JAYHAWK PIPELINE LLC — Notice of Probable Violation

party submissionOfficial PDF320135011_Operator Response_05032013.pdf#

320135011_Closure_03182014_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED March 18, 2014 Mr. James S. Loving President National Cooperative Refinery Association Jayhawk Pipeline LLC Kaw Pipe Line Company 2000 South Main Street McPherson, Kansas 67460 CPF 3-2013-5011 Dear Mr. Loving: On June 28, 2013, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to National Cooperative Refinery Association, Jayhawk Pipeline, L.L.C., and Kaw Pipe Line Company a Final Order in the above-referenced case. This Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation you provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of this Order. Accordingly, this case is now closed and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, Linda Daugherty Director, Central Region Pipeline and Hazardous Materials Safety Administration cc: Mr. Richard S. Petersen, Vice President, Transportation, National Cooperative Refinery Association#

320135011_NOPV PCP PCO_04052013_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 5, 2013 Mr. Rick Petersen President Jayhawk Pipeline 1391 Iron Horse Road McPherson, KS 67460 CPF 3-2013-5011 Dear Mr. Petersen: On December 5-8, 2011, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code conducted an inspection of your Integrity Management Program (IMP) and procedures at your facilities in McPherson, KS. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are: 1. §195.452 Pipeline integrity management in high consequence areas. (j) What is a continual process of evaluation and assessment to maintain a pipeline's integrity? (2) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to assure pipeline integrity. An operator must base the frequency of#

320135011_NOPV PCP PCO_04052013_text.pdf, page 2evaluation on risk factors specific to its pipeline, including the factors specified in paragraph (e) of this section. The evaluation must consider the results of the baseline and periodic integrity assessments, information analysis (paragraph (g) of this section), and decisions about remediation, and preventive and mitigative actions (paragraphs (h) and (i) of this section). Jayhawk did not follow their process for conducting periodic evaluation of pipeline integrity, including review of integrity assessment results and information analysis for five (5) of their liquid pipeline segments. Jayhawk uses the form “Individual Line Review Form” to integrate all assessment information. However, five (5) individual line segments were missing the assessment evaluation form. The five (5) line segments that did not have the review form are as follows: Jayhawk Meade to Chase Jayhawk Valley Center to McPherson NCRA Conway 8” Gas NCRA Conway 8” Nat Gasoline NCRA Conway 6” Pentane 2. §195.452 Pipeline integrity management in high consequence areas. (i) What preventive and mitigative measures must an operator take to protect the high consequence area? (3) Leak detection. An operator must have a means to detect leaks on its pipeline system. An operator must evaluate the capability of its leak detection means and modify, as necessary, to protect the high consequence area. An operator's evaluation must, at least, consider, the following factors–length and size of the pipeline, type of product carried, the pipeline's proximity to the high consequence area, the swiftness of leak detection, location of nearest response personnel, leak history, and risk assessment results. Jayhawk/NCRA did not perform a leak detection capability evaluation on any of the Jayhawk, KAW, or NCRA systems. An evaluation is required to determine the leak detection system capability, and if modifications are necessary. This was identified in the last IMP inspection. 3. §195.452 Pipeline integrity management in high consequence areas. (i) What preventive and mitigative measures must an operator take to protect the 2#

320135011_NOPV PCP PCO_04052013_text.pdf, page 3high consequence area? (4) Emergency Flow Restricting Devices (EFRD). If an operator determines that an EFRD is needed on a pipeline segment to protect a high consequence area in the event of a hazardous liquid pipeline release, an operator must install the EFRD. In making this determination, an operator must, at least, consider the following factors–the swiftness of leak detection and pipeline shutdown capabilities, the type of commodity carried, the rate of potential leakage, the volume that can be released, topography or pipeline profile, the potential for ignition, proximity to power sources, location of nearest response personnel, specific terrain between the pipeline segment and the high consequence area, and benefits expected by reducing the spill size. Jayhawk did not conduct an EFRD analysis of the KAW pipeline system. The KAW system and the El Dorado to Halstead line were brought into the IMP program in 2009 subsequent to the last PHMSA IMP inspection. The El Dorado to Halstead segment was evaluated and results concluded that no EFRDs were needed. However, the KAW system was overlooked and was not evaluated. 4. §195.452 Pipeline integrity management in high consequence areas. (l) What records must be kept? (1) An operator must maintain for review during an inspection: (ii) Documents to support the decisions and analyses, including any modifications, justifications, variances, deviations and determinations made, and actions taken, to implement and evaluate each element of the integrity management program listed in paragraph (f) of this section. Jayhawk did not keep records or properly fill out the forms per their IMP Plan for multiple IMP processes. The following deficient or missing records were noted: a) Jayhawk had insufficient records showing that new HCA’s were identified and confirmed since 2006. Jayhawk’s process for identifying newly Identified HCA’s clearly require that this review be documented. Review of the Jayhawk’s Annual Integrity Management Review records which is used to document the HCA review was last completed in 2006. Jayhawk personnel were able to provide internal email correspondence showing that the company was actively trying to identify new HCA’s through the use of NPMS from 2010 to present; however, this is not consistent with the record keeping process. 3#

