{"operation":"document","citation":"CPF 320155010","title":"TC OIL PIPELINE OPERATIONS INC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2015-11-20","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.401(a), 195.573(a)(1), 195.573(e), 195.577(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-320155010.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-320155010.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-320155010","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/320155010","body":"Notice of Probable Violation involving TC OIL PIPELINE OPERATIONS INC. PHMSA's enforcement data identifies the cited regulations as 195.401(a),  195.573(a)(1),  195.573(e),  195.577(a). The case was opened on 2015-11-20 and is reported as closed as of 2017-06-15. Proposed civil penalty: $187,200. Assessed civil penalty: $135,400. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n320155010_Final Order_05312017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320155010/320155010_Final%20Order_05312017.pdf\n\n320155010_Final Order_05312017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320155010/320155010_Final%20Order_05312017_text.pdf\n\n320155010_NOPV PCP PCO_11202015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320155010/320155010_NOPV%20PCP%20PCO_11202015.pdf\n\n320155010_NOPV PCP PCO_11202015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320155010/320155010_NOPV%20PCP%20PCO_11202015_text.pdf\n\n320155010_Operator Response to Notice and Request for Hearing_12182015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320155010/320155010_Operator%20Response%20to%20Notice%20and%20Request%20for%20Hearing_12182015.pdf\n\n320155010_NOPV PCP PCO_11202015_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nNovember 20, 2015\nMr. Vern Meier\nPresident\nTransCanada (TC) Oil Pipeline Operations, Inc.\n717 Texas Avenue\nHouston, Texas 77002-2761\nCPF 3-2015-5010\nDear Mr. Meier:\nOn multiple occasions between April 2 and November 15, 2012, representatives of the Pipeline\nand Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\npursuant to Chapter 601 of 49 United States Code inspected TransCanada Oil Pipeline\nOperations Inc.’s (TransCanda’s) Keystone Pipeline throughout the central United States.\nPhysical facilities and records were inspected on the mainline from the Canadian Border to\nPatoka, Illinois and the Cushing Extension.\nBackground\nTransCanada’s Keystone Pipeline (Keystone) is a hazardous liquid pipeline transporting crude\noil from Canada to facilities in the central United States comprised of the following two lines:\n• A 1,025-mile, 30-inch diameter, Mainline from the Canadian border at Cavalier County,\n\n\n\nNorth Dakota, traversing the states of North Dakota, South Dakota, Nebraska, Kansas\nand Missouri, to Wood River and Patoka, Illinois; and\n• A 291-mile, 36-inch diameter, Cushing Extension from Steele City (Jefferson County),\nNebraska through Kansas, to Cushing (Marion County), Oklahoma.\nTransCanada completed construction of the Keystone mainline segment from the Canadian\nborder to Steele City, Nebraska in 2008 followed by construction of the mainline segment from\nSteele City, Nebraska to Wood River and Patoka, Illinois in 2009-2010, all of which were then\nplaced in service by June 30, 2010. The Cushing Extension from Steele City, Nebraska to\nCushing, Oklahoma was placed in service by February 8, 2011. In October 2012, Keystone\nreported to PHMSA four significant metal loss anomalies from an in-line inspection (ILI)\nrequiring immediate pressure reduction and verification digs in the Salisbury, Missouri to\nPatoka, Illinois segment (MP 868 to 1083). The digs validated that stray current D.C.\ninterference from foreign pipelines near MP 995 had caused four metal loss features over sixty\npercent deep (97%, 69%, 74%, 61%). The 97% deep anomaly left a remaining wall thickness of\n0.0120 inch, which is less than 1/64 inch. Keystone conducted a close interval survey in\nDecember 2011 which had identified cathodic protection potentials that were below criteria,\nalong with the existence of interference from other pipeline operators in the vicinity. A report,\nCorrosion Anomaly at MP 995 KS9 Salisbury to Patoka on Keystone Pipeline (Report), issued\non November 21, 2012, identified the primary cause of the pitting mechanism as the inadequacy\nof the original CP design. The secondary cause identified was the timeliness of corrective actions\nthat could have been accelerated to mitigate the corrosion.\nAs a result of the inspection, it appears that TransCanada has committed probable violations of\nthe Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and\nthe probable violations are:\n1. §195.401 General requirements.\n(a) No operator may operate or maintain its pipeline systems at a level of safety\nlower than that required by this subpart and the procedures it is required to\nestablish under §195.402(a) of this subpart.