{"operation":"document","citation":"CPF 420075019","title":"NUSTAR LOGISTICS, L.P. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2007-05-21","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.573(a)(2).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420075019.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420075019.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420075019","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420075019","body":"Notice of Probable Violation involving NUSTAR LOGISTICS, L.P.. PHMSA's enforcement data identifies the cited regulation as 195.573(a)(2). The case was opened on 2007-05-21 and is reported as closed as of 2010-09-16. Proposed civil penalty: $50,000. Assessed civil penalty: $50,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420075019_FinalOrder _08312010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420075019/420075019_FinalOrder%20_08312010.pdf\n\n420075019_FinalOrder _08312010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420075019/420075019_FinalOrder%20_08312010_text.pdf\n\n420075019_Notice Letter_05212007.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420075019/420075019_Notice%20Letter_05212007.pdf\n\n420075019_operator response to notice letter_06192007.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420075019/420075019_operator%20response%20to%20notice%20letter_06192007.pdf\n\n420075019_Notice Letter_05212007.pdf\n\nU.S. Department\nof Transportation\n8701 S. Gessner, Suite 1110\nHouston, TX 77074\nPipeline and\nHazardous Materials\nSafety Administration\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nPROPOSED COMPLIANCE ORDER\nand\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nMay 21, 2007\nMr. Richard Bluntzer\nVice President, Pipeline Operations\nOne Valero Way\nNustar Logistics, L.P.\nSan Antonio, Texas 78249\nCPF No. 4-2007-5019\nDear Mr. Bluntzer:\nIn 2004, a team of representatives of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA), pursuant to Chapter 601 of 49 United States Code, conducted an\nyour headquarters in San Antonio, Texas. In August 2005 a follow up pipeline safety inspection\nonsite pipeline safety irispection of your Corrosion Control manuals, records and procedures at\nof your Corrosion Control manuals, records and procedures was conducted at the PHMSA\noffice in Houston, Texas. Concurrent field inspections were conducted during 2004.\nValero Logistics Operations, LP) did not comply with the pipeline safety regulations located at\nAs a result of the inspection, it appears that Nustar Logistics, L.P. (Nustar) (formerly known as\nTitle 49, Code of Federal Regulation (CFR), Part 195. The following probable violations are\n§195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine whether cathodi\nprotection required by this subpart complies with Sec. 195.571:\n(2) Identify before December 29, 2003 or not more than 2 years after cathodic\nprotection is installed, whichever comes later, the circumstances in which a close-\ninterval survey or comparable technology is practicable and necessary to\n\n\n\naccomplish the objectives of paragraph 10.1.1.3 of NACE Standard RP0169-96\n(incorporated by reference, see Sec. 195.3).\nNustar has not identified the circumstances in which a close interval survey should be\npipelines are adequately protected.\nperformed. As a result have not performed the close interval surveys to demonstrate that their\nProposed Civil Penalty\n$100,000 for each violation for each day the violation persists up to a maximum of $1,000,000\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed\nfor any related series of violations. The Compliance Officer has reviewed the circumstances and\nsupporting documentation involved in the above probable violation(s) and has recommended\nthat you be preliminarily assessed a civil penalty of $[total amount] as follows:\nItem number\nPENALTY\n1.\n$50,000\nProposed Compliance Order\nMaterials Safety Administration proposes to issue a Compliance Order to Nustar Logistics, L.P.\nWith respect to item 1 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous\nPlease refer to the Proposed Compliance Order, which is enclosed and made a part of this\nResponse to this Notice\nin Compliance Proceedings. Please refer to this document and note the response options. Be\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators\nadvised that all material you submit in response to this enforcement action is subject to being\nmade publicly available. If you believe that any portion of your responsive material qualifies for\nmust provide a second copy of the document with the portions you believe qualify for\nconfidential treatment under 5 U.S.C. 552(b), along with the complete original document you\nqualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days\nconfidential treatment redacted and an explanation of why you believe the redacted information\nNotice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in\nof receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this\nthis Notice without further notice to you and to issue a Final Order.