{"operation":"document","citation":"CPF 420065003","title":"KINDER MORGAN CO2 CO. LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2006-01-20","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.410(a)(1), 195.420(c), 195.573(a)(1), 195.579(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065003.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065003.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065003","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420065003","body":"Notice of Probable Violation involving KINDER MORGAN CO2 CO. LLC. PHMSA's enforcement data identifies the cited regulations as 195.410(a)(1),  195.420(c),  195.573(a)(1),  195.579(a). The case was opened on 2006-01-20 and is reported as closed as of 2012-04-16. Proposed civil penalty: $35,000. Assessed civil penalty: $25,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420065003_Closure Letter_04162012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065003/420065003_Closure%20Letter_04162012.pdf\n\n420065003_Closure Letter_04162012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065003/420065003_Closure%20Letter_04162012_text.pdf\n\n420065003_FinalOrder_10122010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065003/420065003_FinalOrder_10122010.pdf\n\n420065003_FinalOrder_10122010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065003/420065003_FinalOrder_10122010_text.pdf\n\n420065003_Closure Letter_04162012_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nApril 16, 2012\nMr. R. Tim Bradley\nPresident\nKinder Morgan CO2 Company, L.P.\n500 Dallas Street, Suite 1000\nHouston, TX 77002\nCPF 4-2006-5003\nDear Mr. Bradley:\nOn October 12, 2010, the Pipeline and Hazardous Materials Safety Administration (PHMSA)\nissued to Kinder Morgan CO2 Company, L.P. a Final Order in the above-referenced case. This\nOrder included a Compliance Order and Civil Penalty assessment. Based on our review of the\ndocumentation you provided and confirmation of payment of the civil penalty, it has been\ndetermined that you have complied with the terms of this Order.\nAccordingly, this case is now closed and no further action is contemplated with respect to the\nmatters involved in this case. Thank you for your cooperation in this matter.\nSincerely,\nR. M. Seeley\nDirector, Southwest Region\nPipeline and Hazardous\nMaterials Safety Administration\n\n420065003_FinalOrder_10122010_text.pdf\n\nOCT 12 2010\nMr. R. Tim Bradley\nPresident\nKinder Morgan CO2 Company, L.P.\n500 Dallas Street, Suite 1000\nHouston, TX 77002\nRe: CPF No. 4-2006-5003\nDear Mr. Bradley:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a reduced civil penalty of $25,000, and specifies actions that need to be taken\nby Kinder Morgan CO2 Company, L.P., to comply with the pipeline safety regulations. The\npenalty payment terms are set forth in the Final Order. When the civil penalty has been paid and\nthe terms of the compliance order completed, as determined by the Director, Southwest Region,\nthis enforcement action will be closed. Service of the Final Order by certified mail is deemed\neffective upon the date of mailing, or as otherwise provided 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. Jeffrey R. Roper, Assistant General Counsel for Kinder Morgan Energy Partners, L.P.\nMr. R.M. Seeley, Director, Southwest Region, PHMSA\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 2933]\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 )\nKinder Morgan CO2 Company, L.P., ) CPF No. 4-2006-5003\nformerly Kinder Morgan CO2 Logistics Operations, L.P., )\n)\n)\n)\nRespondent. )\n_____________________________________________________ )\nFINAL ORDER\nOn June 28 – July 2, 2004, and October 18 – 22, 2004, pursuant to 49 U.S.C. § 60117, a\nrepresentative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office\nof Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and\nrecords of Kinder Morgan CO2 Company, L.P. (Respondent or KMCO2),\nMexico, and Colorado. The inspection covered facilities and records pertaining to portions of\nRespondent’s Cortez, Central Basin (CB), and Canyon Reef Carriers (CRC) pipeline systems.\nThese pipelines are used to transport carbon dioxide liquid. The Cortez system includes\napproximately 557 miles of pipeline running from Cortez, Colorado, to Denver City, Texas. The\nCB and CRC systems include approximately 482 miles of pipeline in western Texas.