# NAVAJO NATION OIL AND GAS COMPANY — Notice of Probable Violation

- **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:** Not available
- **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).
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- **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.

Official case documents:

420065029_Closure_03192014.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Closure_03192014.pdf

420065029_Closure_03192014_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Closure_03192014_text.pdf

420065029_Consent Agreement_09022011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Agreement_09022011.pdf

420065029_Consent Agreement_09022011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Agreement_09022011_text.pdf

420065029_Consent Order_09022011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Order_09022011.pdf

420065029_Consent Order_09022011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Consent%20Order_09022011_text.pdf

420065029_Final Order _03172010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Final%20Order%20_03172010.pdf

420065029_Final Order _03172010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065029/420065029_Final%20Order%20_03172010_text.pdf

420065029_Consent Order_09022011_text.pdf

SEP 02 2011
Mr. Wilson Groen
President and CEO
Navajo Nation Oil & Gas Company, Inc.
P.O. Box 4439
Window Rock, AZ 86515
Re: CPF No. 4-2006-5029
Dear Mr. Groen:
Enclosed please find the Consent Order incorporating the terms of the Consent Agreement that
you signed on August 18, 2011. Service of the Consent Order and Consent Agreement is
complete upon mailing as provided under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Jeffrey D. Wiese
Associate Administrator
for Pipeline Safety
Enclosures
cc: Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, Pipeline Safety
Mr. Rod Seeley, Director, Southwest Region, PHMSA
Ms. Susan A. Olenchuk, Counsel for NNOGC
Van Ness Feldman P.C., 1050 Thomas Jefferson St. NW, Washington, D.C. 20007
CERTIFIED MAIL – RETURN RECEIPT REQUESTED[7005 1160 0001 0075 9893]



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
______________________________________
In the Matter of )
Navajo Nation Oil & Gas Company, Inc., ) CPF No. 4-2006-5029
A Federal corporation, )
)
)
)
Respondent. )
______________________________________ )
CONSENT ORDER
By letter dated March 17, 2010, pursuant to 49 U.S.C. § 60122 and 49 C.F.R. § 190.213, the
Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety
(OPS), issued a Final Order to Navajo Nation Oil & Gas Company, Inc. (NNOGC or
Respondent) in this matter. The Final Order determined that NNOGC committed violations of
49 C.F.R. Part 195, assessed a civil penalty of $212,000 for the violations, and found that
NNOGC had completed corrective action to remediate the violations.
On April 30, 2010, pursuant to 49 C.F.R. § 190.215, NNOGC filed a petition for reconsideration
of the Final Order, requesting, in part, that PHMSA give consideration to NNOGC’s status as a
Federally chartered corporation under Section 17 of the Indian Reorganization Act, 25 U.S.C.
§ 477. By separate correspondence, NNOGC proposed to undertake specific additional safety
projects in order to settle this matter.
In recognition of the unique legal and political relationship the United States has with Indian
tribal governments, established through and confirmed by the Constitution of the United States,
treaties, statutes, executive orders, and judicial decisions, PHMSA has engaged in good faith
settlement discussions with Respondent regarding its proposal to undertake additional safety
projects, resulting in the attached Consent Agreement. The Consent Agreement is hereby
approved and incorporated by reference into this Order. Respondent is ordered to comply with
the terms of the Consent Agreement, effective immediately. The terms and conditions of this
Consent Order are effective upon receipt.
____________________________________ _________________
Jeffrey D. Wiese Date Issued
Associate Administrator
for Pipeline Safety

