# LAMBDA ENERGY GATHERING LLC — Warning Letter

- **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:** Not available
- **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.

Official case documents:

32025009WL_Warning Letter_10102025_(24-297197).pdf: https://primis.phmsa.dot.gov/enforcement-documents/32025009WL/32025009WL_Warning%20Letter_10102025_(24-297197).pdf

32025009WL_Warning Letter_10102025_(24-297197)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/32025009WL/32025009WL_Warning%20Letter_10102025_(24-297197)_text.pdf

32025009WL_Warning Letter_10102025_(24-297197)_text.pdf

WARNING LETTER
VIA ELECTRONIC MAIL TO: hfaulkner@lambdaoil.com; jmcgrath@lambdaenergyllc.com;
bberthelot@lambdaenergyllc.com
October 10, 2025
Mr. Harry Faulkner
President and CEO
Lambda Energy Gathering, LLC
12012 Wickchester Lane, Suite 300
Houston, TX 77079
CPF 3-2025-009-WL
Dear Mr. Faulkner:
From June 11 to July 25, 2024, a representative of the Pipeline and Hazardous Materials Safety
Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United
States Code (U.S.C.), conducted an onsite inspection of the Control Room Management
procedures and records of Lambda Energy Gathering, LLC (Lambda), in Kalkaska, Michigan.
As a result of the inspection, it is alleged that Lambda has committed probable violations of the
Pipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected
and the probable violations are:
1. § 195.444 Leak detection.
(a) . . . .
(b) General. A pipeline must have an effective system for detecting leaks in
accordance with §§ 195.134 or 195.452, as appropriate. An operator must evaluate
the capability of its leak detection system to protect the public, property, and the
environment and modify it as necessary to do so. At a minimum, an operator’s
evaluation must consider the following factors – length and size of the pipeline, type
of product carried, the swiftness of leak detection, location of nearest response
personnel, and leak history.



Lambda failed to have an effective system for detecting leaks in accordance with § 195.452.1
Procedure “IM-011 Leak Detection and EFRD Analysis” (rev. Sept. 28, 2023) (Procedure IM-
011) included “testing” as a method to determine whether modifications to Lambda’s leak
detection means are needed to improve its ability to respond to a pipeline failure. A section of
Lambda’s “Leak Detection Analysis template” included a section for “Leak Detection System
Testing.” However, Procedure IM-011 did not contain any information for how to conduct the
testing and no records of any type of testing was provided. Lambda did provide modeled
scenarios2 developed by the previous pipeline operator and adopted by Lambda supporting
Emergency Flow Restricting Device (EFRD) placement. These modeled scenarios were not
related to the control room leak detection capabilities as described and required in Procedure IM-
011. Therefore, Lambda could not demonstrate it had an effective system for detecting leaks, in
violation of § 195.444(b).
2. § 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. An operator must develop the
procedures no later than August 1, 2011, and must implement the procedures
according to the following schedule. The procedures required by paragraphs (b),
(c)(5), (d)(2) and (d)(3), (f) and (g) of this section must be implemented no later than
October 1, 2011. The procedures required by paragraphs (c)(1) through (4), (d)(1),
(d)(4), and (e) must be implemented no later than August 1, 2012. The training
procedures required by paragraph (h) must be implemented no later than August 1,
2012, except that any training required by another paragraph of this section must be
implemented no later than the deadline for that paragraph.
Lambda failed to have and follow a Control Room Management Plan (ver. 1.0, effective April 18,
2022) (CRM Plan), as required by § 195.446(a). While Lambda did have a document it called a
CRM Plan, in many sections the language either simply paraphrased the regulation or only
provided guidance on how a process may be developed to demonstrate compliance with the
regulation, rather than providing a written process. In addition, during PHMSA’s inspection,
Lambda presented for review forms that were different than the forms referenced in the CRM Plan,
described practices that were not formalized in the CRM Plan, and described procedures in the
CRM Plan that were not matched by the practice in place. Thus, Lambda did not follow its written
procedures. Therefore, Lambda failed to comply with § 195.446(a).
1 Because the pipeline was in a high consequence area, § 195.452 is applicable.
2 “Modeled scenarios,” in this context, are models of different leak conditions that are used to determine where to
put remotely operated valves or valves that can automatically close, based on certain conditions monitored at the
valve.



