# MAGELLAN PIPELINE COMPANY, LP — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 420055016
- **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:** 2005-04-18
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 195.505(b).
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- **markdown:** https://regulus.evalyn.ai/document/phmsa-enforcement-420055016.md
- **app url:** https://regulus.evalyn.ai/document/phmsa-enforcement-420055016
- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/420055016
**body:**

Notice of Probable Violation involving MAGELLAN PIPELINE COMPANY, LP. PHMSA's enforcement data identifies the cited regulation as 195,  195.505(b). The case was opened on 2005-04-18 and is reported as closed as of 2009-03-04. Proposed civil penalty: $183,000. Assessed civil penalty: $120,500. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

420055016_Decision on Petition_02132009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055016/420055016_Decision%20on%20Petition_02132009.pdf

420055016_Decision on Petition_02132009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055016/420055016_Decision%20on%20Petition_02132009_text.pdf

420055016_Final Order_09062006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055016/420055016_Final%20Order_09062006.pdf

420055016_Petition for Reconsideration_09282006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055016/420055016_Petition%20for%20Reconsideration_09282006.pdf

CPF_NO_4-2005-5016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055016/CPF_NO_4-2005-5016.pdf

420055016_Decision on Petition_02132009_text.pdf

VIA CERTIFIED MAIL – RETURN RECEIPT REQUESTED
Mr. Paul E. Pratt, Esq.
Magellan Midstream Partners, L.P.
One Williams Center
Suite 2800
Tulsa, OK 74172
Re: CPF No. 4-2005-5016
Dear Mr. Pratt:
Enclosed is the decision on the petition for reconsideration filed by Magellan Midstream
Partners, L.P., in the above-referenced case. For the reasons specified therein, the petition is
granted, in part. Payment of the $120,500 civil penalty is due within 20 days of service. The
findings of the Final Order remain unaltered and stand as stated therein. When the civil
penalty is paid, this enforcement action will be closed. Your receipt of this decision
constitutes service under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Jeffrey D. Wiese
Associate Administrator
for Pipeline Safety
Enclosure



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾)
In the Matter of )
Magellan Midstream Partners, L.P. ) CPF No. 4-2005-5016
Petitioner. )
)
)
)
)
DECISION ON PETITION FOR RECONSIDERATION
On September 6, 2006, pursuant to 49 U.S.C. § 60112, the Associate Administrator for
Pipeline Safety (Associate Administrator) issued a Final Order in this case finding
Petitioner had violated the pipeline safety regulations and assessing a civil penalty in the
amount of $183,500.
PHMSA’s records are unclear as to the date Petitioner filed a petition for reconsideration
of the Final Order. Therefore, I am treating the petition as timely filed. In its petition,
Petitioner sought reconsideration of the $183,500 civil penalty assessed for two pipeline
safety violations: (1) failing to provide records demonstrating that three hundred and
fifteen (315) of its employees were properly qualified to perform the covered task under
Respondent’s operator qualification (OQ) plan; and (2) failing to ensure through
evaluations that individuals performing covered tasks were qualified.
Petitioner seeks a reduction in the civil penalty assessed on the grounds that
PHMSA erred by stating in the Order that Petitioner “failed to justify mitigation or
elimination of the civil penalty.” Specifically, Petitioner argues PHMSA failed to
consider three mitigating factors Petitioner had presented prior to the issuance of
the Final Order – factors PHMSA was required to consider. Petitioner claims the
penalty should have been mitigated based on the information submitted in its Post-
Hearing brief, based on its expeditious response in correcting the violations, and
based on “other matters as justice may require.”
First, Petitioner argues that PHMSA ignored the mitigating information Petitioner
had provided in its post-hearing brief when PHMSA considered the nature,
circumstances and gravity of the violation. The Final Order indicates that the
records provided in its post-hearing brief did not remove the finding of violation;
however, the Final Order did not adequately address the issue of mitigation of the
penalty based on the information submitted in its Post-Hearing brief. In the Final