420065029_Final Order _03172010_text.pdf

MAR 17 2010
Mr. Wilson Groen
President and CEO
Navajo Nation Oil & Gas Company, Inc.
P.O. Box 4439
Window Rock, AZ 86515
Re: CPF No. 4-2006-5029
Dear Mr. Groen:
Enclosed is the Final Order issued in the above-referenced case. It makes findings of violation
and assesses a reduced civil penalty of $212,000. It further finds that you have completed the
actions specified in the Notice required to comply with the pipeline safety regulations. The
penalty payment terms are set forth in the Final Order. When the civil penalty has been paid, this
enforcement action will be closed. Service of the Final Order by certified mail is deemed
effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Jeffrey D. Wiese
Associate Administrator
for Pipeline Safety
Enclosure
cc: Ms. Patricia Godley, Esq., Counsel for Navajo Nation Oil & Gas Company
Van Ness Feldman, P.C.
1050 Thomas Jefferson Street, NW, Suite 700
Washington, DC 20007
Mr. Rod Seeley, Director, Southwest Region, PHMSA
CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 5156]



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
____________________________________
In the Matter of )
Navajo Nation Oil & Gas Company, Inc., ) CPF No. 4-2006-5029
A Federal corporation, )
)
)
)
Respondent. )
____________________________________)
FINAL ORDER
On September 12-15, 2005, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and
Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),
conducted an on-site pipeline safety inspection of the facilities and records of Navajo Nation Oil
& Gas Company, Inc.’s (Navajo’s or Respondent’s) Running Horse pipeline system. The
Running Horse system consists of approximately 88 miles of 16-inch diameter crude oil pipeline
running from Utah to New Mexico.
As a result of the inspection, the Director, Southwest Region, PHMSA (Director), issued to
Respondent, by letter dated June 1, 2006, a Notice of Probable Violation, Proposed Civil
Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the
Notice proposed finding that Respondent had committed various violations of 49 C.F.R. Part
195, assessing a civil penalty of $230,000 for the alleged violations, and ordering Respondent to
take certain measures to correct the alleged violations. The Notice also proposed finding that
Navajo had committed another probable violation of 49 C.F.R. Part 195 and warning the
company to take appropriate corrective action to address it or be subject to future enforcement
action.
After requesting and receiving an extension of time, Respondent responded to the Notice by
letter dated July 14, 2006 (Response). Respondent requested an informal telephonic hearing. On
February 23, 2007, Respondent submitted further response materials. An informal hearing was
held via telephone conference on March 6, 2007, with Larry White, Attorney, Office of Chief
Counsel, PHMSA, presiding. Respondent was represented by counsel during the hearing. After
the hearing, Respondent provided further materials for the record on April 5, 2007, and
December 5, 2008.



2
FINDINGS OF VIOLATION
The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:
Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.589(c), which states:
§ 195.589 What corrosion control information do I have to maintain?
(a) . . .
(c) You must maintain a record of each analysis, check, demonstration,
examination, inspection, investigation, review, survey, and test required by
this subpart in sufficient detail to demonstrate the adequacy of corrosion
control measures or that corrosion requiring control measures does not exist.
You must retain these records for at least 5 years, except that records related
to §§ 195.569, 195.573(a) and (b), and 195.579(b)(3) and (c) must be
retained for as long as the pipeline remains in service.
Item 1A of the Notice alleged that Respondent failed to maintain records of atmospheric
corrosion monitoring for the three-year period prior to the September 2005 PHMSA inspection.
Periodic monitoring for atmospheric corrosion is required by 49 C.F.R. § 195.583(a), which
states:
§ 195.583 What must I do to monitor atmospheric corrosion control?
(a) You must inspect each pipeline or portion of pipeline that is exposed
to the atmosphere for evidence of atmospheric corrosion as follows:
If the pipeline is located: Then the frequency of inspection is:
Onshore ………….. At least once every 3 calendar years, but
with intervals not exceeding 39 months.
Offshore …………… At least once each calendar year, but with
intervals not exceeding 15 months.
Navajo responded by contending that from May through July of 2003, those portions of the
pipeline exposed to the atmosphere were inspected, cleaned and painted by a painting contractor.
Respondent was able to provide invoices from the contractor but acknowledged that it did not
have records demonstrating that it had performed a full atmospheric corrosion inspection
meeting the requirements of § 195.583(a). Respondent explained that only about 500 feet of the
pipeline was exposed to the atmosphere, the majority of which was associated with pig launchers
and receivers. Respondent further stated that the pipeline was examined at the time of the
cleaning and inspection and found to be in good condition, with no evidence of atmospheric
corrosion. The company also stated that its personnel regularly inspected the areas of the
pipeline that were exposed to the atmosphere to check for corrosion in the course of routine
pipeline operations and maintenance.