\nTransCanada did not operate the Steele City to Patoka and Cushing Extension at a level\nof safety as required by Subpart F and the procedures required by §195.402(a). Part 195.402(a)\nrequires each operator to prepare and follow procedures for normal operations and maintenance\nactivities which are further described in §195.402(c)(3) to include “operating, maintaining, and\nrepairing the pipeline system in accordance with each of the requirements of this subpart and\nsubpart H of this part.” Subpart H – Corrosion Control includes Part 195.563(a) which requires\neach pipeline to have cathodic protection (CP) in operation no later than 1 year after the pipeline\nis constructed.\nThe mainline segment from Steele City, Nebraska to Patoka, Illinois was placed in\nservice by June 30, 2010. Corrective measures to complete the installation of the CP did not\noccur until November 2012 and then again in 2013. According to the criteria in TransCanada’s\n2\n\n\n\nprocedures and Part 195.563(a), adequate CP should have been in operation on the pipeline by\nJune 30, 2011.\nUpon investigation, the CP system was not designed properly as stated in TransCanada’s\nCorrosion Anomaly at MP 995 KS9 Salisbury to Patoka on Keystone Pipeline Report (Report),\nand did not meet its procedure TED-CP-DD Cathodic Protection Design Directive regarding\nsufficient current supplied to the pipeline as described in Section 9 “Current Required for\nProtection.” The summary of the Report found (in part):\n“The anomalies in the MP995 Anomaly Area were unprecedented…..(they) are believed\nto be a direct result of low cathodic protection levels caused by an inadequate cathodic\nprotection design which did not fully consider all of the bare metallic structures including\nsubstation grounding grids in the pump stations.”\nIn discussions with TransCanada’s personnel in November 2012 and as documented in\nthe CP reports, TransCanada determined that design changes made to the pump stations early in\nthe project were not communicated to the personnel designing the CP system. The design\nchanges in the pump stations created an increased demand for CP current, which was not\nadequately incorporated into the final design of the CP system. In addition, the initial CP design\nonly called for ground beds at the pump stations on the mainline between Steele City, Nebraska\nand Patoka, Illinois. The CP system on the mainline from the Canadian border to Steele City, on\nthe other hand, had ground beds at both the pump stations and midway between the pump\nstations.\nTransCanada’s initial CP survey of the Steele City to Patoka mainline completed in\nDecember 2010 and the Cushing Extension segments completed in August 2011 showed low CP\nin numerous locations. As a result, TransCanada installed 12 new ground bed systems on the\nmainline between Steele City and Patoka and an additional 4 ground beds installed on the\nCushing Extension in 2012. An additional 5 ground beds were installed on the Steele City to\nPatoka segment of the mainline in 2013, primarily at the eastern end of the mainline just west of\nSt. Louis. An additional two ground beds were installed on the Cushing Extension in 2013.\nTransCanada operated its cathodic protection system on the Keystone Pipeline at a level\nof safety below that required by Subpart F; therefore specifically violating §195.401(a).\n2. §195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine whether cathodic\nprotection required by this subpart complies with Sec. 195.571:\n(1) Conduct tests on the protected pipeline at least once each calendar year, but\nwith intervals not exceeding 15 months. However, if tests at those intervals are\n3\n\n\n\nimpractical for separately protected short sections of bare or ineffectively coated\npipelines, testing may be done at least once every 3 calendar years, but with\nintervals not exceeding 39 months.\nTransCanada failed to conduct tests to monitor the protected pipeline at least once each\ncalendar year, but with intervals not exceeding 15 months. According to TransCanada’s records,\nfifty-one (51) required annual cathodic protection test station readings were not taken from 2010\nto 2012 on the East Leg of Keystone from Steel City, Nebraska to Patoka, Illinois. Twenty-three\n(23) were from Steele City to Salisbury and the other twenty-eight 28 were from Salisbury to\nPatoka. TransCanada provided no rational for the failure to conduct and record the required\ntesting.\n3. §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 Sec. 195.401(b).\nTransCanada failed to correct cathodic protection deficiencies found in 62 locations within\na reasonable time. TransCanada’s records indicate deficiencies that remained uncorrected for\nmultiple years.