{"operation":"document","citation":"CPF 420071007","title":"EL PASO NATURAL GAS CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2007-07-24","effective_on":null,"summary":"CLOSED notice of probable violation citing 192.5(c), 192.907(a), 192.917(a), 192.933(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420071007.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420071007.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420071007","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420071007","body":"Notice of Probable Violation involving EL PASO NATURAL GAS CO. PHMSA's enforcement data identifies the cited regulations as 192.5(c),  192.907(a),  192.917(a),  192.933(a). The case was opened on 2007-07-24 and is reported as closed as of 2012-05-29. Proposed civil penalty: $129,000. Assessed civil penalty: $129,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420071007_Closure Letter_05292012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420071007/420071007_Closure%20Letter_05292012.pdf\n\n420071007_Closure Letter_05292012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420071007/420071007_Closure%20Letter_05292012_text.pdf\n\n420071007_Final Order_03102011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420071007/420071007_Final%20Order_03102011.pdf\n\n420071007_Final Order_03102011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420071007/420071007_Final%20Order_03102011_text.pdf\n\n420071007_NOPV Post Hearing Response_06122008.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420071007/420071007_NOPV%20Post%20Hearing%20Response_06122008.pdf\n\n420071007_nopvpcppco_07242007_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420071007/420071007_nopvpcppco_07242007_text.pdf\n\n420071007_Closure Letter_05292012_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nMay 29, 2012\nMr. Daniel B. Martin\nSenior Vice President, Pipeline Safety\nEl Paso Corporation\nP.O. Box 2511\nHouston, TX 77252-2511\nMr. Lee Hobbs\nSenior Vice President and General Manager\nUS Pipelines\nANR Pipeline Corporation\nTransCanada Corporation\nP.O. Box 2446\nHouston, TX 77252-2446\nCPF 4-2007-1007\nDear Mr. Martin and Mr. Hobbs:\nOn March 10, 2011, the Pipeline and Hazardous Materials Safety Administration (PHMSA)\nissued to El Paso Corporation and ANR Pipeline Company a Final Order in the above-referenced\ncase. This Order included a Compliance Order and Civil Penalty assessment. Payment of the\ncivil penalty was received on April 4, 2011. Based on our review of the documentation you\nprovided, it has been determined that you have complied with the terms of this Order.\nAccordingly, this case is now closed and no further action is contemplated with respect to the\nmatters involved in this case. Thank you for your cooperation in this matter.\nSincerely,\nR. M. Seeley\nDirector, Southwest region\nPipeline and Hazardous\nMaterials Safety Administration\n\n420071007_Final Order_03102011_text.pdf\n\nMAR 10 2011\nMr. Daniel B. Martin\nSenior Vice President, Pipeline Safety\nEl Paso Corporation\nP.O. Box 2511\nHouston, TX 77252-2511\nMr. Lee Hobbs\nSenior Vice President and General Manager\nUS Pipelines\nANR Pipeline Corporation\nTrans Canada Corporation\nP. O. Box 2446\nHouston, TX 77252-2446\nRe: CPF No. 4-2007-1007\nGentlemen:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a civil penalty of $129,000 against El Paso Corporation, and specifies\nactions that need to be taken by both El Paso Corporation and ANR Pipeline Company to\ncomply with the pipeline safety regulations. The penalty payment terms are set forth in the\nFinal Order. When the civil penalty has been paid and the terms of the compliance order\ncompleted, as determined by the Director, Southwest Region, this enforcement action will be\nclosed. Service of the Final Order by certified mail is deemed effective upon the date of\nmailing, or as otherwise provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Rod Seeley\nDirector, Southwest Region, PHMSA\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 1160 0001 0040 0153]\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 )\nEl Paso Pipeline Corporation, ) CPF No. 4-2007-1007\nand )\nANR Pipeline Company, )\n)\n)\n)\n)\n)\nRespondents. )\n____________________________________)\nFINAL ORDER\nDuring the weeks of April 17-21, May 1-5, and May 22-26, 2006, pursuant to 49 U.S.C.\n§ 60117, representatives of the Pipeline and Hazardous Materials Safety Administration\n(PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of\nthe facilities and records of El Paso Pipeline Group, a division of El Paso Corporation (El\nPaso) in Houston, Texas. The following pipeline systems were covered in the inspection:\nSouthern Natural Gas Co., Colorado Interstate Gas Co., El Paso Natural Gas Co., Tennessee\nGas Pipeline Co. (El Paso), ANR Pipeline Co., Mojave Pipeline Operating Co., and Bear\nCreek Storage Co. Collectively, these systems include over 47,000 miles of natural gas\ntransmission pipelines.