{"operation":"document","citation":"CPF 420065029","title":"NAVAJO NATION OIL AND GAS COMPANY — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2006-06-01","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.402(a), 195.402(c)(13), 195.402(e)(9), 195.403(b)(2), 195.403(c), 195.404(b)(1), 195.420(c), 195.573(a)(1), 195.573(c), 195.573(e), 195.589(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065029.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065029.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065029","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420065029","body":"Notice of Probable Violation involving NAVAJO NATION OIL AND GAS COMPANY. PHMSA's enforcement data identifies the cited regulations as 195.402(a),  195.402(c)(13),  195.402(e)(9),  195.403(b)(2),  195.403(c),  195.404(b)(1),  195.420(c),  195.573(a)(1),  195.573(c),  195.573(e),  195.589(c). The case was opened on 2006-06-01 and is reported as closed as of 2014-03-19. Proposed civil penalty: $230,000. Assessed civil penalty: $0. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420065029_Closure_03192014.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Closure_03192014.pdf\n\n420065029_Closure_03192014_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Closure_03192014_text.pdf\n\n420065029_Consent Agreement_09022011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Agreement_09022011.pdf\n\n420065029_Consent Agreement_09022011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Agreement_09022011_text.pdf\n\n420065029_Consent Order_09022011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Order_09022011.pdf\n\n420065029_Consent Order_09022011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Order_09022011_text.pdf\n\n420065029_Final Order _03172010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Final%20Order%20_03172010.pdf\n\n420065029_Final Order _03172010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Final%20Order%20_03172010_text.pdf\n\n420065029_Consent Order_09022011_text.pdf\n\nSEP 02 2011\nMr. Wilson Groen\nPresident and CEO\nNavajo Nation Oil & Gas Company, Inc.\nP.O. Box 4439\nWindow Rock, AZ 86515\nRe: CPF No. 4-2006-5029\nDear Mr. Groen:\nEnclosed please find the Consent Order incorporating the terms of the Consent Agreement that\nyou signed on August 18, 2011. Service of the Consent Order and Consent Agreement is\ncomplete upon mailing as 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\nEnclosures\ncc: Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, Pipeline Safety\nMr. Rod Seeley, Director, Southwest Region, PHMSA\nMs. Susan A. Olenchuk, Counsel for NNOGC\nVan Ness Feldman P.C., 1050 Thomas Jefferson St. NW, Washington, D.C. 20007\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED[7005 1160 0001 0075 9893]\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, DC 20590\n______________________________________\nIn the Matter of )\nNavajo Nation Oil & Gas Company, Inc., ) CPF No. 4-2006-5029\nA Federal corporation, )\n)\n)\n)\nRespondent. )\n______________________________________ )\nCONSENT ORDER\nBy letter dated March 17, 2010, pursuant to 49 U.S.C. § 60122 and 49 C.F.R. § 190.213, the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), issued a Final Order to Navajo Nation Oil & Gas Company, Inc. (NNOGC or\nRespondent) in this matter. The Final Order determined that NNOGC committed violations of\n49 C.F.R. Part 195, assessed a civil penalty of $212,000 for the violations, and found that\nNNOGC had completed corrective action to remediate the violations.\nOn April 30, 2010, pursuant to 49 C.F.R. § 190.215, NNOGC filed a petition for reconsideration\nof the Final Order, requesting, in part, that PHMSA give consideration to NNOGC’s status as a\nFederally chartered corporation under Section 17 of the Indian Reorganization Act, 25 U.S.C.\n§ 477. By separate correspondence, NNOGC proposed to undertake specific additional safety\nprojects in order to settle this matter.\nIn recognition of the unique legal and political relationship the United States has with Indian\ntribal governments, established through and confirmed by the Constitution of the United States,\ntreaties, statutes, executive orders, and judicial decisions, PHMSA has engaged in good faith\nsettlement discussions with Respondent regarding its proposal to undertake additional safety\nprojects, resulting in the attached Consent Agreement. The Consent Agreement is hereby\napproved and incorporated by reference into this Order. Respondent is ordered to comply with\nthe terms of the Consent Agreement, effective immediately. The terms and conditions of this\nConsent Order are effective upon receipt.