Order, I found Petitioner had not adequately reviewed the qualification records
transferred from Williams since it did not have them readily accessible during the
inspection. After reviewing the case file, including Petitioner’s documentation
submitted with its post-hearing brief, I find that the documentation does warrant
some mitigation of the penalty.
Petitioner’s second argument is that its expeditious response in correcting the
violations demonstrates a good faith attempt to achieve compliance, thereby
warranting a reduction in the penalty. The “good faith” factor represents an
operator’s good faith in attempting to comply with the regulations prior to an
inspection. The factor is designed to give an operator credit for its attempt to
comply, even if it ultimately was not in compliance. After reviewing the
documentation submitted with its post-hearing brief, Petitioner appears to have
made good faith efforts to comply with the regulations and some mitigation is
warranted.
Petitioner’s third basis for a reduction is the criterion “such other matters as justice
may require.” Petitioner argues that PHMSA’s failure to mitigate the penalty will
have a chilling effect on other companies who are considering what action to take
following an inspection. Although Petitioner made efforts to bring itself into
compliance in a timely manner following the inspection, it did not take any actions
that were not already required under the regulations. Petitioner should not derive
any benefit for its failure to comply or for its prompt response to bring a violation
into compliance following an inspection.
Relief Granted, in part
I have considered Petitioner’s request for reconsideration. This Decision does not
alter the findings of violation as described in the Final Order. Although the
additional information submitted with Petitioner’s post-hearing Brief warrants
mitigation of the civil penalty, it does not establish that the violations found in the
Final Order did not occur. The civil penalty of $183,500 assessed in the Final
Order should have been reduced to reflect all of the information submitted by
Petitioner during the course of the enforcement proceeding. Accordingly, I hereby
assess a civil penalty of $120,500.
Payment of the civil penalty must be made
within 20 days of service.
Federal
regulations (49 C.F.R. § 89.21(b)(3)) require this payment be made by wire transfer,
through the Federal Reserve Communications System (Fedwire), to the account of
the U.S. Treasury. Questions concerning wire transfers should be directed to:
Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike
Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, OK 73125;
(405) 954-8893.
Failure to pay the 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.
2



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. Failure
to pay the civil penalty may result in referral of the matter to the Attorney General
for appropriate action in a United States District Court.
This decision on reconsideration is the final administrative action in this
proceeding.
____________________________ _____________
Jeffrey D. Wiese Date Issued
Associate Administrator
for Pipeline Safety
3

420055016_Final Order_09062006.pdf

U.S. Department 400 Seventh Street, S.W.
of Transportation Washington, D.C. 20590
Pipeline and Hazardous
Materials Safety Administration
Richard A. Olson
Vice President, Transportation Operations
Magellan Midstream Partners, L.P.
One Williams Center
P.O. Box 22 186
Tulsa, OK 74 12 1
RE: CPF NO. 4-2005-50 16
Dear Mr. Olson:
Enclosed is the Final Order issued by the Acting Associate Administrator for Pipeline Safety in
the above-referenced case. It makes findings of violation, assesses a civil penalty of $1 83,500 and
specifies actions to be taken to comply with the pipeline safety regulations. The penalty payment
terms are set forth in the Final Order. When the civil penalty is paid and the terms of the compliance
order completed, as determined by the Director, Southwest Region, this enforcement action will be
closed. Your receipt of the Final Order constitutes service of that document under 49 C.F.R. 190.5.
Sincerely,
James Reynolds
Pipeline Compliance Registry
Office of Pipeline Safety
cc: Mr. Paul E. Pratt, Counsel for Magellan Midstream Partners, L.P.
Mr. Rod Seeley, Director, Southwest Region, OPS
Enclosure
CERTIFIED MAIL - RETURN RECEIPT REOUESTED



DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
In the Matter of 1
Magellan Midstream Partners, L.P., ) CPF No. No. 4-2005-5016
Respondent. 1
FINAL ORDER
On April 28-29,2004, pursuant to 49 U.S.C. 9 601 17, a team of representatives of the Pipeline and
Hazardous Materials Safety Administration (PHMSA), Southwest Region, and the Minnesota Office
of Pipeline Safety conducted an on-site pipeline safety inspection of Respondent's Operator
Qualification records and procedures in Tulsa, Oklahoma. As a result of the inspection, the Director,
Southwest Region, issued to Respondent, by letter dated April 18, 2005, a Notice of Probable
Violation, Proposed Civil Penalty and Proposed Compliance Order (Notice). In accordance with 49
C.F.R. 5 190.207, the Notice proposed finding that Respondent had violated 49 C.F.R. §195.505(b)
and proposed assessing a total civil penalty of $1 83,500 for the alleged violation. The Notice also
proposed that Respondent take certain measures to correct the alleged violation.
Respondent responded to the Notice by letter dated May 19,2005 (Response). Respondent contested
part A of the allegation, offered information to explain the allegation and requested that the proposed
civil penalty be eliminated. Respondent also requested a hearing.
The hearing was held in Houston, Texas via teleconference on September 2 1,2005. Respondent was
granted permission to submit a post-hearing Response. In support of its position, Respondent
submitted a Post-Hearing Brief dated October 28, 2005. On December 29, 2005, Respondent.
submitted records of all employees that had been re-evaluated pursuant to the proposed compliance
order.
FINDINGS OF VIOLATION
Uncontested
Respondent did not contest the alleged violation of 49 C.F.R. $195 in Item 1B of the Notice.
Accordingly, I find that Respondent violated 49 C.F.R. Part 195, as more filly described in the
Notice:
49 C.F.R. §192.505(b) - failure to ensure through evaluations that individuals
performing covered tasks are qualified.
This finding of violation will be considered a prior offense in any subsequent enforcement
action taken against Respondent.



