# NAVAJO NATION OIL AND GAS COMPANY — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 32022037NOPV
- **title:** NAVAJO NATION OIL AND GAS COMPANY — Notice of Probable Violation
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2022-03-01
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 195.446(a), 195.446(c)(3), 195.446(e)(1), 195.446(h).
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- **app url:** https://regulus.evalyn.ai/document/phmsa-enforcement-32022037nopv
- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/32022037NOPV
**body:**

Notice of Probable Violation involving NAVAJO NATION OIL AND GAS COMPANY. PHMSA's enforcement data identifies the cited regulations as 195.446(a),  195.446(c)(3),  195.446(e)(1),  195.446(h). The case was opened on 2022-03-01 and is reported as closed as of 2023-05-05. Proposed civil penalty: $22,800. Assessed civil penalty: $22,800. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

32022037NOPV_Closure Letter_05052023_(21-201004).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32022037NOPV/32022037NOPV_Closure%20Letter_05052023_(21-201004).pdf

32022037NOPV_Closure Letter_05052023_(21-201004)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/32022037NOPV/32022037NOPV_Closure%20Letter_05052023_(21-201004)_text.pdf

32022037NOPV_Final Order_10172022_(21-201004).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32022037NOPV/32022037NOPV_Final%20Order_10172022_(21-201004).pdf

32022037NOPV_Final Order_10172022_(21-201004)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/32022037NOPV/32022037NOPV_Final%20Order_10172022_(21-201004)_text.pdf

32022037NOPV_Operator Response to Notice_05242022_(21-201004).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32022037NOPV/32022037NOPV_Operator%20Response%20to%20Notice_05242022_(21-201004).pdf

32022037NOPV_PCP PCO_03012022_(21-201004).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32022037NOPV/32022037NOPV_PCP%20PCO_03012022_(21-201004).pdf

32022037NOPV_PCP PCO_03012022_(21-201004)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/32022037NOPV/32022037NOPV_PCP%20PCO_03012022_(21-201004)_text.pdf

32022037NOPV_Final Order_10172022_(21-201004)_text.pdf

October 17, 2022
VIA ELECTRONIC MAIL TO: jmcclure@nnogoc.com
Mr. James McClure
Chief Executive Officer
Navajo Nation Oil and Gas Company
PO Box 4439
Window Rock, Arizona 86515
Re: CPF No. 3-2022-037-NOPV
Dear Mr. McClure:
Enclosed please find the Final Order issued in the above-referenced case. It withdraws one of
the allegations of violation, makes other findings of violation, assesses a civil penalty of $22,800,
and specifies actions that need to be taken by Navajo Nation Oil and Gas Company to comply
with the pipeline safety regulations. The penalty payment terms are set forth in the Final Order.
When the civil penalty has been paid and the terms of the compliance order completed, as
determined by the Director, Central Region, this enforcement action will be closed. Service of
the Final Order by e-mail is effective upon the date of transmission and acknowledgement of
receipt 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. Gregory Ochs, Director, Central Region, Office of Pipeline Safety, PHMSA
Mr. Joseph P. Robertson, P.E., Vice-President, NNOGC, jrobertson@nnogc.com
Ms. Susan A. Olenchuk, Counsel for NNOGC, Van Ness Feldman, LLP, sam@vnf.com
CONFIRMATION OF 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 )
Navajo Nation Oil and Gas Company, ) CPF No. 3-2022-037-NOPV
)
)
)
Respondent. )
____________________________________)
FINAL ORDER
From May 24 to 28, 2021, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and
Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),
inspected the control room management procedures and records of Navajo Nation Oil and Gas
Company (NNOGC or Respondent) in Montezuma Creek, Utah. NNOGC operates the Running
Horse Pipeline, an 88-mile, 16-inch diameter interstate pipeline transporting crude oil through
Colorado, New Mexico, and Utah.
As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent,
by letter dated March 1, 2022, a Notice of Probable Violation, Proposed Civil Penalty, and
Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice
proposed finding that NNOGC had committed four violations of 49 C.F.R. Part 195 and
proposed assessing a civil penalty of $22,800 for the alleged violations. The Notice also
proposed ordering Respondent to take certain measures to correct the alleged violations.
NNOGC responded to the Notice by letter dated May 24, 2022 (Response). Respondent
contested one of the allegations and offered additional information in response to the Notice.
Respondent did not request a hearing and therefore has waived its right to one.
FINDINGS OF VIOLATION
The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.446(a), which states in
relevant part:
§ 195.446 Control room management.
(a) General. This section applies to each operator of a pipeline facility
with a controller working in a control room who monitors and controls all