\n____________________________________ _________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n420065029_Final Order _03172010_text.pdf\n\nMAR 17 2010\nMr. Wilson Groen\nPresident and CEO\nNavajo Nation Oil & Gas Company, Inc.\nP.O. Box 4439\nWindow Rock, AZ 86515\nRe: CPF No. 4-2006-5029\nDear Mr. Groen:\nEnclosed is the Final Order issued in the above-referenced case. It makes findings of violation\nand assesses a reduced civil penalty of $212,000. It further finds that you have completed the\nactions specified in the Notice required 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, this\nenforcement 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: Ms. Patricia Godley, Esq., Counsel for Navajo Nation Oil & Gas Company\nVan Ness Feldman, P.C.\n1050 Thomas Jefferson Street, NW, Suite 700\nWashington, DC 20007\nMr. Rod Seeley, Director, Southwest Region, PHMSA\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 5156]\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 )\nNavajo Nation Oil & Gas Company, Inc., ) CPF No. 4-2006-5029\nA Federal corporation, )\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nOn September 12-15, 2005, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nconducted an on-site pipeline safety inspection of the facilities and records of Navajo Nation Oil\n& Gas Company, Inc.’s (Navajo’s or Respondent’s) Running Horse pipeline system. The\nRunning Horse system consists of approximately 88 miles of 16-inch diameter crude oil pipeline\nrunning from Utah to New Mexico.\nAs a result of the inspection, the Director, Southwest Region, PHMSA (Director), issued to\nRespondent, by letter dated June 1, 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 committed various violations of 49 C.F.R. Part\n195, assessing a civil penalty of $230,000 for the alleged violations, and ordering Respondent to\ntake certain measures to correct the alleged violations. The Notice also proposed finding that\nNavajo had committed another probable violation of 49 C.F.R. Part 195 and warning the\ncompany to take appropriate corrective action to address it or be subject to future enforcement\naction.\nAfter requesting and receiving an extension of time, Respondent responded to the Notice by\nletter dated July 14, 2006 (Response). Respondent requested an informal telephonic hearing. On\nFebruary 23, 2007, Respondent submitted further response materials. An informal hearing was\nheld via telephone conference on March 6, 2007, with Larry White, Attorney, Office of Chief\nCounsel, PHMSA, presiding. Respondent was represented by counsel during the hearing. After\nthe hearing, Respondent provided further materials for the record on April 5, 2007, and\nDecember 5, 2008.\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. § 195.589(c), which states:\n§ 195.589 What corrosion control information do I have to maintain?\n(a) . . .\n(c) You must maintain a record of each analysis, check, demonstration,\nexamination, inspection, investigation, review, survey, and test required by\nthis subpart in sufficient detail to demonstrate the adequacy of corrosion\ncontrol measures or that corrosion requiring control measures does not exist.\nYou must retain these records for at least 5 years, except that records related\nto §§ 195.569, 195.573(a) and (b), and 195.579(b)(3) and (c) must be\nretained for as long as the pipeline remains in service.\nItem 1A of the Notice alleged that Respondent failed to maintain records of atmospheric\ncorrosion monitoring for the three-year period prior to the September 2005 PHMSA inspection.\nPeriodic monitoring for atmospheric corrosion is required by 49 C.F.R. § 195.583(a), which\nstates:\n§ 195.583 What must I do to monitor atmospheric corrosion control?\n(a) You must inspect each pipeline or portion of pipeline that is exposed\nto the atmosphere for evidence of atmospheric corrosion as follows:\nIf the pipeline is located: Then the frequency of inspection is:\nOnshore ………….. At least once every 3 calendar years, but\nwith intervals not exceeding 39 months.\nOffshore …………… At least once each calendar year, but with\nintervals not exceeding 15 months.\nNavajo responded by contending that from May through July of 2003, those portions of the\npipeline exposed to the atmosphere were inspected, cleaned and painted by a painting contractor.\nRespondent was able to provide invoices from the contractor but acknowledged that it did not\nhave records demonstrating that it had performed a full atmospheric corrosion inspection\nmeeting the requirements of § 195.583(a). Respondent explained that only about 500 feet of the\npipeline was exposed to the atmosphere, the majority of which was associated with pig launchers\nand receivers. Respondent further stated that the pipeline was examined at the time of the\ncleaning and inspection and found to be in good condition, with no evidence of atmospheric\ncorrosion. The company also stated that its personnel regularly inspected the areas of the\npipeline that were exposed to the atmosphere to check for corrosion in the course of routine\npipeline operations and maintenance.