PANHANDLE EASTERN PIPELINE CO — Notice of Probable Violation

420041003_Final Order_08242004.pdf, page 1Official PDF?} U.S.Deporlment of Tro nsoortotion Reseorch ond Speciol Progromt Administrotion 400 Seventh Sl.. S W Washrnglon. D.C 205S0 AUC 2 4 2004 Mr. Rob Martinovich Senior Vice President of Operations Duke Energy Field Services 6120 S. Yale. Suite 1100 Tulsa, OK 74136 RE: CPFNo.4-2004-1003 Dear Mr. Martinovich: Enclosed is the Final Order issued bythe Associate Administrator for Pipeline Safety in the above-referenced case. It makes a finding ofviolation and assesses a civil penalty of$4,000. The penaltypayrnenttemsaresetforthintheFinalOrder. Thisenforcementactionclosesautomatically upon pa)ment. Your receipt of the Final Order constitutes service ofthat document under 49 C.F.R. $ 190.5. Sincerely, *:- {u"- $u(- Cwendolyn M. Hill Pipeline Compliance Registry Office of PiPeline SafetY Enclosure cc: Mr. R. M. Seeley, Director, OPS Southwest Region CERTIFIED MAIL. RETURN RECEIPT REOUESTED#

420041003_Final Order_08242004.pdf, page 2DEPARTMENT OF TRANSPORTATION RESEARCH AND SPECIAL PROGRAMS ADMINISTRATION OFFICE OF' PIPELINE SAF'ETY WASHINGTON. DC 20590 In the Matter of Duke Energy Field Services, Respondent. ) ) ) ) ) CPF No. 4-2004-1003 FINAL ORDER On April 21-25,2003, pursuant to 49 U.S.C. $ 60117, a representative of the Office of Pipeline Safety (OPS) conducted an on-site pipeline safety inspection of Panhandle Eastem Pipeline Company's (PEPL's) onshore pipeline facilities and records in the Guyrnon-Hansford area ofTexas and Oklahoma, which are operated by Duke Energy Field Services (Respondent). As a result of the inspection, the Director, Southwest Region, OPS, issued to Respondent, by letter dated February I l, 2004, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. $ 1 90.207, the Notice proposed frnding that Respondent had violated 49 C.F,R. $ 192.605 and proposed assessing a civil penalty of$4,000 for the alleged violation. Respondent responded to the Notice by letter dated March 4, 2004 (Response). Respondurt contested the allegation, offered information in explanation of the allegation and requested reconsideration. Respondent did not request a hearing, and therefore has waived the right to one. FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. $192.605 (a) by failing to have an updated O&M Manual and Standard Operating Procedures (SOP) available to appropriately maintain its facilities. Respondent has ax agreement with Panhandle Eastem Pipeline (PEPL) to operate certain PEPL pipelines located in Texas, Kansas and Oklahoma. At time of the inspection, the O & M Manual and SOP in use by Respondent had not been updated for the years 2001 Nrd2002. In its Response, Respondent explained that it entered into an agreement in 1998 with PEPL to operate cerlain PEPL pipelines and to dc sc in accorCance rvith PEPL's 1998 O & M Manual and SOP. A facility-specific O & M Manual and SOP were created for the Gu1'rnon-Hansford area PEPL pipelines operated by Respondent. Respondent further explained that the agreement only allowed facility-specific updates that would be necessary to comply with changes in applicable laws or#

