CHEVRON PIPE LINE CO — Notice of Probable Violation

party submissionOfficial PDF420075018_Operator Response_08022007.pdf#

420075018_Final Order_06082009_text.pdf, page 1Official PDFJUN 08 2009 Ms. Rebecca Roberts President Chevron Pipe Line Company Unocal Pipeline Company – Eastern Region 4800 Fournace Place Bellaire, TX 77401-2324 Re: CPF No. 4-2007-5018 Dear Ms. Roberts: Enclosed is the Final Order issued by the Associate Administrator for Pipeline Safety in the above-referenced case. It makes findings of violation and assesses a civil penalty. I acknowledge receipt of and accept your wire transfer for $48,000 as payment in full of the civil penalty assessed in the Final Order. The Order also acknowledges your completion of the proposed compliance order terms to comply with the pipeline safety regulations. This case is now closed. Your receipt of the Final Order constitutes service of that document 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 CERTIFIED MAIL – RETURN RECEIPT REQUESTED#

420075018_Final Order_06082009_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 __________________________________________ In the Matter of ) Chevron Pipe Line Company, ) and ) CPF No. 4-2007-5018 Unocal Pipeline Company – Eastern Region, ) ) ) ) ) ) Respondent. ) __________________________________________) FINAL ORDER On June 13 – 17, 2005, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety (OPS) conducted an on- site pipeline safety inspection of the facility and records associated with the Unocal Beaumont Breakout Tank Farm in Nederland, Texas, then owned by Unocal Pipeline Company – Eastern Region (Unocal or Respondent). As a result of the inspection, by letter dated May 21, 2007, the Director, Southwest Region, OPS (Director), issued to Unocal and the current owner of the facility, Chevron Pipeline Company (Chevron or Respondent), 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 Unocal had committed certain violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $48,000 for the alleged violations. The Notice also proposed ordering Chevron to take certain measures to correct the alleged violations. After requesting an extension of time to respond, Chevron responded by letter dated August 2, 2007 (Response), explaining that Chevron had merged with Unocal, and that certain corrective actions were being taken to address the issues raised in the Notice. Chevron also responded by submitting a wire transfer the same date, in the amount of the proposed civil penalty ($48,000), waiving further right to respond and authorizing the entry of this Final Order. FINDINGS OF VIOLATION Pursuant to 49 U.S.C. § 60122 and 49 C.F.R. §§ 190.209(a)(1) and 190.213, I find that Respondent violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.432(b) and (d), which states:#

420075018_Final Order_06082009_text.pdf, page 32 § 195.432 Inspection of in-service breakout tanks. (a) . . . . (b) Each operator shall inspect the physical integrity of in-service atmospheric and low-pressure steel aboveground breakout tanks according to section 4 of API Standard 653. However, if structural conditions prevent access to the tank bottom, the bottom integrity may be assessed according to a plan included in the operations and maintenance manual under §195.402(c)(3) . . . . (d) The intervals of inspection specified by documents referenced in paragraphs (b) and (c) of this section begin on May 3, 1999, or on the operator’s last recorded date of the inspection, whichever is earlier. The Notice alleged that Unocal failed to properly inspect the physical integrity of its breakout tanks in accordance with section 4 of API Standard 653. Although the company’s records indicated that inspections had been conducted, the actual conditions of the tanks as observed by the PHMSA representative showed that necessary maintenance and repairs had not been properly identified and performed to comply with section 4 of API Standard 653. In its Response, Chevron explained that the tanks at issue and all former Unocal facilities are now being inspected and repaired under Chevron’s maintenance and inspection procedures to ensure compliance with API 653 requirements. Accordingly, I find that Respondent violated 49 C.F.R. § 195.432(b) and (d) as alleged in the Notice. Item 2: 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 . . . . At least six times each calendar year, but with intervals not exceeding 2 1/2 months . . . . The Notice alleged Unocal failed to electrically check for proper performance each rectifier at least six times each calendar year, with intervals not exceeding 2 1/2 months. Specially, one rectifier was allowed to fail (or taken off line) and not repaired or replaced for almost 2 years. All rectifier readings were late or missed for several required intervals during 2003 and 2004. In addition, the operator’s records were incomplete and did not explain the addition of a new rectifier. In its Response, Chevron explained that Unocal technicians have been trained to use Chevron’s software for record keeping and maintenance management. Accordingly, I find that Respondent violated 49 C.F.R. § 195.573(c) as alleged in the Notice. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(d), which states: § 195.573 What must I do to monitor external corrosion control? (a) . . . .#

