{"operation":"document","citation":"CPF 32025009WL","title":"LAMBDA ENERGY GATHERING LLC — Warning Letter","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2025-10-10","effective_on":null,"summary":"CLOSED warning letter citing 195.444(b), 195.446(a), 195.446(b)(4), 195.446(c)(2), 195.446(c)(3), 195.446(e)(1), 195.446(e)(2), 195.446(e)(4).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-32025009wl.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-32025009wl.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-32025009wl","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/32025009WL","body":"Warning Letter involving LAMBDA ENERGY GATHERING LLC. PHMSA's enforcement data identifies the cited regulations as 195.444(b),  195.446(a),  195.446(b)(4),  195.446(c)(2),  195.446(c)(3),  195.446(e)(1),  195.446(e)(2),  195.446(e)(4). The case was opened on 2025-10-10 and is reported as closed as of 2025-10-10. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n32025009WL_Warning Letter_10102025_(24-297197).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32025009WL/32025009WL_Warning%20Letter_10102025_(24-297197).pdf\n\n32025009WL_Warning Letter_10102025_(24-297197)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/32025009WL/32025009WL_Warning%20Letter_10102025_(24-297197)_text.pdf\n\n32025009WL_Warning Letter_10102025_(24-297197)_text.pdf\n\nWARNING LETTER\nVIA ELECTRONIC MAIL TO: hfaulkner@lambdaoil.com; jmcgrath@lambdaenergyllc.com;\nbberthelot@lambdaenergyllc.com\nOctober 10, 2025\nMr. Harry Faulkner\nPresident and CEO\nLambda Energy Gathering, LLC\n12012 Wickchester Lane, Suite 300\nHouston, TX 77079\nCPF 3-2025-009-WL\nDear Mr. Faulkner:\nFrom June 11 to July 25, 2024, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United\nStates Code (U.S.C.), conducted an onsite inspection of the Control Room Management\nprocedures and records of Lambda Energy Gathering, LLC (Lambda), in Kalkaska, Michigan.\nAs a result of the inspection, it is alleged that Lambda has committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected\nand the probable violations are:\n1. § 195.444 Leak detection.\n(a) . . . .\n(b) General. A pipeline must have an effective system for detecting leaks in\naccordance with §§ 195.134 or 195.452, as appropriate. An operator must evaluate\nthe capability of its leak detection system to protect the public, property, and the\nenvironment and modify it as necessary to do so. At a minimum, an operator’s\nevaluation must consider the following factors – length and size of the pipeline, type\nof product carried, the swiftness of leak detection, location of nearest response\npersonnel, and leak history.\n\n\n\nLambda failed to have an effective system for detecting leaks in accordance with § 195.452.1\nProcedure “IM-011 Leak Detection and EFRD Analysis” (rev. Sept. 28, 2023) (Procedure IM-\n011) included “testing” as a method to determine whether modifications to Lambda’s leak\ndetection means are needed to improve its ability to respond to a pipeline failure. A section of\nLambda’s “Leak Detection Analysis template” included a section for “Leak Detection System\nTesting.” However, Procedure IM-011 did not contain any information for how to conduct the\ntesting and no records of any type of testing was provided. Lambda did provide modeled\nscenarios2 developed by the previous pipeline operator and adopted by Lambda supporting\nEmergency Flow Restricting Device (EFRD) placement. These modeled scenarios were not\nrelated to the control room leak detection capabilities as described and required in Procedure IM-\n011. Therefore, Lambda could not demonstrate it had an effective system for detecting leaks, in\nviolation of § 195.444(b).\n2. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a controller\nworking in a control room who monitors and controls all or part of a pipeline facility\nthrough a SCADA system. Each operator must have and follow written control room\nmanagement procedures that implement the requirements of this section. The\nprocedures required by this section must be integrated, as appropriate, with the\noperator's written procedures required by § 195.402. An operator must develop the\nprocedures no later than August 1, 2011, and must implement the procedures\naccording to the following schedule. The procedures required by paragraphs (b),\n(c)(5), (d)(2) and (d)(3), (f) and (g) of this section must be implemented no later than\nOctober 1, 2011. The procedures required by paragraphs (c)(1) through (4), (d)(1),\n(d)(4), and (e) must be implemented no later than August 1, 2012. The training\nprocedures required by paragraph (h) must be implemented no later than August 1,\n2012, except that any training required by another paragraph of this section must be\nimplemented no later than the deadline for that paragraph.