\nOn the TransCanada Keystone Pipeline from Steel City, Nebraska to Patoka, Illinois\ncompiled records from 2010 to 2012 documented the following 56 deficiencies:\n• 44 multiple-year cathodic protection test station deficient (low) readings with 5\nstill not remediated by March 2013;\n• 3 test stations at 1 pump station not remediated by March 2013; and\n• 9 multiple-year cathodic protection deficient (low) readings at 5 valve sites.\nIn addition, on the TransCanada Keystone Cushing Extension from Steele City, Nebraska\nto Cushing, Oklahoma records from 2010 to 2012 documented the following 6 deficiencies:\n• 3 mainline multiple-year cathodic protection test station deficient readings; and\n• 3 multiple-years of cathodic protection deficient readings at 1 pump station.\n4. §195.577 What must I do to alleviate interference currents?\n(a) For pipelines exposed to stray currents, you must have a program to identify,\ntest for, and minimize the detrimental effects of such currents.\nTransCanada failed to minimize the detrimental effect of interference currents on at least\ntwo areas under the influence of another pipeline CP system in a timely manner. Records\ndocument that at MPs 991 to 998 on the mainline near St. Louis and MP 137 on the Cushing\nExtension, stray currents existed on the pipeline over a year after installing corrosion control\n4\n\n\n\nmeasures meant to alleviate the problem. TransCanada reported to PHMSA on March 27, 2012,\nin the Special Permit Condition #37 Response, the existence of interference locations and\nmitigation efforts taken to address those problems. Phase 1 refers to the pipeline from the\nCanadian/US border to Illinois and Phase 2 refers to the Cushing Extension.\nThe response stated in part:\n• “Phase 1\no A review of the 2010 annual survey data indicates potential DC interference\nconditions existed at thirty (30) locations. Prior to the 2011 annual survey,\nremedial action had been completed at all thirty (30) potential interference\nsites. A review of 2011 annual survey data indicates the potential for DC\ninterference exists at five (5) locations of which four (4) are from the initial\nsites identified in 2010; one (1) new location has been identified in 2011. Site\ntesting has been planned at these 5 sites in Q2 2012.”\n• “Phase 2\no A review of the 2011 survey data indicates potential DC interference\nconditions existed at two (2) locations.\no Both sites identified as having potential interference issues have had remedial\nfacilities installed.”\nTransCanada’s own contractor finding from its National Pipeline Service report dated\nOctober 23, 2013 stated:\n“The existing cathodic protection systems at St. Paul and Hartford Pump Stations\nwere installed and energized in June of 2010, approximately 9 months after\ninstallation of the pipeline. The temporary bonds were then installed\napproximately one year later in August of 2011, after baseline annual test point\nsurveys indicated inadequate potentials and then ensuing investigation\ndetermined the strong possibility for stray current interference from neighboring\npipelines.”\nSevere interference corrosion anomalies were identified in October 2012 near St. Louis MP\n998. On November 14, 2012, TransCanada’s Close Interval Survey dated November 14, 2012,\nshowed interference current still on the pipeline from MP 991 to 998 which was 28 months after\nthe pipeline was placed in service. Keystone had knowledge of the foreign pipelines in these\nlocations as this was a common pipeline corridor as shown in alignment sheets.\nTransCanada also continued to remediate interference on the Cushing Extension near MP\n137 through 2012 which involved another operator’s facility that had been in place over 50\nyears. TransCanada did not correct the interference until November 2, 2012, almost 21 months\nafter deliveries began on February 8, 2011. Problems continued to persist requiring one rectifier\nto be installed at MP 136.62 in May 2013. TransCanada continued to identify anomalies from\n5\n\n\n\nlow cathodic protection levels as documented in its Letter to PHMSA December 9, 2013 – KS 10\nProposed Excavation. The letter stated:\n“In accordance with special condition 42, TransCanada hereby informs PHMSA\nof a proposed correlation excavation on the Cushing Extension of Keystone on or\naround Dec 20th, 2013. Specifically, the excavation is on the KS10 section in\nKansas near the Burns receipt barrel. Although the metal loss anomaly is not in a\nHCA (or in a could affect segment), nor does it meet any prescribed response\ncriteria, with a reported depth of 67%WT the feature has been flagged for\ncorrelation in support of the final report for the ILI. This feature is in an area of\ninitially low CP potentials that were subsequently remediated with the addition of\nnew anode beds. The dig sheet for the proposed excavation is attached.”