{"operation":"document","citation":"CPF 420055048","title":"NUSTAR LOGISTICS, L.P. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2005-12-14","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.406(a), 195.410(a), 195.410(a)(1), 195.410(c), 195.412(a), 195.420(c), 195.436, 195.438, 195.581(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420055048.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420055048.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420055048","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420055048","body":"Notice of Probable Violation involving NUSTAR LOGISTICS, L.P.. PHMSA's enforcement data identifies the cited regulations as 195.406(a),  195.410(a),  195.410(a)(1),  195.410(c),  195.412(a),  195.420(c),  195.436,  195.438,  195.581(a). The case was opened on 2005-12-14 and is reported as closed as of 2010-05-04. Proposed civil penalty: $255,000. Assessed civil penalty: $115,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420055048_FinalOrder_ 03112009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055048/420055048_FinalOrder_%2003112009_text.pdf\n\n420055048_FinalOrder_03112009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055048/420055048_FinalOrder_03112009.pdf\n\n420055048_finalorder_03112009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420055048/420055048_finalorder_03112009_text.pdf\n\n420055048_finalorder_03112009_text.pdf\n\nU S Department\nof Transportation\nPipeline and Hazardous Materials\nSafety Administration\n1200 New Jersey Ave, SE\nWashington, DC 20590\nMAR 112009\nMr. Todd Denton\nVice President of Regional Operations\nNuStar Logistics, L. P.\n2330 North Loop 1604 West\nSan Antonio, Texas 78248\nRe: CPF No. 4-2005-5048\nDear Mr. Denton:\nEnclosed is the Final Order issued in the above-referenced case. It makes findings of violation,\nwithdraws certain allegations of violation, assesses a reduced civil penalty of $115, 000, and\nspecifies actions that need to be taken by NuStar to comply with the pipeline safety regulations.\nThe penalty payment terms are set forth in the Final Order. When the civil penalty has been paid\nand the terms of the compliance order completed, as determined by the Director, Southwest\nRegion, this enforcement action will be closed. Your receipt of the Final Order constitutes\nservice of that document under 49 C. F. R. ) 190. 5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. R. M. Seeley, Director Southwest Region, PHMSA\nMs. Rebecca L. Fink, Esquire\nCERTIFIED MAIL — RETURN RECEIPT RE UESTED\n\n\n\nU. S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D. C. 20590\n)\nIn the Matter of\n)\n)\nNnStar Logistics, L. P.\n, )\nf/k/a Valero Logistics Operations, L. P.\n, )\n)\nRespondent\n)\nCPF No. 4-2005-504S\nFINAL ORDER\nOn September 27-October 1, November 1-5 and 15-19, and November 29-December 3, 2004,\npursuant to 49 U. S. C. $ 60117, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety\ninspection of the facilities and records of Valero Logistics Operations, L. P. 's (Valero or\nRespondent) hazardous liquid pipeline system throughout Texas. ' On or about April 1, 2007,\nValero's parent company, Valero, L. P.\n, changed its name to NuStar Energy, L. P.\n,\nand currently\noperates Respondent's pipeline facilities through a subsidiary, NuStar Logistics, L. P. NuStar\nEnergy operates over 4, 000 miles of hazardous liquid pipelines throughout the United States.\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated December 14, 2005, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice). In accordance with 49 C. F. R. ) 190. 207, the\nNotice proposed finding that Respondent had violated 49 C. F. R. )) 195 406(b), 195. 410(a),\n195. 410(c), 195. 412(a), 195. 420(a)-(c), 195. 436, 195. 438, and 195. 581(a) and assessing a civil\npenalty of $255, 000 for the alleged violations. The Notice also proposed ordering Respondent to\ntake certain measures to correct the alleged violations.\nRespondent responded to the Notice by letter dated January 18, 2006 (\" Response\" ), and\nrequested a hearing. In its Response, Valero set forth a statement of the issues that it planned to\nraise at the hearing. The company supplemented its Response with a revised statement of issues\nand a list of prospective hearing attendees, by letter dated July 26, 2006. Prior to the hearing,\nValero submitted the written statement of one of its prospective witnesses, Mr. Todd Denton,\nalong with certain exhibits, by letter dated August 9, 2006 (\"Prefiled Testimony\" ). A hearing via\ntelephone conference was subsequently held on August 17, 2006, with Mr. Jim Curry, Esquire,\n' The OPS representative mspected the following Valero petroleum pipehne systems Denver Products, Turpm\nProducts; Clawson Crude Oil, El Paso Products, Albuquerque Products, Southlake Products, and Trans-Texas\nLiquefied Petroleum Gas (LPG)\n\n\n\nOffice of Chief Counsel, PHMSA, presiding. At the hearing, Respondent was represented by\ncounsel. Following the hearing, Respondent's counsel timely submitted a closing statement, by\nletter dated September 5, 2006 (\" Closing\" ). The following Final Order discusses each of the\nallegations set forth in the Notice and the issues raised by Respondent and is divided into three\nsections: Findings of Violation; Assessment of Penalty; and Compliance Order.