\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to El\nPaso, by letter dated July 24, 2007, a Notice of Probable Violation, Proposed Civil Penalty,\nand Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the\nNotice proposed finding that El Paso had committed various violations of 49 C.F.R. Part 192\nand proposed assessing a civil penalty of $129,000 for two of the alleged violations. The\nNotice also proposed ordering El Paso to take certain measures to correct the alleged\nviolations.\nOn February 22, 2007, one of El Paso’s subsidiaries, ANR Pipeline Company (ANR), was\nacquired by a subsidiary of TransCanada Corporation.1\nBoth El Paso and ANR (collectively,\nRespondents) responded to the Notice by letter dated August 23, 2007 (Response), contested\nthe allegations, and requested a hearing. An informal hearing was subsequently held on\nApril 30, 2008, in Houston, Texas, with an attorney from the Office of Chief Counsel,\nPHMSA, presiding. At the hearing, Respondents were represented by counsel and submitted a\nbinder of documents and slides. After the hearing, the companies provided additional material\nfor the record by letter dated June 12, 2008 (Closing).\n1 Response, at 1.\n\n\n\n2\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondents violated 49 C.F.R. Part 192, as follows:\nItem 1: The Notice alleged that Respondents violated 49 C.F.R. § 192.5(c), which states, in\nrelevant part:\n§ 192.5 Class locations.\n(a) . . .\n(c) The length of Class locations 2, 3, and 4 may be adjusted as follows:\n(1) . . .\n(2) When a cluster of buildings intended for human occupancy requires a\nClass 2 or 3 location, the class location ends 220 yards (200 meters) from the\nnearest building in the cluster.\n§ 192.903 What definitions apply to this subpart?\nThe following definitions apply to this subpart: . . .\nHigh consequence area means an area established by one of the methods\ndescribed in paragraphs (1) or (2) as follows:\n(1) An area defined as—\n(i) A Class 3 location under §192.5; or . . . .\nThe Notice alleged that Respondents violated 49 C.F.R. § 192.5 by failing to properly delineate a\nClass 3 location for High Consequence Area (HCA) 2718 on Line 1204, in a manner that\ncaptured all buildings intended for human occupancy in the class location unit. Specifically, the\nNotice alleged that the boundaries established under Respondents’ approach for delineating\nClass 3 locations did not include approximately eight structures to the west of HCA 2718 on its\nHCA map, as required by § 192.5. In their Response and at the hearing, the companies\ncontended that they interpreted the regulations on “clustering” to allow them to exclude these\neight buildings from the Class 3 area.\nUnder 49 C.F.R. Part 192, natural gas pipelines are categorized into different class locations.\nThe purpose of designating class locations is to apply higher safety standards to pipelines located\nnear densely populated areas and to protect people working and living in those areas. External\nstresses on pipelines, the potential for damage from third parties, and other factors which\ncontribute to accidents all tend to increase with higher population densities in the vicinity of\npipelines, as do the consequences of accidents. Under the regulations, class locations are used as\na means of determining the frequency of monitoring pipelines and patrolling rights-of-way, for\nconducting leakage surveys, and for determining the maximum allowable operating pressure\n(MAOP) of gas pipelines.\n\n\n\n3\nA “class location unit” is defined under the regulations as an “area that extends 220 yards (200\nmeters) on either side of the centerline of any continuous 1-mile (1.6 kilometer) length of\npipeline.\n”2 The class location is determined by the number and type of buildings in a given\nlowest density and Class 4 being the highest. A group of buildings within the class location unit\nis sometimes referred to as a “cluster” of buildings.\ncontinuous one-mile length of pipeline known as the \"sliding mile,”3 with Class 1 being the\nClass 3 areas are defined in the pipeline safety regulations as “any class location unit that has 46\nor more buildings intended for human occupancy.”4 Each separate dwelling unit in a multiple\ndwelling unit building is counted as a separate building intended for human occupancy.5 Class 3\nareas also include those where the pipeline lies within 100 yards of either a building or a small,\nwell-defined outside area, such as a playground, recreation area, outdoor theater, or other place\nof public assembly, that is occupied by 20 or more persons on at least 5 days a week for 10\nweeks in any 12-month period.6\nThe length of a Class 3 location unit, however, can be adjusted under certain circumstances.