\n\n\n\n3\nWhile Respondent is correct about the limited amount of exposed pipe that it has in its system,\nsuch limited quantity has no bearing on the regulatory requirement to keep adequate records.\nNavajo was unable to produce any records during the September 2005 PHMSA inspection to\nconfirm that the required inspections for atmospheric corrosion had been performed for the prior\nthree-year period. The 2003 invoices of a painting contractor, subsequently produced by the\noperator in 2007, do not meet the regulatory requirement for complete records of the atmospheric\ncorrosion inspection that had to be performed by the operator. We acknowledge that Respondent\ncarried out an atmospheric corrosion inspection in 2007; the period relevant to the violation,\nhowever, is the three-year period prior to September of 2005.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by\nfailing to maintain records of atmospheric corrosion monitoring required by 49 C.F.R.\n§ 195.583(a).\nItem 1B of the Notice alleged that Respondent failed to maintain records of examinations of\nexposed portions of the Running Horse pipeline, as required by 49 C.F.R. § 195.569, which\nstates:\n§ 195.569 Do I have to examine exposed portions of buried pipelines?\nWhenever you have knowledge that any portion of a buried pipeline is\nexposed, you must examine the exposed portion for evidence of external\ncorrosion if the pipe is bare, or if the coating is deteriorated. If you find\nexternal corrosion requiring corrective action under §195.585, you must\ninvestigate circumferentially and longitudinally beyond the exposed portion\n(by visual examination, indirect method, or both) to determine whether\nadditional corrosion requiring remedial action exists in the vicinity of the\nexposed portion.\nSpecifically, the Notice alleged that at the time of the 2005 PHMSA inspection, Navajo failed to\nproduce records verifying that it had performed an external corrosion examination of an exposed\nportion of the Running Horse pipeline system that had been exposed to repair a leak occurring on\nOctober 7, 2004.\nIn its Response and during the hearing, Navajo stated that it had performed the required\ninspection at the time of the October 7, 2004 leak, but was unable to produce a contemporaneous\nrecord. Respondent did provide photographs of a four-foot section of pipe that was reported to\nhave been removed from the pipeline in October of 2004. In addition, Respondent provided an\ninspection form for the 2004 leak incident that was dated February 20, 2007.\nThere were no records produced at the September 2005 PHMSA inspection to confirm that\nthe required inspection for external corrosion on exposed buried pipe had been performed for the\n2004 accident. Photographs of the removed pipe furnished to PHMSA in 2007 do not satisfy the\nregulatory requirement to maintain a complete record “with sufficient detail to demonstrate the\nadequacy of corrosion control or that corrosion requiring control measures does not exist,\n” nor\ndoes an inspection form that was filled out in 2007.\n\n\n\n4\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by\nfailing to maintain adequate records of exposed pipeline examinations required by 49 C.F.R.\n§ 195.569.\nItem 1C of the Notice alleged that Respondent failed to maintain records of internal surface\ncorrosion inspections on the pipeline, as required by 49 C.F.R. § 195.579(c), which states:\n§ 195.579 What must I do to mitigate internal corrosion?\n(a) . . .\n(c) Removing pipe. Whenever you remove pipe from a pipeline, you must\ninspect the internal surface of the pipe for evidence of corrosion. If you find\ninternal corrosion requiring corrective action under §195.585, you must\ninvestigate circumferentially and longitudinally beyond the removed pipe (by\nvisual examination, indirect method, or both) to determine whether additional\ncorrosion requiring remedial action exists in the vicinity of the removed pipe.\nSpecifically, the Notice alleged that at the time of the 2005 PHMSA inspection, Navajo failed to\nproduce records verifying that it had performed an inspection of the internal surface of pipe that\nhad been removed on the Running Horse pipeline system following a leak that occurred on\nOctober 7, 2004.