\nFINDINGS OF VIOLATION\nI. Uncont'ested Allegations\nAt the hearing, Respondent did not contest the allegations in the Notice that it violated 49 C. F. R.\nPart 195 as follows:\nItem 3: The Notice alleged that Respondent violated 49 C. F. R. ) 195. 410(c), which states:\ng 195. 410 Line markers.\n(a)\n(c) Each operator shall provide line marking at locations where the line is\nabove ground in areas that are accessible to the public.\nThe Notice alleged that Valero violated ) 195. 410(c) by failing to provide line marking where its\npipelines are above ground in areas that are accessible to the public. Specifically, the Notice\nalleged that certain spans of formerly buried pipelines in ravines and water drainage areas had\nbeen washed out and left exposed. The company did not contest this allegation. Accordingly, I\nfind that Respondent violated 49 C. F. R. $ 195. 410(c) by failing to provide line marking at\ncertain spans of formerly buried pipelines in ravines and water drainage areas that had been\nwashed out and left exposed.\nItem 4: The Notice alleged that Respondent violated 49 C. F. R. $ 195 412(a), which states:\ng 195. 412 Inspection of rights-of-way and crossings under navigable waters.\n(a) Each operator shall, at intervals not exceeding 3 weeks, but at least 26\ntimes each calendar year, inspect the surface conditions on or adjacent to\neach pipeline right-of-way. Methods of inspection include walking, driving,\nflying or other appropriate means of traversing the right-of-way.\nThe Notice alleged that Respondent violated ) 195. 412(a) by failing to inspect the surface\nconditions on sections of its Trans-Texas, Southlake, Albuquerque, and El Paso pipelines.\nRespondent routinely conducts aerial right-of-way (ROW) surveillance, yet certain areas on or\nadjacent to these pipelines were not visible from the air because the ROWs were obscured by\nvegetation. Valero did not contest this portion of the allegation. The Notice also alleged that the\nPHMSA inspector had observed Valero's aerial surveillance aircraft veer off of the ROW during\nan aerial inspection. The Notice indicated that this observation raised the issue of the adequacy\nof Respondent's ROW surveillance, clearing and marking programs. Respondent failed to\npresent any evidence that in this particular instance, the pilot had not veered off course.\nAccordingly, I find that Respondent violated 49 C. F. R. $ 195. 412(a) by failing to inspect the\nsurface conditions on the above-described portions of its pipeline ROW,\n\n\n\nItem 6: The Notice alleged that Respondent violated 49 C. F. R. $ 195. 436, which states:\ng 195. 436 Security of facilities.\nEach operator shall provide protection for each pumping station and\nbreakout tank area and other exposed facility (such as scraper traps) from\nvandalism and unauthorized entry.\nThe Notice alleged that Respondent violated $ 195. 436 by failing to provide protection for\ncertain pump stations from vandalism and unauthorized entry. Specifically, the Notice alleged\nthat Respondent failed to protect most of its Albuquerque pipeline pump stations by allowing\nholes to remain in the chain link fencing surrounding the pump stations after certain piping going\nthrough the fencing had been removed. The Notice also alleged that Respondent failed to protect\nsome of its Trans-Texas, Southlake, and El Paso pipeline pump stations by allowing gaps to form\nunder the chain link fencing surrounding the pump stations. Valero did not contest this\nallegation. These holes and gaps threatened pipeline safety because unauthorized persons could\nhave gained easy access to sensitive facilities through or under the fencing. Accordingly, I find\nthat Respondent violated 49 C. F. R. $ 195. 436 by failing to protect certain pump stations from\nvandalism and unauthorized entry.\nII. Contested Allegations\nThe Notice alleged that Respondent violated 49 C. F. R. Part 195, as follows;\nItem 1: The Notice alleged that Respondent violated 49 C. F. R. $ 195. 406(b), which states:\ng 195. 406 Maximum operating pressure.\n(a)\n(b) No operator may permit the pressure in a pipeline during surges or\nother variations from normal operations to exceed 110 percent of the\noperating pressure limit established under paragraph (a) of this section.\nEach operator must provide adequate controls and protective equipment to\ncontrol the pressure within this limit.\nItem 1 of the Notice alleged that Respondent violated ) 195. 406(b) by failing to provide\nadequate controls and protective equipment to control the pressure on its pipelines within the\nlimit established under ) 195. 