320135011_NOPV PCP PCO_04052013_text.pdf, page 4b) c) d) e) f) g) h) Records were not available that documented the Communication of Evaluation for 2010. Jayhawk documents the Communication of Evaluation meetings through sign- up sheets at their annual IMP committee meeting. However, the sign-up sheet and agenda for the 2010 meeting was missing. Records that indicated that a baseline assessment was done on the KAW system were not available. Jayhawk utilizes a Pipe Summary Assessment E Form to evaluate and document what baseline assessment is going to be performed. No record of that form could be found that showed that the assessment was conducted on the KAW system. Jayhawk could not produce any record that showed that a continual assessment and evaluation was conducted on the NCRA system. They could not find a completed record for the NCRA system for 2008 and 2009. Jayhawk could not produce any records showing that an analysis was conducted to determine the reassessment interval. Jayhawk/NCRA personnel indicated that the analysis was documented on the Mitigation Information Analysis, and Reassessment Interval Review documentation. However, the documentation presented to PHMSA during the inspection found that the forms were not filled out for the NCRA, KAW, and Jayhawk systems. Jayhawk did not have records of any effectiveness reviews for the NCRA system. Jayhawk personnel conduct annual reviews to determine the effectiveness of the IMP program. Jayhawk personnel document the reviews through typed agendas and their IMP Audit and Industry Benchmarking forms. No forms could be produced to show that the NCRA system was evaluated during these meetings. Jayhawk did not have records of any evaluation of performance measures for either the NCRA or Jayhawk systems. Jayhawk personnel indicated that the performance measures were typically documented on the Annual Integrity Form. However, they were not able to provide any of those forms from 2006 to current. Jayhawk did not document the mitigative review form for the Roth to Sullivan line segment. Per Section 7 (Preventitative and Mitigative Measures of the IMP program) of Jayhawk/NCRA’s IMP manual, a mitigative review form should have been filled out for the Roth to Sullivan line segment. Company personnel could not find any follow-up documentation after being risk ranked in April 2010. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a related series of violations. For violations occurring prior to January 4, 2012, the maximum 4#

320135011_NOPV PCP PCO_04052013_text.pdf, page 5penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $82,400 as follows: Item number PENALTY 1 $ 29,300 2 $ 33,100 4 $ 20,000 Proposed Compliance Order With respect to item(s) 2, 3, and 4 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Jayhawk Pipeline. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. All material you submit in response to this enforcement action may be made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 3-2013-5011 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, David Barrett Director, Central Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 5#

320135011_NOPV PCP PCO_04052013_text.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Jayhawk Pipeline a Compliance Order incorporating the following remedial requirements to ensure the compliance of Jayhawk Pipeline with the pipeline safety regulations: 1. 2. 3. 3. 4. In regard to Item Number 2 of the Notice pertaining to Jayhawk not performing a leak detection capability analysis on any of the pipeline segments, Jayhawk/NCRA must conduct the leak detection capability analysis on the Jayhawk, KAW, and NCRA systems. In regard to Item Number 3 of the Notice pertaining to Jayhawk not conducting an EFRD analysis of the KAW system. Jayhawk must perform the EFRD analysis on the KAW pipeline system. In regard to Item 4 of the Notice pertaining to Jayhawk not maintaining numerous required Integrity Management documents and records, a document management and records retention system must be established within 90 days of the Final Order. Submit the proposed document management process to the Region Director within 30 days of the Final order for the Director’s approval. The evaluations required in 1 and 2 of this Proposed Compliance Order must be completed within 60 days of the date of the Final Order. Submit to the Region Director documentation of the evaluations within 30 days of completion. It is requested (not mandated) that Jayhawk Pipeline maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to David Barrett, Director, Central Region, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. 6#