\nUnder § 192.5(c)(2), “[w]hen a cluster of buildings intended for human occupancy requires a\nClass 2 or 3 location, the class location ends 220 yards (200 meters) from the nearest building in\nthe cluster,” rather than at the end of the one-mile class location unit that would otherwise\ndetermine the end point of the unit. Clustering is therefore a means of reducing the length of a\nClass 2 or 3 area in a sliding mile unit that requires a Class 2 or 3 location.7\nIn this case, however, Respondents argue that clustering should also serve as a means of\nexcluding buildings in the sliding mile from being part of the Class 3 area at all. They argue that\nthe group of eight buildings to the west of HCA 2718 on their HCA map should be excluded\nfrom the Class 3 area, despite being located within the Class 3 sliding mile containing the other\nbuildings in the HCA.\n2 49 C.F.R. § 192.5(a)(1).\n3 For example, a pipeline can be divided into 1/8 mile segments and the number of buildings tallied for each\nsegment. The “sliding mile” would be calculated by summing eight consecutive 1/8 mile segment tallies, and\nassigning the Class accordingly. Then the sliding mile is moved down by one segment and the process is repeated,\nuntil the entire line has been evaluated and Classes assigned. Modern software programs typically calculate the\nsliding mile foot by foot.\n4 49 C.F.R. § 192.5(b)(3)(i).\n5 49 C.F.R. § 192.5(a)(2).\n6 49 C.F.R. § 192.5(b)(3)(ii).\n7 For example, if all buildings in a sliding mile containing enough buildings to require a Class 3 location were\nclustered in the middle of that sliding mile, the Class 3 area would end 220 yards from the nearest building (on\neither side of the cluster through which the pipeline passes) rather than at the end of the one-mile class location unit\nthat would otherwise be the basis for classification. Thus, if the cluster itself were 200 yards in length, the total\nlength of the Class 3 area would be 640 yards.\n\n\n\n4\nThey contend that a June 1996 rule amendment, which was reversed one month later, provides\npreamble of the 1996 correction:\nsupport for their position.8 In particular, Respondents cite the following discussion in the\n“Since the revision was published, [the Research & Special Programs\nAdministration (RSPA)] has learned that many operators customarily apply\nthe cluster adjustment irrespective of buildings outside the cluster. We also\nlearned that this practice was tacitly accepted by RSPA enforcement\npersonnel and may be consistent with instruction at RSPA’s Transportation\nSafety Institute.”9\nBased upon this language, Respondents now contend that the NOPV issued in this proceeding\nreflects a “new” requirement being imposed by PHMSA in the absence of notice and comment\nrulemaking and that such new requirement is inconsistent with earlier actions by the agency.10\nI reject Respondents’ argument for several reasons. First, § 192.5(c)(2) states that “[w]hen a\ncluster of buildings intended for human occupancy requires a Class 2 or 3 location, the class\nlocation ends 220 yards (200 meters) from the nearest building in the cluster.” Thus, as noted\nabove, the length of a Class 2 or 3 location can be reduced by clustering. The ability to conduct\na cluster adjustment, however, is explicitly premised on a given sliding mile unit and the\nbuildings therein requiring a Class 2 or 3 location to begin with. Moreover, § 192.5(c)(2) must\nbe read in conjunction with § 192.5(a)(1), which defines the term “class location unit,\n” and\nsubsection (b)(3), which defines the term “Class 3 location.\n” When all three subsections are read\ntogether, Respondents’ interpretation of clustering contradicts the plain language and purpose of\nthe regulations. If an operator could use clustering to exclude groups of buildings in the sliding\nmile unit from the unit’s Class 3 classification altogether, it would undermine the regulatory\nrequirement to use a continuous one-mile distance as the class location unit and, under some\ncircumstances, would circumvent the regulatory definition of a Class 3 location.\nSecond, it should be noted that the class location regulations for gas pipelines have been in place\nfor decades and the regulatory requirements reflected in the NOPV are not new. While\nRespondents are correct that the amendment was reversed by the correction and the previous\nlanguage on cluster adjustment restored, it is important to note that the amendment being\nreversed was itself only a narrow limitation stating that a cluster adjustment could only be used\nfor class location units where all buildings in the one-mile unit were in a single cluster.\n11\nThe\namended rule did not allow buildings within the sliding mile to be excluded from the class\nlocation even before the amendment was reversed. Restoring the status quo—that the cluster\n8 See Final Rule, Regulatory Review; Gas Pipeline Safety Standards, 61 FR 28770 (June 6, 1996). See also\nCorrection of Final Regulation, Regulatory Review; Gas Pipeline Safety Standards; Correction, 61 FR 35139 (July\n5, 1996).