or part of a pipeline facility through a SCADA system. Each operator must
have and follow written control room management procedures that
implement the requirements of this section. The procedures required by this
section must be integrated, as appropriate, with the operator’s written
procedures required by § 195.402 . . . .
The Notice alleged that Respondent violated 49 C.F.R. § 195.446(a) by failing to have and
follow written control room management procedures that implement the requirements of this
section. Specifically, the Notice alleged, Respondent failed and have and follow a procedure to
verify correct safety-related set point values during the calibration of overfill protection systems
in accordance with §§ 195.446(e)(3) and 195.428(d).1 The Notice alleged that NNOGC failed to
complete field inspections of the overfill protection system to compare with SCADA values for
breakout tanks LT-1430, LT-1431, and LT-1432 for 2019 and 2020.
In its Response, NNOGC asserted that Item 1 should be withdrawn because the storage tanks at
Montezuma Creek are not breakout tanks. Citing to the definition of breakout tank in § 195.2,
Respondent explained that the tanks cannot receive surges from a regulated pipeline and that
they receive oil from gravity-fed pipelines that are not subject to the pipeline safety regulations
in Part 195, other than reporting. NNOGC submitted supporting documentation.2
In a recommendation for final action submitted pursuant to § 190.209(b)(7), the Director
recommended withdrawing the alleged violation of § 195.446(a). Accordingly, after considering
the evidence and arguments presented, I hereby order that Item 1 be withdrawn.
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.446(c)(3), which states:
§ 195.446 Control room management.
(a) . . . .
(c) Provide adequate information. Each operator must provide its
controllers with the information, tools, processes and procedures necessary
for the controllers to carry out the roles and responsibilities the operator has
defined by performing each of the following:
(1) . . . .
(3) Test and verify an internal communication plan to provide adequate
means for manual operation of the pipeline safely, at least once each
calendar year, but at intervals not to exceed 15 months;
The Notice alleged that Respondent violated 49 C.F.R. § 195.446(c)(3) by failing to test and
verify its internal communication plan for manual operation of the pipeline safely at least once
each calendar year, but at intervals not exceeding 15 months for the years 2019 and 2020.
1 Section 195.446(e)(3) requires each operator using a SCADA system to have a written alarm management plan
that includes provisions to verify the correct safety-related alarm set-point values. Section 195.428(d) requires each
operator to inspect and test overfill protection systems.
2 Respondent cited as support for its position a 2000 interagency agreement between OPS and EPA (known as the
“Felder-Luftig Memo”). Respondent is advised that the Felder-Luftig Memo was terminated in 2013.



Respondent did not contest this allegation of violation. Accordingly, based on a review of the
evidence, I find that Respondent violated 49 C.F.R. § 195.446(c)(3) by failing to test and verify
its internal communication plan for manual operation of the pipeline safely at least once each
calendar year, but at intervals not exceeding 15 months.
Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.446(e)(1), which states:
§ 195.446(e)(1) Control room management.
(a) . . . .
(e) Alarm management. Each operator using a SCADA system must
have a written alarm management plan to provide for effective controller
response to alarms. An operator’s plan must include provisions to:
(1) Review SCADA safety-related alarm operations using a process that
ensures alarm are accurate and support safe pipeline operations;
The Notice alleged that Respondent violated 49 C.F.R. § 195.446(e)(1) by failing to ensure
SCADA safety-related alarms are accurate and support safety pipeline operations. Specifically,
the Notice alleged Respondent’s set points in its procedure did not match those in SCADA and
safety-related alarms were not properly identified.
Respondent did not contest this allegation of violation. Accordingly, based on a review of all of
the evidence, I find that Respondent violated 49 C.F.R. § 195.446(e)(1) by failing to ensure
SCADA safety-related alarms are accurate and support safety pipeline operations.
Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.446(h), which states:
§ 196.446 Control room management.
(a)
(h) Training. Each operator must establish a controller training program
and review the training program content to identify potential improvements
at least once each calendar year, but at intervals not to exceed 15 months.
An operator’s program must provide for training each controller to carry out
the roles and responsibilities defined by the operator. In addition, the
training program must include the following elements:
The Notice alleged that Respondent violated 49 C.F.R. § 195.446(h) by failing to establish a
controller training program and review the content to identify potential improvements at least
once each calendar year, but at intervals not to exceed 15 months. Specifically, the Notice
alleged that Respondent’s procedures described a structured on-the-job training (OJT) program,
however the existing training was not structured, and the operator had not developed a formal
training program with defined plans, milestones, assessments and training content. In addition,
Respondent failed to review the training content during the years 2018, 2019, and 2020.
Respondent did not contest this allegation of violation. Accordingly, based on a review of the
evidence, I find that Respondent violated 49 C.F.R. § 195.446(h) by failing to establish a