\nThe dig sheet called pits with depths of 34.1 to 66.9 percent through wall which were later\nvalidated in TransCanada’s “Summary of Initial Correlation Excavation on KS10” report to be\n32 to 34 percent through wall.\nThe multiple anomalies found on TransCanada’s Keystone segments near St. Louis,\nMissouri and on the Cushing Extension near Burns, Kansas were the result of not correcting the\neffects of interference corrosion in a timely manner as required by §195.577.\nProposed Civil Penalty\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000\nper violation per day the violation persists up to a maximum of $2,000,000 for a related series of\nviolations. For violations occurring prior to January 4, 2012, the maximum penalty may not\nexceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a\nrelated series of violations. The Compliance Officer has reviewed the circumstances and\nsupporting documentation involved in the above probable violation(s) and has recommended that\nyou be preliminarily assessed a civil penalty of $187,200 as follows:\nItem number PENALTY\n1 $53,800\n2 $51,800\n3 $53,200\n4 $28,400\nProposed Compliance Order\nWith respect to item(s) 1, 3, and 4 pursuant to 49 United States Code § 60118, the Pipeline and\nHazardous Materials Safety Administration proposes to issue a Compliance Order to\nTransCanada. Please refer to the Proposed Compliance Order, which is enclosed and made a\npart of this Notice.\n6\n\n\n\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators\nin Compliance Proceedings. Please refer to this document and note the response options. All\nmaterial you submit in response to this enforcement action may be made publicly available. If\nyou believe that any portion of your responsive material qualifies for confidential treatment\nunder 5 U.S.C. 552(b), along with the complete original document you must provide a second\ncopy of the document with the portions you believe qualify for confidential treatment redacted\nand an explanation of why you believe the redacted information qualifies for confidential\ntreatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice,\nthis constitutes a waiver of your right to contest the allegations in this Notice and authorizes the\nAssociate Administrator for Pipeline Safety to find facts as alleged in this Notice without further\nnotice to you and to issue a Final Order.\nIn your correspondence on this matter, please refer to CPF 3-2015-5010 and for each document\nyou submit, please provide a copy in electronic format whenever possible.\nSincerely,\nAllan C. Beshore\nDirector, Central Region, OPS\nPipeline and Hazardous Materials Safety Administration\nEnclosures: Proposed Compliance Order\nResponse Options for Pipeline Operators in Compliance Proceedings\n7\n\n\n\nPROPOSED COMPLIANCE ORDER\nPursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) proposes to issue to TransCanada (TC) Oil Pipeline Operations, Inc. a\nCompliance Order incorporating the following remedial requirements to ensure the compliance\nof TransCanada Oil Pipeline Operations, Inc. with the pipeline safety regulations:\n1. 2. 3. 4. In regard to Items Number 1 and 4 of the Notice pertaining to an inadequate\ncathodic protection system, TC Keystone must provide records of facilities\ninstalled and close interval surveys taken on the Keystone Pipeline confirming\nthat the pipeline is adequately protected on the East Leg segment from Steele\nCity, Nebraska to Patoka, Illinois and interference currents have been alleviated.\nIn regard to Item Number 3 of the Notice pertaining to deficiencies in corrosion\ncontrol, TC Keystone must correct the remaining deficiencies listed in Item 3 of\nthe NOPV and record the cathodic protection pipe-to-soil potentials.\nTC Keystone must provide the records in Item 1 and 2 of the proposed\ncompliance order within six (6) months of the date of the Final Order.\nIt is requested (not mandated) that TransCanada (TC) Oil Pipeline Operations Inc.\nmaintain documentation of the safety improvement costs associated with fulfilling\nthis Compliance Order and submit the total to Allan Beshore, Director, Central\nRegion, Pipeline and Hazardous Materials Safety Administration. It is requested\nthat these costs be reported in two categories: 1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses, and 2) total cost\nassociated with replacements, additions and other changes to pipeline\ninfrastructure.