406(a) Specifically, the Notice alleged that Respondent could not\nprovide documentation that its pipelines were protected from overpressure, or that surge\noverpressure had been considered and could be prevented. Respondent contested this allegation\nof violation,\nRespondent first argued that the Notice did not allege that Valero was out of compliance with\n$ 195. 406(b). Instead, it contended that the allegation was actually that Respondent had failed\nto provide \"on-the-spot\" documentation of its \"compliance procedures. \"\" I disagree with\nRespondent's characterization of the allegation. At the hearing, the PHMSA inspector testified\n' Five examples of holes in and gaps under fencing are mcluded m PHMSA's Violation Report as Figures 30-34.\n' Supplement to Response, at 2\n' Id, and Prefiled Testimony, at 6\n\n\n\nthat during the inspection, he had observed that Respondent's systems did not use full flow\npressure relief valves or breakout tanks to control pressure. He explained that this observation\nled him to ask Respondent for information on how the company had determined whether it had\nadequate pressure controls and protective equipment.\nInherent in this performance-based requirement that Respondent provide \"adequate\" controls and\nprotective equipment to control pressure is the notion that the company must use reasonable\nmeans to determine what constitutes \"adequate\" controls and equipment for its own particular\npipeline system and document such a decision-making process. If it hasn't performed such an\nanalysis, Respondent might, for example, select undersized equipment or an insufficient number\nof pressure control devices. Valero asserted that it had, in fact, performed analyses of each of its\npipelines to verify that they were protected from surges.\n' However, despite having been given\nnumerous opportunities, Respondent failed to provide any evidence that such analyses had\nactually been performed or that they were adequate.\nRespondent did provide other information, however, in support of its argument that it had\nadequate pressure controls and protective equipment on its pipelines. It offered portions of its\nOperations and Maintenance (OAM) manual, information about pipeline operating history, and\noverpressure protection calibration and inspection records However, none of this information\naddressed the key issue of whether Valero's overpressure controls and protective equipment\nwere adequate.\nDuring the hearing, Respondent offered a segment of its OAM manual. This document\ncontained cursory statements that overpressure controls must be provided but provided no\nexplanation as to how to determine whether such controls were adequate. Respondent next\noffered information about the operating history of its pipelines Respondent's operating history\ndoes not confirm the adequacy of controls and protective equipment nor does it indicate that\nsurge overpressure had been adequately analyzed. An operating history that reveals no instances\nof pipeline overpressure may simply be a matter of Respondent's luck. Finally, Respondent\noffered information regarding the inspection and calibration of its overpressure safety devices. 9\nWhile such information may indeed indicate that Valero's equipment was functioning properly,\nit does not show that the equipment was adequate to control pressure on the system. For\nexample, a well-maintained and calibrated device might still be undersized for the system and\ntherefore inadequate to control pressure within the prescribed limits.\nAfter considering all of the evidence in the record, I find that Respondent violated 49 C. F. R.\n) 195. 406(b) by failing to provide adequate controls and protective equipment on its pipelines to\ncontrol the pressure within the limit established under ) 195. 406(a)\nItem 2: The Notice alleged that Respondent violated 49 C. F. R. ) 195. 410(a), which states:\ng 195. 410 Line markers.\n' Prefiled Testimony, at 7\nPrefiled Testimony, at 7, and Ex. 4, at 316-1, Valero L. P OkM Manual 316 Maximum OPerating Pressure\n' Prefiled Testimony Ex. 4, at 316-1, 5\n' Prefiled Testimony, at 6-8\n' ld, at 8-9, and Prefiled Testimony Ex 5\n\n\n\n(a) Except as provided in paragraph (b) of this section, each operator shall\nplace and maintain line markers over each buried pipeline in accordance with\nthe following:\n(1) Markers must be located at each public road crossing, at each railroad\ncrossing, and in sufficient number along the remainder of each buried line so\nthat its location is accurately known. . . .\nItem 2 of the Notice alleged that Respondent violated $ 195. 410(a) by failing to place and\nmaintain pipeline markers over each buried pipeline in sufficient number that the location of the\npipeline was accurately known. Specifically, the Notice alleged that when crossing cultivated\nfields, Valero's pipeline markers frequently could not be seen on the far side of the fields and\nthat at valve sites, looking in both directions, markers were not visible.\nRespondent contested this allegation, objecting to the so-called \"line-of-sight\" test used by\nPHMSA to determine the adequacy of a pipeline operator's line marking. Valero contended that\nits pipelines were marked under ) 195. 