{"operation":"document","citation":"CPF 420095007","title":"DENBURY ONSHORE, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2009-05-11","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.222, 195.260.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420095007.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420095007.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420095007","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420095007","body":"Notice of Probable Violation involving DENBURY ONSHORE, LLC. PHMSA's enforcement data identifies the cited regulations as 195.222,  195.260. The case was opened on 2009-05-11 and is reported as closed as of 2010-11-15. Proposed civil penalty: $46,300. Assessed civil penalty: $46,300. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420095007_Closure_11152010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420095007/420095007_Closure_11152010.pdf\n\n420095007_Closure_11152010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420095007/420095007_Closure_11152010_text.pdf\n\n420095007_FinalOrder_04222010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420095007/420095007_FinalOrder_04222010.pdf\n\n420095007_FinalOrder_04222010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420095007/420095007_FinalOrder_04222010_text.pdf\n\n420095007_NOPVPCPPCO_05112009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420095007/420095007_NOPVPCPPCO_05112009.pdf\n\n420095007_NOPVPCPPCO_05112009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420095007/420095007_NOPVPCPPCO_05112009_text.pdf\n\n420095007_FinalOrder_04222010_text.pdf\n\nAPR 22 2010\nMr. Robert Cornelius\nSenior Vice President, Operations\nDenbury Onshore, LLC\n5100 Tennyson Parkway, Suite 3000\nPlano, TX 75024\nRe: CPF No. 4-2009-5007\nDear Mr. Cornelius:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a civil penalty of $46,300, and specifies actions that need to be taken by\nDenbury Onshore, LLC to comply with the pipeline safety regulations. The penalty payment\nterms are 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 enforcement\naction will be closed. Service of the Final Order by certified mail is deemed effective upon the\ndate of mailing, 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. R. M. Seeley, Director, Southwest Region, PHMSA\nMr. Vince Murchison, Esquire\nSonnenschein Nath & Rosenthal LLP\n2000 McKinney Avenue, Suite 1900\nDallas, TX 75201-1858\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 2506]\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 )\nDenbury Onshore, LLC, ) CPF No. 4-2009-5007\na Subsidiary of Denbury )\nResources, Inc., )\n)\n)\n)\nRespondent. )\n______________________________)\nFINAL ORDER\nFrom March 23 to 25 and April 14 to 15, 2009, pursuant to 49 U.S.C. § 60117, a representative\nof the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline\nSafety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of\nDenbury Onshore, LLC (Denbury or Respondent).\n1 The inspection focused on the Green\nPipeline, a 317.5-mile pipeline that originates in Donaldson, Louisiana, and terminates in\nHastings, Texas, and the Delhi Pipeline, an 77.9-mile pipeline that originates in Tinsely,\nMississippi, and terminates in Dunn, Louisiana. Though still under construction at the time of\nthe inspection, both of these pipelines are designed to transport carbon dioxide for use in tertiary\nrecovery operations in mature oil fields and for carbon sequestration.\n2\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated May 11, 2009, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the\nNotice proposed finding that Respondent had violated 49 C.F.R. §§ 195.222(a) and 195.260 and\nproposed assessing a civil penalty of $46,300 for the alleged violations. The Notice also\nproposed ordering Respondent to take certain measures to correct the alleged violations.\n1 Denbury Onshore, LLC is a subsidiary of Denbury Resources, Inc. See http://www.denbury.com (accessed on\nApr. 9, 2010).\n2 Carbon dioxide, “[a]n inert, noncombustible, odorless gas at normal temperature and pressure conditions[,] . . . has\nbecome a valuable resource employed in tertiary oil recovery methods both as a pressurizer and as a solvent to\nenhance oil recovery.” MANUAL OF OIL AND GAS TERMS, 132 (10th ed. 1997) (citing Aulston v United States, 915\nF.2d 584 (10th Cir. 1990)).\n\n\n\n2\nDenbury responded to the Notice by letters dated May 20, May 22, and June 19, 2009\n(Response). Respondent contested the allegations and requested a hearing.3 However, by\nseparate letters dated November 5, 2009 (Supplemental Response), Respondent presented new\ninformation on the steps it would take to satisfy the terms of the proposed compliance order and\nwithdrew its request for a hearing, thereby authorizing the entry of this Final Order without\nfurther notice.4\nFINDINGS OF VIOLATION\nIn its Supplemental Response, Denbury did not contest the allegations in the Notice that it\nviolated 49 C.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.222(a), which states:\n§ 195.222 Welders: Qualification of welders.\n(a) Each welder must be qualified in accordance with section 6 of API\n1104 (incorporated by reference, see § 195.3) or section IX of the ASME\nBoiler and Pressure Vessel Code, (incorporated by reference, see § 195.3)\nexcept that a welder qualified under an earlier edition than listed in\n§ 195.3 may weld but may not re-qualify under that earlier edition.