Item 1A of the Notice alleged that Respondent violated 49 C.F.R. 5 195.505(b), when Respondent
did not provide records to demonstrate that three hundred and fifteen (315) of its employees,
transferred from Williams to Respondent, were qualified to perform the covered task under
Respondent's operator qualification (OQ) program. The records contained no evidence that
Respondent validated Williams' evaluations or that Respondent reviewed corresponding records to
ensure that each of the employees in question successfully performed each covered task referred to
as "qualified" to perform. The records were void of any documentation that the employees in
question had performed each covered task on a regular basis prior to the effective date of the rule.
The records were also void of any documentation that the tasks were performed without error and
that the performance of any covered task did not result in an accident. Therefore, the OPS inspection
team determined that the evaluation method actually used by Respondent was an un-documented
misuse of the work performance history evaluation method, which amounted to "grandfathering"
employees.
In response to Item 1 A, Respondent advised that it requested and received a documented work
performance history review worksheet for each Williams employee transferred to Respondent.
Respondent further advised that the Williams organization that was operating the assets the hour
before the transition to Respondent was the same organization (supervisors and employees) that were
operating the organization an hour after the transition. Respondent stated that Williams performed
a DOT-Operator Qualification Work History Performance Review Field Worksheet on its applicable
employees. Respondent further stated that Williams transferred the Qualification Worksheets
associated with each applicable employee to Respondent. In support of its position, Respondent
submitted records that consisted of a six page document entitled "Work History Performance Review
Field Worksheet" and a sample "Qualification Worksheet."
Respondent contended that work history performance review (WHR) is specifically recognized as
an acceptable evaluation methodology for transitional qualifications. Transitional qualification
under the Final Rule' is defined as "qualification completed by October 28,2002, of individuals who
have been performing a covered task on a regular basis prior to the effective date of the rule."
Respondent further argued that the Final Rule specifically states, "Prior to the three year compliance
date operators may use work performance history review as the sole method for evaluation when
qualifying individuals."
OPS argued that, during the compliance inspection, Respondent failed to provide records to
demonstrate that three hundred and fifteen (3 15) of its employees, transferred from Williams to
Respondent were properly qualified to perform the covered task or that they were properly qualified
to perform the covered task under the Respondent's OQ program. The issue is whether Respondent
provided adequate OQ records to demonstrated compliance with 49 C.F.R. 5 195.505(b) and that it
validated the evaluations.
'~inal Rule, Pipeline Safety: Qualification of Pipeline Personnel, 64 FR 46853, August 27, 1999.