\n9 61 FR 35139.\n10 Respondents also argue that PHMSA had the opportunity to review its class location procedures during previous\nEl Paso inspections and did not issue any citations for non-compliance. The absence of citations for non-compliance\nduring one inspection visit, however, does not preclude PHMSA from citing the operator as the result of a\nsubsequent inspection.\n11 61 FR 28772.\n\n\n\n5\nadjustment could potentially be used even when there was more than one Class 3 cluster in a\ngiven one-mile Class 3 class location unit—in no way permits clustering to be used as a\nmechanism to exclude individual or smaller groups of buildings from being part of a particular\nClass 3 unit. Under the regulations in place both prior to the amendment and after the correction,\nif individual or smaller groups of buildings are within a Class 3 class location unit, any cluster\nadjustment must be conducted in a manner that includes them as part of a Class 3 cluster and the\nClass 3 area endpoint of that cluster would be 220 yards from the outermost building.12\nI find that the regulations do not permit the use of clustering as a mechanism to exclude\nbuildings within a Class 3 sliding mile from being part of a Class 3 area and therefore part of the\nHCA. Respondents were unable to demonstrate that PHMSA published any guidance or other\nmaterial that would have justified reliance on the approach to clustering now advocated by\nRespondents. Their approach is inconsistent with the plain language of the regulations and\nwould frustrate the purpose of the class location regulations, which is to ensure that higher safety\nstandards apply in more highly populated areas and thus provide greater protection for human\noccupants in those areas.\nAccordingly, after considering all of the evidence and the legal issues presented, I find that\nRespondents violated 49 C.F.R. § 192.5(c) by failing to define a Class 3 location for HCA 2718\non Line 1204 in a manner that captured all buildings intended for human occupancy in that class\nlocation unit.\nItem 2: The Notice alleged that Respondents violated 49 C.F.R. § 192.907(a), which states:\n§ 192.907 What must an operator do to implement this subpart?\n(a) General. No later than December 17, 2004, an operator of a covered\npipeline segment must develop and follow a written integrity management\nprogram that contains all the elements described in § 192.911 and that\naddresses the risks on each covered transmission pipeline segment. The initial\nintegrity management program must consist, at a minimum, of a framework\nthat describes the process for implementing each program element, how\nrelevant decisions will be made and by whom, a time line for completing the\nwork to implement the program element, and how information gained from\nexperience will be continuously incorporated into the program. The\nframework will evolve into a more detailed and comprehensive program. An\noperator must make continual improvements to the program.\nThe Notice alleged that Respondents violated 49 C.F.R. § 192.907(a), by failing to develop and\nfollow, by December 17, 2004, an integrity management program that contained all the elements\ndescribed in § 192.911. That section states:\n12 Nothing in this Final Order is intended to prevent an operator from making proper use of clustering to reduce the\nlength of a Class 2 or 3 area. For example, if a given sliding mile had a group of 47 buildings situated in the first\n200 yards at one end of the sliding mile and a second group of 47 buildings situated in the last 200 yards at the other\nend of the sliding mile and no buildings in between, the 420 yard lengths at either end would be Class 3 areas and\nthe 920 yards in the middle of the mile would not. However, if one or more buildings were later constructed in\nbetween, the outermost building would become the last building in each of the two Class 3 clusters and that enlarged\ncluster’s Class 3 area would have to be expanded to encompass that building plus 220 yards.\n\n\n\n6\n§ 192.911 What are the elements of an integrity management\nprogram?\nAn operator's initial integrity management program begins with a\nframework (see §192.907) and evolves into a more detailed and\ncomprehensive integrity management program, as information is gained and\nincorporated into the program. An operator must make continual\nimprovements to its program. The initial program framework and subsequent\nprogram must, at minimum, contain the following elements. (When indicated,\nrefer to ASME/ANSI B31.8S (incorporated by reference, see § 192.7) for\nmore detailed information on the listed element.)\n(a) An identification of all high consequence areas, in accordance with\n§ 192.905.