\nThe Notice alleged that Denbury violated 49 C.F.R. § 195.222(a) by failing to qualify each\nwelder in accordance with section 6 of API 1104. Specifically, the Notice alleged that 10 of\nRespondent’s welder qualification reports did not indicate the actual values that those welders\nhad achieved during the performance of certain tests. The Notice also alleged that two of those\nreports showed that Respondent’s welders went outside of the acceptable parameters limits\nestablished by the company’s procedures during their qualification tests. Respondent did not\n3 In particular, Denbury argued that the Pipeline Safety Laws and Regulations did not apply to the Green and Delhi\nPipelines, because neither was engaged in the transportation of hazardous liquids at the time of the OPS inspection.\nIn the alternative, it further argued that the first allegation of probable violation lacked merit, and that the second\nallegation of probable violation was the subject of a pending petition for finding or approval. Although Respondent\nlater abandoned these arguments, I note that PHMSA’s authority to regulate the construction of natural gas and\nhazardous liquid pipeline systems is firmly established. 49 U.S.C. § 60102(a)(2)(B) (“The Secretary shall prescribe\nminimum safety standards for pipeline transportation and pipeline facilities. The standards . . . may apply to the . . .\nconstruction of pipeline facilities.”); S. REP. NO. 96-182 (1979), reprinted in 1979 U.S.C.C.A.N. 1971, 1978 (noting\nthat a modification to the definition of pipeline facility to clarify the agency’s authority to regulate construction prior\nto operation, as proposed in a prior draft of the Pipeline Safety Act of 1979, Pub. L. No. 96-129, 93 Stat. 989 (1979),\nwas not necessary, because “DOT and industry representatives agree that this authority is already implied by the\nterms of the [Natural Gas Pipeline Safety Act of 1968, Pub. L. No. 90-481, 82 Stat. 720 (1968)].”) I also note that\nPHMSA denied Respondent’s petition for finding or approval by letter dated October 9, 2009.\n4After submitting its Response, Denbury obtained new counsel, Mr. Vince Murchison, Esquire. Mr. Murchison filed\nits Supplemental Response.\n\n\n\n3\ncontest these allegations in its Supplemental Response. Instead, Denbury introduced evidence\nshowing that it had re-qualified seven of its welders after receiving the Notice. It also\nsubstantiated the integrity of the welds performed by two other welders who no longer work for\nthe company. Accordingly, based upon a review of all of the evidence, I find that Respondent\nviolated 49 C.F.R. § 195.222(a) by failing to qualify each welder in accordance with section 6 of\nAPI 1104.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.260(e), which states:\n§ 195.260 Valves: Location.\nA valve must be installed at each of the following locations:\n(a) . . . .\n(e) On each side of a water crossing that is more than 100 feet (30\nmeters) wide from high-water mark to high-water mark unless the\nAdministrator finds in a particular case that valves are not justified.\nThe Notice alleged that Denbury violated 49 C.F.R. § 195.260(e) by failing to install a valve on\neach side of a water crossing that is more than 100 feet wide from high-water mark to high-water\nmark. Specifically, the Notice alleged that the Green Pipeline had 21 water crossings over 100\nfeet in length, with as many as 26 locations in those areas requiring the installation of valves, and\nthat the Delhi Pipeline had 13 water crossings over 100 feet in length, with as many as 25\nlocations in those areas requiring the installation of valves.\nIn its Supplemental Response, Denbury admitted that 19 water crossings on the Green Pipeline\nand 12 water crossings on the Delhi Pipeline met the criteria in § 195.260(e). Respondent also\nsubmitted a work plan for installing valves and taking other measures to ensure the safe\noperation of those lines. Accordingly, based upon a review of all of the evidence, I find that\nRespondent violated 49 C.F.R. § 195.260(e) by failing to install a valve on each side of a water\ncrossing that is more than 100 feet wide from high-water mark to high-water mark.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken 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\nrelated series of violations.\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I\nmust 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\n\n\n\n4\nof Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that\nthe 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\ndamages, and such other matters as justice may require. The Notice proposed a total civil\npenalty of $46,300 for the first violation cited above.\nItem 2: The Notice proposed a civil penalty of $46,300 for Respondent’s failure to install a\nvalve on each side of a water crossing that is more than 100 feet wide from high-water mark to\nhigh-water mark as required by 49 C.F.R. § 195.260(e). In terms of the assessment criteria,\nRespondent notes that the purpose of the regulation is to protect waterways from contamination,\nand that a release of carbon dioxide would not have the same adverse environmental impact as a\nrelease of petroleum products.\nWhile I agree with that assertion in principle, I cannot ignore the other aggravating factors that\nare present in this case. Specifically, Denbury does not dispute the fact that it overlooked 31\ndifferent locations on the Green and Delhi Pipelines that met the criteria in § 195.260(e), thereby\nincreasing the gravity of the violation. Respondent’s history of prior offenses also includes a\nfinding of violation for failing to perform valve inspections on another hazardous liquid pipeline\nsystem.