\nIn its Response and during the hearing, Navajo stated that it had performed the required\ninspection at the time of the October 7, 2004 leak, and attached an inspection form dated\nFebruary 20, 2007. Respondent also included photographs of a four-foot section of pipe that it\nclaimed had been removed from the pipeline in October of 2004.\nSuch evidence, however, does not satisfy the record-keeping requirements of 49 C.F.R.\n§ 195.589(c). There were no records produced at the September 2005 PHMSA inspection\ndocumenting completion of the required inspection for internal corrosion on exposed pipe in\nconnection with the 2004 accident. Photographs of the removed pipe furnished to PHMSA in\n2007 do not satisfy the regulatory requirement to maintain a complete record “with sufficient\ndetail to demonstrate the adequacy of corrosion control or that corrosion requiring control\nmeasures does not exist,” nor does an inspection form that was filled out in 2007.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by\nfailing to maintain adequate records of internal surface corrosion inspections required by 49\nC.F.R. § 195.579(c).\nItem 1D of the Notice alleged that Respondent failed to maintain records of the identification of\nthe circumstances in which a close-interval survey or comparable testing was necessary to\ndetermine the adequacy of cathodic protection on the Running Horse pipeline. Such steps to\nmonitor external corrosion are required by 49 C.F.R. § 195.573(a)(2), 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 whether\ncathodic protection required by this subpart complies with §195.571:\n\n\n\n5\n(1) . . .\n(2) Identify not more than 2 years after cathodic protection is installed,\nthe circumstances in which a close-interval survey or comparable technology\nis practicable and necessary to accomplish the objectives of paragraph\n10.1.1.3 of NACE Standard RP 0169 (incorporated by reference, see §195.3).\nSpecifically, the Notice alleged that at the time of the 2005 PHMSA inspection, Navajo failed to\nproduce records demonstrating that it had identified the circumstances in which such testing was\nneeded on the Running Horse pipeline system, which Respondent had operated since December\n2002.\nRespondent did not contest the allegation in Item 1D of the Notice. In its Response, Navajo\nexplained that it was in the process of satisfying the requirements of Item 4 of the Proposed\nCompliance Order with respect to the close-interval survey (CIS). Respondent acknowledged\nthe benefits of conducting a CIS and indicated that it had obtained three estimates for conducting\none on the Running Horse Pipeline. In its letter of April 27, 2007, Respondent notified PHMSA\nthat it would perform a CIS in the third quarter of 2007. Respondent provided information in its\nApril 23, 2008 correspondence that it had awarded CORRPRO Companies a contract for\nconducting a CIS of its entire pipeline and later confirmed that it had been completed on\nNovember 3, 2007.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by\nfailing to maintain records of the identification of the circumstances in which a close-interval\nsurvey or comparable technology was practicable and necessary to determine the adequacy of\ncathodic protection on the Running Horse pipeline required by 49 C.F.R. § 195.573(a)(2).\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.404(b)(1), which states:\n§ 195.404 Maps and records.\n(a) . . .\n(b) Each operator shall maintain for at least 3 years daily operating\nrecords that indicate—\n(1) The discharge pressure at each pump station; . . . .\nSpecifically, the Notice alleged that Respondent failed to maintain daily operating records\nindicating the discharge pressure of its two pump stations, except for the 30-day period prior to\nthe inspection.\nRespondent did not contest the allegation in Item 2 of the Notice. In its Response and during the\nhearing, Navajo explained that it had developed an internal guidance document governing the\ngeneration and storage of daily discharge pressure data. The procedure described the process by\nwhich the company ensured that daily discharge pressure data for each pump station were to be\nmaintained and kept available for at least three years. Respondent stated that under its\nprior procedures, these records had been stored in a digitally computerized format that did not\npermit ready retrieval.\n\n\n\n6\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.404(b)(1)\nby failing to maintain daily operating records indicating the discharge pressure of its two pump\nstations, except for the 30-day period prior to the inspection.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) General. Each operator shall prepare and follow for each pipeline\nsystem a manual of written procedures for conducting normal operations and\nmaintenance activities and handling abnormal operations and emergencies.