3
While Respondent is correct about the limited amount of exposed pipe that it has in its system,
such limited quantity has no bearing on the regulatory requirement to keep adequate records.
Navajo was unable to produce any records during the September 2005 PHMSA inspection to
confirm that the required inspections for atmospheric corrosion had been performed for the prior
three-year period. The 2003 invoices of a painting contractor, subsequently produced by the
operator in 2007, do not meet the regulatory requirement for complete records of the atmospheric
corrosion inspection that had to be performed by the operator. We acknowledge that Respondent
carried out an atmospheric corrosion inspection in 2007; the period relevant to the violation,
however, is the three-year period prior to September of 2005.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by
failing to maintain records of atmospheric corrosion monitoring required by 49 C.F.R.
§ 195.583(a).
Item 1B of the Notice alleged that Respondent failed to maintain records of examinations of
exposed portions of the Running Horse pipeline, as required by 49 C.F.R. § 195.569, which
states:
§ 195.569 Do I have to examine exposed portions of buried pipelines?
Whenever you have knowledge that any portion of a buried pipeline is
exposed, you must examine the exposed portion for evidence of external
corrosion if the pipe is bare, or if the coating is deteriorated. If you find
external corrosion requiring corrective action under §195.585, you must
investigate circumferentially and longitudinally beyond the exposed portion
(by visual examination, indirect method, or both) to determine whether
additional corrosion requiring remedial action exists in the vicinity of the
exposed portion.
Specifically, the Notice alleged that at the time of the 2005 PHMSA inspection, Navajo failed to
produce records verifying that it had performed an external corrosion examination of an exposed
portion of the Running Horse pipeline system that had been exposed to repair a leak occurring on
October 7, 2004.
In its Response and during the hearing, Navajo stated that it had performed the required
inspection at the time of the October 7, 2004 leak, but was unable to produce a contemporaneous
record. Respondent did provide photographs of a four-foot section of pipe that was reported to
have been removed from the pipeline in October of 2004. In addition, Respondent provided an
inspection form for the 2004 leak incident that was dated February 20, 2007.
There were no records produced at the September 2005 PHMSA inspection to confirm that
the required inspection for external corrosion on exposed buried pipe had been performed for the
2004 accident. Photographs of the removed pipe furnished to PHMSA in 2007 do not satisfy the
regulatory requirement to maintain a complete record “with sufficient detail to demonstrate the
adequacy of corrosion control or that corrosion requiring control measures does not exist,
” nor
does an inspection form that was filled out in 2007.



