{"operation":"document","citation":"CPF 32021067NOPV","title":"MAGELLAN PIPELINE COMPANY, LP — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2021-10-20","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.452(l)(1)(ii), 195.573(a)(1), 195.573(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-32021067nopv.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-32021067nopv.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-32021067nopv","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/32021067NOPV","body":"Notice of Probable Violation involving MAGELLAN PIPELINE COMPANY, LP. PHMSA's enforcement data identifies the cited regulations as 195.452(l)(1)(ii),  195.573(a)(1),  195.573(c). The case was opened on 2021-10-20 and is reported as closed as of 2022-05-02. Proposed civil penalty: $66,800. Assessed civil penalty: $59,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n32021067NOPV_Final Order_04252022_(20-179535).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32021067NOPV/32021067NOPV_Final%20Order_04252022_(20-179535).pdf\n\n32021067NOPV_Final Order_04252022_(20-179535)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/32021067NOPV/32021067NOPV_Final%20Order_04252022_(20-179535)_text.pdf\n\n32021067NOPV_Operator Response to Notice_01252022_(20-179535).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32021067NOPV/32021067NOPV_Operator%20Response%20to%20Notice_01252022_(20-179535).pdf\n\n32021067NOPV_PCP_10202021_(20-179535).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32021067NOPV/32021067NOPV_PCP_10202021_(20-179535).pdf\n\n32021067NOPV_PCP_10202021_(20-179535)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/32021067NOPV/32021067NOPV_PCP_10202021_(20-179535)_text.pdf\n\n32021067NOPV_Final Order_04252022_(20-179535)_text.pdf\n\nApril 25, 2022\nVIA ELECTRONIC MAIL TO: mike.mears@magellanlp.com\nMr. Michael Mears\nChief Executive Officer\nMagellan Midstream Partners, LP\nP.O. Box 22186\nTulsa, Oklahoma 74121\nRe: CPF No. 3-2021-067-NOPV\nDear Mr. Mears:\nEnclosed please find the Final Order issued in the above-referenced case to Magellan Pipeline\nCompany, LP. It makes findings of violation and assesses a reduced civil penalty of $59,000.\nThe penalty payment terms are set forth in the Final Order. This enforcement action closes\nautomatically upon receipt of payment. Service of the Final Order by e-mail is effective upon\nthe date of transmission and acknowledgement of receipt 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. Gregory Ochs, Director, Central Region, Office of Pipeline Safety, PHMSA\nMr. Mark Materna, Director, Pipeline Integrity, Magellan Midstream Partners, LP,\nmark.materna@magellanlp.com\nMr. Jason Smith, Vice President, Asset Integrity, Magellan Midstream Partners, LP,\njason.smith@magellanlp.com\n\n\n\nMr. Aaron Milford, Chief Operating Officer, Magellan Midstream Partners, LP,\naaron.milford@magellanlp.com\nMs. Laurie England, Senior Regulatory Compliance Coordinator, Magellan Midstream\nPartners, LP, laurie.england@magellanlp.com\nCONFIRMATION OF 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______________________________________________\n)\nIn the Matter of )\n)\nMagellan Pipeline Company, LP, ) CPF No. 3-2021-067-NOPV\na subsidiary of Magellan Midstream Partners, LP, )\n)\nRespondent. )\n______________________________________________)\nFINAL ORDER\nFrom March 9, 2020, through April 3, 2021, pursuant to 49 U.S.C. § 60117, a representative of\nthe Pipeline 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 Magellan\nPipeline Company, LP (Magellan or Respondent) in Texas. Magellan is a subsidiary of\nMagellan Midstream Partners, LP. Magellan’s Texas system consists of 46 breakout tanks and\napproximately 1,017 miles of refined products pipelines from El Paso to Odessa.1\nAs a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,\nby letter dated October 20, 2021, 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 Magellan\nhad committed two violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of\n$66,800 for the alleged violations. The Notice also included an additional warning item pursuant\nto 49 C.F.R. § 190.205, which required no further action, but warned the operator to correct the\nprobable violation or face possible future enforcement action.\nAfter requesting and receiving an extension of time to respond, Magellan responded to the\nNotice by letter dated January 25, 2022 (Response). The company did not contest the allegations\nof violation but provided an explanation of its actions and requested that the proposed civil\npenalty be reduced. Respondent did not request a hearing and therefore has waived its right to\none.