420075018_Final Order_06082009_text.pdf, page 43 (d) Breakout tanks. You must inspect each cathodic protection system used to control corrosion on the bottom of an aboveground breakout tank to ensure that operation and maintenance of the system are in accordance with API Recommended Practice 651. However, this inspection is not required if you note in the corrosion control procedures established under §195.402(c)(3) why compliance with all or certain operation and maintenance provisions of API Recommended Practice 651 is not necessary for the safety of the tank. The Notice alleged that Unocal failed to ensure that operation and maintenance of the cathodic protection system used to control corrosion on the bottom of breakout tanks was in accordance with API Recommended Practice 651. Cathodic protection on some tank bottoms and piping did not meet the applicable -850 mV “on” potential criterion. Unocal also did not perform testing to determine and account for voltage (IR) drop. In its Response, Chevron explained that it will review and revise the design of the cathodic protection systems to bring cathodic protection up to adequate levels. Accordingly, I find that Respondent violated 49 C.F.R. § 195.573(d) as alleged in the Notice. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.589, which states: § 195.589 What corrosion control information do I have to maintain? (a) You must maintain current records or maps to show the location of— (1) Cathodically protected pipelines; (2) Cathodic protection facilities, including galvanic anodes, installed after January 28, 2002; and (3) Neighboring structures bonded to cathodic protection systems. (b) Records or maps showing a stated number of anodes, installed in a stated manner or spacing, need not show specific distances to each buried anode. (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. The Notice alleged that Unocal failed to maintain current records or maps showing the type of cathodic protection being used on each tank. The Notice further alleged that the operator failed to maintain current records documenting and explaining the details of a new rectifier added to the system. In its Response, Chevron explained that it has prepared hard copies and electronic drawings of the terminal showing the location and details of cathodic protection devices, bonds, and test stations. Accordingly, I find that Respondent violated 49 C.F.R. § 195.589 as alleged in the Notice. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent.#

420075018_Final Order_06082009_text.pdf, page 54 ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to a civil penalty not to exceed $100,000 per violation for each day of the violation up to a maximum of $1,000,000 for any related series of violations. The Notice proposed a total civil penalty of $48,000 for the violation of § 195.573(c) in Item 2. 49 U.S.C. § 60122 and 49 C.F.R. § 190.225 require that, in determining the amount of the civil penalty, I 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. Having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $48,000 for the violation of § 195.573(c), which has already been paid by Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1, 2, 3, and 4 in the Notice for violations of §§ 195.432(b) and (d), 195.573(c), 195.573(d), and 195.589, respectively. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids by pipeline or who owns or operates a hazardous liquid pipeline facility is required to comply with the applicable safety standards established under chapter 601. The Director has indicated that Respondent has taken the following actions to comply with the terms of the proposed compliance order: • Chevron has initiated an inspection and repair program for breakout tanks to ensure compliance with § 195.432(b) and (d) (Item 1). On June 19, 2008, a representative from the Southwest Region, OPS, performed a specialized inspection of Chevron’s procedures and records, and verified field conditions at the breakout tank facility in Nederland, Texas. • Chevron will use computerized record keeping software to track maintenance and recurring inspections to ensure compliance with § 195.573(c) (Item 2). • Chevron has developed and implemented a plan to revise the design of the cathodic protection system at the breakout tank facility in accordance with § 195.573(d) (Item 3). • Chevron has developed and implemented a plan to show the source of cathodic protection currents to breakout tanks on a spreadsheet in accordance with § 195.589 (Item 4). Chevron also completed terminal drawings showing the locations of all cathodic protection devices, bonds, and test stations. In addition, the company will use computer software programs for standardized record keeping.#

