{"operation":"document","citation":"CPF 420065035","title":"DELEK LOGISTICS OPERATING, LLC. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2006-09-05","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.505(b), 195.507(a), 195.509.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065035.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065035.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420065035","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420065035","body":"Notice of Probable Violation involving DELEK LOGISTICS OPERATING, LLC.. PHMSA's enforcement data identifies the cited regulations as 195.505(b),  195.507(a),  195.509. The case was opened on 2006-09-05 and is reported as closed as of 2009-03-04. Proposed civil penalty: $45,000. Assessed civil penalty: $20,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420065035_Final Order_11042008.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065035/420065035_Final%20Order_11042008.pdf\n\n420065035_final order_11042008_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065035/420065035_final%20order_11042008_text.pdf\n\ncpf_np_4-2006-5035.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420065035/cpf_np_4-2006-5035.pdf\n\n420065035_final order_11042008_text.pdf\n\nO\nU S Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety\nAdministration\n1200 New Jersey Ave S E\nWashington DC 20590\nNQV 4 2008\nMr. Larry Hartness\nSenior Vice President, Operations\nLion Oil Trading 4 Transportation, Inc.\nP. O. Box 7005\nEl Dorado, Arkansas 71731-7005\nRE: CPF No. 4-2006-5035\nDear Mr. Hartness:\nEnclosed is the Final Order issued in the above-referenced case, It makes findings of violation,\nassesses a civil penalty of $20, 000, and specifies actions to be taken by Lion Oil Trading A\nTransportation, Inc.\n,\nto comply with the pipeline safety regulations. The penalty payment terms\nare set forth in the Final Order. When the civil penalty has been paid and the terms of the\ncompliance order completed, as determined by the Director, Southwest Region, this\nenforcement action will be closed. Your receipt of the Final Order constitutes service of that\ndocument 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: John Warren, Vice President Operations, LOTT\nKyle Michael, Management Controls Supervisor, LOTT\nR, M Seeley, Director, Southwest Region, OPS\nCERTIFIED MAIL — RETURN RECEIPT RE UESTED\n\n\n\nU. S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D. C. 20590\nIn the Matter of\n)\n)\n)\nLion Oil Trading A Transportation, Inc.\n, )\n)\n)\nRespondent.\n)\nCPF No. 4-2006-5035\nFINAL ORDER\nOn April 27-28, 2005, pursuant to 49 U. S. C. $ 60117, representatives of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety, conducted an\ninspection of the Operator Qualification (OQ) plans, procedures, and records of Lion Oil Trading\nk Transportation, Inc. ( LOTT or Respondent), relating to its hazardous liquid pipeline facilities.\nThe inspection took place at Respondent's offices in El Dorado, Arkansas. LOTT is a subsidiary\nof Lion Oil Company, whose operations include a crude oil refinery in El Dorado, three crude oil\npipelines, and two refined products terminals in Memphis and Nashville. As a result of the\ninspection, the Director, Southwest Region, PHMSA (Director), issued to Respondent, by letter\ndated September 5, 2006, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed\nCompliance Order (Notice). In accordance with 49 C. F. R. ( 190 207, the Notice proposed\nfinding that Respondent committed various violations of 49 C. F, R Part 195, Subpart G, and\nassessing a civil penalty of $45, 000 for the alleged violations, The Notice also proposed ordering\nRespondent to take certain measures to correct the alleged violations.\nRespondent responded to the Notice by letter dated November 9, 2006 (Response). LOTT\ncontested several of the allegations, offered information in explanation of others, and requested\nan informal hearing. Respondent also requested and was granted an extension of time to comply\nwith the terms of the proposed compliance order. A hearing was held on March 1, 2007, in\nHouston, Texas, with Renita K. Bivins, Esquire, Office of Chief Counsel, PHMSA, presiding. At\nthe hearing, Respondent presented evidence regarding its OQ program and subsequently\nsubmitted additional written materials for the record.\n\n\n\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondent violated 49 C. F. R. Part 195, as follows:\nItem 1(A): Item 1(A) of the Notice alleged that Respondent violated 49 C. F. R. $ 195 505(b),\nwhich states:\ng 195, 505 Qualification program.\nEach operator shall have and follow a written qualification program.\nThe program shall include provisions to:\n(a) Identify covered tasks;\n(b) Ensure through evaluation that individuals performing covered tasks\nare qualified;. . .\nThe Notice alleged that Respondent violated $ 195. 