\nLambda failed to have and follow a Control Room Management Plan (ver. 1.0, effective April 18,\n2022) (CRM Plan), as required by § 195.446(a). While Lambda did have a document it called a\nCRM Plan, in many sections the language either simply paraphrased the regulation or only\nprovided guidance on how a process may be developed to demonstrate compliance with the\nregulation, rather than providing a written process. In addition, during PHMSA’s inspection,\nLambda presented for review forms that were different than the forms referenced in the CRM Plan,\ndescribed practices that were not formalized in the CRM Plan, and described procedures in the\nCRM Plan that were not matched by the practice in place. Thus, Lambda did not follow its written\nprocedures. Therefore, Lambda failed to comply with § 195.446(a).\n1 Because the pipeline was in a high consequence area, § 195.452 is applicable.\n2 “Modeled scenarios,” in this context, are models of different leak conditions that are used to determine where to\nput remotely operated valves or valves that can automatically close, based on certain conditions monitored at the\nvalve.\n\n\n\n3. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a controller\nworking in a control room who monitors and controls all or part of a pipeline facility\nthrough a SCADA system. Each operator must have and follow written control room\nmanagement procedures that implement the requirements of this section. . . .\n(b) Roles and responsibilities. Each operator must define the roles and responsibilities\nof a controller during normal, abnormal, and emergency operating conditions. To\nprovide for a controller's prompt and appropriate response to operating conditions,\nan operator must define each of the following:\n(1) . . . .\n(4) A method of recording controller shift changes and any hand-over of\nresponsibility between controllers;\nLambda failed to follow its CRM Plan, section C, subsection 3.2 for shift change documentation.\nSubsection 3.2 required the shift change to be documented on Lambda’s Form CR-05. However,\nwhen shift change records were reviewed by PHMSA, all of the shift-changes were recorded on a\ndifferent form. The provided shift change records consisted of separate Excel spreadsheets.\nTherefore, Lambda failed to follow its CRM Plan, section C, subsection 3.2 for shift change\ndocumentation, per the requirements of § 195.446(b)(4). In addition, CRM Plan, section B,\nsubsection 12.0, stated, \"[s]pecific information communicated to arriving Controllers is\ndocumented by the departing Controller in the electronic log.\" It is unclear whether subsections\n3.2 and 12.0 referred to Form CR-05 or different documents; therefore, the method of recording\nshift changes and hand-over of responsibility between controllers was not defined. Therefore,\nLambda failed to comply with § 195.446(b)(4).\n4. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a controller\nworking in a control room who monitors and controls all or part of a pipeline facility\nthrough a SCADA system. Each operator must have and follow written control room\nmanagement procedures that implement the requirements of this section. . . .\n(b) . . . .\n(c) Provide adequate information. Each operator must provide its controllers with the\ninformation, tools, processes and procedures necessary for the controllers to carry\nout the roles and responsibilities the operator has defined by performing each of the\nfollowing:\n(1) . . . .\n(2) Conduct a point-to-point verification between SCADA displays and related field\nequipment when field equipment is added or moved and when other changes that\naffect pipeline safety are made to field equipment or SCADA displays.\nLambda failed to have and follow written control room management procedures that implement\nthe requirements for conducting a point-to-point (P2P) verification. Specifically, Lambda failed to\nprovide details in its CRM Plan, section C, subsection 5.2, to define when P2P verifications needed\nto be completed. In addition, CRM Plan, section C, subsection 5.3, did not require certain details\n\n\n\nnecessary to carry out verification of the points between SCADA displays and related field\nequipment. While the procedure required P2P documentation to include physical location of the\ndevice, data value or status of the device, alarm set-point values, and date and names of individuals\ninvolved in the verification process, it did not require documentation of whether the point was\ntested live or simulated, or the sequence of the point on the pipeline (for example, whether the\ntransmitter upstream or downstream of the valve matched the SCADA display configuration).