# DAKOTA GASIFICATION COMPANY — Notice of Probable Violation

- **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:** Not available
- **summary:** CLOSED notice of probable violation citing 195.440(c), 195.577(a).
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- **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.

Official case documents:

320185002_Final Order_09122019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_Final%20Order_09122019.pdf

320185002_Final Order_09122019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_Final%20Order_09122019_text.pdf

320185002_NOPV PCP_05292018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_NOPV%20PCP_05292018.pdf

320185002_NOPV PCP_05292018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_NOPV%20PCP_05292018_text.pdf

320185002_Operator Response to Notice_10052018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/320185002/320185002_Operator%20Response%20to%20Notice_10052018.pdf

320185002_Final Order_09122019_text.pdf

September 12, 2019
Mr. Paul Sukut
Chief Executive Officer and General Manager
Basin Electric Power Cooperative
1717 East Interstate Avenue
Bismarck, North Dakota 58503
Re: CPF No. 3-2018-5002
Dear Mr. Sukut:
Enclosed please find the Final Order issued in the above-referenced case to your subsidiary,
Dakota Gasification Company. It makes findings of violation and assesses a civil penalty of
$38,300. The penalty payment terms are set forth in the Final Order. This enforcement action
closes automatically upon receipt of payment. Service of the Final Order by certified mail is
effective upon the date of mailing, as provided under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Alan K. Mayberry
Associate Administrator
for Pipeline Safety
Enclosure
cc: Mr. Allan C. Beshore, Director, Central Region, Office of Pipeline Safety, PHMSA
Mr. David Sauer, Chief Operating Officer and Senior Vice President, Dakota Gasification
Company, 1717 East Interstate Avenue, Bismarck North Dakota 58503
CERTIFIED MAIL - RETURN RECEIPT REQUESTED



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
______________________________________________
In the Matter of )
Dakota Gasification Company, ) CPF No. 3-2018-5002
a subsidiary of Basin Electric Power Cooperative, )
)
)
)
Respondent. )
______________________________________________)
FINAL ORDER
From January 30 through May 12, 2017, 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 facilities and records of Dakota
Gasification Company (DGC or Respondent) near Beulah, North Dakota. DGC is a subsidiary
of Basin Electric Power Cooperative, which operates a coal-gasification facility and synthetic
natural gas and carbon dioxide pipelines in North Dakota and Canada.1
As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,
by letter dated May 29, 2018, a Notice of Probable Violation and Proposed Civil Penalty
(Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that DGC had
violated 49 C.F.R. §§ 195.577(a) and 195.440(c), and proposed assessing a civil penalty of
$38,300 for the alleged violations.
After requesting and receiving an extension of time, DGC responded to the Notice by letter dated
October 5, 2018 (Response). The company did not contest the allegations of violation, but
provided an explanation of its actions and requested that the proposed civil penalty be reduced or
eliminated. Respondent did not request a hearing and therefore has waived its right to one.
FINDINGS OF VIOLATION
In its Response, DGC 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. § 195.577(a), which states:
1 Dakota Gasification Company website, available at https://www.dakotagas.com/about-us/at-a-glance (last
accessed Feb. 13, 2019).



CPF No. 3-2018-5002
Page 2
§ 195.577 What must I do to alleviate interference currents?
(a) For pipelines exposed to stray currents, you must have a program to
identify, test for, and minimize the detrimental effects of such currents.
The Notice alleged that Respondent violated 49 C.F.R. § 195.577(a) by failing to alleviate
interference currents with a program to identify, test for, and minimize the detrimental effects of
such currents. Specifically, the Notice alleged that two locations on DGC’s pipelines showed
alternating current (AC) voltage readings over four volts. Based on such readings, the Notice
alleged that DGC should have reasonably foreseen interference currents at those locations, but
did not take protective measures to isolate the pipelines from detrimental current sources.
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. § 195.577(a) by failing to alleviate
interference currents with a program to identify, test for, and minimize the detrimental effects of
such currents.
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.440(c), which states:
§ 195.440 Public awareness.
(a) . . . .
(c) The operator must follow the general program recommendations,
including baseline and supplemental requirements of API RP 1162, unless
the operator provides justification in its program or procedural manual as to
why compliance with all or certain provisions of the recommended practice
is not practicable and not necessary for safety.
The Notice alleged that Respondent violated 49 C.F.R. § 195.440(c) by failing to follow the
general program recommendations, including baseline and supplemental requirements of
American Petroleum Institute (API) Recommended Practice (RP) 1162, unless it provided
justification in its program or procedural manual as to why compliance with all or certain
provisions of the RP is not practicable and not necessary for safety. Section 8.4 of RP 1162
states, in relevant part:
8.4 MEASURING PROGRAM EFFECTIVENESS
Operators should assess progress on the following measures to assess
whether the actions undertaken in implementation of this RP are achieving
the intended goals and objectives:
 Whether the information is reaching the intended stakeholder
audiences
 If the recipient audiences are understanding the messages delivered
 Whether the recipients are motivated to respond appropriately in
alignment with the information provided
 If the implementation of the Public Awareness Program is impacting
bottom-line results (such as reduction in the number of incidents
caused by third-party damage). . . .