\nIn your correspondence on this matter, please refer to CPF 4-2007-5019 and for each document\nyou submit, please provide a copy in electronic format whenever possible.\nSincerely,\nHem sals\nR. M. Seeley\nPipeline and Hazardous\nDirector, Southwest Region\nMaterial Safety Administration\nEnclosures:\nProposed Compliance Order\nResponse Options for Pipeline Operators in Compliance Proceedings\n\n\n\nPROPOSED COMPLIAilCE ORDER\nPursuant to 49 United States Code $ 601 18, the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) proposes to issue to Nustar Logistics, L.P. (Ntlstar)(fermerly known as\nValero Logisticd Operations, LP) a Compliance Order incorporating the following remedial\nrequiremeirts tcl ensure the compliance of Nustar Logistics L.P. with the pipeline safety\nregulations:\n1. In regard to ltem 1 of the Notice pertaining to Nustar's pipeline systems, review\nNustir's CP data collection and evaluation to ensure that data meets the regulatory\nrequirements, including lR drop considerations and that the pipelines are protected-\nln areas where the pipelines are not adequately protected, develop a plan and time\ntable to improve the CP systems to bring Nustar into compliance.\n2. Nustar shall maintain documentation of the improvement costs. Submit to the\nDirector, Southwest Region, Pipeline and Hazardous Materials Safety\nAdministration, 870'l Soutn Gessner, Suite 1'110, Houston, Texas 77074:\no Results of surveys, assessments, and plans, with time table, must be\nsubmitted within 30 days following the receipt of the Final order\n. All items shall be completed within 180 days following the receipt of the Final\nOrder.\n3. Nustar shall maintain documentation of the safety improvement costs associated\nwith fulfilling this Compliance Order and submit the total to R.M. Seeley, Director,\nSouthwest Region, Pipeline and Hazardous Materials Safety Administration. Costs\nshall be reported in two categories: 1) total cost associated with preparation/revision\nof plans, procedures, studies and analyses, and 2) total cost associated with\nreplacements, additions and other changes to pipeline infrastructure.\n\n420075019_FinalOrder _08312010_text.pdf\n\nAUG 31 10\nMr. Todd Denton\nVice President of Operations\nNuStar Logistics, L.P.\nOne Valero Way\nSan Antonio, Texas 78249\nRe: CPF No. 4-2007-5019\nDear Mr. Denton:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation and assesses a civil penalty of $50,000. It further finds that NuStar Logistics, L.P. has\ncompleted the actions specified in the Notice to comply with the pipeline safety regulations. When\nthe civil penalty has been paid, this enforcement action will be closed. Service of the Final Order\nby certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49\nC.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, Director, Southwest Region, PHMSA\nMs. Rebecca Fink, Counsel, NuStar Logistics, L.P.\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 2896]\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n____________________________________\n)\nIn the Matter of )\n)\nNuStar Logistics, L.P., ) CPF No. 4-2007-5019\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nOn various dates in 2004 and 2005, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline\nand Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nconducted an on-site pipeline safety inspection of the facilities and records of NuStar Logistics,\nL.P. (NuStar or Respondent) in San Antonio, Texas. NuStar operates approximately 4578 miles of\npetroleum and liquid hydrocarbon pipelines in various states including Texas, Oklahoma, New\nMexico, and Colorado.\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated May 21, 2007, a Notice of Probable Violation, Proposed Civil Penalty,\nand Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice\nproposed finding that NuStar had violated 49 C.F.R. § 195.573 and proposed assessing a civil\npenalty of $50,000 for the alleged violation. The Notice also proposed ordering Respondent to\ntake certain measures to correct the alleged violation.\nRespondent responded to the Notice by letter dated June 19, 2007, as supplemented by letter dated\nJuly 20, 2007 (Response), contested the allegation of violation and requested a hearing. An\ninformal hearing was subsequently held via telephone conference on December 31, 2008, with\nLarry White, Attorney, PHMSA Office of Chief Counsel, presiding. At the hearing, Respondent\nwas represented by counsel. Following the hearing, NuStar submitted additional materials for the\nrecord by letter dated December 22, 2009.