\nMoreover, Lambda’s CRM plan, section C, subsection 5.3, referenced Form CRM-7 to document\nthe P2P verification. However, Form CRM-7 did not require all the information required by the\nprocedure to be documented. For these reasons, Lambda failed to comply with § 195.446(c)(2).\nIn addition, Lambda failed to demonstrate it performed the P2P verification that should have been\ndone when the crude oil system was purchased from Markwest Michigan Pipeline Company, LLC,\nand added to Lambda’s SCADA system in 2019. Documentation of the verification expected,\nbased on Lambda’s procedures, and records were required to be maintained pursuant to\n§ 195.446(j)(1). The lack of records indicates no verification was performed. Therefore, Lambda\nfailed to meet the requirements of § 195.446(c)(2) by not following its procedure.\n5. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a controller\nworking in a control room who monitors and controls all or part of a pipeline facility\nthrough a SCADA system. Each operator must have and follow written control room\nmanagement procedures that implement the requirements of this section. . . .\n(b) . . . .\n(c) Provide adequate information. Each operator must provide its controllers with the\ninformation, tools, processes and procedures necessary for the controllers to carry\nout the roles and responsibilities the operator has defined by performing each of the\nfollowing:\n(1) . . . .\n(3) Test and verify an internal communication plan to provide adequate means for\nmanual operation of the pipeline safely, at least once each calendar year, but at\nintervals not to exceed 15 months;\nLambda failed to have and follow written control room management procedures that implement\nthe requirements to have and test an internal communication plan for the manual operation of the\npipeline safely to demonstrate compliance per the requirements of § 195.446(c)(3). Specifically,\nCRM Plan, section C, subsections 6 and 7, provided considerations to be included in a plan, rather\nthan instruction and direction on how to manage the pipeline in the event SCADA or\ncommunications failed. The lack of an internal communication plan to provide sufficient means\nfor safe manual operation of the pipeline resulted in tests of the procedure being inadequate to\ndemonstrate compliance. In addition, forms CRM - 26A and CRM - 26B were intended to\ndocument the date and test or actual event of SCADA failure. The forms included documentation\nof the SCADA failure notification procedure. However, a test and verification need to incorporate\nall elements of the plan to provide for adequate means for manual operation of the pipeline safely,\nwhich the forms did not do. The forms did not provide a method to manually document operating\n\n\n\nconditions of the pipeline, such as pipeline pressures, flows, tank levels, abnormal or emergency\noperations that might occur or any leaks detected. Consequently, Lambda failed to comply with\n§ 195.446(c)(3).\n6. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a controller\nworking in a control room who monitors and controls all or part of a pipeline facility\nthrough a SCADA system. Each operator must have and follow written control room\nmanagement procedures that implement the requirements of this section. . . .\n(b) . . . .\n(e) Alarm management. Each operator using a SCADA system must have a written\nalarm management plan to provide for effective controller response to alarms. An\noperator's plan must include provisions to:\n(1) Review SCADA safety-related alarm operations using a process that ensures\nalarms are accurate and support safe pipeline operations;\nLambda failed to have and follow written control room management procedures that implement\nthe requirements of § 195.446(e)(1). Specifically, a review of CRM Plan, section E, “Alarm\nManagement,” identified basic paraphrasing of the regulation and excerpts from API RP 1167.\nRather than providing procedures to support sound Alarm Management principles to implement\nin the control room, section E offered guidance on how an operator might consider implementing\ntopics within an Alarm Management Plan.\nCRM Plan, section E failed to provide a process to consistently document and rationalize (D&R)\nalarms to determine if alarms were valid, assigned meaningful priority, and given accurate setpoint\nvalues to support adequate safety responses. The procedure did not provide any alarm priorities.\nSection C, subsection 4.5.4.1.2, offered no definition for priorities that were assigned in Lambda’s\nSCADA system.\nA review of the SCADA master alarm database identified two priorities: critical and not critical.