\nSpecifically, the Notice alleged that Respondents failed to identify all HCA areas known as\n“identified sites” and certain other areas meeting the HCA definition on the basis of having 20 or\nmore structures or certain class location changes.13\nIn their Response and at the hearing, El Paso and ANR acknowledged that several of their HCAs\nwere “misclassified” in 2004 and stated that they took action in 2005 to “re-classify those areas\nwhich had earlier been misclassified as non-HCAs.\n”14 Respondents, however, stated that they\nbelieved they were in compliance with the regulations because they had developed a detailed and\ncomprehensive HCA identification process and had made ongoing improvements to this process.\nThe companies further argued that they should not be penalized for “the human errors involved\nin the initial implementation.\n”15\nThe relevant regulations required pipeline operators to identify all HCAs by December 17, 2004\n(December 2004 Deadline). Based on the information in the record, 85 HCAs, totaling\napproximately 32 miles in length, were not properly designated as HCAs by the December 2004\nmanner in which the process was implemented resulted in the failure to identify the 32 miles as\nhowever, did not refute the allegation that they failed to identify these 85 areas as HCAs.\nDeadline.16 sufficient to constitute compliance with this requirement. The companies acknowledged that the\nHCA mileage. At the hearing, Respondents expressed the view that the missed areas were\nstatistically insignificant in light of the size of the companies’ overall systems. Respondents,\nThe fact that Respondents had an HCA identification process in place is not\nAccordingly, after considering all of the evidence and the legal issues presented, I find that\nRespondents violated 49 C.F.R. § 192.907(a) by failing to develop and follow an integrity\nmanagement program that included the identification of all HCAs on their pipeline routes by the\nDecember 2004 Deadline. To the extent that the information and arguments offered by\nRespondents are relevant to whether and at what level a civil penalty should be assessed, these\nare discussed in the Assessment of Penalty section below.\n13 49 C.F.R. § 192.903.\n14 Closing, at 5.\n15 Id., at 6.\n16 Respondents’ PowerPoint Presentation dated April 30, 2008, slide 34.\n\n\n\n7\nItem 3: The Notice alleged that Respondents violated 49 C.F.R. § 192.917(a) which states:\n§ 192.917 How does an operator identify potential threats to pipeline\nintegrity and use the threat identification in its integrity\nprogram?\n(a) Threat identification. An operator must identify and evaluate all\npotential threats to each covered pipeline segment. Potential threats that\nan operator must consider include, but are not limited to, the threats\nlisted in ASME/ANSI B31.8S (incorporated by reference, see §192.7),\nsection 2, which are grouped under the following four categories:\n(1) Time dependent threats such as internal corrosion, external\ncorrosion, and stress corrosion cracking;\n(2) Static or resident threats, such as fabrication or construction\ndefects;\n(3) Time independent threats such as third party damage and outside\nforce damage; and\n(4) Human error.\nThe Notice alleged that Respondents violated 49 C.F.R. § 192.917(a) by failing to identify and\nevaluate all potential threats to each covered pipeline segment in their systems. Specifically, it\nalleged that Respondents failed to consider the threats listed in ASME/ANSI B31.8S, section 2,\nand to have a threat evaluation process that comprehensively integrated available data to enable\nfull consideration of interacting threat conditions on pipeline integrity.\n17\nIn their Response and at the hearing, El Paso and ANR contended that their threat evaluation and\nrisk-ranking process did indeed account for combinations of threats. The companies indicated\nthat they had considered interactive threats in the risk-ranking process, in accordance with\nSection 2.2 of ASME B31.8S, and provided several examples, including: (1) the interaction of\npre-1970 electric-resistance welded (ERW) pipe with land movement and frost heave conditions;\n(2) the interaction of couplings, welds, bell and spigot pipe, wrinkle bends with frost heave or\nbackfill removal; and (3) the interaction of coating type and corrosion history. At the hearing,\nOPS responded by pointing out that while Respondents did consider multiple threats, they did so\nin an additive, as opposed to a multiplicative, manner.\nRespondents’ method of considering multiple threats was to assign a numerical value to each of\nthe different threats and then to add those values together for purposes of ranking the overall\nrather than to add them. They argued that the agency’s position constituted an “unwritten\nthreat level.18 Respondents argued that OPS’ allegation of violation was based upon the\nagency’s position that the proper method of ranking risk was to multiply the various risk values\ninterpretation” having no factual predicate or scientific basis and that OPS was unable to derive\nan appropriate multiplier for these interactive threats.