\n1 in Texas, New\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated January 20, 2006, 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. §§ 195.410(a)(1), 195.420(c),\n195.573(a)(1) and 195.579(a), assessing a civil penalty of $35,000 for the alleged violations, and\nordering Respondent to take certain measures to correct the alleged violations.\nKMCO2 responded to the Notice by letter dated February 17, 2006 (Response). Respondent\ncontested all the allegations and requested a hearing, which was subsequently held on\nAugust 16, 2006, in Houston, Texas, with an attorney from the Office of Chief Counsel,\nPHMSA, presiding. Respondent provided numerous documents at the hearing (Hearing\nExhibits), which have been incorporated into the record. Respondent was represented by counsel\nin this matter. After the hearing, Respondent provided additional information for the record on\nSeptember 14, 2006 (Closing).\n1 The Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order was issued to Kinder\nMorgan CO2 Logistics Operations, L.P. That entity is now known as Kinder Morgan CO2 Company, L.P., and is a\nsubsidiary of Kinder Morgan Energy Partners, L.P.\n\n\n\n2\nFINDINGS OF VIOLATION\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. § 195.410(a)(1), which states:\n§ 195.410 Line markers.\n(a) Except as provided in paragraph (b) of this section, each operator\nshall place and maintain line markers over each buried pipeline in\naccordance with the following:\n(1) Markers must be located at each public road crossing, at each\nrailroad crossing, and in sufficient number along the remainder of each\nburied line so that its location is accurately known.\nThe Notice alleged that KMCO2 violated 49 C.F.R. § 195.410(a)(1) by failing to place and\nmaintain line markers over its Cortez, CB, and CRC pipelines in sufficient number that the\nlocation of the lines was accurately known. Specifically, it alleged that when crossing cultivated\nagricultural fields, the markers on the far side of a field often could not be seen. The Notice also\nalleged that from valve sites, the next marker for the pipeline was not visible.\nKMCO2 objected to the so-called “line-of-sight” test used by OPS to determine the adequacy of\nRespondent’s pipeline marking in cultivated fields.\n2 PHMSA acknowledges that while many\noperators follow the so-called “line-of-sight” test, as applied in the Notice in this case, many\nothers do not. Furthermore, the regulation does not expressly require “line-of-sight.” In an\neffort to arrive at greater consensus on this and other line-marking issues, PHMSA convened a\nrulemaking. Under such circumstances, I find it appropriate to withdraw this allegation of\npublic workshop in 20083 and is currently considering whether to issue a notice of proposed\nviolation. Such withdrawal neither constitutes an interpretation of § 195.410(a)(1) nor prejudices\nfuture potential enforcement action against Respondent or any other operator.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.420(c), which states:\n§ 195.420 Valve maintenance.\n(a) ….\n(c) Each operator shall provide protection for each valve from\nunauthorized operation and from vandalism.\nThe Notice alleged that KMCO2 violated 49 C.F.R. § 195.420(c) by failing to provide\nprotection from vandalism for a large number of the Cortez, CB, and CRC pipeline\nvalves. Specifically, it alleged that while many of the valves had pipe post-and-beam\nenclosures, such enclosures did not provide protection from vandalism. The Notice also\nalleged that some valves that were inspected had no enclosure or fence whatsoever.\n2 Response at 2.\n3 PHMSA held a public workshop on February 20-21, 2008, in Houston, Texas, to discuss, among other issues, the\nplacement of line markers. Pipeline Safety: Workshop on Public Awareness Programs for Pipeline Operators and\nLocation of Line Markers, 73 Fed. Reg 223 (Jan.2, 2008).\n\n\n\n3\nKMCO2 contested this item, arguing that its unfenced valves were protected by chains and locks\nto prevent unauthorized operation. The company contended that it had evaluated each of these\nsites and determined that it was not necessary to fence them in order to discourage vandalism.4\nHowever, there is no evidence in the record to support this argument.\nAccording to Respondent, the Notice alleged that fencing was necessary at all valve sites.