420041003_Final Order_08242004.pdf, page 32 regulations. Respondent contends that it reviewed the facility-specific O&M manual and SOP in 2001 and 2002 andno required changes were identified. After the OPS inspection, Respondent submitted documentation to the OPS regional office indicating that updated O&M manual and SOP was provided to Respondent by PEPL, Respondent also explained that based upon changes in the terms of its operating agreement with PEPL, the updates and the O&M manual and SOP will now be provided by PEPL. Respondent stated that the O & M Manual and SOP were not updated as the terms of the agreement between Respondent and PEPL did not provide for sufficient flexibility with respect to voluntary modifications or revisions. All gas and hazardous liquid pipeline operators must prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance acti.,'ities and for emergency response to safely and effectively maintain its facilities. This manual must be reviewed and updated by the operator at intervals not exceeding 1 5 months, but at least once eachcalendaryear. Thelanguagein4gc.F.R.$l92.605ismandatory,asitusestheword"must"and creates an obligation for all gas operators to update their O&M manuals. Compliance with federal regulations is not optional. The O & M Manual and SOP in use by Respondent at time of the inspection had not been updated for the years 2001 arrd2002. Accordingly, I find that Respondent violated 49 C.F.R. 9192.605(a) by failing to updated its O & M Manual and SOP at intervals not exceeding 15 months, but at least once each calendar year. This finding ofviolation will be considered a prior offense in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. Q 60122, Respondent is subject to a civil penalty not to exceed $100,000 per violation for each day of the violation up to a maximum of $1,000,000 for any related series of violations. The Notice proposed a $4,000 civil penalty for violation of 49 C.F'R. $ 195.605(a). 49 U.S.C. g 60122 and 49 C.F.R. $ 1g0.225 require that, in determining the amount of the civil penalty, I consider the following criteria: nature, circumstances, and gravity ofthe violation, degree of Responaent's culpability, history of Respondent's prior offenses, Respondent's ability to pay the penalty, good faith by Respondent in attempting to achieve compliance, the effect on Respondent's ability to continue in business, and such other matters as justice may require. The Notice proposed a civil penalty of $4,000, as Respondent failed to updated its o & M Manual and SOp at intervals not exceeding 15 months, but at least once each calendar year. Procedures are essential to an operator's employees being able to perform their duties. An operatorneeds to have written proceCures instructing personnel to recognize those safety-related conditions that can affect#

420041003_Final Order_08242004.pdf, page 41 3 a pipeline's operation so that issues can be appropriately addressed and reported. Respondent does not deny that the O & M Manual and SOP were not updated as required by 49 C.F.R. $ 195.605(a). Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $4,000. Payrnent of the civil penalty must be made within 20 days of service. Pa)rrnent may be made by sending a certified check or money order (containing the CPF Number for this case) payable to 'U.S. Department of Transportation" to the Federal Aviation Adminishation, Mike Monroney Aeronautical Center, Financial Operations Division (ANIZ-120), P.O. Box 25770, OklahomaCity, oK 73125. Federal regulations (49 C.F.R. $ 89.21(bX3) also permit this paynent to be made bywire transfer, throughtheFederalReserve Communications System(Fedwire), tothe aecountoftheU.S. Trea,sury. Detailed instructions are contained in the enclosure. Questions conceming wire transfers should be directed to: Financial Operations Division ( NIZ-I}}), Federal Aviation Administration, Mike MonroneyAeronautical Center, P.O. Box 25082, Oklahoma City, OK '13125; (405) 954-8893. Failure to pay the $4,000 civil penalty will result in accrual of interest at the curent annual rate in accordancewith3l U.S.C. 53717,31 C.F.R. $ 901.9and49C.F.R. $ 89.23. Pursuanttothosesame authorities, a late penalty charge of six percent (6%) per arurum will be charged if paynent is not made within 1 10 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate acfion in an United States District Court. Under 49 C.F.R. $ 190.215, Respondent has a right to petition for reconsideration of this Final Order. The petition must be received within 20 days ofRespondent's receipt of this Final Ordsr and must contain abief statement of the issue(s). The filing of a petition automatically stays the paynent of any civil penalty assessed. All other terms ofthe order, including any required corrective action, shall remain in full effect unless the Associate Administrator, upon written request, grants a stay. The terms and conditions of this Final Order are effective upon receipt. Failure to comply with this Final Order may result in the assessment of civil penalties of up to $100,000 per violation per day, or in the refenal ofthe case forjudicial enforcement. AU0 2 4 2004 Date Issued Associate Administrator for Pipeline Safety#