{"operation":"document","citation":"CPF 320185002","title":"DAKOTA GASIFICATION COMPANY — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2018-05-29","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.440(c), 195.577(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-320185002.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-320185002.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-320185002","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/320185002","body":"Notice of Probable Violation involving DAKOTA GASIFICATION COMPANY. PHMSA's enforcement data identifies the cited regulations as 195.440(c),  195.577(a). The case was opened on 2018-05-29 and is reported as closed as of 2019-10-02. Proposed civil penalty: $38,300. Assessed civil penalty: $38,300. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n320185002_Final Order_09122019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_Final%20Order_09122019.pdf\n\n320185002_Final Order_09122019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_Final%20Order_09122019_text.pdf\n\n320185002_NOPV PCP_05292018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_NOPV%20PCP_05292018.pdf\n\n320185002_NOPV PCP_05292018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_NOPV%20PCP_05292018_text.pdf\n\n320185002_Operator Response to Notice_10052018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_Operator%20Response%20to%20Notice_10052018.pdf\n\n320185002_Final Order_09122019_text.pdf\n\nSeptember 12, 2019\nMr. Paul Sukut\nChief Executive Officer and General Manager\nBasin Electric Power Cooperative\n1717 East Interstate Avenue\nBismarck, North Dakota 58503\nRe: CPF No. 3-2018-5002\nDear Mr. Sukut:\nEnclosed please find the Final Order issued in the above-referenced case to your subsidiary,\nDakota Gasification Company. It makes findings of violation and assesses a civil penalty of\n$38,300. 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\neffective upon the date of mailing, as 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 C. Beshore, Director, Central Region, Office of Pipeline Safety, PHMSA\nMr. David Sauer, Chief Operating Officer and Senior Vice President, Dakota Gasification\nCompany, 1717 East Interstate Avenue, Bismarck North Dakota 58503\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 )\nDakota Gasification Company, ) CPF No. 3-2018-5002\na subsidiary of Basin Electric Power Cooperative, )\n)\n)\n)\nRespondent. )\n______________________________________________)\nFINAL ORDER\nFrom January 30 through May 12, 2017, 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 Dakota\nGasification Company (DGC or Respondent) near Beulah, North Dakota. DGC is a subsidiary\nof Basin Electric Power Cooperative, which operates a coal-gasification facility and synthetic\nnatural gas and carbon dioxide pipelines in North Dakota and Canada.1\nAs a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,\nby letter dated May 29, 2018, 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 DGC had\nviolated 49 C.F.R. §§ 195.577(a) and 195.440(c), and proposed assessing a civil penalty of\n$38,300 for the alleged violations.\nAfter requesting and receiving an extension of time, DGC responded to the Notice by letter dated\nOctober 5, 2018 (Response). The company did not contest the allegations of violation, but\nprovided an explanation of its actions and requested that the proposed civil penalty be reduced or\neliminated. Respondent did not request a hearing and therefore has waived its right to one.\nFINDINGS OF VIOLATION\nIn its Response, DGC did not contest the allegations in the Notice that it violated 49 C.F.R.\nPart 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.577(a), which states:\n1 Dakota Gasification Company website, available at https://www.dakotagas.com/about-us/at-a-glance (last\naccessed Feb. 13, 2019).\n\n\n\nCPF No. 3-2018-5002\nPage 2\n§ 195.577 What must I do to alleviate interference currents?\n(a) For pipelines exposed to stray currents, you must have a program to\nidentify, test for, and minimize the detrimental effects of such currents.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.577(a) by failing to alleviate\ninterference currents with a program to identify, test for, and minimize the detrimental effects of\nsuch currents. Specifically, the Notice alleged that two locations on DGC’s pipelines showed\nalternating current (AC) voltage readings over four volts. Based on such readings, the Notice\nalleged that DGC should have reasonably foreseen interference currents at those locations, but\ndid not take protective measures to isolate the pipelines from detrimental current sources.\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. § 195.577(a) by failing to alleviate\ninterference currents with a program to identify, test for, and minimize the detrimental effects of\nsuch currents.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.440(c), which states:\n§ 195.440 Public awareness.\n(a) . . . .\n(c) The operator must follow the general program recommendations,\nincluding baseline and supplemental requirements of API RP 1162, unless\nthe operator provides justification in its program or procedural manual as to\nwhy compliance with all or certain provisions of the recommended practice\nis not practicable and not necessary for safety.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.440(c) by failing to follow the\ngeneral program recommendations, including baseline and supplemental requirements of\nAmerican Petroleum Institute (API) Recommended Practice (RP) 1162, unless it provided\njustification in its program or procedural manual as to why compliance with all or certain\nprovisions of the RP is not practicable and not necessary for safety. Section 8.4 of RP 1162\nstates, in relevant part:\n8.4 MEASURING PROGRAM EFFECTIVENESS\nOperators should assess progress on the following measures to assess\nwhether the actions undertaken in implementation of this RP are achieving\nthe intended goals and objectives:\n Whether the information is reaching the intended stakeholder\naudiences\n If the recipient audiences are understanding the messages delivered\n Whether the recipients are motivated to respond appropriately in\nalignment with the information provided\n If the implementation of the Public Awareness Program is impacting\nbottom-line results (such as reduction in the number of incidents\ncaused by third-party damage). . . .