505(b) by failing to evaluate 63 of its\nemployees in a manner that ensured that the individuals were qualified to perform each covered\ntask. Specifically, the Notice alleged that the process established by Respondent to determine an\nindividual's ability to perform a covered task was conducted in a group setting, where each\nemployee could hear and benefit from the responses of other employees to answer the questions.\nThis prevented each individual from being accurately \"evaluated, \"\nas that term is defined in 49\nC. F. R. $ 195. 503. The Notice also alleged that Respondent's OQ Plan (Plan) failed to cross-\nreference the activities of each employee to the covered tasks enumerated m the Plan and failed\nto identify abnormal operating conditions (AOCs) applicable to each covered task for which an\nemployee was required to be evaluated, as more fully set forth in the Notice.\nAt the hearing, Respondent asserted that only four of the 63 individuals whose qualification\nrecords were examined actually worked on its pipeline facilities and were therefore subject to\n$ 195. 505(b). Respondent also expressed its belief that there had been a misunderstanding\nduring the inspection regarding the availability of records for the tasks being performed by\nRespondent's employees. Records that cross-referenced the activities of each employee to the\ncovered tasks in the Plan and records that identified AOCs applicable to each covered task were\napparently available at the time of the inspection but not reviewed by the inspector. Respondent\nstated that, for whatever reason, the Office of Pipeline Safety (OPS) inspector only reviewed\nsummaries of the covered tasks, Respondent explained that the summaries did not show the\ncross-references between covered tasks and AOCs. At the hearing and in its post-hearing\nsubmission, Respondent provided evidence and documents to address the qualification of certain\nemployees, to show that it had cross-referenced the activities of each employee to the covered\ntasks in the Plan, and to identify the AOCs applicable to each covered task,\nFinally, in response to OPS' concern that employees had been impermissibly evaluated in a\ngroup setting, Respondent indicated that its qualification exams were, in fact, administered\nindividually and in accordance with regulatory requirements. Respondent argued that OPS had\nincorrectly inferred that the individuals shared answers during testing because employees were\nphysically situated in a classroom setting. Respondent clarified that any sharing of information\n\n\n\n3\namong employees occurred only after completion of the exam, at which time information was\nshared to ensure that each individual understood why a particular response was correct or not.\nRespondent did acknowledge, however, that there may have been other deficiencies with its\ntraining and evaluation programs.\nAfter considering all of the evidence, I find that Respondent's OQ documentation did cross-\nreference the activities of each employee to the covered tasks in the Plan; that Respondent did\nidentify those AOCs that were applicable to each covered task; and that Respondent did properly\nadminister OQ exams to individual employees. However, I further find that Respondent failed to\ndocument adequate training and evaluations to ensure that all of its employees had the ability to\nrecognize and react to task-specific AOCs. Accordingly, I find that Respondent violated 49\nC. F. R. $ 195. 505(b) by failing to ensure through evaluation that all individuals performing\ncovered tasks were qualified to perform those tasks and that each individual could recognize and\nreact to specific AOCs that might be encountered while performing covered tasks.\nItem 1(B): Item 1(B) of the Notice alleged that Respondent violated 49 C. F. R. ) 195. 505(b), as\nstated above, by failing to ensure through evaluation that 14 individuals utilized as contractors to\nperform two covered tasks on LOTT's pipeline facilities were properly qualified. These 14\nindividuals were Lion Oil Company refinery employees. They worked as \"pumpers\" and\n\"pumper assistants\" on two of Respondent's product pipelines running from the adjacent\nrefinery. Specifically, the Notice alleged that the Plan treated these 14 individuals as contractors\nand that Respondent's only qualification records for them consisted of a single attendance sign-\nup sheet for one group meeting held on November 22, 2002, almost a month after the transitional\nqualification compliance deadline of October 28, 2002, had passed. '\nThe Notice ftuther alleged that Respondent used an unacceptable evaluation method for these 14\nindividuals. The Plan required the 14 workers to participate in a \"simulated walk-through, \" but\nthere was no indication whether the employees were evaluated on an individual or group basis or\nwhether AOCs were addressed as part of this \"walk-through. \" Finally, the Notice alleged that the\nthree general refinery operation tests furnished to the PHMSA inspector appeared to have been\ndeveloped to meet certain \"Process Safety Management\" (PSM) requirements of the federal\nOccupational Safety and Health Administration (OSHA), rather than the OQ requirements set\nforth in 49 C. F. R, Part 195 (Subpart 6, Qualification of Pipeline Personnel).