\n8\n\n320155010_Final Order_05312017_text.pdf\n\nMr. Russell K. Girling\nPresident and Chief Executive Officer\nTransCanada Corporation\n450 - First Street SW\nCalgary, Alberta, Canada\nT2P 5H1\nRe: CPF No. 3-2015-5010\nDear Mr. Girling:\nEnclosed please find the Final Order issued in the above-referenced case to your subsidiary, TC\nOil Pipeline Operations, Inc. It withdraws one of the allegations of violation and the proposed\ncompliance order, makes three other findings of violation, and assesses a reduced civil penalty of\n$135,400. The penalty payment terms are set forth in the Final Order. This enforcement action\ncloses automatically upon receipt of payment. Service of the Final Order by certified mail is\ndeemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Allan Beshore, Director, Central Region, Office of Pipeline Safety, PHMSA\nMr. Vern J. Meier, President, TC Oil Pipeline Operations Inc., 700 Louisiana Street,\nSuite 700, Houston, Texas 77002\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 )\n)\n)\nTC Oil Pipeline Operations, Inc., )\na/k/a TransCanada Oil Pipeline Operations, Inc., )\nRespondent. )\n________________________________________________)\n) CPF No. 3-2015-5010\nFINAL ORDER\nOn multiple occasions between April 2 and November 15, 2012, pursuant to 49 U.S.C. § 60117,\na representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA),\nOffice of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities\nand records of TC Oil Pipeline Operations, Inc. (TransCanada or Respondent), throughout the\ncentral United States, including the company’s mainline from the Canadian border to Patoka,\nIllinois (Mainline Segment), and its 291-mile, 36-inch-diameter Cushing Extension pipeline from\nSteele City, Nebraska, through Kansas to Cushing, Oklahoma (Cushing Extension). 1\nTransCanada is a multi-national corporation with tens of thousands of miles of oil and gas\npipelines, as well as extensive oil and gas storage assets, throughout North America. The\nfacilities are part of TransCanada’s Keystone Pipeline System within the United States.2\nAs a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,\nby letter dated November 20, 2015, a Notice of Probable Violation, Proposed Civil Penalty and\nCompliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed\nfinding that TransCanada had committed four violations of 49 C.F.R. Part 195, assessing a civil\npenalty of $187,200 for the alleged violations, and ordering Respondent to take certain actions to\ncorrect the alleged violations.\nTransCanada responded to the Notice by letter dated December 18, 2015 (Response). The\ncompany contested one of the allegations of violation, provided an explanation of its actions, and\nrequested that the proposed civil penalties for the uncontested Items be reduced. Respondent\ninitially requested a hearing but subsequently waived that right, based on discussions with the\n1 TC Oil Pipeline Operations, Inc., is a wholly indirectly-owned subsidiary of TransCanada Corporation. See\nComplaint, TransCanada Keystone Pipeline, LP, and TC Oil Pipeline Operations, Inc., v. John Kerry, et als (January\n6, 2016), available at http://www.keystone-xl.com/wp-content/uploads/2016/01/TransCanada-Complaint-January-6-\n2016.pdf (last accessed March 24, 2017).\n2 See http://www.transcanada.com/facts-figures.html. (current as of 8/17/16)\n\n\n\nCPF No. 3-2015-5010\nPage 2\nRegion by email on April 1, 2016. By letter of the same date, the Region withdrew Item 2 and\nthe associated civil penalty and, based on the additional information provided by TransCanada\nshowing that the requested corrective actions had been completed, withdrew the Proposed\nCompliance Order.\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. § 195.401(a), which states:\n§ 195.401 General requirements.\n(a) No operator may operate or maintain its pipeline systems at a level\nof safety lower than that required by this subpart and the procedures it is\nrequired to establish under §195.402(a) of this subpart.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.401(a) by failing to operate the\nMainline Segment and the Cushing Extension at the required level of safety. Specifically, the\nNotice alleged that the Mainline Segment had been in service since June 30, 2010, but corrective\nmeasures to complete the installation of cathodic protection (CP) were not begun until November\n2012 and not completed until 2013. According to TransCanada’s own procedures established\nunder § 195.402(a) and 49 C.F.R. § 195.563(a), adequate CP should have been in operation on\nthe pipeline by June 30, 2011.3\nThe Notice further alleged that TransCanada’s initial CP survey of the Mainline Segment was\ncompleted in December 2010 and the survey of the Cushing Extension was completed in August\n2011. According to the Notice, both surveys revealed low CP readings at “numerous locations”\nbut the company failed to install additional ground beds until 2012-13. The company’s own\ninvestigation revealed that TransCanada’s CP system had not been designed properly and did not\nmeet the company’s own procedure (TED-CP-DD, Cathodic Protection Design Directive)\nregarding sufficient current being supplied to the pipeline.4\nIn its Response, TransCanada did not contest the allegations of violation, acknowledging that the\noriginal CP system had inadequately compensated for the amount of current lost to substation\ngrounding grids at pump stations and that such lost current had had an adverse effect on localized\nportions of the pipeline. However, TransCanada noted that the issues were identified within six\nmonths of the line being placed in service, even though the time required to implement those\n3 49 C.F.R. § 195.563(a) states:\n“(a) Each buried or submerged pipeline that is constructed, relocated, replaced, or\notherwise changed after the applicable date in § 195.401(c) must have cathodic protection.