\nFINDING OF VIOLATION\nThe Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(2), which states in\nrelevant part:\n\n\n\n2\n§ 195.573 – What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine\nwhether cathodic protection required by this subpart complies with\n§195.571:\n(2) Identify not more than 2 years after cathodic protection is installed, the\ncircumstances in which a close-interval survey or comparable technology is\npracticable and necessary to accomplish the objectives of paragraph 10.1.1.3 of\nNACE Standard RP 0169 (incorporated by reference, see §195.3).\nSpecifically, the Notice alleged that NuStar failed to identify the circumstances in which a close-\ninterval survey is needed to accomplish the objectives of the cited standard which include assessing\nthe effectiveness of the cathodic protection system and identifying areas of inadequate protection.\nIn its June 19, 2007 Response, NuStar acknowledged that its corrosion control manual in place at the\ntime of the inspection “did not identify the circumstances in which a close-interval survey or\nportions of its corrosion control manual in 2005 and enclosed copies of the revised procedures with\nits Response. During the hearing, NuStar stated that it had conducted some close-interval surveys\nprior to the inspection in 2004 on portions of its pipelines but did not provide any records\ndocumenting that this work was performed. Respondent did provide documentation showing that\ncomparable technology would be used.”1 NuStar stated that it subsequently revised the relevant\nclose-interval surveys were performed on approximately 1387 miles of pipe during 2006 through\n2008 under the close-interval survey procedures it added to its manual in 2005 after PHMSA’s\ninspection. This work resulted in the installation of cathodic protection rectifiers and ground beds\ntotaling $365,600 in 2006, $116,380 in 2007, and $851,794 in 2008.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.573(a)(2) by failing to identify the circumstances in which a close-interval survey is needed to\naccomplish the objectives of paragraph 10.1.1.3 of NACE Standard RP 0169.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related\nseries of violations. In determining the amount of a civil penalty under 49 U.S.C. § 60122 and\n49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of\nthe violation, including adverse impact on the environment; the degree of Respondent’s culpability;\nthe history of Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect\nthat the penalty may have on its ability to continue doing business; and the good faith of Respondent\nin attempting to comply with the pipeline safety regulations. In addition, I may consider the\neconomic benefit gained from the violation without any reduction because of subsequent damages,\nand such other matters as justice may require.\n1 June 19, 2007 Response at page 1.\n\n\n\n3\nItem 1: The Notice proposed a civil penalty of $50,000 for Respondent’s violation of 49 C.F.R.\n§ 195.573(a)(2) for failing to identify the circumstances in which a Close-Interval Survey is needed\nto accomplish the objectives of paragraph 10.1.1.3 of NACE Standard RP 0169.\nMaintaining continuous and effective cathodic protection is a key part of pipeline safety. Operators\nare obligated to exercise care in selecting electrical survey methods to assess the effectiveness of the\ncathodic protection system, provide base line operating data, locate areas of inadequate protection\nlevels, and identify areas likely to be adversely affected by construction or stray currents. This\nenables operators to take remedial measures such as clearing shorts, repairing inoperative cathodic\nprotection equipment or adding supplemental cathodic protection where needed to prevent corrosion\nwhich can lead to failures.\nIn its Response and during the hearing, Respondent contended that the civil penalty amount\nproposed in the Notice should be reduced. First, Respondent argued that the increase in the amount\nof pipeline mileage on which close-interval surveys were performed during 2006 through 2008 was\nthe result of a “discretionary decision” to obtain a base line for future risk assessments. Obtaining as\nbase line, however, is one of the reasons for the close-interval survey requirement to begin with.\nSecond, Respondent contended that it had taken a “proactive stance” by purchasing upgraded\nsoftware and hardware, installing remote monitor units, and adding personnel to its corrosion staff\nprior to the issuance of the Notice. I acknowledge that NuStar took action to address the situation.\nThese activities, however, took place after PHMSA’s inspection and therefore do not constitute a\ngood faith effort to comply.\nThird, Respondent argued that the violation involved written procedures and that no leak or safety\nhazard occurred. While Respondent was fortunate that a corrosion leak did not occur, the purpose of\ncorrosion control measures is to prevent corrosion from happening in the first place.