\n17 ASME B31.8S, Section 2.2, Integrity Threat Classification, states: “The interactive nature of threats (i.e., more\nthan one threat occurring on a section of pipeline at the same time) shall also be considered. An example of such an\ninteraction is corrosion at a location that also has third party damage.”\n18 Closing, at 6.\n\n\n\n8\nA determination of whether Respondents complied with their obligations under the regulation\nturns on whether the additive approach they took was sufficient to achieve the purpose of the\nrequirement. As commonly used, the term “interactive” means that the threats are influencing or\nhaving an effect on each other. There is no question that multiple pipeline threats influence or\nhave effects on each other. In the context of analyzing interactive threats for purposes of\nidentifying and mitigating safety risks, the real question is how are the threats interacting? Two\nor more threats acting on the same pipe location may raise the threat beyond what either threat\nwould do independently or if simply added together. For example, does the risk associated with\npre-1970 ERW pipe double with the risk of frost heave or does the potential for frost heave\nincrease the ERW pipe risk twenty times? Fully considering threats and performing effective\nrisk ranking requires at least some degree of technical analysis of how the threats interact.\nThe integrity management regulations are designed to be flexible and to allow operators to\ndevelop their own processes for threat evaluation that are best suited to their particular pipeline\nsystems and operations. However, such flexibility does not mean that Respondents may simply\nadd threat scores and disregard the undisputedly more complex relationship among threats. The\nintent of a threat evaluation process is to provide an operator with a sophisticated and accurate\nmeasure of the individual and combined threats facing its pipeline system, so that it may address\nthese threats and reduce pipeline integrity risks. In this case, Respondents need not use any\nspecific “plus” factor or any other particular logarithm or process. Rather, the regulations give\nRespondents the flexibility to develop a procedure that realistically assesses the interactive\nnature of threats. Only through such a realistic assessment, however, will Respondents have an\naccurate indication of the potential threats to the integrity of their system.\nAccordingly, after considering all of the evidence and the legal issues presented, I find that\nRespondents violated 49 C.F.R. § 192.917(a) by failing to have a threat evaluation process that\ncomprehensively integrated available data to enable full consideration of interacting threat\nconditions on pipeline integrity.\nItem 4: The Notice alleged that Respondents violated 49 C.F.R. § 192.933(a), which states:\n§ 192.933 What actions must be taken to address integrity issues?\n(a) General requirements. An operator must take prompt action to\naddress all anomalous conditions that the operator discovers through the\nintegrity assessment. In addressing all conditions, an operator must evaluate\nall anomalous conditions and remediate those that could reduce a pipeline's\nintegrity. An operator must be able to demonstrate that the remediation of\nthe condition will ensure that the condition is unlikely to pose a threat to the\nintegrity of the pipeline until the next reassessment of the covered segment.\nIf an operator is unable to respond within the time limits for certain\nconditions specified in this section, the operator must temporarily reduce the\noperating pressure of the pipeline or take other action that ensures the safety\nof the covered segment. If pressure is reduced, an operator must determine\nthe temporary reduction in operating pressure using ASME/ANSI B31G\n(incorporated by reference, see Sec. 192.7) or AGA Pipeline Research\nCommittee Project PR-3-805 (``RSTRENG''; incorporated by reference, see\nSec. 192.7) or reduce the operating pressure to a level not exceeding 80% of\nthe level at the time the condition was discovered. (See appendix A to this\n\n\n\n9\npart 192 for information on availability of incorporation by reference\ninformation). A reduction in operating pressure cannot exceed 365 days\nwithout an operator providing a technical justification that the continued\npressure restriction will not jeopardize the integrity of the pipeline.19\nThe Notice alleged that Respondents violated 49 C.F.R. § 192.933(a) by failing to take prompt\naction to address two anomalous conditions on the 2nd North Main of the Southern Natural Gas\npipeline system that were discovered through the integrity assessment process. Specifically, the\nNotice alleged that an anomalous condition (74% wall loss) at Mile Post (MP) 188-45+00 and an\nanomalous condition at MP 190-49+31 (70% wall loss) were recoated and backfilled, whereas\nthe applicable requirements dictated pipe replacement, repair sleeves, or a reduction in MAOP.