controller training program and review the content to identify potential improvements at least
once each calendar year, but at intervals not to exceed 15 months.
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.3
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; the good faith of Respondent in attempting to comply with the pipeline safety
regulations; and self-disclosure or actions to correct a violation prior to discovery by PHMSA.
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 $22,800 for the violations cited above.
Item 2: The Notice proposed a civil penalty of $22,800 for Respondent’s violation of 49 C.F.R.
§ 195.446(c)(3) for failing to test and verify its internal communication plan for manual
operation of the pipeline safely at least once each calendar year, but at intervals not exceeding 15
months for the years 2019 and 2020. NNOGC neither contested the allegation nor presented any
evidence or argument justifying a reduction in the proposed penalty. Accordingly, having
reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of
$22,800 for violation of 49 C.F.R. § 195.446(c)(3).
Payment of the civil penalty must be made within 20 days after receipt of this Final Order.
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 $22,800 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
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.
3 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223 for adjusted amounts.



COMPLIANCE ORDER
The Notice proposed a compliance order with respect to Items 1, 3, and 4 in the Notice for
violations of 49 C.F.R. §§ 195.446(a), 195.446(e)(1), and 195.446(h), respectively. Under 49
U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids or who
owns or operates a pipeline facility is required to comply with the applicable safety standards
established under chapter 601. As discussed above, Item 1 has been withdrawn. Therefore, the
compliance terms proposed in the Notice for that Item are not included in this Order.
Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is
ordered to take the following actions to ensure compliance with the pipeline safety regulations
applicable to its operations:
1. With respect to the violation of § 195.446(e)(1) (Item 3), Respondent must
identify all safety related points and alarms, rationalize all alarms to establish
the appropriate set points and verify the alarm descriptions are correct. Part of
the process must be to apply, in the database, the appropriate alarm priority
level as defined by procedure, along with verification of the color presentation
and any audible alerts and animation (flashing) for alarms. Additionally,
safety related points and alarms must be defined in the SCADA master
database (if capabilities for this exist) and, at a minimum, distinguish in the
alarm description if the alarm is safety related. This must be completed within
90 days of receipt of the Final Order.
2. With respect to the violation of § 195.446(h) (Item 4), Respondent must
implement a structured on the job training plan that includes, at a minimum:
identification specific training content, web based or instructor led training,
assessments for training courses and periodic progress. This must be provided
for all positions, defined in the control room, who will maintain operator
qualification to operate a console for either assigned shift rotation or to fill a
temporary vacancy. The training plan should be developed so that the
individual trainee, mentor, and supervisor understand the requirements and
can track progress. This must be completed within 180 days of receipt of the
Final Order.
The Director may grant an extension of time to comply with any of the required items upon a
written request timely submitted by the Respondent and demonstrating good cause for an
extension.
PHMSA requests that Respondent maintain documentation of the safety improvement costs
associated with fulfilling this Compliance Order and submit the total to the Director. It is
requested that these costs be reported in two categories: (1) total cost associated with
preparation/revision of plans, procedures, studies and analyses; and (2) total cost associated with
replacements, additions and other changes to pipeline infrastructure.



Failure to comply with this Order may result in the administrative assessment of civil penalties
not to exceed $200,000, as adjusted for inflation (see 49 C.F.R. § 190.223), for each violation for
each day the violation continues or in referral to the Attorney General for appropriate relief in a
district court of the United States.
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. The written petition must be received no later than
20 days after receipt of the Final Order by Respondent. Any petition submitted must contain a
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 corrective action, remain in effect unless the Associate Administrator, upon
request, grants a stay.
The terms and conditions of this Final Order are effective upon service in accordance with 49
C.F.R. § 190.5.
October 17, 2022
___________________________________ __________________________
Alan K. Mayberry Date Issued
Associate Administrator
for Pipeline Safety

32022037NOPV_Closure Letter_05052023_(21-201004)_text.pdf

VIA ELECTRONIC MAIL TO: jmcclure@nnogc.com and jrobertson@nnogc.com
May 5, 2023
Mr. James McClure, CEO
Navajo Nation Oil and Gas
PO Box 4439
Window Rock, AZ 86515
RE: CPF 3-2022-037-NOPV
Dear Mr. McClure:
On October 17, 2022, the Pipeline and Hazardous Materials Safety Administration (PHMSA)
issued to Navajo Nation Oil and Gas a Final Order in the above-referenced case. This Order
included a Compliance Order and Civil Penalty assessment. Based on our review of the
documentation you provided and confirmation of payment of the civil penalty, it has been
determined that you have complied with the terms of this Order.
Accordingly, this case is now closed and no further action is contemplated with respect to the
matters involved in this case. Thank you for your cooperation in this matter.
Sincerely,
Gregory A. Ochs
Director, Central Region, Offices of Pipeline Safety
Pipeline and Hazardous Materials Safety Administration
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