\n5 The\ncompany contended that any interpretation requiring fencing at all valve sites would be a new\ninterpretation of the regulation, for which KMCO2 had not received fair notice.6\nI read the\nregulation and the Notice differently. The regulation plainly does not require fencing at all valve\nsites; rather, it requires that an operator provide “protection for each valve from unauthorized\noperation and from vandalism.” Because I agree that the regulation does not require the fencing\nof all valve sites, it is unnecessary to reach Respondent’s fair notice argument.\nRespondent further argued that these valves had been in operation for 34 years with no incidents\nof vandalism, and that this was evidence that chains and locks were adequate to protect against\nvandalism.\n7 The company argued that it attempts to preserve the property on which valves are\nlocated for the landowner’s use and that it tries not to build unnecessary structures around valves\nin a manner that would disrupt the landowner’s use of the property.8\nThis argument, however, is\nunpersuasive. The regulation does not contain an exception to the valve protection requirement\nbased on the underlying use of the land on which the valve is located.\nKMCO2 has flexibility under the regulation to provide protection for valves from unauthorized\noperation and vandalism in various ways. Inherent in such flexibility, however, is the need for\noperators to show that they have considered the particular circumstances at each valve site and\nhave determined the specific measures that are necessary to protect each valve from vandalism.\nDepending on the analysis of threats at a particular valve site, a variety of different protective\nmeasures may be appropriate, including, but not limited to, post-and-beam enclosures, fencing,\nconcertina wire, alarms, video monitoring, rock/brick or wooden walls, or combinations of these\nmeasures. Without some type of documented process for evaluating the on-site conditions and\nevidence that the necessary measures have been satisfactorily implemented, neither Respondent\nnor PHMSA can determine whether the company has provided adequate protection for each\nvalve site. At the time of the inspection, KMCO2 had no documented process for determining\nvalve site protection, nor did the company provide any evidence as to how it had otherwise\nevaluated valve sites for this purpose. In its Closing, Respondent provided updated procedures\nthat included a process for valve site protection, but such updated procedures were not in effect\nas of the date of the inspection.\n9\n4 Response at 3.\n5 Response at 3.\n6 Closing at 2.\n7 Response at 3.\n8 Id.\n9 Closing at 2; Attachment #1 at 2; and Attachment #3.\n\n\n\n4\nBased on the foregoing, I find that KMCO2 violated 49 C.F.R. § 195.420(c) by failing to provide\nprotection from vandalism for a large number of the Cortez, CB, and CRC pipeline valves.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1), which states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine\nwhether cathodic protection required by [Subpart H] complies with\n§ 195.571:\n(1) Conduct tests on the protected pipeline at least once each calendar\nyear, but with intervals not exceeding 15 months. However, if tests at\nthose intervals are impractical for separately protected short sections of\nbare or ineffectively coated pipelines, testing may be done at least once\nevery 3 calendar years, but with intervals not to exceed 39 months.\nThe Notice alleged that KMCO2 violated 49 C.F.R. § 195.573(a)(1) by failing to properly\nconduct tests on its cathodically protected pipelines. Specifically, it alleged that KMCO2 failed\nto consider “IR drop” during the annual corrosion testing on its Cortez, CB, and CRC pipeline\nsystems.10\nThe primary purpose of the annual testing required by § 195.573(a)(1) is to provide an operator\nwith information about whether it is providing adequate cathodic protection to its pipelines.\nSuch information allows an operator to take action to remedy any inadequate cathodic protection.\nKMCO2’s cathodic protection must comply with one or more of the applicable criteria and other\nconsiderations for cathodic protection contained in paragraphs 6.2 and 6.3 of NACE Standard\n49 C.F.R. § 195.571.