\nFINDINGS OF VIOLATION\nIn its Response, Magellan did not contest the allegations in the Notice that it violated 49 C.F.R.\nPart 195, as follows:\n1 Pipeline Safety Violation Report (Violation Report), at 1, (October 20, 2021) (on file with PHMSA).\n\n\n\nCPF 3-2021-067-NOPV\nPage 2\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 on the protected pipeline at least once each calendar year, but with intervals not exceeding\n15 months. Specifically, the Notice alleged that a review of Magellan’s corrosion-control\nrecords showed 46 missing cathodic protection inspections and three inspections exceeding 15\nmonths on the Odessa to El Paso unit.\nRespondent did not contest this allegation of violation but provided additional information and\nrequested a reduction of the civil penalty. Accordingly, based on a review of the evidence, I find\nthat Respondent violated 49 C.F.R. § 195.573(a)(1) by failing to conduct tests on the protected\npipeline at least once each calendar year, but with intervals not exceeding 15 months.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(c), which states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) …\n(c) Rectifiers and other devices. You must electrically check for proper\nperformance each device in the first column at the frequency stated in the\nsecond column.\nDevice Check frequency\nRectifier…………………………..\nAt least six times each calendar\nyear, but with intervals not\nexceeding 2 ½ months.\nReverse current switch.\nDiode.\nInterference bond whose failure\nwould jeopardize structural\nprotection.\nOther interference bond…………. At least once each calendar year,\nbut with intervals not exceeding\n15 months.\n\n\n\nCPF 3-2021-067-NOPV\nPage 3\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.573(c) by failing to electrically\ncheck for proper performance of rectifiers or critical interference bonds at least six times each\ncalendar year, at intervals not to exceed 2 ½ months, and other interference bonds at least once\neach calendar year, but with intervals not exceeding 15 months. Specifically, the Notice alleged\nthat Magellan failed to conduct 15 readings on a rectifier from 2017-2019; three readings on a\ncritical bond in 2019; and two readings on three others interference bonds in 2017 and 2018, for\na total of six readings.\nRespondent did not contest this allegation of violation but provided additional information and\nrequested a reduction of the civil penalty. Accordingly, based on a review of the evidence, I find\nthat Respondent violated 49 C.F.R. § 195.573(c) by failing to electrically check for proper\nperformance of rectifiers or critical interference bonds at least six times each calendar year, at\nintervals not to exceed 2 ½ months, and other interference bonds at least once each calendar\nyear, but with intervals not exceeding 15 months.\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\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I\nmust consider the following criteria: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent’s culpability; the history\nof Respondent’s prior offenses; any effect that the penalty may have on its ability to continue\ndoing business; the good faith of Respondent in attempting to comply with the pipeline safety\nregulations; and self-disclosure or actions to correct a violation prior to discovery by PHMSA.\nIn addition, I may consider the economic benefit gained from the violation without any reduction\nbecause of subsequent damages, and such other matters as justice may require. The Notice\nproposed a total civil penalty of $66,800 for the violations cited above.\nItem 2: The Notice proposed a civil penalty of $23,100 for Respondent’s violation of 49 C.F.R.\n§ 195.573(a)(1), for failing to conduct tests on the protected pipeline at least once each calendar\nyear, but with intervals not exceeding 15 months. Specifically, the Notice alleged that a review\nof Magellan’s corrosion-control records showed 46 missing cathodic protection inspections and\nthree inspections exceeding 15 months on the Odessa to El Paso unit for a total of 49 instances of\nviolation. As fully described below, I reduce the number of instances of violation from 49 to 33.\nWith respect to gravity, Magellan stated that from July 3, 2013, to July 31, 2019, it leased a\nportion of its pipeline to DCP Midstream (DCP). Magellan noted that it filed the Operator\n2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.