\n5 Finally, there is also no indication that it cannot pay the proposed penalty amount, that\ndoing so would impair its ability to stay in business, or that it sought in good faith to comply\nwith the regulation.6 Accordingly, having reviewed the record and considered the assessment\ncriteria, I assess Respondent a civil penalty of $46,300 for violation of 49 C.F.R. § 195.260(e).\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 269039, Oklahoma City, OK 73125; (405) 954-8893.\nFailure to pay the $46,300 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. 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.\n5 In the Matter of Denbury Onshore, LLC, C.P.F. 2-2005-2007 (finding that Respondent had violated 49 C.F.R.\n§§ 195.403(a)-(c) and 195.420(a)-(b)) (available at www.phmsa.dot.gov/pipeline/enforcement).\n6 Department of Transportation, Part 195-Transportation of Liquids by Pipeline: Requirements for Design,\nConstruction, Operation, and Maintenance, 34 Fed. Reg. 15475, 15480 (1969); see also In the Matter of Sun Pipe\nLine Co., PHMSA Interpretation, #PI-72-058 (Aug. 22, 1972) (available at\nhttp://www.phmsa.dot.gov/pipeline/regs/interps).\n\n\n\n5\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. §§195.222(a), 195.260(e), respectively. Under 49 U.S.C. § 60118(a),\neach person who engages in the transportation of hazardous liquids or who owns or operates a\npipeline facility is required to comply with the applicable safety standards established under\nchapter 601. The Director has indicated that Respondent has taken the following actions to\naddress one of the cited violations:\n1. With respect to the violation of § 195.222(a) (Item 1), Respondent has re-qualified\nthe welders who remain on staff and submitted records verifying the integrity of the\nwelds performed by two other welders who no longer work for the company.\nAccordingly, I find that compliance has been achieved with respect to this violation. Therefore,\nthe compliance terms proposed in the Notice for Item 1 are not included in this Order.\nAs for the remaining compliance terms, pursuant to the authority of 49 U.S.C. § 60118(b) and 49\nC.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with\nthe pipeline safety regulations applicable to its operations:\n1. With respect to the violation of § 195.260(e) (Item 2), Respondent must implement\nthe two work plans, dated November 5, 2009, and titled Delta-Delhi Pipeline System\nConfiguration Plan and the Green Pipeline System Configuration Plan, that were\nsubmitted with its Supplemental Response to ensure the safe operation of the Green\nand Delhi Pipelines.\n2. Respondent must maintain documentation of the safety improvement costs associated\nwith fulfilling the terms of this Compliance Order and submit the total to R. M.\nSeeley, Director, Southwest Region, PHMSA. Such costs shall be reported in two\ncategories: (1) total cost associated with preparation/revision of plans, procedures,\nstudies, and analyses, and (2) total cost associated with replacements, additions, and\nother changes to pipeline infrastructure.\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nFailure to comply with this Order may result in administrative assessment of civil penalties not\nto exceed $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. The petition must be sent to: Associate Administrator, Office of Pipeline\nSafety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC\n20590. A copy of the petition should also be sent to: Assistant Chief Counsel for Pipeline\nSafety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC\n\n\n\n6\n20590. The petition must be received no later than 20 days after service of this Final Order upon\nthe Respondent and must contain a brief statement of the issue(s) and meet all other requirements\nof 49 C.F.R. § 190.215. The filing of the petition automatically stays the payment of any civil\npenalty assessed. Unless the Associate Administrator, upon request, grants a stay, all other terms\nand conditions of this Final Order are effective upon receipt of service.\n___________________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n420095007_Closure_11152010_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nNovember 15, 2010\nMr. Robert Cornelius\nSenior Vice President, Operations\nDenbury Onshore, LLC\n5100 Tennyson Parkway, Suite 3000\nPlano, TX 75024\nCPF No. 4-2009-5007\nDear Mr. Cornelius:\nOn April 22, 2010, the Pipeline and Hazardous Materials Safety Administration\n(PHMSA) issued to Denbury Onshore, LLC a Final Order in the above-referenced case.\nThis Order included a Compliance Order and Civil Penalty assessment. Based on the\nconfirmation of payment of the civil penalty and the documentation that Denbury\nOnshore, LLC provided May 6, 2010 and an inspection conducted by this office during\nthe week of July 19-23, 2010, it has been determined that you have complied with the\nterms of this Order.\nAccordingly, this case is now closed and no further action is contemplated with respect\nto the matters involved in this case. Thank you for your cooperation in this matter.\nSincerely,\nR. M. Seeley\nDirector, Southwest\nPipeline and Hazardous\nMaterials Safety Administration","truncated":false,"body_characters":18628}