4
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by
failing to maintain adequate records of exposed pipeline examinations required by 49 C.F.R.
§ 195.569.
Item 1C of the Notice alleged that Respondent failed to maintain records of internal surface
corrosion inspections on the pipeline, as required by 49 C.F.R. § 195.579(c), which states:
§ 195.579 What must I do to mitigate internal corrosion?
(a) . . .
(c) Removing pipe. Whenever you remove pipe from a pipeline, you must
inspect the internal surface of the pipe for evidence of corrosion. If you find
internal corrosion requiring corrective action under §195.585, you must
investigate circumferentially and longitudinally beyond the removed pipe (by
visual examination, indirect method, or both) to determine whether additional
corrosion requiring remedial action exists in the vicinity of the removed pipe.
Specifically, the Notice alleged that at the time of the 2005 PHMSA inspection, Navajo failed to
produce records verifying that it had performed an inspection of the internal surface of pipe that
had been removed on the Running Horse pipeline system following a leak that occurred on
October 7, 2004.
In its Response and during the hearing, Navajo stated that it had performed the required
inspection at the time of the October 7, 2004 leak, and attached an inspection form dated
February 20, 2007. Respondent also included photographs of a four-foot section of pipe that it
claimed had been removed from the pipeline in October of 2004.
Such evidence, however, does not satisfy the record-keeping requirements of 49 C.F.R.
§ 195.589(c). There were no records produced at the September 2005 PHMSA inspection
documenting completion of the required inspection for internal corrosion on exposed pipe in
connection with the 2004 accident. Photographs of the removed pipe furnished to PHMSA in
2007 do not satisfy the regulatory requirement to maintain a complete record “with sufficient
detail to demonstrate the adequacy of corrosion control or that corrosion requiring control
measures does not exist,” nor does an inspection form that was filled out in 2007.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by
failing to maintain adequate records of internal surface corrosion inspections required by 49
C.F.R. § 195.579(c).
Item 1D of the Notice alleged that Respondent failed to maintain records of the identification of
the circumstances in which a close-interval survey or comparable testing was necessary to
determine the adequacy of cathodic protection on the Running Horse pipeline. Such steps to
monitor external corrosion are required by 49 C.F.R. § 195.573(a)(2), which states:
§ 195.573 What must I do to monitor external corrosion control?
(a) Protected pipelines. You must do the following to determine whether
cathodic protection required by this subpart complies with §195.571:



5
(1) . . .
(2) Identify not more than 2 years after cathodic protection is installed,
the circumstances in which a close-interval survey or comparable technology
is practicable and necessary to accomplish the objectives of paragraph
10.1.1.3 of NACE Standard RP 0169 (incorporated by reference, see §195.3).
Specifically, the Notice alleged that at the time of the 2005 PHMSA inspection, Navajo failed to
produce records demonstrating that it had identified the circumstances in which such testing was
needed on the Running Horse pipeline system, which Respondent had operated since December
2002.
Respondent did not contest the allegation in Item 1D of the Notice. In its Response, Navajo
explained that it was in the process of satisfying the requirements of Item 4 of the Proposed
Compliance Order with respect to the close-interval survey (CIS). Respondent acknowledged
the benefits of conducting a CIS and indicated that it had obtained three estimates for conducting
one on the Running Horse Pipeline. In its letter of April 27, 2007, Respondent notified PHMSA
that it would perform a CIS in the third quarter of 2007. Respondent provided information in its
April 23, 2008 correspondence that it had awarded CORRPRO Companies a contract for
conducting a CIS of its entire pipeline and later confirmed that it had been completed on
November 3, 2007.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by
failing to maintain records of the identification of the circumstances in which a close-interval
survey or comparable technology was practicable and necessary to determine the adequacy of
cathodic protection on the Running Horse pipeline required by 49 C.F.R. § 195.573(a)(2).
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.404(b)(1), which states:
§ 195.404 Maps and records.
(a) . . .
(b) Each operator shall maintain for at least 3 years daily operating
records that indicate—
(1) The discharge pressure at each pump station; . . . .
Specifically, the Notice alleged that Respondent failed to maintain daily operating records
indicating the discharge pressure of its two pump stations, except for the 30-day period prior to
the inspection.
Respondent did not contest the allegation in Item 2 of the Notice. In its Response and during the
hearing, Navajo explained that it had developed an internal guidance document governing the
generation and storage of daily discharge pressure data. The procedure described the process by
which the company ensured that daily discharge pressure data for each pump station were to be
maintained and kept available for at least three years. Respondent stated that under its
prior procedures, these records had been stored in a digitally computerized format that did not
permit ready retrieval.