\nThis manual shall be reviewed at intervals not exceeding 15 months, but at\nleast once each calendar year, and appropriate changes made as necessary to\ninsure that the manual is effective. This manual shall be prepared before initial\noperations of a pipeline system commence, and appropriate parts shall be kept\nat locations where operations and maintenance activities are conducted.\nThe Notice alleged that Respondent failed to demonstrate that it had conducted annual reviews of\nits procedural manual for operations, maintenance, and emergencies (O&M Manual) at intervals\nnot exceeding 15 months, but at least once each calendar year. Specifically, it alleged that even\nthough Navajo had been operating the Running Horse pipeline system since December 2002, it\ndid not have records reflecting annual O&M Manual reviews for calendar years prior to 2005.\nIn its Response and at the hearing, Respondent acknowledged that it could not produce the\nrecords and explained that from 2002 to 2005, it had relied on a consulting company to perform\nthe required reviews of its O&M Manual but that Navajo was unable to locate documentation of\nthe consultant’s inspections. Navajo stated that it had now retained a new consultant to\nrestructure the format of the procedural manual so that it met DOT requirements. Respondent\nindicated that it had developed an inspection form to be completed by Navajo personnel\nwhen reviewing the pipeline's O&M Manual, and a copy of the form was attached to the\nFebruary 23, 2007 letter.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(a) by\nfailing to demonstrate that it had conducted annual reviews of its O&M Manual at intervals not\nexceeding 15 months, but at least once each calendar year.\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(c)(13), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) . . .\n(c) Maintenance and normal operations. The manual required by\nparagraph (a) of this section must include procedures for the following to\nprovide safety during maintenance and normal operations: . . .\n\n\n\n7\n(13) Periodically reviewing the work done by operator personnel to\ndetermine the effectiveness of the procedures used in normal operation and\nmaintenance and taking corrective action where deficiencies are found.\nSpecifically, the Notice alleged that Respondent failed to demonstrate that it had periodically\nreviewed the work done by operator personnel to determine the effectiveness of the procedures\nused in normal operation and maintenance and had taken corrective action where deficiencies\nwere found, as required by §195.402(c).\nIn its Response and during the hearing, Navajo acknowledged that it could not produce any\nrecords showing that it had conducted such periodic reviews and explained that it was a small\ncompany with only four employees. As such, its communications among employees and its\nreview of operational processes reflected in the O&M Manual had been informal. Respondent\nstated that it had now developed an inspection form that would be completed by Respondent\npersonnel in the future when reviewing work performed by operator personnel. Such form\nwould be used to assess the effectiveness of the company’s procedures for conducting normal\noperation and maintenance activities, and for taking corrective action when deficiencies were\nfound. Respondent also indicated that it had developed a form to document monthly safety\nmeeting discussions that involved the O&M Manual.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(c)(13)\nby failing to demonstrate that it had periodically reviewed the work done by operator personnel\nto determine the effectiveness of the procedures used in normal operation and maintenance and\nfor taking corrective action where deficiencies were found, as required by §195.402(c).\nItem 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(e)(9), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) . . .\n(e) Emergencies. The manual required by paragraph (a) of this section\nmust include procedures for the following to provide safety when an\nemergency condition occurs: . . .\n(9) Providing for a post accident review of employee activities to\ndetermine whether the procedures were effective in each emergency and\ntaking corrective action where deficiencies are found.\nSpecifically, the Notice alleged that Respondent failed to demonstrate that it had provided for a\npost-accident review of employee activities to determine whether the company’s procedures\nwere effective in each emergency, and that it had taken corrective action where deficiencies were\nfound. At least one accident occurred on this pipeline on October 7, 2004.