\n\n\n\nCPF 3-2021-067-NOPV\nPage 4\nRegistry Notification in 2013 regarding DCP’s status as “Operator of Record,” and again in 2019\nwhen Magellan resumed as “Operator of Record.” Therefore, Magellan contended it was not the\nOperator of Record for the applicable portions of the pipeline corresponding to 43 of the 46\nmissing cathodic protection readings. For the remaining three instances of missing cathodic\nprotection readings, Magellan stated that mileposts (MP) 113.8, 113.88 and 113.9 were not\ninstalled until 2018 thus there were no missing readings associated with these locations in 2017.\nMagellan also provided additional records that it obtained from DCP regarding the PHMSA\nidentified missing records (Missing Records). The Missing Records contained the 2018\ninspection records for MP zero through 13 in Kermit Station. The Missing Records also\nincluded information demonstrating that the rectifier location at MP zero was not a test point. In\nconsideration of the Missing Records and the lease agreement with DCP, Magellan requested a\nreduction in the proposed civil penalty.\nMagellan’s argument that it was not the “Operator of Record” does not excuse it from\ncompliance with Part 195.3 Section 195.2 defines an operator as any “person who owns or\noperates pipeline facilities.”4 Consequently, Magellan is an operator as long as it owns pipeline\nfacilities, irrespective of any other contractual arrangements. Further, although “[a]n operator\nmay make arrangements with another person for the performance of any action required by [Part\n195] … the operator is not thereby relieved from the responsibility for compliance with any\nrequirement of [Part 195].”5 Thus, although Magellan leased portions of its pipeline facilities to\nDCP, it maintained responsibility for compliance with Part 195 throughout the lease term (i.e.,\nJuly 3, 2013, to July 31, 2019).\nHowever, having reviewed and considered the Missing Records provided by Magellan, I\nwithdraw the instances of allegation of missing test records for MP 113.8, 113.88, and 113.9 in\n2017; from MP zero through 13 in Kermit Station in 2018; and MP zero, for the reasons\ndiscussed above. As such, I reduce the number of instances of violation by 16, from 49 to 33.\nWith respect to culpability, Magellan asserted that it “conducted all required inspections\nin accordance with 49 CFR § 195.573(a)(1)” upon expiration of the DCP lease agreement.6\nHowever, all of the missing inspections occurred during the lease term. Therefore, Magellan’s\nactions upon expiration of the lease term to comply with § 195.573(a)(1), while commendable,\ndo not warrant further reduction in the civil penalty.\nBased on the foregoing, I assess Respondent a reduced civil penalty of $21,000 for violation of\n49 C.F.R. § 195.573(a)(1).\n3 “Operator of Record” is not a status PHMSA recognizes. That phrase does not appear in the pipeline safety\nstatute or regulations. If a person owns or operates a pipeline, it is responsible for compliance with Part 195.\n4 49 C.F.R. § 195.2.\n5 Id. § 195.10.\n6 Violation Report, at 9.\n\n\n\nCPF 3-2021-067-NOPV\nPage 5\nItem 3: The Notice proposed a civil penalty of $43,700 for Respondent’s violation of 49 C.F.R.\n§ 195.573(c), for failing to electrically check for proper performance of rectifiers and critical\ninterference bonds at least six times each calendar year, at intervals not to exceed 2 ½ months\nand other interference bonds at least once each calendar year, but with intervals not exceeding 15\nmonths. As fully described below, I reduce the number of instances of violation from 24 to 6.\nWith respect to gravity, as noted above, Magellan stated that DCP was the “Operator of Record”\nof the applicable portion of the Odessa to El Paso pipeline during the time frame alleged in the\nNotice. Therefore, Magellan coordinated with DCP to obtain records and respond to the\nallegations in the Notice. Regarding the alleged 15 instances of violation for failure to\nelectrically check for the proper performance of a rectifier, Magellan obtained the 2017, 2018,\nand 2019 rectifier inspection records for line segment 6936 at MP 107.955 (Rectifier Records).