CPF No. 3-2018-5002
Page 3
Specifically, the Notice alleged that DGC did not perform a written effectiveness evaluation in
2016 for the recipient audience, as required by its own public awareness plan. DGC’s records
contain only survey responses, with no assessment as to whether the actions undertaken in
implementing RP 1162 were actually achieving the intended goals and objectives.
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. § 195.440(c) by failing to follow the
general program recommendations, including baseline and supplemental requirements of API RP
1162, and did not provide justification in its program or procedural manual as to why compliance
with all or certain provisions of the RP is not practicable and not necessary for safety.
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
$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any
related series of violations.2 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; 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 $38,300 for the violations cited above.
Item 1: The Notice proposed a civil penalty of $19,300 for Respondent’s violation of 49 C.F.R.
§ 195.577(a), for failing to alleviate interference currents with a program to identify, test for, and
minimize the detrimental effects of such currents. DGC requested reduction or elimination of
the proposed civil penalty, based on AC current readings taken during digs performed after the
PHMSA inspection, the lack of adverse impacts caused by the violation, the purportedly minor
nature of the violation, and the fact that DGC had “put considerable time and resources into
achieving compliance both during and after the inspection.”3 DGC indicated that it had
contracted with a third-party consultant to model AC interference on the pipeline and that in the
event of any abnormalities, it would take necessary mitigative action.4
While I acknowledge and commend the corrective actions taken by the company, these actions
2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223; Revisions to Civil Penalty Amounts,
83 Fed. Reg. 60732, 60744 (Nov. 27, 2018).
3 Response, at 1.
4 Id. The company stated that the modeling was expected to be completed by June 30, 2019, and that any mitigative
work would be complete before the annual cathodic-protection survey in 2020.



CPF No. 3-2018-5002
Page 4
were taken in response to regulatory requirements noted during the PHMSA inspection and were
ones that any prudent operator would take. To ensure compliance, PHMSA intends to follow up
on these modeling results and the timely completion of any needed mitigation work.
Finally, I would also note that the Violation Report already took into account the reduced gravity
of the violation, stating that “pipeline safety was minimally affected.”5 Therefore, no further
reduction is warranted. Respondent has not shown any other circumstances that would justify
any further reduction. Accordingly, having reviewed the record and considered the assessment
criteria, I assess Respondent a civil penalty of $19,300 for violation of 49 C.F.R. § 195.577(a).
Item 2: The Notice proposed a civil penalty of $19,000 for Respondent’s violation of 49 C.F.R.
§ 195.440(c), for failing to follow general program recommendations, including baseline and
supplemental requirements of API RP 1162, and did not provide justification in its program or
procedural manual as to why compliance with all or certain provisions of the RP is not
practicable and not necessary for safety. DGC requested reduction or elimination of the
proposed civil penalty, based on a program-effectiveness evaluation performed after issuance of
the Notice and the purportedly minor nature of the violation. The company also noted that it had
“no prior offenses under 49 CFR § 195.440(c).”6 While I acknowledge and commend the
corrective actions taken by the company, these actions were taken in response to regulatory
requirements after the Notice was issued. I would also note that PHMSA did not propose an
enhanced penalty based upon prior violations of this particular regulation.
I must also emphasize the importance of public awareness programs. Of particular significance
is the requirement that operators periodically review their programs for effectiveness and
enhance the programs as necessary. Finally, Respondent has not shown any other circumstances
that would justify reduction of the proposed civil penalty. Accordingly, having reviewed the
record and considered the assessment criteria, I assess Respondent a civil penalty of $19,000 for
violation of 49 C.F.R. § 195.440(c).
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 $38,300.
Payment of the civil penalty must be made within 20 days of service. Federal regulations (49
C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal
Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed
instructions are contained in the enclosure. Questions concerning wire transfers should be
directed to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike
Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.
The Financial Operations Division telephone number is (405) 954-8845.
Failure to pay the $38,300 civil penalty will result in accrual of interest at the current annual rate
in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to
those same authorities, a late penalty charge of six percent (6%) per annum will be charged if
5 Pipeline Safety Violation Report (Violation Report), (May 29, 2018) (on file with PHMSA), at 8.
6 Response, at 2.



CPF No. 3-2018-5002
Page 5
payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty
may result in referral of the matter to the Attorney General for appropriate action in a district
court of the United States.
Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final
Order to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey
Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of
Chief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the
Final Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)
and meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically
stays the payment of any civil penalty assessed. The other terms of the order, including any
corrective action, remain in effect unless the Associate Administrator, upon request, grants a
stay. If Respondent submits payment of the civil penalty, the Final Order becomes the final
administrative decision and the right to petition for reconsideration is waived.
The terms and conditions of this Final Order are effective upon service in accordance with 49
C.F.R. § 190.5.
September 12, 2019
___________________________________ __________________________
Alan K. Mayberry Date Issued
Associate Administrator
for Pipeline Safety
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