\nThe cathodic protection must be in operation not later than 1 year after the pipeline is\nconstructed, relocated, replaced or otherwise changed, as applicable.”\n4 As detailed in TransCanada’s Corrosion Anomaly at MP 995 KS9 Salisbury to Patoka on Keystone Pipeline\nReport. See Pipeline Safety Violation Report, TransCanada Oil Pipeline Operations, Inc., CPF No. 3-2015-5010\n(Violation Report), Nov. 20, 2015 (on file with PHMSA).\n\n\n\nCPF No. 3-2015-5010\nPage 3\nmeasures was extended by factors outside its control.5\nThe Region met with TransCanada to receive additional information on February 4, 2016. At\nthat meeting, TransCanada indicated it was not contesting this Item but requested that PHMSA\nconsider withdrawing it altogether or reducing the proposed penalty.6 Given the seriousness of\nTransCanada’s failure to maintain adequate cathodic protection of its pipeline over an extended\nperiod of time and the fact that TransCanada did not dispute the allegations of violation, I see no\nbasis for withdrawing this Item. As for the alternative request that the penalty be reduced, I will\naddress that issue in the “Assessment of Penalty” section below.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.401(a) by failing to operate the Mainline Segment and the Cushing Extension at the\nrequired level of safety.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1), which states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine\nwhether cathodic protection required by this subpart complies with\n§ 195.571:\n(1) Conduct tests on the protected pipeline at least once each calendar\nyear, but with intervals not exceeding 15 months. However, if tests at those\nintervals are impractical for separately protected short sections of bare or\nineffectively coated pipelines, testing may be done at least once every 3\ncalendar years, but with intervals not exceeding 39 months.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1) by failing to conduct\ntests to monitor protected pipelines at least once each calendar year, but with intervals not\nexceeding 15 months. Specifically, the Notice alleged that TransCanada’s records showed 51\nrequired annual CP-test-station readings were not taken from 2010 to 2012 on the East Leg of the\nMainline Segment but did not provide any rationale for its failure to conduct and record the tests\nin a timely manner.\nTransCanada contested this allegation, claiming that each of the required readings was timely\ntaken, in compliance with the regulations, but that the data presented to PHMSA may have been\nconfusing in its tabulation, formatting, and naming conventions. TransCanada initially requested\na hearing to re-present the data in a better format and to demonstrate compliance. The Region\nsubsequently met with TransCanada on February 4, 2016, to allow the company to provide\nfurther information about the proposed compliance items and then, on the next day, to provide\nthe re-formatted data.\nAs a result of this meeting, the Central Region has reviewed the re-formatted data, concluded\n5 In its Response, TransCanada stated that the time required to complete its CP remediation program “was affected\nby unavoidable factors such as acquiring land access permission, environmental permitting, and the need for the\nsupplemental facilities to polarize the pipeline before they could be adequately assessed.” Response, at 5.\n6 Response, at 10.\n\n\n\nCPF No. 3-2015-5010\nPage 4\nthat the readings were indeed properly taken, and recommends that this Item be withdrawn.\nAccordingly, after considering all of the evidence, I hereby order that Item 2 be withdrawn,\nincluding the related civil penalty and Proposed Compliance Order.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(e), which states, in\nrelevant part:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) . . .\n(e) Corrective action. You must correct any identified deficiency in\ncorrosion control as required by § 195.401(b). . . .