320135011_Final Order_06282013_text.pdf, page 1Official PDFJUNE 28, 2013 Mr. James S. Loving President National Cooperative Refinery Association 2000 South Main Street McPherson, Kansas 67460 Re: CPF No. 3-2013-5011 Dear Mr. Loving: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $82,400, and specifies actions that need to be taken by National Cooperative Refinery Association and its affiliates, Jayhawk Pipeline, LLC, and Kaw Pipe Line Company, to comply with the pipeline safety regulations. This letter acknowledges receipt of payment of the full penalty amount, by wire transfer dated May 6, 2013. When the compliance order has been completed, as determined by the Director, Central Region, this enforcement action will be closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. David Barrett, Director, Central Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS Mr. Richard S. Peterson, Vice President, Transportation, National Cooperative Refinery Association CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

320135011_Final Order_06282013_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 _________________________________________ In the Matter of ) National Cooperative Refinery Association, ) CPF No. 3-2013-5011 a nonprofit corporation, ) ) ) ) Respondent. ) _________________________________________ ) FINAL ORDER On December 5-8, 2011, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the records and integrity management program (IMP) of Jayhawk Pipeline, LLC (Jayhawk), in McPherson, Kansas. Jayhawk is a wholly-owned subsidiary of National Cooperative Refinery Association (NCRA or Respondent).1 NCRA operates a refinery in McPherson and transports product from that refinery through pipelines in Kansas, Nebraska, and Iowa. 2 Jayhawk transports crude oil over more than 1,000 miles of pipeline in Nebraska, Kansas, Oklahoma, and Texas.3 Jayhawk also operates pipelines for Kaw Pipe Line Company (Kaw),4 which is majority-owned by NCRA.5 The IMP inspection covered the NCRA, Jayhawk, and Kaw pipeline systems.6 As a result of the inspection, the Director, Central Region, OPS (Director), issued to Jayhawk, by letter dated April 5, 2013, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Jayhawk had committed various violations of 49 C.F.R. § 195.452 and proposed assessing a civil penalty of $82,400 for the alleged violations. The Notice also proposed 1 Jayhawk Pipeline, LLC, website (Jayhawk website), available at http://www.jayhawkpl.com/ (last accessed June 6, 2013) 2 NCRA website, available at http://www.ncra.coop/MediaCenter/Gettoknow.pdf (last accessed June 6, 2013). 3 Jayhawk website, supra note 1. 4 Id. 5 NCRA website, supra note 2. 6 Pipeline Safety Violation Report (Violation Report), (April 5, 2013) (on file with PHMSA), at 1.#

320135011_Final Order_06282013_text.pdf, page 32 ordering Jayhawk to take certain measures to correct the alleged violations. 7 NCRA responded to the Notice on behalf of NCRA, Jayhawk, and Kaw, by letter dated May 3, 2013 (Response). NCRA did not contest the allegations of violation and paid the proposed civil penalty of $82,400, as provided in 49 C.F.R. § 190.227. Payment of the penalty authorizes the Associate Administrator to make findings of violation as to the uncontested items, with prejudice to Respondent. FINDINGS OF VIOLATION In its Response, NCRA did not contest the allegations in the Notice that it violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(2), which states: § 195.452 Pipeline integrity management in high consequence areas. (a) . . . . (j) What is a continual process of evaluation and assessment to maintain a pipeline’s integrity?—(1) . . . . (2) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to assure pipeline integrity. An operator must base the frequency of evaluation on risk factors specific to its pipeline, including the factors specified in paragraph (e) of this section. The evaluation must consider the results of the baseline and periodic integrity assessments, information analysis (paragraph (g) of this section), and decisions about remediation, and preventive and mitigative actions (paragraphs (h) and (i) of this section). The Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(2) by failing to conduct a periodic evaluation of its line pipe as frequently as needed to assure pipeline integrity. Specifically, the Notice alleged that NCRA’s evaluation process failed to consider the results of integrity assessments and information analyses for two Jayhawk line segments and three NCRA line segments. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.452(j)(2) by failing to conduct a periodic evaluation of its line pipe as frequently as needed to assure pipeline integrity. 7 Although the Notice was issued solely to Jayhawk, it alleged violations by NCRA, Jayhawk, and Kaw. Since NCRA controls all three entities, responded to the Notice on behalf of Jayhawk, and did not contest any of the violations, this Final Order is being issued to NCRA, the parent organization.#