\nIn its Response and during the hearing, Navajo acknowledged that it did not have a 2004 record\ndocumenting a post-accident review of the October 7, 2004 failure, but stated that meetings were\nheld with its personnel and insurance personnel to review how the company had responded to the\naccident. Respondent provided a document dated March 30, 2007, documenting the post-\naccident review of employee activities for the 2004 accident. Respondent contended that this\n\n\n\n8\n2007 record constituted compliance with the requirement. I disagree. The requirement to create\nand maintain records means the record must be created contemporaneously with the required\nactivity. Creating a record two and one-half years after an accident does not meet the regulatory\nrequirement to maintain complete post-accident records.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(e)(9)\nby failing to demonstrate that it had provided for a post-accident review of employee activities to\ndetermine whether the company’s procedures were effective in each emergency, and that it had\ntaken corrective action where deficiencies were found.\nItem 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.403(b), which states:\n§ 195.403 Emergency response training.\n(a) . . .\n(b) At the intervals not exceeding 15 months, but at least once each\ncalendar year, each operator shall:\n(1) Review with personnel their performance in meeting the objectives of\nthe emergency response training program set forth in paragraph (a) of this\nsection; and\n(2) Make appropriate changes to the emergency response training\nprogram as necessary to ensure that it is effective.\nSpecifically, the Notice alleged that Respondent failed to demonstrate that it had conducted a\nreview with personnel of their performance in meeting the objectives of the company’s\nemergency response training program, and had made appropriate changes to the program as\nnecessary to ensure that it was effective.\nIn its Response and during the hearing, Navajo acknowledged that it could not produce records\nof the emergency response training program personnel reviews, but explained that it believed it\nhad been diligent about ensuring that its employees received adequate and effective emergency\nresponse training and gave examples of the company’s emergency response training and\nexercises. However, training alone does not meet the regulatory requirements of §195.403(b).\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.403(b) by\nfailing to demonstrate that it had conducted a review with personnel of their performance in\nmeeting the objectives of the emergency response training program, and had made appropriate\nchanges to the emergency response training program as necessary to ensure that it was effective.\nItem 7: The Notice alleged that Respondent violated 49 C.F.R. § 195.403(c), which states:\n§ 195.403 Emergency response training.\n(a) . . .\n(c) Each operator shall require and verify that its supervisors maintain a\nthorough knowledge of that portion of the emergency response procedures\nestablished under § 195.402 for which they are responsible to ensure\ncompliance.\n\n\n\n9\nSpecifically, the Notice alleged that Respondent failed to demonstrate that it had required and\nverified that its supervisors maintained a thorough knowledge of that portion of the emergency\nprocedures for which they were responsible.\nIn its Response and during the hearing, Navajo explained that it was committed to effective\nemergency response training for all of its employees, including supervisors, but acknowledged\nthat it did not document compliance with this requirement during the relevant time period.\nRespondent provided copies of the forms it had begun using to document this requirement.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.403(c) by\nfailing to demonstrate that it had required and verified that its supervisors maintained a thorough\nknowledge of that portion of the emergency procedures for which they were responsible.\nItem 9: 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 whether\ncathodic protection required by this subpart complies with §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 those\nintervals are impractical for separately protected short sections of bare or\nineffectively coated pipelines, testing may be done at least once every 3\ncalendar years, but with intervals not exceeding 39 months.