{"operation":"document","citation":"CPF 420105005","title":"HOLLY ENERGY PARTNERS - OPERATING, L.P. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2010-01-20","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.310(a), 195.402(c)(13), 195.402(c)(6), 195.410(a)(1), 195.432(d), 195.571, 195.573(e).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420105005.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420105005.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420105005","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420105005","body":"Notice of Probable Violation involving HOLLY ENERGY PARTNERS - OPERATING, L.P.. PHMSA's enforcement data identifies the cited regulations as 195.310(a),  195.402(c)(13),  195.402(c)(6),  195.410(a)(1),  195.432(d),  195.571,  195.573(e). The case was opened on 2010-01-20 and is reported as closed as of 2011-04-15. Proposed civil penalty: $92,500. Assessed civil penalty: $92,500. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420105005_FinalOrder_03302011.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420105005/420105005_FinalOrder_03302011.pdf\n\n420105005_FinalOrder_03302011_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420105005/420105005_FinalOrder_03302011_text.pdf\n\n420105005_NOPV PCP PCO_01202010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420105005/420105005_NOPV%20PCP%20PCO_01202010.pdf\n\n420105005_NOPV PCP PCO_01202010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420105005/420105005_NOPV%20PCP%20PCO_01202010_text.pdf\n\n420105005_Response to NOPV PCP PCO_02222010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420105005/420105005_Response%20to%20NOPV%20PCP%20PCO_02222010.pdf\n\n420105005_NOPV PCP PCO_01202010_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nJanuary 20, 2010\nMr. Mark Cunningham, P. E.\nVice President, Operations\nHolly Energy Partners\n100 Crescent Court, Suite 1600\nDallas, TX 75201-6927\nCPF 4-2010-5005\nDear Mark Cunningham:\nOn November 30 though December 3, 2009, representatives of the Pipeline and Hazardous\nMaterials Safety Administration (PHMSA) inspected your River and Trust Pipelines in Big\nSpring, Abilene, and Wichita Falls, TX, pursuant to Chapter 601 of 49 United States Code.\nAs a result of the inspection, it appears that you have committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the\nprobable violation(s) are:\n1. §195.310 Records.\n(a) A record must be made of each pressure test required by this subpart, and the\nrecord of the latest test must be retained as long as the facility tested is in use.\n\n\n\nHolly Energy Partners (HEP) informed PHMSA representatives that records of the pressure test\nfor three of eleven pipeline segments were missing, and that HEP was attempting to locate them.\nHEP is required to retain these records for as long as the facility tested is in use.\nA spreadsheet titled Pipeline Maximum Operating Pressures summarizing the pipeline segment\ntest pressures and MOPs was provided by HEP to the PHMSA representatives during the records\nreview at the HEP Big Springs office location on November 30, 2009. The spreadsheet listed\neleven Trust Pipeline System pipeline segments and relevant materials and testing information\nfor use in the calculation of the MOP. The spreadsheet indicated the following three segments\nhad no test records:\nSystem Segment\nX-6 Big Spring to Hawley\n6 / 8 Colorado City to Merkel\n6 / 8 Throckmorton to Archer\nThe operator voluntarily reduced the operating pressure to 80% of the normal operating pressure\nprior to the PHMSA inspection. Additionally, HEP indicated that they were continuing to\nattempt to locate these records, and that if they were not located, it was their intention to re-test\nthese three pipeline segments.\nHEP must have records conforming to 49 CFR 195.310 that demonstrate the three segments\nidentified above have been pressure tested in accordance with Subpart E of 49 CFR 195.\n2. §195.402 Procedural manual for operations, maintenance, and emergencies.\n(c) Maintenance and normal operations. The manual required by paragraph (a) of\nthis section must include procedures for the following to provide safety during\nmaintenance and normal operations:\n(5) Analyzing pipeline accidents to determine their causes.\n(6) Minimizing the potential for hazards identified under paragraph (c)(4) of this\nsection and the possibility of recurrence of accidents analyzed under paragraph\n(c)(5) of this section.