420075018_Final Order_06082009_text.pdf, page 65 Accordingly, since compliance has been achieved with respect to these violations, the compliance terms are not included in this Order. The terms and conditions of this Final Order shall be effective upon receipt. ___________________________________ __________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

420075018_Notice Letter_05212007.pdf, page 1Official PDF,t \t U.S. Deportmenl of Tronsportotion Plpetlne ono Hozorclou3 ltoterlots lcmlnlsrotlon 8701 Soutr Gessner, Suite 1110 Houston, TX 77074 sot€ily NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED May 2'1,20A7 Ms. Rebecca Roberts Chevron Pipe Line Company 4800 Fournace Place Beflaire, Texas 77 401 -2324 Mr Terry Duhon Unocal Pipeline Co. Eastern Region One Sugar Creek Place 14141SW Freeway Sugarfand, TX 77478 cPF 4-2007-5018 Dear Ms Rebecca Roberts and Mr. Terry Duhon: On June 13 - 17,2005, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected the Unocal Beaumont Breakout Tank Farm, now owned by Chevron Pipeline Company. At that time the O & M procedures and records were reviewed in Nederland, Texas. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violations are: 1. 5195.432 Breakout tanks. (b) Each operator shall inspect the physical integrity of in-service atmospheric and low-pressure steel aboveground breakout tanks according to section 4 of API Standard 653. However, if structural conditions prevent access to the tank bottom, the bottom integrity may#

420075018_Notice Letter_05212007.pdf, page 2be assessed according to a plan included in the operations and maintenance manual under $19S.a02(cX3). (d) The intervals of inspection specified by documents referenced in paragraphs (b) and (c) of this section begin on May 3, 1999, or on the operator's last recorded date of the inspection, whichever is earlier. The inspection of your tank farm revealed that many of the tanks did not meet API 653 requirements. API 653 requires periodic inspections of breakout tanks, on specific schedules. Records wero reviewed that indicate the required inspections are being conducted. Actual conditions of the tanks indicate that no actions are being generated from the inspection reports. The conditions of the tanks show that the tanks are being neglected and the regulatory required repairs and maintenance have not been conducted. 2. 5195.573 What must I do to monitor external corrosion control? (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. Rectifier...........At least six times each calendar year, but with intervals not exceeding 2 % months. The Bighill Rectifier @ BMT terminal, RSB 458 was off line from some time after the July 2002 reading, through the latest reading at the time of the inspection. Rectifier records for January 2004 indicate that the rectifier is'down', otherwise there is no note to explain why this rectifier was down for so long, and not repaired. Readings were taken on all rectifiers through the July 2003 set of readings. No readings were taken on the 24 rectifiers for the September, November, or January, 2004 reading'window'. Afterthe June 2004 readings were taken, 80 days elapsed before the next readings were taken on September 2,2Q04, over the 2 % month window for readings on all24 rectifiers. From the September 02, 2004 readings, 109 days elapsed before the next readings were taken on the 24 rectifiers, on December20,2004, overthe 2/zmonth window. Afterthe December 20, 2A04, readings were taken ,77 days elapsed before the next readings taken on 31812005, over the 2lzmonth window. ln June 2OC/', a 25th rectifier was added to the list. No explanation was given. To summarize, one rectifler was allowed to fail/ taken off line, and not replaced for almost 2 years. All rectifier readings were late or missed for several required readings during 2004. Operator records are incomplete and do not explain the addition of a 25th rectifier into the system. 3. 5195.573 What must I do to monitor external corrosion control? (d) Breakout tanks. You must inspect each cathodic protection system used to control corrosion on the bottom of an aboveground breakout tank to ensure that operation and maintenance of the system are in accordance with API Recommended Practice 651. However, this inspection is not#