6
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.404(b)(1)
by failing to maintain daily operating records indicating the discharge pressure of its two pump
stations, except for the 30-day period prior to the inspection.
Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states:
§ 195.402 Procedural manual for operations, maintenance, and
emergencies.
(a) General. Each operator shall prepare and follow for each pipeline
system a manual of written procedures for conducting normal operations and
maintenance activities and handling abnormal operations and emergencies.
This manual shall be reviewed at intervals not exceeding 15 months, but at
least once each calendar year, and appropriate changes made as necessary to
insure that the manual is effective. This manual shall be prepared before initial
operations of a pipeline system commence, and appropriate parts shall be kept
at locations where operations and maintenance activities are conducted.
The Notice alleged that Respondent failed to demonstrate that it had conducted annual reviews of
its procedural manual for operations, maintenance, and emergencies (O&M Manual) at intervals
not exceeding 15 months, but at least once each calendar year. Specifically, it alleged that even
though Navajo had been operating the Running Horse pipeline system since December 2002, it
did not have records reflecting annual O&M Manual reviews for calendar years prior to 2005.
In its Response and at the hearing, Respondent acknowledged that it could not produce the
records and explained that from 2002 to 2005, it had relied on a consulting company to perform
the required reviews of its O&M Manual but that Navajo was unable to locate documentation of
the consultant’s inspections. Navajo stated that it had now retained a new consultant to
restructure the format of the procedural manual so that it met DOT requirements. Respondent
indicated that it had developed an inspection form to be completed by Navajo personnel
when reviewing the pipeline's O&M Manual, and a copy of the form was attached to the
February 23, 2007 letter.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(a) by
failing to demonstrate that it had conducted annual reviews of its O&M Manual at intervals not
exceeding 15 months, but at least once each calendar year.
Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(c)(13), which states:
§ 195.402 Procedural manual for operations, maintenance, and
emergencies.
(a) . . .
(c) Maintenance and normal operations. The manual required by
paragraph (a) of this section must include procedures for the following to
provide safety during maintenance and normal operations: . . .



7
(13) Periodically reviewing the work done by operator personnel to
determine the effectiveness of the procedures used in normal operation and
maintenance and taking corrective action where deficiencies are found.
Specifically, the Notice alleged that Respondent failed to demonstrate that it had periodically
reviewed the work done by operator personnel to determine the effectiveness of the procedures
used in normal operation and maintenance and had taken corrective action where deficiencies
were found, as required by §195.402(c).
In its Response and during the hearing, Navajo acknowledged that it could not produce any
records showing that it had conducted such periodic reviews and explained that it was a small
company with only four employees. As such, its communications among employees and its
review of operational processes reflected in the O&M Manual had been informal. Respondent
stated that it had now developed an inspection form that would be completed by Respondent
personnel in the future when reviewing work performed by operator personnel. Such form
would be used to assess the effectiveness of the company’s procedures for conducting normal
operation and maintenance activities, and for taking corrective action when deficiencies were
found. Respondent also indicated that it had developed a form to document monthly safety
meeting discussions that involved the O&M Manual.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(c)(13)
by failing to demonstrate that it had periodically reviewed the work done by operator personnel
to determine the effectiveness of the procedures used in normal operation and maintenance and
for taking corrective action where deficiencies were found, as required by §195.402(c).
Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(e)(9), which states:
§ 195.402 Procedural manual for operations, maintenance, and
emergencies.
(a) . . .
(e) Emergencies. The manual required by paragraph (a) of this section
must include procedures for the following to provide safety when an
emergency condition occurs: . . .
(9) Providing for a post accident review of employee activities to
determine whether the procedures were effective in each emergency and
taking corrective action where deficiencies are found.
Specifically, the Notice alleged that Respondent failed to demonstrate that it had provided for a
post-accident review of employee activities to determine whether the company’s procedures
were effective in each emergency, and that it had taken corrective action where deficiencies were
found. At least one accident occurred on this pipeline on October 7, 2004.
In its Response and during the hearing, Navajo acknowledged that it did not have a 2004 record
documenting a post-accident review of the October 7, 2004 failure, but stated that meetings were
held with its personnel and insurance personnel to review how the company had responded to the
accident. Respondent provided a document dated March 30, 2007, documenting the post-
accident review of employee activities for the 2004 accident. Respondent contended that this