\nHEP had two accidents that were reportable to PHMSA, one in 2005 and a second in 2006. Both\naccidents were a result of second party excavation by the same contractor performing\nremediation work on HEP’s pipeline. HEP was unable to produce a written accident\ninvestigation and could not demonstrate revisions to their damage prevention program resulting\nfrom any investigations related to either accident.\n2\n\n\n\nHEP could not demonstrate that an investigation for the accident reported under PHMSA\nHazardous Liquid Accident Report ID 20050342 occurred. HEP could not produce documents\nrelated to the determination of the cause and minimizing the recurrence, and the procedures\nfailed to achieve the desired results as demonstrated by the second event reported under PHMSA\nHazardous Liquid Accidents Report ID 20060309. Similarly, HEP could not demonstrate that an\ninvestigation had occurred for this accident.\n3. §195.402 Procedural manual for operations, maintenance, and emergencies.\n(13) Periodically reviewing the work done by operator personnel to determine the\neffectiveness of the procedures used in normal operation and maintenance and\ntaking corrective action where deficiencies are found.\nTwo second party excavation accidents occurred in 2005 and 2006, but HEP was unable to\ndemonstrate that a procedural review or revision to the damage prevention procedure 23.1 HEP-\nO&M-195.442(Damage Prevention Program) had occurred. The excavation accidents were\nby the same contractor, performing similar work and occurred a year apart. These events\nindicate potential procedural deficiencies in multiple areas relating to Contractor Oversight,\nOperator Qualifications, Excavation and Trenching, Damage Prevention, and Accident\nInvestigation, yet no documentation of procedural reviews for any of these procedures could be\nprovided, and the change log maintained to document that procedures are reviewed indicated no\nrevisions to these procedures resulting from an accident investigation or effectiveness review.\n4. §195.410 Line markers.\n(a) Except as provided in paragraph (b) of this section, each operator shall place\nand maintain line markers over each buried pipeline in accordance with the\nfollowing:\n(1) Markers must be located at each public road crossing, at each railroad\ncrossing, and in sufficient number along the remainder of each buried line so\nthat its location is accurately known.\nHEP has placed line markers along fence lines at road crossings, but has not consistently placed\nthem in the right of ways of rural locations. Looking from the roadway in several locations\nidentified in the field inspection, the PHMSA inspector, and the HEP Compliance Manager were\nunable to identify the location of the pipeline, or its route. This was particularly noticeable in\nremote locations. The requirement of 49 CFR 195.410 does not make a distinction between rural\nor populated areas and the pipeline should be accurately markers so that its location is known.\n3\n\n\n\n5. §195.432 Inspection of in-service breakout tanks.\n(b) Each operator shall inspect the physical integrity of in-service atmospheric and\nlow-pressure steel aboveground breakout tanks according to section 4 of API\nStandard 653. However, if structural conditions prevent access to the tank bottom,\nthe bottom integrity may be assessed according to a plan included in the operations\nand maintenance manual under §195.402(c)(3).\n(d) The intervals of inspection specified by documents referenced in paragraphs (b)\nand (c) of this section begin on May 3, 1999, or on the operator's last recorded date\nof the inspection, whichever is earlier.\nHEP acquired the Wichita Falls Terminal facilities in 2005. Internal inspection summary reports\nwere provided to HEP from the previous owner that indicated an API Standard 653 (API 653)\ninternal inspection was performed on tanks 8 and 9 at the Wichita Falls Terminal in 1996. HEP\nrelied upon these inspection reports to establish the next internal inspection intervals and set the\ninternal inspection intervals to the API 653 maximum of 20 years for Tanks 8 and 9. Based upon\nthis interval, HEP has not performed an internal inspection of these two tanks since 1996, and an\ninternal inspection was scheduled for both tanks for the year 2016.