410(a) in a manner that accurately identified their location\nand that the \"line-of-sight\" test \"impermissibly create[ed] additional obligations on regulated\n\"'\nparties beyond those in the rule. . . .\nPHMSA acknowledges that the \"line-of-sight\" test, while simple to understand, has resulted in\nconfusion within the industry and has been applied differently in various regions. As a result, the\nagency has initiated a re-examination of the use of the \"line-of-sight\" test but no decision has yet\nbeen reached on whether or how it should be revised. ' Based upon the foregoing, I find that it is\nappropriate to withdraw Item 2 of the Notice, PHMSA shall not be prejudiced, however, by this\nwithdrawal nor precluded from alleging future violations of $ 195. 410(a) against Respondent or\nany other operator.\nItem 5: The Notice alleged that Respondent violated 49 C. F. R. $ 195. 420(a)-(c), which states:\ng 195. 420 Valve maintenance.\n(a) Each operator shall maintain each valve that is necessary for the safe\noperation of its pipeline systems in good working order at all times.\n(b) Each operator shall, at intervals not exceeding 7Y2 months, but at least\ntwice each calendar year, inspect each mainline valve to determine that it is\nfunctioning properly.\n(c) Each operator shall provide protection for each valve from\nunauthorized operation and from vandalism.\nItem 5 of the Notice alleged that Respondent committed four violations of ( 195. 420, as follows:\nBy failing to maintain certain valves that were necessary for the safe operation of its pipeline\nsystem; by failing to inspect various mainline valves within the required intervals; and by failing\nto protect certain other valves from unauthorized operation and vandalism. Each of the specific\nallegations is addressed separately below.\n' Closing, at 4.\n\" PHMSA held a public workshop on February 20-21, 2008, m Houston, TX to discuss, among other issues, the\nlocation of hne markers Pipeline Safety: Workshop on Public Awareness Programs for Pipehne Operators and\nLocation of Line Markers, 73 Fed. Reg 223 (Jan. 2, 2008)\n\n\n\n1. Clawson Crude Oil Pipeline, Valve Site MP 11.\nThe Notice alleged that Valero failed to inspect the valve at Valve Site Mile Post (MP) 11 on its\nClawson Crude Oil Pipeline in accordance with the required 7'/~-month inspection interval set\nout in $ 195. 420(b). The Notice alleged that PHMSA inspectors observed that the chain locking\nthe valve was adhered with paint to the hand wheel of the valve, and that the car seals locking the\nvalve in place were very corroded. ' The Notice further alleged that these conditions showed\nthat Respondent had not moved the valve for an extended period of time and therefore that the\nvalve could not have been inspected in a timely manner.\nValero responded by presenting evidence that the valve had been painted on the same day that\nthe valve was last inspected and that it had been inspected within the required interval. '\nRespondent also presented credible evidence that the MP 11 valve was a ball-type valve that\ncould be completely closed in five (5) movements, that only a partial movement of the valve\nhand wheel was necessary to inspect the valve, and that such a partial movement did not require\nthe removal or unlocking of the car seals. ' I find that Respondent presented sufficient evidence\nto indicate that it had inspected the MP 11 valve in accordance with the 7'/~-month inspection\nrequirement set forth in $ 195. 420(b). Accordingly, upon considering all of the evidence, I\nhereby withdraw that portion of the allegation in Item 5 relating to the MP 11 valve.\n2. Turpin Products Pipeline, Valve Site MP 44.\nThe Notice alleged that Respondent failed to maintain its MP 44 valve in good working order at\nall times as required by ( 195. 420(a). Specifically, the Notice alleged that Valero allowed the\npipeline into and out of the Turpin MP 44 valve (and therefore the valve itself) to be supported\nby blocks of wood, thereby risking severe corrosion of the pipeline within a short period of time.\nThe Notice also alleged that Respondent did not provide any fencing or other protection for the\nvalve as required by ) 195. 420(c). The valve was located in a farm equipment storage yard,\nwhere heavy equipment was frequently moved in and out, thereby exposing the valve to\nunauthorized operation or vandalism.\nRespondent acknowledged that the Turpin MP 44 valve site was out of compliance with\n$ 195. 420. \" Accordingly, upon considering all of the evidence, I find that Respondent violated\n49 C. F. R. ) 195. 420(a) and (c) by failing to maintain the Turpin MP 44 valve in good working\norder and by failing to provide protection for the valve from unauthorized operation and\nvandalism.\n3. Mainline Valve Inspection Interval.