Based upon the "undocumented" evaluation or lack of validation, OPS determined that no effort had
been made by Respondent to ensure that the employees in question had performed each covered task
on a regular basis prior to the rule's effective date, that the tasks were performed without error, and
that the performance of any covered task did not result in an accident. OPS further argued that
Respondent did not provide any additional information to support the evaluation or qualification of
the employees. OPS concluded, based upon the lack of records and documentation, that the
employees were "grandfathered," with their Williams qualifications and no validation of their
evaluations.
Respondent contended that it was in compliance with 49 C.F.R. §195.505(b) and did have
documentation that employees who were transitionally qualified to perform specific covered tasks
had 1) performed those tasks on a regular basis prior to the effective date of the rule, 2) performed
the tasks without error. Respondent further contended that the inspection team did not ask
Respondent to provide this documentation during the April 2004 PHMSA audit.
Even considering Respondent's argument in a light most favorable to Respondent, it is Respondent
is required to demonstrate compliance with an applicable regulation during a PHMSA inspection.
The violation report clearly indicates that the PHMSA inspection team inquired about compliance
with 49 C.F.R. §195.505(b) and were provided the "Williams Appendix C -Work History
Performance Review" form and the "Magellan OJT Checklist - Performance Requirements" by one
employee of the Respondent and was witnessed by another. Respondent acknowledged that an
inspector discussed its deficiencies during the exit interview. Therefore, Respondent was well aware
of the lack of sufficient documentation and the requirement to provide relevant OQ records to
demonstrate compliance before the conclusion ofthe inspection. Respondent had ample opportunity,
prior to the inspection, during the inspection, and during the exit interview, to provide any and all
records to demonstrate compliance.
Furthermore, an operator is required to maintain records in accordance with the requirements of 49
CFR 195, subpart G, for all individuals performing covered tasks. Operators are required to
maintain records regarding covered task, individual performing, evaluation method(s), continuing
performance evaluation, reevaluation interval, and reevaluation records. An inspector is not required
to specifically request a particular form or document, as the inspector would have no knowledge of
every form that an operator may use for its OQ Program. It is the operator that must provide proof
of compliance. Respondent has an affirmative duty to achieve and maintain compliance. Therefore,
during a pipeline safety inspection operators must provide the documentation and records, as
required by federal pipeline safety laws and regulations, to demonstrate compliance.
Ultimately, the Respondent is responsible for compliance with the pipeline safety regulations, which
includes sound record keeping. During the inspection, in response to the Notice, and at the hearing,
Respondent failed to present adequate evidence to demonstrate that an acceptable method,
transitional or otherwise, was used to qualifL the employees in question to perform the covered task
under Respondent's OQ program. No records were provided by Respondent to validate the
evaluations or to show that Respondent reviewed corresponding records to ensure that each of the
employees in question successfully performed each covered task, "qualified" to perform. The
records were not provided during the inspection nor during the post inspection exit interview.



On one hand, Respondent argued that there was a seamless transition of ownership interest from
Williams to Magellan and all relevant records were transferred for applicable employees. If they
were one and the same, then all of Respondent's OQ records and supporting documentation should
have been readily available and provided during the inspection. The records and documentation of
the qualification method used by Respondent should have been provided during the inspection to
adequately show that an acceptable method was used for qualification and that employees were
properly qualified to perform the covered task. Respondent has not provided any explanation or
justification why the records and documentation were not provided during the inspection or exit
interview to demonstrate compliance.
Without the required records and history, it is difficult for an operator to demonstrate that employees
are properly qualified to perform specific covered tasks, that they performed these tasks on a regular
basis prior to the effective date of the rule and that they performed the tasks without error.
Accordingly,I find that Respondent violated 49 C.F.R. $195.505(b), as Respondent failed to provide
adequate records or data that carefully and thoroughly document and support the evaluation and
qualification of the employees to perform specific covered tasks under Respondent's OQ program.
ASSESSMENT OF PENALTY
Under 49 U.S.C. $ 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.
49 U.S.C. $ 60122 and 49 C.F.R. $ 190.225 require that, in determining the amount of the civil
penalty, I consider the following criteria: nature, circumstances, and gravity of the violation, degree
of Respondent'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 total civil penalty of $ 183,500 for violations of 49 C.F.R. Part 195.
The proposed civil penalty for Item 1A & B is $183,500 for violation of 49 C.F.R. $ 195.505(b), as
Respondent failed to provide records to demonstrate that three hundred and fifteen (3 15) of its
employees were properly qualified to perform the covered task under Respondent's operator
qualification (OQ) program. Respondent also failed to ensure through evaluations that individuals
performing covered tasks are qualified. Respondent countered that, given its response in the Post-
Hearing Brief, to assess a civil penalty is without merit and unsubstantiated. Respondent also argued
that after learning of the concerns expressed by the inspection team at the exit interview, it
immediately commenced and diligently pursued acts to address those concerns. The concerns were
addressed by the submission of a written action plan within approximately two (2) months of the
inspection. Respondent also incorporated the results of the written action plan into its 2005 OQ
Plan. Respondent also contended that the proposed civil penalty is greater than penalties assessed
against other companies for violation of 49 C.F.R. $195.505.