\nAt the hearing, Respondent presented evidence that these 14 individuals worked within the\nadjacent Lion Oil Company refinery and had been trained and evaluated in accordance with PSM\nrequirements set by OSHA. Respondent provided documents and records of the PSM tests and\nevidence that the evaluations had been administered on an individual basis. Respondent\ncontended that these evaluations required employees to demonstrate the personal knowledge,\ni 'Transitional quahfication is \"quahfication completed by October 28, 2002, of mdividuals who have been\nperforming a covered task on a regular basis prior to the effective date of the rule, \" Fmal Rule, Pipehne Safety\nQualification of Pipeline Personnel, 64 FR 46853 (Aug 27, 1999)\n\n\n\nskills, and abilities necessary to implement certain \"safe work practices\" that were equivalent to\nAOCs and therefore that the evaluations performed for these 14 employees met the requirements\nof the OQ regulations. Respondent argued that these 14 individuals had been properly qualified\nprior to the October 28, 2002, deadline because the refinery's PSM program predated the\neffective date of the OQ requirements.\nThe purpose of the 49 C. F. R. Part 195 OQ regulations is to ensure that individuals performing\noperations and maintenance tasks affecting the operations of a hazardous liquid pipeline are\nqualified to perform certain tasks, in order to minimize threats to the public, property, and the\nenvironment from a potential pipeline failure. The purpose of OSHA's regulatory program, on\nthe other hand, is to protect workers in the workplace. While compliance with a particular\nOSHA requirement may potentially satisfy an OQ requirement under certain circumstances,\ncompliance with OSHA requirements does not automatically constitute compliance with the\npipeline safety OQ requirements.\nIn this case, the safe work practices in Respondent's PSM program were not cross-referenced\nwith the AOCs of covered tasks, which would be necessary in order for the PSM program to\nconstitute an acceptable means of satisfying the OQ requirements. Moreover, Respondent did\nnot provide documentation showing that AOCs or other relevant topics were addressed during\nthe PSM evaluations. In fact, Respondent's OQ Plan makes no attempt to correlate the two\nprograms or to demonstrate that its PSM program constituted an acceptable method of evaluation\nunder $ 195. 505(b), Therefore, I find that Respondent's OSHA PSM evaluations neither\nconstitute acceptable evaluations under PHMSA's OQ regulations nor meet the criteria for\ntransitional qualification prior to the October 28, 2002, deadline. Accordingly, after considering\nall of the evidence, I find that Respondent violated 49 C. F. R. ) 195. 505(b) by failing to ensure\nthrough evaluation that the 14 Lion Oil Company workers were qualified through evaluation to\nperform specific covered tasks on LOTT's pipeline and to recognize and react to AOCs\nassociated with those tasks.\nItem 2: Item 2 of the Notice alleged that Respondent violated 49 C. F. R. $ 195. 507(a), which\nstates:\ng 195. 507 Recordkeeping.\nEach operator shall maintain records that demonstrate compliance with this\nsubpart.\n(a) Qualification records shall include:\n(1) Identification of qualified individuals(s);\n(2) Identification of the covered tasks the individual is qualified to perform;\n(3) Date(s) of current qualification; and\n(4) Qualification method(s).\nThe Notice alleged that Respondent violated 49 C. F. R. $ 195. 507(a) by failing to maintain\nrecords demonstrating that all of its contractor personnel were properly evaluated and qualified to\nperform covered tasks. Specifically, the Notice alleged that Respondent failed to maintain\n\n\n\nrecords or documentation demonstrating that AOCs were properly addressed in the qualification\nprocess, particularly for \"certificated\" contractors who were allowed to independently perform\ntheir specialty tasks.\nRespondent did not contest this allegation, either in its Response or at the hearing. Accordingly,\nI find that Respondent violated 49 C. F. R. ) 195. 507(a) by failing to maintain records for\ncontractor personnel demonstrating compliance with all qualification requirements.\nItem 3: Item 3 of the Notice alleged that Respondent violated 49 C. F. R. $ 195. 509(a), which\nstates:\ng 195. 509 General.\n(a) Operators must have a written qualification program by April\n27, 2001. The program must be available for review by the Administrator\nor by a state agency participating under 49 U. S. C. Chapter 601 if the\nprogram is under the authority of that state agency.\nThe Notice alleged that Respondent violated 49 C, F. R. ) 195. 509(a) by failing to have a written\nOQ program in place by April 27, 2001. Specifically, the Notice alleged that Respondent's own\nrecords showed that it did not purchase the Plan and associated recordkeeping software from\nPipeline Operator Qualification System, Inc, (POQS), until August 2001.