\nLambda had not implemented other priorities. The critical alarms were generally considered\nsafety-related alarms. It was suggested by Lambda staff that controllers were allowed to interpret\nthe priority and response to the not-critical-priority alarms based on their experience and\nunderstanding of operations. The lack of set priorities and alarm handling procedures encourages\nineffective controller response to alarms and does not promote pipeline safety.\nIn addition, section E, subsection 4.4, characterized five safety related alarms as: (1) pressures\nexceeding the maximum established limit, (2) pressure beneath minimum safe operating pressure,\n(3) indications an overfill, or leak of hazardous liquid, (4) fire, and (5) hazardous atmosphere. A\nreview of the SCADA master alarm database identified a great deal of inconsistency between\nprocedure and implementation of safety related alarms and alarm priorities.\n\n\n\nLambda failed to demonstrate it conducted a D&R or implemented alarm priorities and safety-\nrelated alarm operations using a process that ensured alarms were accurate and support safe\npipeline operations, as required by § 195.446(e)(1).\n7. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a\ncontroller working in a control room who monitors and controls all or part of a\npipeline facility through a SCADA system. Each operator must have and follow\nwritten control room management procedures that implement the requirements of\nthis section. . . .\n(b) . . . .\n(e) Alarm management. Each operator using a SCADA system must have a written\nalarm management plan to provide for effective controller response to alarms. An\noperator's plan must include provisions to:\n(1) . . . .\n(2) Identify at least once each calendar month points affecting safety that have been\ntaken off scan in the SCADA host, have had alarms inhibited, generated false alarms,\nor that have had forced or manual values for periods of time exceeding that required\nfor associated maintenance or operating activities\nLambda failed to have and follow written control room management procedures that implement\nthe requirements of § 195.446(e)(2) for conducting the monthly identification, recording, review,\nand analysis of points that have been taken off scan, have had alarms inhibited, generated false\nalarms, or that have had forced or manual values for periods of time exceeding that required for\nassociated maintenance or operating activities. Specifically, CRM Plan, section E, subsection 3.3,\nsimply restated the regulation of § 195.446(e)(2). In addition, Lambda did not conduct any monthly\nreviews as required. Nor did the CRM Plan address steps for identifying, categorizing and\ndocumenting false alarms. False alarms cannot be identified by a SCADA event log. This is a\nmanual process of identification and documentation.\nIn addition, section E, subsection 3.3, referenced Lambda’s Form CRM-15, “Monthly Safety\nAlarm Review,” and required Lambda to document the findings of the review. Instructions on the\nform were not adequate to carry out a monthly safety alarm review. Form CRM-15 did not require\nthe date the point was originally taken out of service through the action of off scan, inhibit/disable,\nor forced/manual. Form CRM-15 did not identify the reason for the action, such as end device\nrepair or field maintenance work, that caused the point to be out of service, nor did it have a\ncomparison of the duration of the condition to ensure it did not exceed that required for associated\nmaintenance or operating activities.\nTherefore, Lambda failed to have and follow written control room management procedures that\nimplemented the requirements to identify at least once each calendar month points affecting safety\nthat have been taken off scan in the SCADA host, have had alarms inhibited, generated false\nalarms, or that have had forced or manual values for periods of time exceeding that required for\nassociated maintenance or operating activities, and Lambda did not complete the requisite monthly\nreviews and analysis required by § 195.446(e)(2).\n\n\n\n8. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a\ncontroller working in a control room who monitors and controls all or part of a\npipeline facility through a SCADA system. Each operator must have and follow\nwritten control room management procedures that implement the requirements of\nthis section. . . .\n(b) . . . .\n(e) Alarm management. Each operator using a SCADA system must have a written\nalarm management plan to provide for effective controller response to alarms. An\noperator's plan must include provisions to:\n(1) . . . .\n(4) Review the alarm management plan required by this paragraph at least once each\ncalendar year, but at intervals not exceeding 15 months, to determine the effectiveness\nof the plan.