8
2007 record constituted compliance with the requirement. I disagree. The requirement to create
and maintain records means the record must be created contemporaneously with the required
activity. Creating a record two and one-half years after an accident does not meet the regulatory
requirement to maintain complete post-accident records.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(e)(9)
by failing to demonstrate that it had provided for a post-accident review of employee activities to
determine whether the company’s procedures were effective in each emergency, and that it had
taken corrective action where deficiencies were found.
Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.403(b), which states:
§ 195.403 Emergency response training.
(a) . . .
(b) At the intervals not exceeding 15 months, but at least once each
calendar year, each operator shall:
(1) Review with personnel their performance in meeting the objectives of
the emergency response training program set forth in paragraph (a) of this
section; and
(2) Make appropriate changes to the emergency response training
program as necessary to ensure that it is effective.
Specifically, the Notice alleged that Respondent failed to demonstrate that it had conducted a
review with personnel of their performance in meeting the objectives of the company’s
emergency response training program, and had made appropriate changes to the program as
necessary to ensure that it was effective.
In its Response and during the hearing, Navajo acknowledged that it could not produce records
of the emergency response training program personnel reviews, but explained that it believed it
had been diligent about ensuring that its employees received adequate and effective emergency
response training and gave examples of the company’s emergency response training and
exercises. However, training alone does not meet the regulatory requirements of §195.403(b).
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.403(b) by
failing to demonstrate that it had conducted a review with personnel of their performance in
meeting the objectives of the emergency response training program, and had made appropriate
changes to the emergency response training program as necessary to ensure that it was effective.
Item 7: The Notice alleged that Respondent violated 49 C.F.R. § 195.403(c), which states:
§ 195.403 Emergency response training.
(a) . . .
(c) Each operator shall require and verify that its supervisors maintain a
thorough knowledge of that portion of the emergency response procedures
established under § 195.402 for which they are responsible to ensure
compliance.



9
Specifically, the Notice alleged that Respondent failed to demonstrate that it had required and
verified that its supervisors maintained a thorough knowledge of that portion of the emergency
procedures for which they were responsible.
In its Response and during the hearing, Navajo explained that it was committed to effective
emergency response training for all of its employees, including supervisors, but acknowledged
that it did not document compliance with this requirement during the relevant time period.
Respondent provided copies of the forms it had begun using to document this requirement.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.403(c) by
failing to demonstrate that it had required and verified that its supervisors maintained a thorough
knowledge of that portion of the emergency procedures for which they were responsible.
Item 9: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1), which states:
§ 195.573 What must I do to monitor external corrosion control?
(a) Protected pipelines. You must do the following to determine whether
cathodic protection required by this subpart complies with §195.571:
(1) Conduct tests on the protected pipeline at least once each calendar
year, but with intervals not exceeding 15 months. However, if tests at those
intervals are impractical for separately protected short sections of bare or
ineffectively coated pipelines, testing may be done at least once every 3
calendar years, but with intervals not exceeding 39 months.
Specifically, the Notice alleged that Respondent failed to provide adequate cathodic protection
for the Running Horse pipeline, in accordance with §195.573(a)(1). The applicable criteria for
cathodic protection are contained in paragraphs 6.2 and 6.3 of NACE Standard RP0169-96
(incorporated by reference). The criteria in paragraph 6.2 include "[a] negative polarized
potential (see definitions in Section 2) of at least 850 millivolts (mv) relative to a saturated
copper/copper sulfate reference electrode." Other alternative criteria are listed in RP0169-96,
but Respondent confirmed that it was not utilizing the alternative criteria. Respondent’s records
showed that the 850 mv criteria were not being met consistently over the three calendar years
preceding the inspection.
In its Response and during the hearing, Navajo provided its cathodic protection survey records
for 2004, 2005, and 2006, and contended that they did not support the allegations in the Notice.
Respondent contended that the 2004 survey showed only one low pipe-to-soil reading and that
the 2005 survey showed low readings at block valves resulting from block valve repairs.
Respondent further stated that it did not believe the low pipe-to-soil readings in the 2005 survey
were representative of an overall level of cathodic protection on the line and stated that the 2006
survey showed no low pipe-to-soil readings after repair of an anode bed.
I find this argument unpersuasive. According to Respondent’s own records, the 2003 annual
survey included over 30 readings below the -850 mv criteria, out of approximately 85 total
readings. The 2004 survey indicated two readings below the criteria, although there were several
readings that were very close to -850-860 mv. For the 2005 annual survey, there were over 20
low readings out of a total of approximately 94. During the September 2005 PHMSA inspection,