\nThe Notice alleged that Respondent failed to inspect a large number of mainline valves on the\nTurpin, El Paso, Trans-Texas and Southlake pipelines within the 7'/~-month interval as required\n\" The \"hand wheel\" is the device used to open and close the valve The \"car seals\" are metal seals on the valve that\nlock the valve m position\n\" Respondent offered two notarized affidavits from two of its employees as evidence that the MP 11 valve was\ninspected Prefiled Testimony, at 22, Ex 9 and 10\n\"Prefiled Testimony, at 23, Ex 12, at 313-7\n\" Prefiled Testimony, at 25\n\n\n\nby $ 195. 420(b). According to the PHMSA inspector's review of company records and his\nViolation Report, 220 mainline valves had not been properly inspected. '\nIn its Prefiled Testimony and at the hearing, Respondent admitted that 105 of the valves listed in\nthe Violation Report had not been timely inspected. ' However, Respondent asserted that the\nremaining 115 valves were not mainline valves and therefore not subject to the 7'/2-month\ninspection interval. Valero explained that the list of valves provided to PHMSA during the\ninspection contained all valves, not just the mainline ones. The company provided an excerpt\nfrom its 08aM manual containing a definition of the term \"mainline valves, \" to show that 115 of\nthe valves on the list did not qualify as such. ' Respondent also testified that its definition of\nmainline valves had been in place prior to the inspection and that no valves had been re-\nclassified since that time.\nBased upon a review of all the evidence, I find that Respondent violated 49 C. F. R. $ 195. 420(b)\nby failing to inspect 105 of its mainline valves in accordance with the 7'/2-month interval\nrequired by the regulation.\n4. Valve Site Fencing.\nThe Notice alleged that Respondent failed to provide protection for numerous valves on its\npipeline systems from unauthorized operation and vandalism as required by $ 195. 420(c).\nSpecifically, it alleged that a large number of Valero's valves did not have fencing around the\nvalve sites; instead, many of the valves simply had pipe post-and-beam enclosures around them\nthat might serve to protect them from unauthorized operation but not from vandalism. It also\nalleged that the Denver pipeline had valves with no fencing of any kind around them and that the\nTrans-Texas pipeline had at least one valve site with a four-foot-high cyclone fence that would\nnot protect against vandalism, as it was located adjacent to a busy road in Mt. Belvieu, Texas. In\nits Violation Report, PHMSA provided photographs of examples of the allegedly unprotected\nvalves.\nRespondent asserted that ( 195. 420(c) does not specify the methods by which it must protect\nvalves from unauthorized operation and vandalism and that therefore the means of protection is\nleft to the discretion of the operator. Respondent also argued that the regulation does not require\nit to place fencing around all of its pipeline valves.\nRespondent is correct that $ 195. 420(c) does provide operators with flexibility in providing\nprotection for valves from unauthorized operation and vandalism. While fencing is a common\nmeans of providing such protection, it is not the only possible one. However, inherent m the\nflexibility provided by $ 195. 420(c) is the need for operators to show that they have considered\nthe particular circumstances at each valve site and determined the specific measures that are\nneeded to protect each valve. Without a documented process and evidence that it has been\nsatisfactorily implemented, neither Respondent nor PHMSA can determine whether the company\nhas provided adequate protection under the regulation, Depending on the results of a valve site\n' Violation Report Ex 4b.\n\" Prefiled Testimony, at 26.\n' Id, Prefiled Testimony Ex 15\n\"Prefiled Testimony, at 27, Ex. 12\n\"Closing, at 5\n\n\n\nanalysis, a variety of different protective measures may be appropriate, including, but not limited\nto, post-and-beam enclosures, fencing, security cameras, motion detectors, concertina wire, brick\nwalls, or combinations of these measures.\nDuring the hearing, PHMSA argued that the presence of many unfenced valve sites and the\nexistence of other valves in populated areas with only limited protection indicated that Valero\nhad not made adequate and consistent efforts to protect its valve sites. The company was unable\nto show that it had a process in place for determining what types or levels of protections were\nnecessary in various locations.\nAccordingly, based upon a review of all the evidence, I find that Respondent violated 49 C. F. R.\n$ 195. 420(c) by failing to provide adequate protection for each valve from unauthorized\noperation and vandalism.\nItem 7: The Notice alleged that Respondent violated 49 C. F. R. ) 195. 438, which states:\ng 195. 438 Smoking or open flames.\nEach operator shall prohibit smoking and open flames in each pump\nstation area and each breakout tank area where there is a possibility of the\nleakage of a flammable hazardous liquid or the presence of flammable vapors.\nItem 7 of the Notice alleged that Respondent violated ) 195. 