\nLambda failed to have and follow written control room management procedures that implement\nthe requirements to ensure that Lambda reviewed its alarm management plan to evaluate its\neffectiveness, and review its plan at least once each calendar year, at intervals not exceeding 15\nmonths, per the requirements of § 195.446(e)(4). Specifically, Lambda’s CRM Plan simply\nrestated the regulation with no instruction on how to complete the task required by § 195.446(e)(4).\nIn addition, Lambda did not complete a review of the Alarm Management Plan to determine\neffectiveness for the years 2021, 2022, 2023. Therefore, Lambda did not meet the requirements of\n§ 195.446(e)(4).\n9. § 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a\ncontroller working in a control room who monitors and controls all or part of a\npipeline facility through a SCADA system. Each operator must have and follow\nwritten control room management procedures that implement the requirements of\nthis section. . . .\nLambda failed to follow its procedures for electronic records storage as required by Lambda’s\nCRM Plan, section J, subsection 3.2.2. Lambda’s CRM Plan contained different methods of\nacceptable record retention systems. Some electronic records were saved on personal computers\nrather than a central repository with file folder and filename conventions, contrary to the\nprocedures. The storage on personal computers were not backed up as the procedure required and\nmade records difficult to find or not available at the time of PHMSA’s inspection. Therefore,\nLambda failed to follow its procedure for electronic records storage and management as required\nby Lambda’s CRM Plan.\n\n\n\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed\n$272,926 per violation per day the violation persists, up to a maximum of $2,729,245 for a related\nseries of violations. For violation occurring on or after December 28, 2023 and before December\n30, 2024 the maximum penalty may not exceed $266,015 per violation per day the violation\npersists, up to a maximum of $2,660,135 for a related series of violations. For violation occurring\non or after January 6, 2023 and before December 28, 2023 the maximum penalty may not exceed\n$257,664 per violation per day the violation persists, up to a maximum of $2,576,627 for a related\nseries of violations. For violation occurring on or after March 21, 2022 and before January 6, 2023\nthe maximum penalty may not exceed $239,142 per violation per day the violation persists, up to\na maximum of $2,391,412 for a related series of violations. For violation occurring on or after\nMay 3, 2021 and before March 21, 2022 the maximum penalty may not exceed $225,134 per\nviolation per day the violation persists, up to a maximum of $2,251,334 for a related series of\nviolations. For violation occurring on or after January 11, 2021 and before May 3, 2021 the\nmaximum penalty may not exceed $222,504 per violation per day the violation persists, up to a\nmaximum of $2,225,034 for a related series of violations. For violation occurring on or after July\n31, 2019 and before January 11, 2021 the maximum penalty may not exceed $218,647 per violation\nper day the violation persists, up to a maximum of $2,186,465 for a related series of violations.\nWe have reviewed the circumstances and supporting documents involved in this case and have\ndecided not to conduct additional enforcement action or penalty assessment proceedings at this\ntime. We advise you to correct the items identified in this letter. Failure to do so will result in\nLambada Energy Gathering, LLC being subject to additional enforcement action.\nNo reply to this letter is required. If you choose to reply, in your correspondence please refer to\nCPF 3-2025-009-WL. Be advised that all material you submit in response to this enforcement\naction is subject to being made publicly available. If you believe that any portion of your\nresponsive material qualifies for confidential treatment under 5 U.S.C. § 552(b), along with the\ncomplete original document you must provide a second copy of the document with the portions\nyou believe qualify for confidential treatment redacted and an explanation of why you believe the\nredacted information qualifies for confidential treatment under 5 U.S.C. § 552(b).\nSincerely,\nDavid Barrett\nActing Director, Central Region, Office of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration\ncc: James McGrath, Plant and Pipeline Manager, Lambda, jmcgrath@lambdaenergyllc.com\nBen Berthelot, Regulatory Compliance Manager, Lambda, bberthelot@lambdaenergyllc.com","truncated":false,"body_characters":23554}