10
there were approximately 11 readings made in the field. Six of the 11 were below the criteria,
with low readings at block valves but also at locations where there were no valves. The 2006
annual survey data that Respondent produced subsequent to the 2005 PHMSA inspection were
not during the relevant period 2003-2005 and have no bearing on this violation.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(a)(1)
by failing to provide adequate cathodic protection for the Running Horse pipeline, in accordance
with §195.573(a)(1).
Item 10: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(c), which states:
§ 195.573 What must I do to monitor external corrosion control?
(a) . . .
(c) Rectifiers and other devices. You must electrically check for proper
performance each device in the first column at the frequency stated in the
second column.
Device Check frequency
Rectifier …………………….
Reverse current switch.
Diode.
Interference bond whose failure
would jeopardize structural
protection.
At least six times each calendar year,
but with intervals not exceeding 2½
months.
Other interference bond ………. At least once each calendar year, but
with intervals not exceeding 15
months.
Specifically, the Notice alleged that Navajo: (1) failed to maintain records demonstrating that
electrical checks of its rectifiers were conducted at least six times each calendar year, but with
intervals not exceeding 2½ months, due to its failure to record the day of the month for part of
2004 and all of 2005; and (2) failed to demonstrate that more than four electrical checks were
conducted on the rectifiers in 2003.
In its Response and during the hearing, Navajo acknowledged that only four electrical checks
were conducted in 2003. However, Respondent contested the allegation that the day of the
month that rectifiers were read was not reflected in the 2004 and 2005 records and provided
rectifier inspection data showing inspection dates for 2003-2005. These records consisted of
tables of individual rectifier readings with handwritten entries, all of which included the day,
month and year of the check. Having reviewed these records, I find that Respondent did
demonstrate that it conducted electrical checks of its rectifiers at least six times in calendar years
2004 and 2005, with intervals not exceeding 2½ months. I further find, however, that