\nSpecifically, the Notice alleged that Respondent failed to provide adequate cathodic protection\nfor the Running Horse pipeline, in accordance with §195.573(a)(1). The applicable criteria for\ncathodic protection are contained in paragraphs 6.2 and 6.3 of NACE Standard RP0169-96\n(incorporated by reference). The criteria in paragraph 6.2 include \"[a] negative polarized\npotential (see definitions in Section 2) of at least 850 millivolts (mv) relative to a saturated\ncopper/copper sulfate reference electrode.\" Other alternative criteria are listed in RP0169-96,\nbut Respondent confirmed that it was not utilizing the alternative criteria. Respondent’s records\nshowed that the 850 mv criteria were not being met consistently over the three calendar years\npreceding the inspection.\nIn its Response and during the hearing, Navajo provided its cathodic protection survey records\nfor 2004, 2005, and 2006, and contended that they did not support the allegations in the Notice.\nRespondent contended that the 2004 survey showed only one low pipe-to-soil reading and that\nthe 2005 survey showed low readings at block valves resulting from block valve repairs.\nRespondent further stated that it did not believe the low pipe-to-soil readings in the 2005 survey\nwere representative of an overall level of cathodic protection on the line and stated that the 2006\nsurvey showed no low pipe-to-soil readings after repair of an anode bed.\nI find this argument unpersuasive. According to Respondent’s own records, the 2003 annual\nsurvey included over 30 readings below the -850 mv criteria, out of approximately 85 total\nreadings. The 2004 survey indicated two readings below the criteria, although there were several\nreadings that were very close to -850-860 mv. For the 2005 annual survey, there were over 20\nlow readings out of a total of approximately 94. During the September 2005 PHMSA inspection,\n\n\n\n10\nthere were approximately 11 readings made in the field. Six of the 11 were below the criteria,\nwith low readings at block valves but also at locations where there were no valves. The 2006\nannual survey data that Respondent produced subsequent to the 2005 PHMSA inspection were\nnot during the relevant period 2003-2005 and have no bearing on this violation.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(a)(1)\nby failing to provide adequate cathodic protection for the Running Horse pipeline, in accordance\nwith §195.573(a)(1).\nItem 10: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(c), which states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) . . .\n(c) Rectifiers and other devices. You must electrically check for proper\nperformance each device in the first column at the frequency stated in the\nsecond column.\nDevice Check frequency\nRectifier …………………….\nReverse current switch.\nDiode.\nInterference bond whose failure\nwould jeopardize structural\nprotection.\nAt least six times each calendar year,\nbut with intervals not exceeding 2½\nmonths.\nOther interference bond ………. At least once each calendar year, but\nwith intervals not exceeding 15\nmonths.\nSpecifically, the Notice alleged that Navajo: (1) failed to maintain records demonstrating that\nelectrical checks of its rectifiers were conducted at least six times each calendar year, but with\nintervals not exceeding 2½ months, due to its failure to record the day of the month for part of\n2004 and all of 2005; and (2) failed to demonstrate that more than four electrical checks were\nconducted on the rectifiers in 2003.\nIn its Response and during the hearing, Navajo acknowledged that only four electrical checks\nwere conducted in 2003. However, Respondent contested the allegation that the day of the\nmonth that rectifiers were read was not reflected in the 2004 and 2005 records and provided\nrectifier inspection data showing inspection dates for 2003-2005. These records consisted of\ntables of individual rectifier readings with handwritten entries, all of which included the day,\nmonth and year of the check. Having reviewed these records, I find that Respondent did\ndemonstrate that it conducted electrical checks of its rectifiers at least six times in calendar years\n2004 and 2005, with intervals not exceeding 2½ months. I further find, however, that\n\n\n\n11\nRespondent failed to provide records demonstrating that more than four electrical checks were\nconducted on the rectifiers in 2003.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(c) by\nfailing to demonstrate that more than four electrical checks were conducted on the rectifiers in\n2003.\nItem 11: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(e), which states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) . . .\n(e) Corrective action. You must correct any identified deficiency in\ncorrosion control as required by §195.401(b). However, if the deficiency\ninvolves a pipeline in an integrity management program under §195.452, you\nmust correct the deficiency as required by §195.452(h).