\nThe inspection report of Tank 8, dated 03-04-96, indicated the inspection was due to suspected\ntank bottom leakage. Additionally, a change of product from the product that had been stored in\nthis tank from diesel to jet fuel was anticipated at the time of the 1996 internal inspection. The\nreport included a sketch of the floor inspection results and indicated 8 holes in the tank bottom.\nThe report did not indicate whether the holes were from topside or bottom-side corrosion. Also,\nthe inspection did not establish a topside or bottom-side corrosion rate, and HEP could not\nprovide the inspectors with a corrosion rate for the calculation of the inspection interval. Repairs\nto the tank bottom were recommended in the report, but documentation demonstrating the\nrecommended repairs had been made was not available. The report recommended installation of\na tank bottom topside coating to prevent further corrosion. Records of the product, its\ninstallation or service life were not available.\nAPI 653 Section 6.4.2 describes the method for establishing the inspection intervals for internal\ninspections. Section 6.4.2 requires the calculation of the internal inspection intervals in\naccordance with Section 4.4.7 of the standard, with a maximum internal inspection interval of 20\nyears. If, however, the corrosion rates are unknown, the maximum inspection interval is not to\nexceed 10 years, unless similar service experience is available to estimate the bottom plate\nthickness at the next inspection.\nHEP failed to demonstrate that they had established a corrosion rate for the tank bottoms of\nTanks 8 and 9, and exceeded the 10 year maximum internal inspection interval for unknown\ncorrosion rates in 2007. Additionally, HEP did not have similar service experience, or\nprocedures to apply similar service experience available to make this inspection interval\ndetermination.\n4\n\n\n\nHEP failed to inspect Tanks 8 and 9 at the Wichita Falls Terminal within the maximum 10 year\ninterval in accordance with API 653.\n6. §195.571 What criteria must I use to determine the adequacy of cathodic protection?\nCathodic protection required by this subpart must comply with one or more of the\napplicable criteria and other considerations for cathodic protection contained in\nparagraphs 6.2 and 6.3 of NACE Standard RP 0169 (incorporated by reference, see\n§195.3).\nThe records for the pipe to soil readings on the River and Trust pipelines for the years 2005 to\n2009 were reviewed by the PHMSA representatives. During this review, the following readings\nwere observed to not meet the minimum criteria established by HEP for cathodic protection.\nAdditionally, when further questioned, HEP indicated that there was no other criteria that applied\nto establishing the minimum acceptable values for the River and Trust specific pipe to soil\nreadings than a pipe to soil reading of -0.850 V ON because they had not performed a\ndepolarized survey to establish the criteria that would allow application of the 250 millivolt\ncriteria in their procedure.\nHEP’s procedures for corrosion control adopt two criteria for the cathodic protection of its\npipelines. HEP’s procedure number O&M – 195.563 Cathodic Protection states that:\n“Sufficient current must flow from soil to pipe to maintain a constant voltage difference at the\nsoil-metal interface of 0.25 volt (approximately -0.85 volt between pipe and copper sulfate\nelectrode in contact with soil) or more.”\nThe following readings failed to meet criteria:\nReading Date Milepost Location Pipe to Soil (V) Read\n10/27/2005 103.200 TEPPCO X-ing -0.794\n12/08/2006 -0.776\n12/28/2007 -0.799\n09/30/2008 -0.593\n10/27/2005 103.400 Co. Rd Rectifier TR #103 -0.843\n12/08/2006 -0.829\n12/28/2007 -0.823\n09/30/2008 -0.608\n11/02/2005 103.401 TEX-NEW MEX X-ING -0.841\n12/08/2006 -0.832\n12/28/2007 -0.825\n109/30/2008 T/L Destroyed\n11/02/2005 103.900 Conoco X-ing -0.810\n12/08/2006 -0.852\n5\n\n\n\n12/28/2007 -0.795\n09/30/2008 -0.502\n11/02/2005 110.000 Conoco X-ing -0.772\n12/09/2006 -0.751\n12/28/2007 -0.795\n11/02/2005 110.001 Co. Rd. -0.768\n12/09/2006 -0.746\n11/02/2005 110.400 Conoco X-ing (Field) -0.844\n12/09/2006 -0.811\n11/02/2005 111.000 FM Road (South) -0.779\n12/09/2006 -0.776\n11/02/2005 111.700 FM 1954 -0.859\n12/09/2006 -0.764\nHEP failed to demonstrate adequate cathodic protection levels were maintained for the locations\nidentified above by failing to meet the criteria specified in their corrosion control procedures.