3. § 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. . . .
(b) Roles and responsibilities. Each operator must define the roles and responsibilities
of a controller during normal, abnormal, and emergency operating conditions. To
provide for a controller's prompt and appropriate response to operating conditions,
an operator must define each of the following:
(1) . . . .
(4) A method of recording controller shift changes and any hand-over of
responsibility between controllers;
Lambda failed to follow its CRM Plan, section C, subsection 3.2 for shift change documentation.
Subsection 3.2 required the shift change to be documented on Lambda’s Form CR-05. However,
when shift change records were reviewed by PHMSA, all of the shift-changes were recorded on a
different form. The provided shift change records consisted of separate Excel spreadsheets.
Therefore, Lambda failed to follow its CRM Plan, section C, subsection 3.2 for shift change
documentation, per the requirements of § 195.446(b)(4). In addition, CRM Plan, section B,
subsection 12.0, stated, "[s]pecific information communicated to arriving Controllers is
documented by the departing Controller in the electronic log." It is unclear whether subsections
3.2 and 12.0 referred to Form CR-05 or different documents; therefore, the method of recording
shift changes and hand-over of responsibility between controllers was not defined. Therefore,
Lambda failed to comply with § 195.446(b)(4).
4. § 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. . . .
(b) . . . .
(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) . . . .
(2) Conduct a point-to-point verification between SCADA displays and related field
equipment when field equipment is added or moved and when other changes that
affect pipeline safety are made to field equipment or SCADA displays.
Lambda failed to have and follow written control room management procedures that implement
the requirements for conducting a point-to-point (P2P) verification. Specifically, Lambda failed to
provide details in its CRM Plan, section C, subsection 5.2, to define when P2P verifications needed
to be completed. In addition, CRM Plan, section C, subsection 5.3, did not require certain details



necessary to carry out verification of the points between SCADA displays and related field
equipment. While the procedure required P2P documentation to include physical location of the
device, data value or status of the device, alarm set-point values, and date and names of individuals
involved in the verification process, it did not require documentation of whether the point was
tested live or simulated, or the sequence of the point on the pipeline (for example, whether the
transmitter upstream or downstream of the valve matched the SCADA display configuration).
Moreover, Lambda’s CRM plan, section C, subsection 5.3, referenced Form CRM-7 to document
the P2P verification. However, Form CRM-7 did not require all the information required by the
procedure to be documented. For these reasons, Lambda failed to comply with § 195.446(c)(2).
In addition, Lambda failed to demonstrate it performed the P2P verification that should have been
done when the crude oil system was purchased from Markwest Michigan Pipeline Company, LLC,
and added to Lambda’s SCADA system in 2019. Documentation of the verification expected,
based on Lambda’s procedures, and records were required to be maintained pursuant to
§ 195.446(j)(1). The lack of records indicates no verification was performed. Therefore, Lambda
failed to meet the requirements of § 195.446(c)(2) by not following its procedure.
5. § 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. . . .
(b) . . . .
(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;
Lambda failed to have and follow written control room management procedures that implement
the requirements to have and test an internal communication plan for the manual operation of the
pipeline safely to demonstrate compliance per the requirements of § 195.446(c)(3). Specifically,
CRM Plan, section C, subsections 6 and 7, provided considerations to be included in a plan, rather
than instruction and direction on how to manage the pipeline in the event SCADA or
communications failed. The lack of an internal communication plan to provide sufficient means
for safe manual operation of the pipeline resulted in tests of the procedure being inadequate to
demonstrate compliance. In addition, forms CRM - 26A and CRM - 26B were intended to
document the date and test or actual event of SCADA failure. The forms included documentation
of the SCADA failure notification procedure. However, a test and verification need to incorporate
all elements of the plan to provide for adequate means for manual operation of the pipeline safely,
which the forms did not do. The forms did not provide a method to manually document operating