\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.573(e) by failing, within a\nreasonable time, to correct cathodic protection deficiencies found at 62 locations, as required\nunder § 195.401(b).7 Specifically, the Notice alleged that TransCanada’s records indicated CP\ndeficiencies had remained uncorrected for multiple years. The inspection documented 56\ndeficiencies from Steele City, Nebraska, to Patoka, Illinois, that persisted from 2010 to 2012. An\nadditional six deficiencies were documented from Steele City, Nebraska, to Cushing, Oklahoma,\nfrom 2010 to 2012.\nIn its Response, TransCanada did not contest PHMSA’s allegations, but outlined the company’s\nefforts to remedy known CP deficiencies throughout the relevant time period. At its meeting with\nthe Region on February 4, 2016, TransCanada requested that PHMSA consider eliminating this\nItem or reducing the proposed penalty.8 As noted above, given the seriousness of TransCanada’s\nfailure to maintain proper cathodic protection on the pipeline over an extended period of time\nand the fact that TransCanada did not dispute the allegations of violation, I see no basis to\nwithdraw this Item. As for the alternative request that the proposed penalty be reduced, I will\ndiscuss this issue in the “Assessment of Penalty” section below.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.573(e) by failing, within a reasonable time, to correct cathodic protection deficiencies\nfound at 62 locations, as required under § 195.401(b).\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.577(a), which states:\n§ 195.577 What must I do to alleviate interference currents?\n(a) For pipelines exposed to stray currents, you must have a program\nto identify, test for, and minimize the detrimental effects of such currents.\n7 49 C.F.R. § 195.401(b) states:\n“(b) An operator must make repairs on its pipeline system according to the\nfollowing requirements:\n(1) Non integrity management repairs. Whenever an operator discovers\nany condition that could adversely affect the safe operation of its pipeline system,\nit must correct the condition within a reasonable time…”\n8 Region Recommendation, at 2 (on file with PHMSA).\n\n\n\nCPF No. 3-2015-5010\nPage 5\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.577(a) by failing to minimize the\ndetrimental effects of interference currents on at least two areas under the influence of another\npipeline’s CP system. Specifically, the Notice alleged that TransCanada’s records showed stray\ncurrents existed on the pipeline from milepost (MP) 991 to MP 998 on the Mainline Segment\nnear St. Louis and at MP 137 on the Cushing Extension, over one year after installing corrosion-\ncontrol measures to alleviate the problem.\nPHMSA further alleged that TransCanada reported the existence of these interference locations\nto PHMSA on March 27, 2012, and detailed the company’s efforts to mitigate them.9 According\nto the Notice, a third-party report by a TransCanada contractor confirmed the problem when it\nindicated the “strong possibility for stray current interference.” In addition, TransCanada’s own\nNovember 14, 2012 Close Interval Survey showed interference current on the pipeline from MP\n991 to MP 998 (28 months after the pipeline was put in-service). Finally, the Notice alleged that\nby letter to PHMSA dated December 9, 2013, TransCanada acknowledged its continuing efforts\nto identify and remedy anomalies from low CP levels and that these efforts were the result of\nTransCanada failing to timely correct the effects of interference currents.\nIn its Response, TransCanada did not contest the allegations of violation, but noted that it had\ndeveloped and implemented a stray-current interference program designed to identify, test for,\nand minimize stray-current interference once the company recognized that it had a problem.\nTransCanada’s program identified the existence of stray-current interference during both a\nDecember 2010 survey and an August 2011 survey (both conducted within six months of the\nfacilities going into service). TransCanada outlined a number of steps it had taken upon its\nrecognition of the problems on both systems, but did not contest the allegation that stray-current\ninterference existed well after the initial identification of the problem. However, TransCanada’s\nefforts to identify stray-current interference were not initiated right away and only gradually\naddressed the problem, despite the fact that both pipelines operated in shared pipeline corridors\nwhere stray currents were likely to occur.\nOn February 4, 2016, the Region met with TransCanada to receive further information from the\ncompany about the proposed compliance terms. At that meeting, TransCanada did not contest\nthis Item but requested that PHMSA consider eliminating this Item and/or reducing the proposed\npenalty.10 Given the seriousness of TransCanada’s failure to maintain proper cathodic protection\non the pipeline over an extended period of time and the fact that the company did not contest the\nallegations of violation, I see no basis to withdraw this Item. As for the request that the proposed\npenalty be reduced, I will discuss this issue in the “Assessment of Penalty” section below.