420075018_Notice Letter_05212007.pdf, page 3required if you note in the corrosion control procedures established under $195.402(cX3) why compliance with all or certain operation and maintenance provisions of APlRecommended Practice 651 is not necessary for the safety of the tank. The cathodic protection on tank bottom and piping is not adequate. From the 2005 DOT inspection it was noted that some tanks that do not meet -850 mV on potential. The operator has not done testing to determine lR drop or otherwise account for lR drop. 4. 5195.589 What corrosion control information do I have to maintain? a) You must maintain current records or maps to show the location of- (1) Gathodically protected pipelines; (2) Cathodic protection facilities, including galvanic anodes, installed after January 28,2002; and (3) Neighboring structures bonded to cathodic protection systems. b) Records or maps showing a stated number of anodes, installed in a stated manner or spacing, need not show specific distances to each buried anode. c) You must maintain a recorcl of each analysis, check, demonstration, examination, inspection, investigation, review, survey, and test required by this subpart in sufficient detailto 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 Secs. 195.569, 195.573(a) and (b), and 195.579(bX3) and (c) must be retained for as long as the pipeline remains in service. The operator's conosion records do not have maps and records of what type of cathodic protection is being used on all the tanks. Operator records are incomplete and do not explain the addition of a 25h rectifier into the system. Under 49 United States Code, S 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violations persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $ITOTAL AMOUNT] as follows: Item number 2 PENALTY $48,000 With respect to items 1 through 4 pursuant to 49 United States Code $ 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Chevron Pipe Line Company. Please refer to the Proposed Compliance arder which is enclosed and made a part of this Notice.#

420075018_Notice Letter_05212007.pdf, page 4Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. lf you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. ln your correspondence on this matter, please refer to CPF 4-2007-5018 and for each document you submit, please provide a copv in electronic format whenever possible. Sincerely, -/il(/r/ R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Ad min istration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings#

420075018_Notice Letter_05212007.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code $ 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA)proposes to issue to Chevron Pipe Line Company a Compliance Order incorporating the following remedial requirements to ensure the compliance of Chevron Pipe Line Company with the pipeline safety regulations: 1. Perform an audit to ensure Chevron Pipe Line Company is in compliance S195.432(b). This audit shall consist of: . Demonstrate that the Chevron Pipe Line Company break-out tanks meet APl653 requirements. 2. Perform an audit to ensure Chevron Pipe Line Company is in compliance $195.573(c). This audit shall consist of: . Demonstrate that all Chevron Pipe Line Company breakout tanks rectifiers are being read to meet the minimum safety requirement, as prescribed by 195.573 (c), and are in compliance with applicable procedures. . Based upon the review, develop a plan for conducting rectifier readings to keep Chevron Pipe Line Company in compliance. 3. Perform an audit to ensure Chevron Pipe Line Company is in compliance S195.573(d). This audit shall consist of: . Demonstrate that all Chevron Pipe Line Company breakout tianks meet cathodic protection requirements and that they are in compliance with applicable procedures. . Based upon the review, develop a plan for conducting cathodic protection surveys to keep Chevron Pipe Line Company in compliance. 4. Perform an audit to ensure Chevron Plpe Line Company is in compliance with 5195.589. This audit shallconsist of: . Review allapplicable records of Chevron Pipe Line Company to which tanks have complete records and which have incomplete records, showing what type of CP system is protecting the respective tank. . Based upon the review, develop a plan for updating the cathodic protection records to bring Chevron Pipe Line Company into compliance. 5. Chevron shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Rod Seeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration. Costs shall be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses,#

420075018_Notice Letter_05212007.pdf, page 6and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. Submit to the Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration, 8701 South Gessner, Suite 1110, Houston, Texas 77074. Results of surveys and plans, with time tables, must be submifted within 30 days following the receipt of the FinalOrder. All items shallbe completed within 365 days following the receipt of the Final Order.#