\nConcerning an alleged three instances of violation for failure to electrically check for the proper\nperformance of critical interference bond on line segment 6936 at MP 88.07, Magellan argued\nthat the bond was not critical to its pipeline and provided records to satisfy the bond inspection\nrequirement as non-critical bond (Non-Critical Bond Records). Lastly, for the alleged six\ninstances of violation for failure to electrically check for the proper performance of other\ninterference bonds, Magellan argued that those bonds were not protecting the leased Magellan\npipeline. Rather, Magellan averred that those interference bonds were protecting DCP’s Red\nBluff and Hidalgo pipelines. Magellan stated further that these interference bonds were installed\nduring the lease term and removed after the lease expired. In light of the records and information\nobtained from DCP, Magellan requested a reduction in the proposed civil penalty.\nAs explained above, although Magellan leased portions of its pipeline facilities to DCP, it\nmaintained responsibility for compliance with Part 195 throughout the lease term (i.e., July 3,\n2013, to July 31, 2019). However, having reviewed and considered the Rectifier Records and\nthe Non-Critical Bond Records, I withdraw the 15 instances of allegation of violation for missing\ninspection records for the rectifier located on line segment 6936 at MP 107.955, and three\ninstances of allegation of violation for missing critical bond records. Concerning the interference\nbonds, I am not persuaded by Magellan’s argument that the bonds did not need to be inspected\nbecause they were protecting DCP’s Red Bluff or Hidalgo pipelines. These interference bonds\nwere located on Magellan’s pipeline and Magellan has failed to provide any documentation\nindicating that they were inspected. Therefore, I find no reduction in the number of instances of\nviolation is warranted for Magellan’s failure to electrically check for the proper performance of\nother interference bonds, line segment 6936, mile posts 49.595, 100.887, and 113.212.\nTherefore, in sum, I reduce the number of instances of violation by 18, from 24 to 6.\nWith respect to culpability, as noted above, Magellan asserted that it “conducted all required\ninspections in accordance with 49 CFR § 195.573(a)(1)” upon expiration of the DCP lease\nagreement.7 However, the remaining missing inspections all occurred during the lease term.\nTherefore, Magellan’s actions upon expiration of the lease term to comply with § 195.573(a)(1),\nwhile commendable, do not warrant further reduction in the civil penalty.\n7 Violation Report, at 9.\n\n\n\nCPF 3-2021-067-NOPV\nPage 6\nBased on the foregoing, I assess Respondent a reduced civil penalty of $38,000 for violation of\n49 C.F.R. § 195.573(c).\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a reduced civil penalty of $59,000.\nPayment of the civil penalty must be made within 20 days after receipt of this Final Order.\nFederal regulations (49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer\nthrough the Federal Reserve Communications System (Fedwire), to the account of the U.S.\nTreasury. Detailed instructions are contained in the enclosure. Questions concerning wire\ntransfers should be directed to: Financial Operations Division (AMK-325), Federal Aviation\nAdministration, Mike Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City,\nOklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $59,000 civil penalty will result in accrual of interest at the current annual rate\nin accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nWARNING ITEM\nWith respect to Item 1, the Notice alleged a probable violation of Part 195, but identified it as a\nwarning item pursuant to § 190.205. The warning was for:\n49 C.F.R. § 195.452(l)(1)(ii) (Item 1) ─ Respondent’s alleged failure to complete\nand maintain documents to support the decisions and analyses, including any\nmodifications, justifications, deviations and determinations made, variances, and\nactions taken, to implement and evaluate each element of the integrity\nmanagement program.\nIf OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject\nto future enforcement action.\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. The written petition must be received no later than\n20 days after receipt of the Final Order by Respondent. Any petition submitted must contain a\nbrief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.243. The filing\nof a petition automatically stays the payment of any civil penalty assessed. The other terms of\nthe order, including any corrective action, remain in effect unless the Associate Administrator,\nupon request, grants a stay. If Respondent submits payment of the civil penalty, the Final Order\nbecomes the final administrative decision and the right to petition for reconsideration is waived.\n\n\n\nCPF 3-2021-067-NOPV\nPage 7\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nApril 25, 2022\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":20344}