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.577(a) by failing to minimize the detrimental effect of interference currents in at least two\nareas that were under the influence of another pipeline’s cathodic protection system.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\n9 Violation Report at 24-26.\n10 Region Recommendation, at 2 (on file with PHMSA).\n\n\n\nCPF No. 3-2015-5010\nPage 6\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any\nrelated series of violations.11 In determining the amount of a civil penalty under 49 U.S.C.\n§ 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; and any effect\nthat the penalty may have on its ability to continue doing business; and the good faith of\nRespondent in attempting to comply with the pipeline safety regulations. In addition, I may\nconsider the economic benefit gained from the violation without any reduction because of\nsubsequent damages, and such other matters as justice may require. The Notice proposed a total\ncivil penalty of $187,200 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $53,800 for Respondent’s violation of 49 C.F.R.\n§ 195.401(a), for failing to operate the Mainline Segment and the Cushing Extension at the\nrequired level of safety. TransCanada did not contest this Item but asked that the proposed\npenalty be reduced because (1) it had identified problems with its CP system within six months\nof Phase I of the project being placed in service, (2) it took additional time to implement the\ncorrective measures due to circumstances beyond its control, and (3) the company had\n“commenced remediation and mitigation efforts prior to any response or direction from\nPHMSA.”12 I have reviewed the record and the penalty-assessment factors that the Region\nconsidered in proposing the penalty and believe that the penalty is appropriate. The Violation\nReport noted, among other things, that the inadequate CP system caused metal loss anomalies up\nto 97 percent of pipe wall loss at one location located within a High Consequence Area near St.\nPaul, Missouri, and that the company’s initial CP surveys showed low CP levels at numerous\nlocations.13 In other words, this violation came extremely close to causing a pipeline failure in a\nlocation that could have resulted in serious damage to life, property or the environment.\nFurther, the proposed penalty did recognize and take into account Respondent’s efforts to\naddress its CP problems. Under the “Culpability” penalty factor, the Violation Report noted that\nTransCanada took significant steps to comply with the regulation but that it did not achieve\ncompliance in a timely manner.14 I fail to see how any of the additional or any other arguments\npresented by the company provide a basis for reducing the proposed penalty. Accordingly,\nhaving reviewed the record and considered the assessment criteria, I assess Respondent a civil\npenalty of $53,800 for violation of 49 C.F.R. § 195.401(a).\n11 The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, Pub. L. No. 112-90, § 2(a)(1), 125 Stat.\n1904, January 3, 2012, increased the civil penalty liability for violating a pipeline safety standard to $200,000 per\nviolation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.\n12 Response, at 5.\n13 Violation Report, at 8.\n14 Id., at 9.\n\n\n\nCPF No. 3-2015-5010\nPage 7\nItem 3: The Notice proposed a civil penalty of $53,200 for Respondent’s violation of 49 C.F.R.\n§ 195.573, for failing, within a reasonable time, to correct cathodic protection deficiencies found\nat 62 locations, as required under § 195.401(b). TransCanada did not contest PHMSA’s\nallegations of violation, but requested that the proposed penalty be reduced on account of the\ncompany’s “good faith efforts” to come into compliance. First, it outlined the company’s\nongoing and progressive efforts to remedy known CP deficiencies throughout the relevant time\nperiod. Second, it asserted that TransCanada had self-reported the issue to PHMSA before\ntaking various corrective measures.\nI do not find these arguments persuasive. First, the company’s attempts to correct the CP\ndeficiencies were taken into account in calculating the proposed penalty. Under the\n“Culpability” penalty assessment factor, the Violation Report noted that after TransCanada found\nthe non-compliance, it took action to address the cause of the violation and was in the process of\ncorrecting the problem before PHMSA learned of the violation.15 Second, TransCanada asserts\nin its Response that it self-reported the violation, but the Violation Report alleged that PHMSA\ndiscovered the violation.16\nWhile TransCanada may be correct in its assertion, I can find no evidence in the rec","truncated":true,"body_characters":44027}