\nAt the hearing, Respondent acknowledged that the POQS invoices were dated and submitted for\npayment on August 15, 2001, and September 7, 2001, but contended that its OQ Plan was\nactually completed prior to the April 27, 2001, deadline. It presented evidence that it had secured\nthe services of a consultant to develop the required documentation and associated materials for an\nOQ program prior to the April 27, 2001 date. Having a program in place, however, means that it\nmust have become effective on a specific date and been communicated to the affected employees.\nWhile Respondent's OQ Plan may have been under development prior to its purchase of the\nPOQS software, Respondent was unable to demonstrate that the effective date of its written Plan\nand its communication to affected employees had occurred by April 27, 2001. Accordingly, after\nconsidering all of the evidence, I find that Respondent violated 49 C. F. R. ) 195. 509(a) by failing\nto have a written qualification program in place and available for review by the Administrator by\nApril 27, 2001.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\nThe second sentence was added by an amendment that became effective July 1, 2005 (70 FR 10332).\n\n\n\nASSESSMENT OF PENALTY\nUnder 49 U. S, C. $ 60122, Respondent is subject to a civil penalty not to exceed $100, 000 per\nviolation for each day of the violation, up to a maximum of $1, 000, 000 for any related series of\nviolations.\n49 U. S. C. $ 60122 and 49 C. F. R. ) 190. 225 require that, in determining the amount of the civil\npenalty, I consider the following criteria: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent's culpability; the history\nof Respondent's prior offenses; the Respondent's ability to pay the penalty and any effect that the\npenalty may have on its ability to continue doing business; and the good faith of Respondent in\nattempting to comply with the pipeline safety regulations. In addition, I may consider the\neconomic benefit gained &om the violation without any reduction because of subsequent\ndamages, and such other matters as justice may require. The Notice proposed a total civil penalty\nof $45, 000 for violations of 49 CFR Part 195.\nWith respect to Items 1(A) and 1(B), the Notice proposed that a civil penalty of $35, 000 be\nassessed against Respondent for violating ( 195. 505(b). Item 1(A) alleged that Respondent\nfailed to cross-reference the activities of each employee to the covered tasks in the Plan and to\nidentify AOCs applicable to each covered task. In response, LOTT was able to show that it did\nindeed cross-reference the activities of each employee to the covered tasks in the Plan and did, in\nfact, identify AOCs applicable to each covered task. With respect to Respondent's failure to\ndocument adequate training and evaluations to ensure that its employees could recognize and\nreact to task-specific AOCs, Respondent advised that its Plan was undergoing revisions to\naddress the deficiencies in evaluating AOC proficiency Respondent expected to complete a re-\nevaluation of all of its employees in accordance with the revised Plan by July 31, 2007.\nOn the other hand, LOTT was able to provide records demonstrating that it had addressed the\nqualifications of most of its workers. Approximately ten percent (10%) of its employee records\nshowed that those workers had not been properly evaluated. Accordingly, the civil penalty for\nItem 1(A) has been reduced to $10, 000.\nItem 1(B) alleged that Respondent violated ) 195. 505(b) by failing to ensure through evaluation\nthat the 14 LOTT contract employees were qualified to perform two covered tasks, including the\nability to recognize and react to AOCs. Respondent contested this Item, asserting that its PSM\ntraining and evaluation program satisfied PHMSA's OQ requirements. In its post-hearing\nsubmission, Respondent further advised that the re-evaluation of the pumper and pumper\nassistants on appropriate covered tasks would be completed by May 30, 2007. Respondent\npresented no information, however, that would warrant a reduction of the penalty amount\nassociated with the allegation m Item 1B.\nHaving reviewed the entire record for Items 1(A) and (B) and considered the assessment criteria,\nI have determined that the civil penalty should be reduced from $35, 000 to $10, 000 for violating\n5 195. 505(b),\n\n\n\nWith respect to Item 2, the Notice proposed that a civil penalty of $5, 000 be assessed against\nRespondent for violating 49 C. F. R. $ 195. 507(a). The Notice alleged that LOTT failed to\nmaintain records for contractor personnel that demonstrated compliance with all qualification\nrequirements, Having a complete OQ program in place to ensure that individuals performing\ncovered tasks are properly qualified is an important element of pipeline safety. The\nconsequences of any errors that cause or contribute to a release from the pipeline can be serious.\nRespondent expressed its intention to revise its Plan to ensure that all contractor personnel\nperforming covered tasks were properly evaluated and qualified and that relevant records were\nproperly maintained. Respondent, however, has presented no information that would warrant a\nreduction of the penalty amount proposed for this violation. Accordingly, having reviewed the\nrecord and considered the assessment criteria, I assess Respondent a civil penalty of $5, 000 for\nviolating ) 195. 