conditions of the pipeline, such as pipeline pressures, flows, tank levels, abnormal or emergency
operations that might occur or any leaks detected. Consequently, Lambda failed to comply with
§ 195.446(c)(3).
6. § 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. . . .
(b) . . . .
(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
alarms are accurate and support safe pipeline operations;
Lambda failed to have and follow written control room management procedures that implement
the requirements of § 195.446(e)(1). Specifically, a review of CRM Plan, section E, “Alarm
Management,” identified basic paraphrasing of the regulation and excerpts from API RP 1167.
Rather than providing procedures to support sound Alarm Management principles to implement
in the control room, section E offered guidance on how an operator might consider implementing
topics within an Alarm Management Plan.
CRM Plan, section E failed to provide a process to consistently document and rationalize (D&R)
alarms to determine if alarms were valid, assigned meaningful priority, and given accurate setpoint
values to support adequate safety responses. The procedure did not provide any alarm priorities.
Section C, subsection 4.5.4.1.2, offered no definition for priorities that were assigned in Lambda’s
SCADA system.
A review of the SCADA master alarm database identified two priorities: critical and not critical.
Lambda had not implemented other priorities. The critical alarms were generally considered
safety-related alarms. It was suggested by Lambda staff that controllers were allowed to interpret
the priority and response to the not-critical-priority alarms based on their experience and
understanding of operations. The lack of set priorities and alarm handling procedures encourages
ineffective controller response to alarms and does not promote pipeline safety.
In addition, section E, subsection 4.4, characterized five safety related alarms as: (1) pressures
exceeding the maximum established limit, (2) pressure beneath minimum safe operating pressure,
(3) indications an overfill, or leak of hazardous liquid, (4) fire, and (5) hazardous atmosphere. A
review of the SCADA master alarm database identified a great deal of inconsistency between
procedure and implementation of safety related alarms and alarm priorities.



Lambda failed to demonstrate it conducted a D&R or implemented alarm priorities and safety-
related alarm operations using a process that ensured alarms were accurate and support safe
pipeline operations, as required by § 195.446(e)(1).
7. § 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. . . .
(b) . . . .
(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) . . . .
(2) Identify at least once each calendar month points affecting safety that have been
taken off scan in the SCADA host, have had alarms inhibited, generated false alarms,
or that have had forced or manual values for periods of time exceeding that required
for associated maintenance or operating activities
Lambda failed to have and follow written control room management procedures that implement
the requirements of § 195.446(e)(2) for conducting the monthly identification, recording, review,
and analysis of points that have been taken off scan, have had alarms inhibited, generated false
alarms, or that have had forced or manual values for periods of time exceeding that required for
associated maintenance or operating activities. Specifically, CRM Plan, section E, subsection 3.3,
simply restated the regulation of § 195.446(e)(2). In addition, Lambda did not conduct any monthly
reviews as required. Nor did the CRM Plan address steps for identifying, categorizing and
documenting false alarms. False alarms cannot be identified by a SCADA event log. This is a
manual process of identification and documentation.
In addition, section E, subsection 3.3, referenced Lambda’s Form CRM-15, “Monthly Safety
Alarm Review,” and required Lambda to document the findings of the review. Instructions on the
form were not adequate to carry out a monthly safety alarm review. Form CRM-15 did not require
the date the point was originally taken out of service through the action of off scan, inhibit/disable,
or forced/manual. Form CRM-15 did not identify the reason for the action, such as end device
repair or field maintenance work, that caused the point to be out of service, nor did it have a
comparison of the duration of the condition to ensure it did not exceed that required for associated
maintenance or operating activities.
Therefore, Lambda failed to have and follow written control room management procedures that
implemented the requirements to identify at least once each calendar month points affecting safety
that have been taken off scan in the SCADA host, have had alarms inhibited, generated false
alarms, or that have had forced or manual values for periods of time exceeding that required for
associated maintenance or operating activities, and Lambda did not complete the requisite monthly
reviews and analysis required by § 195.446(e)(2).