438 by failing to prohibit smoking\nand open flames in each pump station area. Specifically, the Notice alleged that Respondent\nfailed to post clearly visible \"No Smoking\" signs at the entrances to its pump station facilities.\nValero contested the allegation but acknowledged that \"No Smoking\" signs were not posted at\nall facility entrances. ' Respondent argued that hanging \"No Smoking\" signs was not the only\nallowable means of achieving compliance with the regulation, contending that it had complied\nwith the regulation simply by having and following its 08aM manual, which included provisions\nto \"ensure\" that ( 195. 438 was followed. The manual required that Valero post signs\nprohibiting smoking and open flames around all facilities (including pump stations) where there\nwas a possibility of flammable hazardous liquid leaks or the presence of flammable vapors.\nWhile it is necessary and appropriate for Respondent to have 0&M procedures prohibiting\nsmoking and open flames in pump station areas, the existence of such procedures alone does not\nconstitute compliance with the regulation. If it did, no operator would ever have to do anything\nother than have a no-smoking policy on the books, Moreover, it is clear that Respondent did not\nfollow its own procedures.\nIn order to achieve compliance with $ 195. 438, an operator must take action that actually\nimplements a no-smoking policy for those persons who may not be familiar with the operator's\nOAM manual. In this case, not all visitors to Respondent's facilities were privy to Valero's\ninternal prohibitions on smoking, and may not have learned about them upon entry to the facility.\nFor example, contractors, delivery persons, emergency responders, law-enforcement, and other\nnon-company personnel may have entered through the pump station gates. Without \"No\nSmoking\" signs or other clear warnings that smoking was prohibited, visitors might be unaware\nthat smoking was prohibited. Respondent provided no evidence of how it had prohibited\n' Prefiled Testimony, at 37\n\" Prefiled Testimony, at 38, Ex. 2l\n\n\n\nsmoking and open flames with regard to visitors in those locations where it had failed to install\n\"No Smoking\" signs.\nAccordingly, based upon a review of all the evidence, I find that Respondent violated 49 C. F. R.\n) 195. 438 by failing to prohibit smoking and open flames in each pump station and breakout\ntank area where there was a possibility of flammable hazardous liquid leaks or the presence of\nflammable vapors.\nItem S: The Notice alleged that Respondent violated 49 C. F. R. $ 195. 581(a), which states:\ng 195. 5S1 Which pipelines must I protect against atmospheric\ncorrosion and what coating material may I usc?\n(a) You must clean and coat each pipeline or portion of pipeline that is\nexposed to the atmosphere, except pipelines under paragraph (c) of this\nsection.\nThe Notice alleged that Respondent violated $ 195. 581(a) by failing to keep certain pipeline\nfacilities properly coated. In many locations, the coatings had failed or were failing, leaving the\nfacilities susceptible to external corrosion. Specifically, the Notice and Violation Report\nincluded examples of facilities that were not properly coated, including above-ground and\nexposed pipelines, above-ground valves, and breakout tank roofs.\nValero responded by claiming that the facilities were properly protected from atmospheric\ncorrosion. In its Prefiled Testimony and during the hearing, the company described a variety of\nmeasures it had taken to protect its facilities but failed to provide any credible evidence or\nargtnnents that the facilities cited were in compliance with ) 195. 581 at the time of the\ninspection. Accordingly, based upon a review of all the evidence, I find that Respondent\nviolated 49 C. F. R. ) 195. 581(a) by failing to keep certain of its pipeline facilities that were\nexposed to the atmosphere properly coated, as more fully described in the Notice and Violation\nReport.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\nIII. Additional Issues Raised by Respondent\nIn addition to the specific allegations discussed above, Valero argued that PHMSA did not meet\nthe notice requirements of 49 C. F. R. ) 190. 207 because many items in the Notice contained\n\"general allegations and unidentified instances of non-compliance. \" As a result, Respondent\ncontended that the Notice \"provide an insufficient basis for PHMSA to allege any non-\ncompliance or seek penalties. \" ' Valero asserted that its due process rights had been violated by\nsuch lack of notice and announced its intention to challenge portions of the Notice based on the\ngenerality of the allegations. However, Respondent did not provide details as to what portions\n\" Violation Report Ex 7. F&gures 39 — 45 consist of photographs of failmg and faded p&pelme coatings on the\nAlbuquerque, Denver, El Paso, Turpin, and Trans-Texas pipehne facihties\n\" Response, at 4\n'Ij\nSupplement to Response, at 2.