\nIn their Response and at the hearing, El Paso and ANR argued that they were not required to\nperform repairs or implement a pressure reduction to address the two anomalies. They\ncontended that the class area involved in both locations had increased from Class 2 to Class 3.\nThey argued that the NOPV allegation was based on OPS using the Class 3 design factor and the\nRSTRENG method to conclude that a pressure reduction was required in the absence of repairs,\nwhereas the companies elected to use the ASME B31G method, as permitted by the regulations,\nand that the latter method allowed the use of the original (Class 2) design factor. Respondents\nstated that they believed many other pipeline operators took the same approach. At the hearing,\nOPS maintained that operators were required to make repairs consistent with the current class\nlocation.\nClass location requirements are central to determining the appropriate MAOP on gas pipelines.\nThe integrity management regulations were established for the purpose of increasing the level of\nsafety in HCAs and populated areas. Respondents’ argument that anomaly remediation\nrequirements should be based on the original design factor, rather than the current class location,\nhas the unfortunate consequence that older pipelines would continue to be operated with safety\nmargins below what would be permitted if a new pipeline were to be constructed in the same\narea. Respondents are correct, however, that the ASME B31G method is a permissible method\nfor determining the appropriate pressure reduction under circumstances where an operator elects\nnot to perform a repair.\nAt the same time, pipeline operators have a general duty to “evaluate all anomalous conditions\nthis case, 74% and 70% of wall thickness respectively, are of sufficient magnitude that they\ncould reduce the pipeline’s integrity, particularly given potential interaction with other threats.\nand remediate those that “could reduce” a pipeline’s integrity.”20 The depth of the anomalies in\nMoreover, Respondents did not provide any information concerning the tolerances of the tool\nthat measured these anomalies; therefore, it is possible that the anomalies may even be 2-3%\ndeeper than reported. Respondents also did not provide any information concerning the growth\nrates of these anomalies.\n19 This regulation has since been amended (72 FR 39016; July 17, 2007).\n20 49 C.F.R. § 192.933(a).\n\n\n\n10\nIf Respondents were allowed to simply recoat and backfill these locations without remediating\nthem, the anomalies could potentially grow to a magnitude exceeding 80% of wall thickness\nbefore the next reassessment were conducted. This could potentially be as long as five years.\nIn addition, these anomalies were located in a HCA and therefore posed a heightened threat to\npublic safety. Under the circumstances, a prudent pipeline operator should have either: (1)\nconcluded that these two anomalous conditions could reduce the pipeline’s integrity and\nperformed repairs or implemented a pressure reduction to ensure safe operation; or (2) performed\nfurther technical study of the nature of the anomalies and their growth rates to justify a\ndetermination that the anomalies could not reduce the pipeline’s integrity. I am not persuaded\nthat the generic approach taken by Respondents, of simply applying ASME B31G, met their\nobligation to evaluate all anomalous conditions and remediate those that could reduce the\npipeline’s integrity.\nAccordingly, after considering all of the evidence and the legal issues presented, I find that\nRespondents violated 49 C.F.R. § 192.933(a) by failing to take prompt action to address two\nanomalous conditions on the 2nd North Main of the Southern Natural Gas pipeline system.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondents.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondents are subject to an administrative civil penalty not to\nexceed $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for\nany related series of violations. In determining the amount of a civil penalty under 49 U.S.C.\n§ 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,\ncircumstances, and gravity of the violation, including adverse impact on the environment; the\ndegree of Respondents’ culpability; their history of prior offenses; their ability to pay the penalty\nand any effect that the penalty may have on its ability to continue doing business; and the good\nfaith of Respondents in attempting to comply with the pipeline safety regulations. In addition, I\nmay consider the economic benefit gained from the violation without any reduction because of\nsubsequent damages, and such other matters as justice may require. The Notice proposed a total\ncivil penalty of $129,000 for the violations cited above.