\nRP0169-2002 (NACE Standard)11 (incorporated by reference, see § 195.3), and required under\nCathodic protection can limit external corrosion on buried pipelines through the application of\ndirect electric current to the metal of the pipeline. Protection is achieved when current flows to\nthe metal in an amount sufficient to prevent the loss of metal from the pipeline to the\nsurrounding environment. If insufficient current is provided, corrosion can result. The NACE\nStandard provides reference criteria against which an operator can measure the flow of current to\nor from its pipelines (pipe-to-soil potential).\nIn order to obtain an accurate reading of pipe-to-soil potential, an operator must consider IR drop\nwhen it conducts annual tests of its cathodic protection system. Paragraph 6.2 of the NACE\nStandard sets out four methods for considering IR drop. If IR drop is not considered, cathodic\nprotection may appear to meet the criteria required by § 195.571, when, in fact, it does not.\nTherefore, when IR drop is not considered in the annual cathodic protection surveys, such\nsurveys do not achieve their intended purpose and do not comply with § 195.573(a).\n10 Notice at 2. IR drop is an error in the pipe-to-soil voltage measurement caused by the electrical resistance of the\nsoil in which the pipeline is buried.\n11 NACE INTERNATIONAL, NACE STANDARD RP0169-2002 CONTROL OF EXTERNAL CORROSION ON\nUNDERGROUND OR SUBMERGED METALLIC PIPING SYSTEMS [hereinafter, NACE STANDARD].\n\n\n\n5\nThe four methods (Methods) set forth in Paragraph 6.2 of the NACE Standard state, in relevant\npart:\nNote: Consideration is understood to mean the application of sound\nengineering practice in determining the significance of [IR] drops by\nmethods such as:\n6.2.2.1.1.1 Measuring or calculating the [IR] drop(s);\n6.2.2.1.1.2 Reviewing the historical performance of the cathodic\nprotection system;\n6.2.2.1.1.3 Evaluating the physical and electrical characteristics\nof the pipe and its environment; and\n6.2.2.1.1.4 Determining whether or not there is physical evidence\nof corrosion.\nIn its Response, KMCO2 asserted that the Notice described a violation of § 195.571, which\nrequires that cathodic protection meet the criteria in the NACE Standard, rather than § 195.573,\nwhich requires testing of the cathodic protection to ensure that it complies with those criteria.\n12 I\ndisagree. The Notice stated that KMCO2 had “not conducted their annual corrosion survey to\naccount for IR drop in their readings.\nto satisfy the NACE Standard, but that the manner by which KMCO2 performed annual testing of\nits cathodic protection did not meet the requirements of § 195.573.\n”13 The allegation is not that the cathodic protection failed\nKMCO2 argued that IR drop considerations “are primarily performed using on/off close interval\nsurveys of its cathodic protection systems” and submitted records to show that IR drop was\nconsidered in its annual surveys.14 Such records, however, do not demonstrate that IR drop was\nconsidered in accordance with one of the Methods in the NACE Standard.\nadditional records submitted by Respondent for the facilities listed below is addressed as\nfollows:\n15 Each of the\n• Centerline Pipeline:\no A close interval survey (CIS) of the pipeline.\nThese records are irrelevant since Centerline was not a subject of the Notice.\n• CB Pipeline:\no A close interval survey from 2005.\nThis document is immaterial since the survey was conducted after the date of the\nOPS inspection.\n12 Response at 4.\n13 Notice at 2.\n14 Closing at 3.\n15 NACE STANDARD 6.2.2.1.1.\n\n\n\n6\no Rectifier readings with “instant off” pipe-to-soil readings.\nThese records fail to reflect how IR drop was considered.\n• CRC Pipeline:\no A CIS from June 2005.\nThis document is immaterial since the survey was conducted after the date of the\nOPS inspection.\n16\n• Cortez Pipeline:\no Close interval surveys of portions of pipeline from 1996-1998, long before the\ntime period at issue in this case;\no A CIS completed after the OPS inspection;\no A CIS of a 10-mile section of the pipeline that was done in November 2003;\no A CIS of a 75-mile section of the pipeline which was performed in 2004;\no Annual surveys of the pipeline for 2002 to 2005, but with no indication of how IR\ndrop was considered; and\no Rectifier readings with “instant off” pipe-to-soil readings, but with no indication\nof how IR drop was considered.