First, the assessment of civil penalties takes into account all of the factors identified in 49 C.F.R.
$190.225 and the application of those factors are fact specific to the individual case in question.
Therefore, Respondent is not privy to all of the various circumstances that may exist in a particular
case, so any attempt to make a comparison based upon violation of a particular regulation and the
amount of the penalty will produce an inaccurate and flawed result.
Second, a determination was made in the "Findings" section of this Order that Respondent violated
49 C.F.R. $ 195.505(b), as Respondent failed to provide adequate records or data that carefully and
thoroughly document and support the evaluation or qualification of the employees to perform
specific covered tasks under Respondent's OQ program referenced in Item 1A of the Notice.
Although Respondent argued that the assessment of the proposed civil penalty is without merit and
unsubstantiated, Respondent has not provided any additional evidence to show that it demonstrated
compliance with 49 C.F.R. 195.505(b) during the inspection or during the exit interview when the
inspection team alerted the Respondent to deficiencies. The regulatory conditions for the conduct
of inspections to determine compliance and gives OPS the general authority to inspect pipelines and
related records for compliance with applicable regulations is set forth in 49 C.F.R. $190.203.
Respondent is under an affirmative duty to achieve and maintain compliance. Respondent failed to
meet its duty. Respondent failed to justify mitigation or elimination of the civil penalty.
As for Item lB, Respondent failed to ensure through evaluations that individuals performing covered
tasks are qualified. Respondent had begun the re-evaluation of employees, however, in many
instances the evaluations were invalid. The inspection revealed evidence of "group" performance
evaluations, rather than individual evaluations and evaluations were given to a group for
"discussion" of the performance of a task. There was also evidence of two individuals re-evaluating
and qualifying each other, as well as evidence that some individuals performing evaluations were
not qualified to perform the covered task, were not subject matter experts and were not provided a
standard "script" with which to conduct the evaluation. The Work History Performance Review
Field Worksheet (WHPR) submitted by Respondent records contained an individual's name,
employee ID number, an evaluator's name, a date and a table of covered tasks and columns to list
records and knowledge. However, no additional documentation was provided to show corresponding
records were reviewed to ensure the employees' successful performance of each covered task
referred to as "qualified" to perform.
Respondent did not contest the allegation of violation but offered an explanation. On December 29,
2005, Respondent submitted additional records. These records indicated that each individual whose
qualifications were performed by WPHR have been re-evaluated or no longer perform covered tasks.
Again, the Respondent is responsible for compliance with the pipeline safety regulations, which
includes sound record keeping. Without adequate records it is difficult for to verify compliance with
the Operator Qualification requirements. The primary objective of the Federal pipeline safety
standards is safe operation of pipeline systems. Failure to conduct a proper operator qualification
evaluation, the operator risks that a task essential in the day to day operation of the pipeline be
incorrectly performed on its facility and thereby increases the risk of harm to the public and the
environment.



Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent
a total civil penalty of $183,500 for violation of 49 C.F.R. §195.505(b).
Payment of the civil penalty must be made within 20 days of service. Federal regulations
(49 C.F.R. 5 89.2 1(b)(3)) require this payment 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 (AMZ-300), Federal Aviation Administration, Mike Monroney Aeronautical
Center, P.O. Box 25082, Oklahoma City, OK 73 125; (405) 954-8893.
Failure to pay the $1 83,500 civil penalty will result in accrual of interest at the current annual rate
in accordance with 31 U.S.C. 5 3717,31 C.F.R. 5 901.9 and 49 C.F.R. 5 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 United States District Court.
COMPLIANCE ORDER
The Notice proposed a compliance order with respect to Item 1 in the Notice for violation of 49
C.F.R. §195.505(b). Under 49 U.S.C. 5 601 18(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. The Regional Director has indicated that
Respondent has taken the following actions specified in the proposed compliance order:
Respondent submitted records to show that each individual, whose qualifications were
performed by work performance history review, have been reevaluated or no longer performs
covered tasks.
Accordingly, since compliance has been achieved with respect to this violation, the compliance
terms are not included in this Order.
Under 49 C.F.R. 5 190.215, Respondent has a right to submit a Petition for Reconsideration of this
Final Order. The petition must be received within 20 days of Respondent's receipt of this Final
Order and must contain a brief statement of the issue(s). The filing of the petition automatically
stays the payment of any civil penalty assessed. However if Respondent submits payment for the
civil penalty, the Final Order becomes the final administrative decision and the right to petition for
reconsideration is waived. The terms and conditions of this Final Order are effective on receipt.
SEP - 6 2006
Date ISS&
for Pipeline Safety
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