\nIn the instant case, El Paso was the parent company of ANR at the time of the violations.\nTherefore, it is the sole “person” financially liable for penalties assessed pursuant to 49 C.F.R.\n§ 190.223 in this proceeding.\nAs a general matter, El Paso also argues that § 60109(c)(9)(A)(iii) only permits PHMSA to act\nunder § 60109(a)(2) to order an operator to revise its integrity management program with a\nNotice of Amendment type of enforcement action (i.e., to require Respondents to amend their\nplans and procedures). The company further argues that this statute precludes or does not give\nPHMSA the authority to act under any other section of Chapter 601 to enforce integrity\nmanagement program regulations by issuing compliance orders and civil penalties.\n\n\n\n11\nWith the enactment of the Pipeline Safety Improvement Act of 2002 (PSIA), the U.S. Congress\ndirected the Department of Transportation, PHMSA, to establish and issue regulations detailing\nstandards for the implementation of an integrity management program.\nThe authority set forth in §§ 60119 and 60122 to enforce pipeline safety standards, laws and\nregulations through compliance orders and civil penalties has been codified since 1979 and\nnothing in PSIA or the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006\n(PIPES Act) affected this authority.\nAny suggestion that, prior to the PIPES Act, section 60109(c)(9)(A)(iii) limited the agency’s\nauthority with respect to operator conduct and to only require an operator to amend an\ninadequate or noncompliant integrity management program is therefore incorrect.\nConsidering the authority established in §§ 60118 and 60122; the legislative history of both\nPSIA and the PIPES Act, including H.R. Rep. No. 109-717, Part 2, § 2(g), at 16 (Dec. 5, 2006);\nand the legal issues presented, I find that PHMSA had the authority and did properly exercise the\nfull spectrum of enforcement tools upon a determination that a risk analysis or integrity\nmanagement program is inadequate or noncompliant.\nItem 2: The Notice proposed a civil penalty of $49,000 for Respondents’ violation of\n§ 192.907(a) for failing to have and follow an integrity management program that included the\nidentification of all HCAs on their pipeline routes by the December 2004 Deadline.\nThe identification of all HCAs is a key step in the integrity management process. Failure to\nindentify all HCAs could hinder an operator’s integrity management program and adversely\nimpact safety. In their Response and at the hearing, the companies stated that the non-\ncompliance was the result of “human error.” Many violations of regulatory requirements,\nhowever, are the result of human error. That does not negate the seriousness of the non-\ncompliance. Respondents also noted that only 32 miles of pipeline were affected. However, 32\nmiles of pipeline is significant, even on a system as large as Respondents’\n. The companies have\npresented no information or arguments that warrant a reduction in the civil penalty amount\nproposed in the Notice. Accordingly, having reviewed the record and considered the assessment\ncriteria, I assess El Paso a civil penalty of $49,000 for violation of 49 C.F.R. § 192.907(a).\nItem 4: The Notice proposed a civil penalty of $80,000 for Respondents’ violation of\n§ 192.933(a), for failing to take required action to promptly address two anomalous conditions\non the 2nd North Main of the Southern Natural Gas pipeline system.\nThe failure to promptly remediate anomalous conditions of the magnitude involved in this case\ncan have direct safety impacts on the public. While Respondents raised legitimate questions\nconcerning whether the decision not to repair or remediate the two cited anomalies was allowed\nby the code, having determined that a violation occurred, the gravity of the violation is\nsufficiently serious to warrant the civil penalty amount proposed in the Notice.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess El Paso\na civil penalty of $80,000 for violation of 49 C.F.R. § 192.933(a).\n\n\n\n12\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess El Paso a total civil penalty of $129,000.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The\nFinancial Operations Division’s telephone number is (405) 954-8893.\nFailure to pay the $129,000 civil penalty will result in accrual of interest at the current annual\nrate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Items 1−4 in the Notice for violations of\n49 C.F.R. §§ 192.5(c), 192.907(a), 192.917(a), and 192.933(a), respectively. Under 49 U.S.C.\n§ 60118(a), each person who engages in the transportation of gas or who owns or operates a\npipeline facility is required to comply with the applicable safety standards established under\nchapter 601. Pursuant to the authority of 49","truncated":true,"body_characters":43387}