reason here to address these arguments again.\n\n\n\n5\nFinancial Operations Division telephone number is (405) 954-8893.\nFailure to pay the $72,500 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 has the right to submit a Petition for Reconsideration of\nthis Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline\nSafety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC\n20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA\nwill accept petitions received no later than 20 days after receipt of service of the Final Order by\nthe Respondent, provided they contain a brief statement of the issue(s) and meet all other\nrequirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of\nany civil penalty assessed but does not stay any other provisions of the Final Order, including\nany required corrective actions. If Respondent submits payment of the civil penalty, the Final\nOrder becomes the final administrative decision and the right to petition for reconsideration is\nwaived.\nThe terms and conditions of this Final Order are effective upon service in accordance with\n49 C.F.R. § 190.5.\n___________________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":16391}