320135011_Final Order_06282013_text.pdf, page 43 Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(i)(3), which states: § 195.452 Pipeline integrity management in high consequence areas. (a) . . . . (i) What preventive and mitigative measures must an operator take to protect the high consequence area?—(1) . . . . (3) Leak detection. An operator must have a means to detect leaks on its pipeline system. An operator must evaluate the capability of its leak detection means and modify, as necessary, to protect the high consequence area. An operator’s evaluation must, at least, consider, the following factors—length and size of the pipeline, type of product carried, the pipeline's proximity to the high consequence area, the swiftness of leak detection, location of nearest response personnel, leak history, and risk assessment results. The Notice alleged that Respondent violated 49 C.F.R. § 195.452(i)(3) by failing to evaluate the capability of its pipeline leak detection system to detect leaks that could affect high consequence areas (HCAs). 8 Specifically, the Notice alleged that Respondent did not perform a leak detection capability evaluation on any segment in the NCRA, Jayhawk, or Kaw pipeline systems. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.452(i)(3) by failing to evaluate the capability of its pipeline leak detection system to detect leaks that could affect HCAs. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(i)(4), which states: § 195.452 Pipeline integrity management in high consequence areas. (a) . . . . (i) What preventive and mitigative measures must an operator take to protect the high consequence area?—(1) . . . . (4) Emergency Flow Restricting Devices (EFRD). If an operator determines that an EFRD is needed on a pipeline segment to protect a high consequence area in the event of a hazardous liquid pipeline release, an operator must install the EFRD. In making this determination, an operator must, at least, consider the following factors—the swiftness of leak detection and pipeline shutdown capabilities, the type of commodity carried, the rate of potential leakage, the volume that can be released, topography or pipeline profile, the potential for ignition, proximity to power sources, location of nearest response personnel, specific terrain between the pipeline segment and the high consequence area, and benefits expected by reducing the spill size. The Notice alleged that Respondent violated 49 C.F.R. § 195.452(i)(4) by failing to determine whether an EFRD was needed on a pipeline segment. Specifically, the Notice alleged that 8 “High Consequence Areas” are defined as commercially navigable waterways, high population areas, other populated areas, and unusually sensitive areas. See 49 C.F.R. § 195.450.#

320135011_Final Order_06282013_text.pdf, page 54 Respondent added the Kaw pipeline system to its IMP in 2009 but failed to evaluate whether that system needed one or more EFRDs. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.452(i)(4) by failing to determine whether an EFRD was needed on a pipeline segment. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(l)(1)(ii), which states: § 195.452 Pipeline integrity management in high consequence areas. (a) . . . . (f) What are the elements of an integrity management program? An integrity management program begins with the initial framework. An operator must continually change the program to reflect operating experience, conclusions drawn from results of the integrity assessments, and other maintenance and surveillance data, and evaluation of consequences of a failure on the high consequence area. An operator must include, at minimum, each of the following elements in its written integrity management program: (1) A process for identifying which pipeline segments could affect a high consequence area; (2) A baseline assessment plan meeting the requirements of paragraph (c) of this section; (3) An analysis that integrates all available information about the integrity of the entire pipeline and the consequences of a failure (see paragraph (g) of this section); (4) Criteria for remedial actions to address integrity issues raised by the assessment methods and information analysis (see paragraph (h) of this section); (5) A continual process of assessment and evaluation to maintain a pipeline’s integrity (see paragraph (j) of this section); (6) Identification of preventive and mitigative measures to protect the high consequence area (see paragraph (i) of this section); (7) Methods to measure the program’s effectiveness (see paragraph (k) of this section); (8) A process for review of integrity assessment results and information analysis by a person qualified to evaluate the results and information (see paragraph (h)(2) of this section). (g) . . . . (l) What records must be kept? (1) An operator must maintain for review during an inspection: (i) . . . . (ii) Documents to support the decisions and analyses, including any modifications, justifications, variances, deviations and determinations made, and actions taken, to implement and evaluate each element of the integrity management program listed in paragraph (f) of this section.#