\nThe Notice alleged that Respondent failed to correct, within a reasonable time, an identified\ndeficiency in its corrosion control system that could adversely affect the safe operation of the\npipeline, as required by 49 C.F.R. § 195.401(b), which states:\n§ 195.401 General requirements.\n(a) . . .\n(b) Whenever an operator discovers any condition that could adversely\naffect the safe operation of its pipeline system, it shall correct it within a\nreasonable time. . . .\nSpecifically, the Notice alleged that Navajo failed to correct a deficiency in its corrosion control\nsystem, in that Rectifier 58 was not operating from August, 2003 until May of 2005, a total of 20\nmonths.\nIn its Response and during the hearing, Navajo acknowledged that Rectifier 58 was not operating\nfor the cited period of time but contended that there was no deficiency in its corrosion control\nsystem. The company contended that because Rectifier 61 was operating approximately three\nmiles away during this period and pipe-to-soil readings taken subsequently met applicable\ncriteria, external corrosion was being controlled. Under §195.573(e), however, deficiencies in\ncorrosion control must be promptly corrected when identified. Respondent’s argument that pipe-\nto-soil readings were sufficient is not persuasive. The pipe-to-soil data for both the March 2004\nand May 2005 annual surveys show values ranging from -530 mv to -850 mv in the vicinity of\nMile Post (MP) 58, and -780 mv in the area of MP 61.\nAfter considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(e) by\nfailing to correct, within a reasonable time, an identified deficiency in its corrosion control\nsystem, in that Rectifier 58 was not operating from August 2003 until May 2005.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\n\n\n\n12\nASSESSMENT OF PENALTY\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 $230,000 for the violations cited above.\nWith respect to Item 1, the Notice proposed a civil penalty of $21,000 for Respondent’s four\nviolations of 49 C.F.R. § 195.589(c), for failing to maintain records of atmospheric corrosion\ninspections, exposed pipe examinations, internal surface corrosion inspections, and close-interval\nsurvey determinations. In its Response and during the hearing, Navajo explained that it had\nperformed a fully documented inspection of the exposed portions of the pipe for atmospheric\ncorrosion in 2007, developed inspection forms for exposed pipe and internal surface corrosion\ninspections, and performed a close-interval survey in 2007. Respondent further stated that no\nsignificant corrosion or other safety threats had occurred as a result of the non-compliance.\nFinally, with respect to the assessment of penalties generally in this case, Respondent estimated\nthat it would spend up to $220,000 to take corrective actions and asserted that the imposition of\ncivil penalties would be inconsistent with other Federal objectives in light of the economic status\nof the Navajo Nation.\nPerforming documented inspections is a key part of pipeline safety—particularly those\ninspections related to an operator’s corrosion control program. Effective corrosion control\ndepends on knowing how the adequacy of specific corrosion control measures, such as cathodic\nprotection, is trending over time. Maintaining complete and accurate records is essential for\nRespondent’s managers to be able to perform oversight of the work performed by personnel and\ncontractors. While it is fortunate that no failures occurred, this does not negate the seriousness of\nthe non-compliance.\nWith respect to financial hardship, Respondent provided no certified final statements or other\ninformation demonstrating that the proposed penalty would affect its ability to continue in\nbusiness. Moreover, to ensure public safety, any company, municipality, or tribal entity that is in\nthe business of transporting hazardous products by pipeline must have sufficient resources to\noperate in a manner consistent with applicable regulations. Respondent has provided no\ninformation that would warrant a reduction in the civil penalty amount proposed in the Notice for\nthis Item. Accordingly, having reviewed the record and considered the assessment criteria, I\nassess Respondent a civil penalty of $21,000 for violating 49 C.F.R. § 195.589(c).\nWith respect to Item 2, the Notice proposed a civil penalty of $28,000 for Respondent’s\nviolation of 49 C.F.R. § 195.404(b)(1), for failing to maintain daily operating records indicating\nthe discharge pressure of its two pump stations, except for the 30-day period prior to the ","truncated":true,"body_characters":78817}