\n\n\n\n10\nof the Notice were too \"general\" or how it had been harmed by such purported generality. Upon\nreview of the record, I find that the Notice contained brief but adequate statements of each\nallegation of violation. In addition, at Valero's request, PHMSA provided a copy of the\nViolation Report, which set out detailed information in support of the allegations, including\nphotographs of specific examples of non-compliance at Respondent's facilities, procedures and\ninspection records. Respondent did not renew its generality arguments at the hearing or in its\nClosing.\nRespondent also argued that the Notice \"may be untimely\" because it was issued more than one\nyear after the inspections. Respondent did not cite any authority or offer any evidence or\ninformation in support of this contention. I find that the Notice was issued well within the\ngeneral five-year federal statute of limitations.\nASSESSMENT OF PENALTY\nUnder 49 U. S. C. $ 60122, Respondent is subject to an administrative civil penalty not to exceed\n$100, 000 per violation for each day of the violation, up to a maximum of $1, 000, 000 for any\nrelated series of violations.\n49 U. S. C $ 60122 and 49 C. F. R. $ 190. 225 require that, in determining the amount of the civil\npenalty, I consider the following criteria: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent's culpability; the history\nof Respondent's prior offenses; the Respondent's ability to pay the penalty and any effect that\nthe penalty may have on its ability to continue doing business; and the good faith of Respondent\nin attempting to comply with the pipeline safety regulations. In addition, I may consider the\neconomic benefit gained from the violation without any reduction because of subsequent\ndamages, and such other matters as justice may require. The Notice proposed a total civil\npenalty of $255, 000 for violations of Part 195.\nNotice Item I proposed a civil penalty of $10, 000 for violation of 49 C. F. R. ) 195. 406(b), for\nRespondent's failure to provide adequate controls and protective equipment to control the\nmaximum operating pressure of the pipeline within the limits established under $ 195. 406(a).\nAdequate pressure controls and protective equipment are particularly important means of\nfostering pipeline safety because they serve to prevent pipeline overpressure and possible\nruptures, spills, and harm to life, property, and the environment. Respondent made several\narguments and offered information in opposition to the allegation and penalty, all of which are\ndiscussed above. None of Respondent's arguments or information warrant a reduction or\nelimination of the proposed civil penalty. Therefore, I assess Respondent a civil penalty of\n$10, 000 for violating 49 C. F. R. $ 195. 406(b).\nNotice Item 2 proposed a civil penalty of $25, 000 for violation of 49 C. F. R. $ 195. 410(a), for\nRespondent's failure to provide sufficient line markers to accurately locate its pipelines. This\nallegation of violation has been withdrawn. Accordingly, I withdraw the proposed penalty for\nthis Item.\n\" Response, at 4\nSee 28 U. S. C. ) 2462.\n\n\n\nNotice Item 5 proposed a civil penalty of $220, 000 for violation of 49 C. F. R. $ 195. 420(b), for\nRespondent's failure to meet the 7'/z-month inspection interval for 220 mainline valves. The\nViolation Report explained that PHMSA was proposing a civil penalty of $1, 000 for each of the\n220 valves allegedly out of interval. As discussed more fully above, the evidence showed that\nRespondent failed to meet the 7'/z-month inspection interval for only 105 valves, as opposed to\nthe 220 alleged in the Notice. No civil penalty was proposed for the other allegations in Item 5.\nRespondent admitted that some penalty was warranted but made several arguments in favor of a\n29\nreduction. First, it argued that the proposed $1, 000-per-valve amount exceeded the penalties\nassessed by PHMSA for similar violations by other operators in the past; in addition, it argued\nthat the penalty should be based upon how late each valve inspection occurred. Respondent\ncited four past Final Orders to support its argument. ' Second, it argued that the missed valve\ninspections occurred during a time period when the company was changing valve inspection\ntracking systems and, therefore, that the missed inspections were inadvertent. Finally,\nRespondent argued that the penalty should be reduced because the missed inspections did not\nresult in any adverse impact on the environment or public safety.\nI find Respondent's arguments unpersuasive for several reasons. First, PHMSA proposes and\nassesses civil penalties in accordance with the assessment criteria set forth in 49 U. S. C. $\n60122(b) and 49 C. F. R. ) 190. 