\nHEP has corrected the conditions identified herein with the installation of two additional\nrectifiers and all readings taken in 2009 were at or above the minimum specified criteria.\n7. §195.573 What must I do to monitor external corrosion control?\ne) Corrective action. You must correct any identified deficiency in corrosion control\nas required by §195.401(b).\nDuring the interview at the Big Spring office on December 1, 2009, HEP indicated that their\ncriteria for effective cathodic protection on the River and Trust Pipelines was – 0.850 V ON, and\nthat the system had not had electrical surveys preformed to establish the native potentials for use\nwith -250 mV criteria. This was confirmed by PHMSA’s review of HEP’s procedure HEP-H-\n195-002 - Corrosion Control.\nDuring the discussion of these readings, HEP also stated that the appropriate timing for\ncorrective actions related to deficient pipe to soil readings was one year, or prior to the next\nannual inspection, and the corrective action was that the pipe to soil reading level should be\nbrought up to the minimum criteria. HEP could not demonstrate information contained within\ntheir corrosion procedures that specified the timing of corrective actions or the definition of\n“prompt” as it pertained to the correction of pipe to soil readings that failed to meet minimum\ncriteria.\nThe records for all test post pipe to soil readings on the River and Trust for the years 2005 to\n2009 were reviewed by PHMSA representatives. During this review, the following locations\nwere observed to not meet the minimum criteria established by HEP for cathodic protection for\nmore than one inspection cycle. The readings that are shown in the following list are included to\nestablish when these locations were brought into compliance with the minimum criteria\nnecessary to demonstrate adequate cathodic protection.\n6\n\n\n\nReading Date Milepost Location Pipe to Soil (V) Read\n11/03/2009 103.200 TEPPCO X-ing -1.522\n11/03/2009 103.400 Co. Rd Rectifier TR #103 -1.974\n11/03/2009 103.401 TEX-NEW MEX X-ING -1.845\n11/03/2009 103.900 Conoco X-ing -1.434\n09/30/2008 110.000 Conoco X-ing -1.246\n12/28/2007 110.001 Co. Rd. -1.412\n12/28/2007 110.400 Conoco X-ing (Field) -1.929\n12/28/2007 111.000 FM Road (South) -1.801\n12/28/2007 111.700 FM 1954 -1.768\nHEP failed to promptly evaluate and correct the deficiencies in corrosion control indicated by the\npipe to soil readings listed above. All readings appeared have been brought up to minimum\nlevels as demonstrated by the readings taken during the 2009 annual survey.\nWarning Items\nWith respect to items 3 and 4, we have reviewed the circumstances and supporting documents\ninvolved in this case and have decided not to conduct additional enforcement action or penalty\nassessment proceedings at this time. We advise you to promptly correct these item(s). Be\nadvised that failure to do so may result in HEP being subject to additional enforcement action.\nProposed Civil Penalty\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000\nfor each violation for each day the violation persists up to a maximum of $1,000,000 for any\nrelated series of violations. The Compliance Officer has reviewed the circumstances and\nsupporting documentation involved in the above probable violation(s) and has recommended that\nyou be preliminarily assessed a civil penalty of $92,500 as follows:\nItem number PENALTY\n2 $22,500\n6 $35,000\n7 $35,000\nProposed Compliance Order\nWith respect to items 1 and 5 above, pursuant to 49 United States Code § 60118, the Pipeline and\nHazardous Materials Safety Administration proposes to issue a Compliance Order to Holly\nEnergy Partners. Please refer to the Proposed Compliance Order, which is enclosed and made a\npart of this Notice.\n7\n\n\n\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators\nin Compliance Proceedings. Please refer to this document and note the response options. Be\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\nconfidential treatment under 5 U.S.C. 552(b), along with the complete original document you\nmust provide a second copy of the document with the portions you believe qualify for\nconfidential treatment redacted and an explanation of why you believe the redacted information\nqualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days\nof receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this\nNotice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in\nthis Notice without further notice to you and to issue a Final Order.