8. § 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. . . .
(b) . . . .
(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) . . . .
(4) Review the alarm management plan required by this paragraph at least once each
calendar year, but at intervals not exceeding 15 months, to determine the effectiveness
of the plan.
Lambda failed to have and follow written control room management procedures that implement
the requirements to ensure that Lambda reviewed its alarm management plan to evaluate its
effectiveness, and review its plan at least once each calendar year, at intervals not exceeding 15
months, per the requirements of § 195.446(e)(4). Specifically, Lambda’s CRM Plan simply
restated the regulation with no instruction on how to complete the task required by § 195.446(e)(4).
In addition, Lambda did not complete a review of the Alarm Management Plan to determine
effectiveness for the years 2021, 2022, 2023. Therefore, Lambda did not meet the requirements of
§ 195.446(e)(4).
9. § 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. . . .
Lambda failed to follow its procedures for electronic records storage as required by Lambda’s
CRM Plan, section J, subsection 3.2.2. Lambda’s CRM Plan contained different methods of
acceptable record retention systems. Some electronic records were saved on personal computers
rather than a central repository with file folder and filename conventions, contrary to the
procedures. The storage on personal computers were not backed up as the procedure required and
made records difficult to find or not available at the time of PHMSA’s inspection. Therefore,
Lambda failed to follow its procedure for electronic records storage and management as required
by Lambda’s CRM Plan.



Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed
$272,926 per violation per day the violation persists, up to a maximum of $2,729,245 for a related
series of violations. For violation occurring on or after December 28, 2023 and before December
30, 2024 the maximum penalty may not exceed $266,015 per violation per day the violation
persists, up to a maximum of $2,660,135 for a related series of violations. For violation occurring
on or after January 6, 2023 and before December 28, 2023 the maximum penalty may not exceed
$257,664 per violation per day the violation persists, up to a maximum of $2,576,627 for a related
series of violations. For violation occurring on or after March 21, 2022 and before January 6, 2023
the maximum penalty may not exceed $239,142 per violation per day the violation persists, up to
a maximum of $2,391,412 for a related series of violations. For violation occurring on or after
May 3, 2021 and before March 21, 2022 the maximum penalty may not exceed $225,134 per
violation per day the violation persists, up to a maximum of $2,251,334 for a related series of
violations. For violation occurring on or after January 11, 2021 and before May 3, 2021 the
maximum penalty may not exceed $222,504 per violation per day the violation persists, up to a
maximum of $2,225,034 for a related series of violations. For violation occurring on or after July
31, 2019 and before January 11, 2021 the maximum penalty may not exceed $218,647 per violation
per day the violation persists, up to a maximum of $2,186,465 for a related series of violations.
We have reviewed the circumstances and supporting documents involved in this case and have
decided not to conduct additional enforcement action or penalty assessment proceedings at this
time. We advise you to correct the items identified in this letter. Failure to do so will result in
Lambada Energy Gathering, LLC being subject to additional enforcement action.
No reply to this letter is required. If you choose to reply, in your correspondence please refer to
CPF 3-2025-009-WL. Be advised that all material you submit in response to this enforcement
action is subject to being made publicly available. If you believe that any portion of your
responsive material qualifies for confidential treatment under 5 U.S.C. § 552(b), along with the
complete original document you must provide a second copy of the document with the portions
you believe qualify for confidential treatment redacted and an explanation of why you believe the
redacted information qualifies for confidential treatment under 5 U.S.C. § 552(b).
Sincerely,
David Barrett
Acting Director, Central Region, Office of Pipeline Safety
Pipeline and Hazardous Materials Safety Administration
cc: James McGrath, Plant and Pipeline Manager, Lambda, jmcgrath@lambdaenergyllc.com
Ben Berthelot, Regulatory Compliance Manager, Lambda, bberthelot@lambdaenergyllc.com
- **truncated:** false
- **body characters:** 23554