320135011_Final Order_06282013_text.pdf, page 65 The Notice alleged that Respondent violated 49 C.F.R. § 195.452(l)(1)(ii) by failing to maintain for review during an OPS inspection the documents supporting the decisions and analyses made, and actions taken, to implement and evaluate each element of the operator’s IMP. Specifically, the Notice alleged eight deficiencies in NCRA’s IMP recordkeeping: (a) insufficient documentation showing new HCAs identified after 2006; (b) missing documentation of the Communication of Evaluation for 2010; (c) missing documentation of a baseline assessment on the Kaw pipeline system; (d) missing documentation of a continual assessment and evaluation on the NCRA pipeline system for 2008 and 2009; (e) missing documentation of a reassessment interval analysis for the NCRA, Jayhawk, and Kaw pipeline systems; (f) missing documentation of effectiveness reviews for the NCRA system; (g) missing documentation of performance measure evaluations for the NCRA and Jayhawk pipeline systems from 2006 to the date of the inspection; and (h) missing documentation of a preventive and mitigation measure review for a Kaw pipeline segment that was risk-ranked in April 2010. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.452(l)(1)(ii) by failing to maintain for review during an OPS inspection the documents supporting the decisions and analyses made, and actions taken, to implement and evaluate each element of its IMP. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative 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. In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $82,400 for the violations cited above. Item 1: The Notice proposed a civil penalty of $29,300 for Respondent’s violation of 49 C.F.R. § 195.452(j)(2), for failing to conduct a periodic evaluation of its line pipe as frequently as needed to assure pipeline integrity. NCRA paid the proposed penalty, which serves to authorize the Associate Administrator to assess the proposed penalty, with prejudice to Respondent. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $29,300 for violation of 49 C.F.R. § 195.452(j)(2). Item 2: The Notice proposed a civil penalty of $33,100 for Respondent’s violation of#

320135011_Final Order_06282013_text.pdf, page 76 49 C.F.R. § 195.452(i)(3), for failing to evaluate the capability of its pipeline leak detection system to detect leaks that could affect HCAs. NCRA paid the proposed penalty, which serves to authorize the Associate Administrator to assess the proposed penalty, with prejudice to Respondent. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $33,100 for violation of 49 C.F.R. § 195.452(i)(3). Item 4: The Notice proposed a civil penalty of $20,000 for Respondent’s violation of 49 C.F.R. § 195.452(l)(1)(ii), for failing to maintain for review during OPS inspections the documents supporting the decisions and analyses made, and actions taken, to implement and evaluate each element of its IMP. NCRA paid the proposed penalty, which serves to authorize the Associate Administrator to assess the proposed penalty, with prejudice to Respondent. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $20,000 for violation of 49 C.F.R. § 195.452(l)(1)(ii). In summary, having reviewed the record and considered the assessment criteria for each of the Items cited above, I assess Respondent a total civil penalty of $82,400. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 2, 3, and 4 in the Notice for violations of 49 C.F.R. § 195.452(i)(3), (i)(4), and (l)(1)(ii), respectively. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 195.452(i)(3) (Item 2), Respondent must conduct a leak detection capability analysis on the NCRA, Jayhawk, and Kaw pipeline systems. 2. With respect to the violation of § 195.452(i)(4) (Item 3), Respondent must perform an EFRD analysis of the Kaw pipeline system. 3. With respect to the violation of § 195.452(l)(1)(ii) (Item 4), Respondent must establish a document management and retention system within 90 days of receipt of this Final Order. Respondent must submit the proposed document management process to the Director within 30 days of receipt of this Final Order for the Director’s approval. 4. Respondent must complete the evaluations required in paragraphs 1 and 2 of this Compliance Order within 60 days of receipt of this Final Order. Respondent must submit documentation of the evaluations to the Director within 30 days of completion.#

320135011_Final Order_06282013_text.pdf, page 87 5. PHMSA requests that Respondent maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the Director. PHMSA requests that Respondent report these costs in two categories: (1) total cost associated with preparation and revision of plans, procedures, studies, and analyses; and (2) total cost associated with replacements, additions, and other changes to pipeline infrastructure. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent and demonstrating good cause for an extension. Failure to comply with this Order may result in the administrative assessment of civil penalties not to exceed $100,000 for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#