\nNone of these records demonstrates that KMCO2 considered IR drop in accordance with\nParagraph 6.2 of the NACE Standard when performing annual cathodic protection surveys.\nAccordingly, I find that KMCO2 violated 49 C.F.R. § 195.573(a) by failing to properly conduct\ntests on its cathodically protected Cortez, CB, and CRC pipeline systems.\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.579(a), which states:\n§ 195.579 What must I do to mitigate internal corrosion?\n(a) General. If you transport any hazardous liquid or carbon dioxide\nthat would corrode the pipeline, you must investigate the corrosive effect\nof the hazardous liquid or carbon dioxide on the pipeline and take\nadequate steps to mitigate internal corrosion.\nThe Notice alleged that KMCO2 violated 49 C.F.R. § 195.579(a) by failing to investigate the\ncorrosive effects of the carbon dioxide liquid transported on its Cortez, CB, and CRC pipelines\nand facilities. In the Violation Report prepared in support of the Notice, OPS asserted that\nKMCO2 had not performed inspections on dead legs, low points, non-piggable pipe, or pipes\ndownstream of supplier taps.\n17 OPS further noted that the CRC pipeline transported carbon\ndioxide containing hydrogen sulfide and therefore that it would be particularly susceptible to\nerosion at ells and direction changes, but that KMCO2 had not considered this additional risk\nfactor.\n18 KMCO2 contested these allegations and argued that the carbon dioxide transported in\n16 This close interval survey showed that significant sections of the CRC pipeline did not meet NACE criteria.\n17 Violation Report at 6.\n18 Violation Report at 6.\n\n\n\n7\nits pipelines was not corrosive, and that the long-term absence of internal corrosion on these\npipelines was proof that the product being transported was not corrosive.\n19\nI reject this argument. The current version of Part 195 of title 49, Code of Federal Regulations,\nwas established pursuant to the Hazardous Liquid Pipeline Safety Act of 1979 (Pub. L. 96-\n129)(Act). The purpose of the Act and the regulations promulgated thereunder is to provide\nadequate protection against risks to life, property and the environment that are posed by the\ntransportation of hazardous liquids and carbon dioxide. The regulations cover the design,\nconstruction, operation, maintenance and emergency response requirements for hazardous liquid\nand carbon dioxide pipeline facilities. A major goal of the regulations is to ensure that pipeline\noperators prevent and control corrosion in their pipeline systems, one of the major causes of\npipeline failures. Operators transporting hazardous liquid and carbon dioxide are obligated to\nrecognize and address corrosion and to prevent corrosion-related leaks and failures on their\npipelines.\nThe phrase “carbon dioxide that would corrode the pipeline,” as used in § 195.579(a), must be\nconstrued in a manner that gives effect to the purpose and intent of the Act and the Part 195\nregulations. The intent of this section is to ensure that harmful leaks of hazardous liquid and\ncarbon dioxide caused by internal corrosion are prevented. To accomplish this objective,\npipeline operators are required to monitor their pipelines wherever causes of internal corrosion\ncould be present and to take appropriate actions to minimize the corrosion in a manner that\nprevents leaks and other hazards. Known causes of internal corrosion include certain materials\ncommonly found in pipeline systems, including hydrogen sulfide, water, sediments and microbes\nthat may cause or contribute to internal corrosion. Water can combine with carbon dioxide and\nform carbonic acid. It is well documented that carbonic acid is corrosive to steel. Other factors\ncan also serve to amplify the corrosive effects of these materials, such as low spots and locations\nwhere the hazardous liquid does not have sufficient velocity to carry away water and sediments.\nIn this case, KMCO2 failed to investigate dead legs, low points, non-piggable pipe, and pipes\nlocated downstream of supplier taps. Therefore, internal corrosion could be present and\ncontinuing at these locations. Any number of changes or upsets in upstream processes could\nintroduce water or other corrosive materials into the liquid stream. In addition, Respondent’s\nCRC pipeline transported carbon dioxide containing hydrogen sulfide, a known contributor to\ncorrosion. Therefore, I find that KMCO2 transports a hazardous liquid that would corrode the\npipeline.