11
Respondent failed to provide records demonstrating that more than four electrical checks were
conducted on the rectifiers in 2003.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(c) by
failing to demonstrate that more than four electrical checks were conducted on the rectifiers in
2003.
Item 11: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(e), which states:
§ 195.573 What must I do to monitor external corrosion control?
(a) . . .
(e) Corrective action. You must correct any identified deficiency in
corrosion control as required by §195.401(b). However, if the deficiency
involves a pipeline in an integrity management program under §195.452, you
must correct the deficiency as required by §195.452(h).
The Notice alleged that Respondent failed to correct, within a reasonable time, an identified
deficiency in its corrosion control system that could adversely affect the safe operation of the
pipeline, as required by 49 C.F.R. § 195.401(b), which states:
§ 195.401 General requirements.
(a) . . .
(b) Whenever an operator discovers any condition that could adversely
affect the safe operation of its pipeline system, it shall correct it within a
reasonable time. . . .
Specifically, the Notice alleged that Navajo failed to correct a deficiency in its corrosion control
system, in that Rectifier 58 was not operating from August, 2003 until May of 2005, a total of 20
months.
In its Response and during the hearing, Navajo acknowledged that Rectifier 58 was not operating
for the cited period of time but contended that there was no deficiency in its corrosion control
system. The company contended that because Rectifier 61 was operating approximately three
miles away during this period and pipe-to-soil readings taken subsequently met applicable
criteria, external corrosion was being controlled. Under §195.573(e), however, deficiencies in
corrosion control must be promptly corrected when identified. Respondent’s argument that pipe-
to-soil readings were sufficient is not persuasive. The pipe-to-soil data for both the March 2004
and May 2005 annual surveys show values ranging from -530 mv to -850 mv in the vicinity of
Mile Post (MP) 58, and -780 mv in the area of MP 61.
After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(e) by
failing to correct, within a reasonable time, an identified deficiency in its corrosion control
system, in that Rectifier 58 was not operating from August 2003 until May 2005.
These findings of violation will be considered prior offenses in any subsequent enforcement
action taken against Respondent.



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ASSESSMENT OF PENALTY
In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I
must consider the following criteria: the nature, circumstances, and gravity of the violation,
including adverse impact on the environment; the degree of Respondent’s culpability; the history
of Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that
the penalty may have on its ability to continue doing business; and the good faith of Respondent
in attempting to comply with the pipeline safety regulations. In addition, I may consider the
economic benefit gained from the violation without any reduction because of subsequent
damages, and such other matters as justice may require. The Notice proposed a total civil
penalty of $230,000 for the violations cited above.
With respect to Item 1, the Notice proposed a civil penalty of $21,000 for Respondent’s four
violations of 49 C.F.R. § 195.589(c), for failing to maintain records of atmospheric corrosion
inspections, exposed pipe examinations, internal surface corrosion inspections, and close-interval
survey determinations. In its Response and during the hearing, Navajo explained that it had
performed a fully documented inspection of the exposed portions of the pipe for atmospheric
corrosion in 2007, developed inspection forms for exposed pipe and internal surface corrosion
inspections, and performed a close-interval survey in 2007. Respondent further stated that no
significant corrosion or other safety threats had occurred as a result of the non-compliance.
Finally, with respect to the assessment of penalties generally in this case, Respondent estimated
that it would spend up to $220,000 to take corrective actions and asserted that the imposition of
civil penalties would be inconsistent with other Federal objectives in light of the economic status
of the Navajo Nation.
Performing documented inspections is a key part of pipeline safety—particularly those
inspections related to an operator’s corrosion control program. Effective corrosion control
depends on knowing how the adequacy of specific corrosion control measures, such as cathodic
protection, is trending over time. Maintaining complete and accurate records is essential for
Respondent’s managers to be able to perform oversight of the work performed by personnel and
contractors. While it is fortunate that no failures occurred, this does not negate the seriousness of
the non-compliance.
With respect to financial hardship, Respondent provided no certified final statements or other
information demonstrating that the proposed penalty would affect its ability to continue in
business. Moreover, to ensure public safety, any company, municipality, or tribal entity that is in
the business of transporting hazardous products by pipeline must have sufficient resources to
operate in a manner consistent with applicable regulations. Respondent has provided no
information that would warrant a reduction in the civil penalty amount proposed in the Notice for
this Item. Accordingly, having reviewed the record and considered the assessment criteria, I
assess Respondent a civil penalty of $21,000 for violating 49 C.F.R. § 195.589(c).
With respect to Item 2, the Notice proposed a civil penalty of $28,000 for Respondent’s
violation of 49 C.F.R. § 195.404(b)(1), for failing to maintain daily operating records indicating
the discharge pressure of its two pump stations, except for the 30-day period prior to the 
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