\nFinally, Respondent questioned whether PHMSA had imposed lower penalties on other operators for\nviolating this same regulation. PHMSA, however, assesses civil penalties in accordance with the\nassessment criteria set forth in 49 U.S.C. § 60122(b) and 49 C.F.R. § 190.225. When PHMSA\nproposes a penalty, it examines the allegations and supporting evidence on a case-by-case basis and\napplies the relevant assessment criteria to those particular facts. This analysis generally includes,\namong other things, a review of an operator’s compliance history, how the alleged non-compliance\nwas discovered and its duration, whether the respondent made a good faith effort to comply with the\nregulation prior to the inspection, and whether there was any immediate or potential safety or\nenvironmental impact. This fact-sensitive, case-by-case approach involves the consideration of risk\nfactors and complexities unique to each pipeline system and under the relevant statute PHMSA has\nnever represented that it would adopt a standard penalty schedule.\nI would also note that the penalty assessed in this case is consistent with another recent enforcement\ncase in which PHMSA proposed a similar amount for an alleged violation of § 195.573.\n2\n2 See In the Matter of Kinder Morgan CO2 Logistics Operations, L.P., Notice of Probable Violation, CPF 4-2006-\n5003(Jan. 20, 2006). The average amount proposed and/or assessed against eight other operators for violations of 49\nC.F.R.§ 195.573(a)(2), a closely related regulation, is $32,300 (not including instances where a warning was given).\n\n\n\n4\nRespondent has presented no information or arguments warranting a reduction in the penalty amount\nproposed in the Notice for this violation. Accordingly, having reviewed the record and considered\nthe assessment criteria, I assess Respondent a total civil penalty of $50,000 for violation of 49 C.F.R.\n§ 195.573(a)(2).\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 directed\nto: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike Monroney\nAeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial\nOperations Division telephone number is (405) 954-8893.\nFailure to pay the $50,000 civil penalty will result in accrual of interest at the current annual rate in\naccordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same\nauthorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not\nmade within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral\nof the matter to the Attorney General for appropriate action in a district court of the United States.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Item 1 in the Notice for violation of 49\nC.F.R. § 195.573(a)(2). Under 49 U.S.C. § 60118(a), each person who engages in the transportation\nof hazardous liquids or who owns or operates a pipeline facility is required to comply with the\napplicable safety standards established under chapter 601. The Director indicates that Respondent\nhas taken the following actions specified in the proposed compliance order:\n1. Respondent added procedures to its corrosion control manual to identify the circumstances in\nwhich a close-interval survey is needed to accomplish the objectives of paragraph 10.1.1.3 of\nNACE Standard RP 0169.\n2. Respondent collected and reviewed cathodic protection data, including IR drop\nmeasurements, and developed and submitted a plan and a time table to conduct close-interval\nsurveys and cathodic protection system improvements as required.\n3. Respondent submitted documentation on the results of the surveys, assessments, plans, and\nremedial work and maintained documentation of the costs associated with fulfilling the\ncompliance requirements.\nAccordingly, I find that compliance has been achieved with respect to this violation. Therefore, the\ncompliance terms proposed in the Notice are not included in this Order.\nUnder 49 C.F.R. § 190.215, Respondent has the right to submit a petition for reconsideration of this\nFinal Order. Should Respondent elect to do so, the petition must be sent to: Associate\nAdministrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd\n\n\n\n5\nFloor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same\naddress. PHMSA will accept petitions received no later than 20 days after receipt of service of the\nFinal Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all\nother requirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment\nof any civil penalty assessed but does not stay any other provisions of the Final Order, including any\nrequired corrective actions. If Respondent submits payment of the civil penalty, the Final Order\nbecomes the final administrative decision and the right to petition for reconsideration is waived.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R.\n§ 190.5.\n___________________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":20970}