\nRespondent further argued that corrosion coupon records from the Cortez pipeline “indicated no\ncorrosion potential.\n”20 However, corrosion coupons only provide a localized indication of\ncorrosion. KMCO2 also stated that pipe segments from the CRC pipeline which the company\nhad removed from service and had inspected “indicated no internal corrosion.\n”21\nSuch evidence,\nagain, is not probative since such segments are not likely to show signs of corrosion if they are\nnot from areas that are susceptible to corrosion.\n19 Response at 5; Closing at 5.\n20 Response at 5.\n21 Id.\n\n\n\n8\nKMCO2 also stated that its maintenance history of pipeline pumps on the Cortez, CB, and CRC\nsuch anecdotal evidence convincing. Indications of corrosion in a carbon dioxide system may be\nvery subtle and easily missed. An absence of such indicators during routine maintenance does\npipelines “[has] not indicated any corrosion products in the CO2 being pumped.”22 I fail to find\nnot constitute evidence that KMCO2 had conducted any sort of actual investigation into the\ncorrosive effect of the carbon dioxide being transported.\nAs discussed above, any number of changes or upsets in upstream processes may introduce\ncorrosive materials into the carbon dioxide liquid, despite KMCO2’s efforts. To account for\npotential changes or upsets, KMCO2 must investigate the corrosive effects of the carbon dioxide\nliquids transported in its pipelines on a continuing basis.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.579(a) by failing to investigate the corrosive effects of the carbon dioxide liquid being\ntransported on its pipeline.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\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.\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I\nmust 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 $35,000 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $10,000 for Respondent’s violation of 49 C.F.R.\n§ 195.410(a)(1), for failing to place and maintain line markers over its pipelines in sufficient\nnumber that the location of the lines was accurately known. Having withdrawn this allegation of\nviolation, I hereby withdraw the penalty proposed for this item.\nItem 3: The Notice proposed a civil penalty of $25,000 for Respondent’s violation of 49 C.F.R.\n§ 195.573(a), for failing to properly conduct tests on its cathodically protected Cortez, CB, and\nCRC pipeline systems. As discussed above, I found that KMCO2 had failed to consider IR drop\nwhen performing annual tests of its cathodic protection system. As a result, Respondent may not\n22 Id.\n\n\n\n9\nhave had an accurate understanding of the effectiveness of such system. Inadequate cathodic\nprotection may lead to external corrosion, which can result in pipeline leaks or failures. This\nviolation continued for many days, yet the amount of the proposed penalty is far below the limit\nof $100,000 per violation per day. Regarding the nature, circumstances and gravity of the\nviolation, the proposed penalty also took into account that no pipeline failures or spills were\nassociated with the violation. KMCO2 has not presented any other evidence or argument\njustifying a reduction or elimination of the proposed penalty. Accordingly, having reviewed the\nrecord and considered the assessment criteria, I assess Respondent a civil penalty of $25,000 for\nviolation of 49 C.F.R. § 195.573(a).\nIn summary, having reviewed the record and considered the assessment criteria for the Item cited\nabove, I assess Respondent a reduced total civil penalty of $25,000.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require such payment to 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. The Financial\nOperations Division’s telephone number is (405) 954-8893.\nFailure to pay the $25,000 civil penalty will result in accrual of interest at the current annual rate\nin accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Items 1, 2, 3, and 4 in the Notice for\nviolations of 49 C.F.R. §§ 195.410(a)(1), 195.420(c), 195.573(a)(1), and 195.579(a),\nrespectively. Having withdrawn the allegation of violation for Item 1, this Final Order contains a\ncompliance order only for Items 2, 3 and 4.