\n\n\n\nCPF No. 3-2018-5002\nPage 3\nSpecifically, the Notice alleged that DGC did not perform a written effectiveness evaluation in\n2016 for the recipient audience, as required by its own public awareness plan. DGC’s records\ncontain only survey responses, with no assessment as to whether the actions undertaken in\nimplementing RP 1162 were actually achieving the intended goals and objectives.\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. § 195.440(c) by failing to follow the\ngeneral program recommendations, including baseline and supplemental requirements of API RP\n1162, and did not provide justification in its program or procedural manual as to why compliance\nwith all or certain provisions of the RP is not practicable and not necessary for safety.\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 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.2 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; 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 $38,300 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $19,300 for Respondent’s violation of 49 C.F.R.\n§ 195.577(a), for failing to alleviate interference currents with a program to identify, test for, and\nminimize the detrimental effects of such currents. DGC requested reduction or elimination of\nthe proposed civil penalty, based on AC current readings taken during digs performed after the\nPHMSA inspection, the lack of adverse impacts caused by the violation, the purportedly minor\nnature of the violation, and the fact that DGC had “put considerable time and resources into\nachieving compliance both during and after the inspection.”3 DGC indicated that it had\ncontracted with a third-party consultant to model AC interference on the pipeline and that in the\nevent of any abnormalities, it would take necessary mitigative action.4\nWhile I acknowledge and commend the corrective actions taken by the company, these actions\n2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223; Revisions to Civil Penalty Amounts,\n83 Fed. Reg. 60732, 60744 (Nov. 27, 2018).\n3 Response, at 1.\n4 Id. The company stated that the modeling was expected to be completed by June 30, 2019, and that any mitigative\nwork would be complete before the annual cathodic-protection survey in 2020.\n\n\n\nCPF No. 3-2018-5002\nPage 4\nwere taken in response to regulatory requirements noted during the PHMSA inspection and were\nones that any prudent operator would take. To ensure compliance, PHMSA intends to follow up\non these modeling results and the timely completion of any needed mitigation work.\nFinally, I would also note that the Violation Report already took into account the reduced gravity\nof the violation, stating that “pipeline safety was minimally affected.”5 Therefore, no further\nreduction is warranted. Respondent has not shown any other circumstances that would justify\nany further reduction. Accordingly, having reviewed the record and considered the assessment\ncriteria, I assess Respondent a civil penalty of $19,300 for violation of 49 C.F.R. § 195.577(a).\nItem 2: The Notice proposed a civil penalty of $19,000 for Respondent’s violation of 49 C.F.R.\n§ 195.440(c), for failing to follow general program recommendations, including baseline and\nsupplemental requirements of API RP 1162, and did not provide justification in its program or\nprocedural manual as to why compliance with all or certain provisions of the RP is not\npracticable and not necessary for safety. DGC requested reduction or elimination of the\nproposed civil penalty, based on a program-effectiveness evaluation performed after issuance of\nthe Notice and the purportedly minor nature of the violation. The company also noted that it had\n“no prior offenses under 49 CFR § 195.440(c).”6 While I acknowledge and commend the\ncorrective actions taken by the company, these actions were taken in response to regulatory\nrequirements after the Notice was issued. I would also note that PHMSA did not propose an\nenhanced penalty based upon prior violations of this particular regulation.\nI must also emphasize the importance of public awareness programs. Of particular significance\nis the requirement that operators periodically review their programs for effectiveness and\nenhance the programs as necessary. Finally, Respondent has not shown any other circumstances\nthat would justify reduction of the proposed civil penalty. Accordingly, having reviewed the\nrecord and considered the assessment criteria, I assess Respondent a civil penalty of $19,000 for\nviolation of 49 C.F.R. § 195.440(c).\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 $38,300.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations (49\nC.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 (AMK-325), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.\nThe Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $38,300 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\n5 Pipeline Safety Violation Report (Violation Report), (May 29, 2018) (on file with PHMSA), at 8.\n6 Response, at 2.\n\n\n\nCPF No. 3-2018-5002\nPage 5\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. § 190.243, Respondent may submit a Petition for Reconsideration of this Final\nOrder to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey\nAvenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of\nChief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the\nFinal Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)\nand meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically\nstays the payment of any civil penalty assessed. The other terms of the order, including any\ncorrective action, remain in effect unless the Associate Administrator, upon request, grants a\nstay. If Respondent submits payment of the civil penalty, the Final Order becomes the final\nadministrative decision and the right to petition for reconsideration is waived.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nSeptember 12, 2019\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":15144}