225. In applying these criteria, PHMSA has determined that the\nmost appropriate means of setting civil penalties is to apply the assessment criteria on a case-by-\ncase basis. When PHMSA proposes a penalty, it examines the allegations and supporting\nevidence and applies the relevant assessment criteria to those particular facts. This analysis\ngenerally includes, among other things, a review of an operator's compliance history, how the\nalleged non-compliance was discovered and its duration, whether the respondent made a good\nfaith effort to comply with the regulation prior to the inspection, and whether there was any\nimmediate or potential safety or environmental impact. This fact-sensitive, case-by-case\napproach is also consistent with PHMSA's largely performance-based regulatory scheme, which\ninvolves the consideration of risk factors and complexities unique to each pipeline system.\nSecond, Respondent suggests that PHMSA take into consideration the amount of penalties\nassessed against other operators in the past for \"similar\" violations and weigh the culpability of\nValero against that of other operators who have been assessed lesser amounts for the same\nviolation. PHMSA has found that such an approach is impracticable, given the unique facts of\neach offense and operating conditions of each pipeline system. Respondent did not cite any law\nor regulation requiring a standardized set of civil penalties, nor am I aware of any requirement\nthat PHMSA follow such an approach\n' Closing, at 8\n\"Closmg, at 6\n\" See Prefiled Testimony at 43-46, citing In the Matter of Sinclair Pipeline Company, Fmal Order, CPF No 55503\n(May 5, 1998), ln the Matter of Mobil Corporation, Fmal Order, CPF No 13504 (June 27, 1997), In the Matter of\nKoch Pipeline Company L P Fmal Order, CPF No. 46501 (June 3, 1998), and In the Matter of Texas Eastern\nPetroleam Products Company, Final Order, CPF No 3-2004-5027 (Jan 3, 2006)\n' The Supreme Court has held that absent a statutory provision to the contrary, \"uniformity of sanctions for similar\nviolations\" is not required See Butz v Glover Livestock Commission Company, Inc, 411 U S 182, 186-87 (1973)\n(holding that \"the employment of a sanction within the authority of an admimstrative agency is thus not rendered\ninvalid in a particular case because it is more severe than sanctions imposed m other cases. \")\n\n\n\n12\nThird, PHMSA has found it appropriate to increase many of its civil penalties in recent years,\nincluding those for violations of $ 195. 420(b). Most of the Final Orders cited by Respondent, in\nwhich several other operators were assessed lower penalties for violations of $ 195. 420(b), were\ninitiated before Congress amended the Pipeline Safety Laws in 2002 to increase the maximum\npenalties that PHMSA can assess through its administrative enforcement process, I would also\nnote that the $1, 000-per-valve penalty assessed in this case is consistent with other recent\nenforcement cases in which PHMSA has proposed and, in most cases, assessed similar amounts\nfor violations of $ 195. 420(b). Unlike some of the older cases that Respondent cited, none of\nthe recent cases adjusted the per-valve penalty amount based upon the length of time the valve\ninspections had been delayed.\nRespondent also argued that its failure to timely inspect 105 valves was the result of a change in\nthe company's administrative tracking systems and that because its error was inadvertent, the\nper-valve penalty should be reduced. I disagree. A change of tracking systems, if anything,\nshould have prompted Valero to exercise greater, not less, vigilance to ensure that inspections\nwere not missed.\nFinally, I reject Respondent's argument that the penalty should be reduced because the missed\nvalve inspections did not result in an adverse impact on the environment or public safety.\nRespondent's failure to conduct timely inspections of more than 100 mainline valves was a\nserious violation that could have had a harmful effect upon public safety or the environment.\nProperly functioning mainline valves are essential to the safe operation of hazardous liquid\npipeline systems; they are used to limit the volume of product released in the event of a spill.\nOne purpose of the mandatory valve inspection interval set forth in ) 195. 420(b) is to ensure that\nvalve problems are identified and corrected before they impact the safety of the pipeline system.\nAccordingly, upon consideration of all of the evidence and the arguments presented, I hereby\nassess Respondent a reduced civil penalty of $105, 000 for violations of 49 C. F. R. $ 195. 420(b).\nIn summary, having reviewed the record and considered the assessment criteria for Items 1 and\n5, I assess Respondent a reduced total civil penalty of $115, 000. There is nothing in the record\nindicating that payment of this penalty would adversely Respondent's ability to continue in\nbusiness.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations (49\nC. F. R. $ 89. 21(b)(3)) require this payment be made by wire transfer, through the Federal\nReserve Communications System (Fedwire), to the account of the U. S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, P. O. Box 269039, Oklahoma City, OK 73125; (405) 954-8893.\n\"The Pipehne Safety","truncated":true,"body_characters":107348}