\nUnder 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids\nor who owns or operates a pipeline facility is required to comply with the applicable safety\nstandards established under chapter 601. Pursuant to the authority of 49 U.S.C. § 60118(b) and\n49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance\nwith the pipeline safety regulations applicable to its operations:\n1. With respect to the violation of § 195.420(c) (Item 2), within 30 days from receipt of this\nFinal Order, Respondent must perform an audit to ensure compliance with § 195.420(c).\nDuring this audit, Respondent must: (1) review all applicable procedures; (2) amend them\nas necessary to prevent future non-compliance with the regulation; and (3) survey each of\nthe valve sites on the pipeline systems subject to the Notice for compliance with the\napplicable amended procedures and the regulation. Based on the results of the audit,\n\n\n\n10\nKMCO2 must develop and implement a plan and schedule for the replacement or\ninstallation of appropriate protective measures at each valve site, according to\nRespondent’s consistent application of the amended procedures. KMCO2 shall base the\nplan on the results of the review and amendment of procedures and the survey. Any\nreplacement or installation of protective measures shall be completed within one year\nfrom receipt of this Final Order.\n2. With respect to the violation of § 195.573(a)(1) (Item 3), within 30 days from receipt of\nthis Final Order, Respondent must review its cathodic protection program and make any\nchanges necessary to ensure that IR drop is being considered in accordance with the\ncriteria in Paragraph 6.2 of the NACE Standard and the findings in this Final Order.\nAfter changes are made to account for IR drop and within one year from receipt of this\nFinal Order, determine whether all areas of the Cortez, CB, and CRC pipelines are\nreceiving adequate cathodic protection.\n3. With respect to the violation of § 195.579(a) (Item 4), within 90 days from receipt of this\nFinal Order, Respondent must perform an audit to ensure KMCO2 is in compliance with\n§ 195.579(a). During this audit, Respondent must: (1) review all applicable procedures;\n(2) amend them as necessary to prevent future non-compliance with the regulation; and\n(3) survey all applicable segments of KMCO2’s pipelines to ensure that inspection,\ntesting, and monitoring for internal corrosion follow these procedures. Within one year\nfrom receipt of this Final Order and based on the results of the audit, KMCO2 must\ndevelop and implement a plan for conducting internal corrosion surveys to ensure that the\ncompany remains in compliance with § 195.579(a).\n4. Respondent must maintain documentation of the safety improvement costs associated\nwith fulfilling this Compliance Order and submit that total to the Director, Southwest\nRegion, PHMSA. Costs shall be reported in two categories: (1) total cost associated with\npreparation and revision of plans, procedures, studies and analyses; and (2) total cost\nassociated with replacements, additions and other changes to pipeline infrastructure.\n5. Respondent must submit all required analyses, results, reviews, plans, timetables, and\ndocumentation of compliance with the requirements of this Compliance Order to:\nDirector, Southwest Region, Pipeline and Hazardous Materials Safety Administration,\n8701 South Gessner, Suite 1110, Houston, Texas 77074.\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nFailure to comply with this Order may result in administrative assessment of civil penalties not\nto exceed $100,000 for each violation for each day the violation continues or in referral to the\nAttorney General for appropriate relief in a district court of the United States.\nUnder 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of\nthis Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline\nSafety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC\n\n\n\n11\n20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA\nwill accept petitions received no later than 20 days after receipt of service of this Final Order by\nthe Respondent, provided they contain a brief statement of the issue(s) and meet all other\nrequirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of\nany civil penalty assessed. Unless the Associate Administrator, upon request, grants a stay, all\nother terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\n___________________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":33109}