507(a).\nWith respect to Item 3, the Notice proposed that a civil penalty of $5, 000 be assessed against\nRespondent for violating 49 C. F. R. $ 195. 509(a). The Notice alleged that LOTT failed to have a\nwritten qualification program in place by the regulatory deadline of April 27, 2001. Having a\ncomplete OQ program in place to ensure that individuals performing covered tasks are properly\nqualified is an important part of pipeline safety. The consequences of any errors that cause or\ncontribute to a release from the pipeline can be serious. Respondent has presented no\ninformation that would warrant a reduction in the penalty amount proposed in the Notice for this\nviolation. Accordingly, having reviewed the record and considered the assessment criteria, I\nassess Respondent a civil penalty of $5, 000 for violating ) 195. 509(a).\nAccordingly, having reviewed the entire record and considered the assessment criteria, I hereby\nassess Respondent a total civil penalty of $20, 000. Respondent has the ability to pay this penalty\nwithout adversely affecting its ability to continue in business.\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 this payment be made by wire transfer, through the Federal\nReserve Communications System (Fedwire), to the account of the U. S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, P. O. Box 25082, Oklahoma City, OK 73125; (405) 954-8893.\nFailiue to pay the $20, 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.\nPursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be\ncharged if payment is not made within 110 days of service. Furthermore, failure to pay the civil\npenalty may result in referral of the matter to the Attorney General for appropriate action in a\nUnited States District Court.\n\n\n\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Items 1 and 2 in the Notice for\nviolations of 49 C. F. R. Part 195.\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. Respondent must—\n1. With respect to Item 1, revise your Plan to evaluate individuals separately and to specify\nhow evaluations will be conducted on each individual to determine such person's ability\nto recognize and react to abnormal operating conditions. Include provisions to:\na. Reevaluate each employee who continues to perform covered tasks on behalf\nof LOTT using the revised procedures, including the evaluation of individuals to\nrecognize and react to the abnormal operating conditions that could be encountered\nperforming covered tasks on your pipeline facility, in accordance with 49 C. F. R. $\n195. 505(b).\nb. Ensure that any individuals, other than employees, performing covered tasks on\nLOTT pipeline facilities are evaluated in accordance with the acceptability criteria in the\nPlan for each covered task and have been evaluated to recognize and react to the\nabnormal operating conditions that could be encountered while performing covered tasks\non your pipeline facility, in accordance with 49 C. F. R. ) 195. 505(b).\n2. With respect to Item 2, generate and maintain records that fully document the\nreevaluation of all individuals who are the subject of Item 1 above and ensure that such\nrecords are retained for inspection to demonstrate compliance, in accordance with 49\nC. F. R. $ 195, 507(a).\n3. Where applicable, costs associated with fulfilling this compliance order shall be reported\nto the Director. Costs shall be reported in two categories: 1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses, and 2) total cost\nassociated with replacements, additions and other changes to pipeline infrastructure.\n4. These requirements shall be completed within 60 days of receipt of the Final Order. One\ncopy of each employee qualification record generated is to be forwarded to R. M. Seeley,\nDirector, Southwest Region, Pipeline and Hazardous Material Safety Administration,\nU. S. Department of Transportation, 8701 South Gessner, Suite1110, Houston, TX 77074.\n\n\n\nThe Director may grant an extension of time to comply with any of the required Items set forth\nabove upon a written request timely submitted by the Respondent demonstrating good cause for\nthe extension.\nFailure to comply with this Order may result in administrative assessment of civil penalties not to\nexceed $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. Should Respondent elect to do so, the petition must be received within 20 days\nof Respondent's receipt of this Final Order and must contain a brief statement of the issue(s).\nThe filing of a petition automatically stays the payment of any civil penalty assessed. All other\nterms of the order, including any required corrective action, remain in full effect unless the\nAssociate Administrator, upon request, grants a stay The terms and conditions of this Final\nOrder shall be effective upon receipt.\nNOV 0 2OO8\nDate Issued\nJef&ey D. Wiese\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":26323}