\nIn your correspondence on this matter, please refer to CPF 4-2010-5005 and for each document\nyou submit, please provide a copy in electronic format whenever possible.\nSincerely,\nR. M. Seeley\nDirector, Southwest Region\nPipeline and Hazardous\nMaterials Safety Administration\nEnclosures: Proposed Compliance Order\nResponse Options for Pipeline Operators in Compliance Proceedings\n8\n\n\n\nPROPOSED COMPLIANCE ORDER\nPursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) proposes to issue to Holly Energy Partners (HEP) a Compliance Order\nincorporating the following remedial requirements to ensure the compliance of HEP with the\npipeline safety regulations:\n1. In regard to Item Number 1 of the Notice pertaining to missing pressure testing\nrecords, HEP shall maintain the 20% pressure reduction for the segments\nidentified below until such time HEP provides records to PHMSA that conform to\nthe requirements of 49 CFR 195.310 and demonstrate the three segments\nidentified below have been pressure tested in accordance with Subpart E of 49\nCFR 195.\nSystem Segment\nX-6 Big Spring to Hawley\n6 / 8 Colorado City to Merkel\n6 / 8 Throckmorton to Archer\nAdditionally, HEP’s relevant pressure testing and record retention procedures\nshould be expanded to include the accountabilities, process and storage location to\nensure that critical records are retained for as long as the facility tested is in use.\n2. In regard to Item Number 5 of the Notice pertaining to exceeding the maximum\nAPI Standard 653 internal inspection interval for breakout tanks numbers 8 and 9\nat Wichita Falls Terminal, HEP shall remove the tanks from service until such\ntime that an API 653 internal inspection has been performed by a qualified party,\nand all deficiencies identified during the inspection requiring action have been\naddressed.\n3. The timing for Items 1 and 2 is proposed as follows:\nItem 1: Provide pressure test records to PHMSA, SW Region Director no later\nthan 180 days from the Final Order.\nItem 5: Remove tanks 8 and 9 from service no later than 30 days from the Final\nOrder. These tanks shall remain out of service until the inspection has been\nperformed and documentation submitted to the SW region Director and approval\nto return to service has been granted.\n4. HEP shall maintain documentation of the safety improvement costs associated\nwith fulfilling this Compliance Order and submit the total to R. M. Seeley,\nDirector, SW Region, Pipeline and Hazardous Materials Safety Administration.\nCosts shall be reported in two categories: 1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses, and 2) total cost\nassociated with replacements, additions and other changes to pipeline\ninfrastructure.\n9\n\n420105005_FinalOrder_03302011_text.pdf\n\nMAR 30 2011\nMr. Mark Cunningham\nVice President – Operations\nHolly Energy Partners, L.P.\n100 Crescent Court\nSuite 1600\nDallas, TX 75201\nRe: CPF No. 4-2010-5005\nDear Mr. Cunningham:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation and assesses a civil penalty of $92,500. It further finds that Holly Energy Partners, L.P.\nhas completed the actions specified in the Notice to comply with the pipeline safety regulations.\nWhen the civil penalty has been paid, this enforcement action will be closed. Service of the\nFinal Order by certified mail is deemed effective upon the date of mailing, or as otherwise\nprovided 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 M. Seeley, Director, Southwest Region, PHMSA\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0077 5503]\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 )\nHolly Energy Partners, L.P., ) CPF No. 4-2010-5005\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nBetween November 30, 2009 and December 3, 2009, pursuant to 49 U.S.C. § 60117, a\nrepresentative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office\nof Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities known\nas the River and Trust pipelines in Big Springs, Abilene, and Wichita Falls, Texas. The River\nand Trust pipelines system is approximately 273 miles long and transports refined products.1\nThese pipeline facilities are owned and operated by Holly Energy Partners, L.P. (Holly Energy\nor Respondent), which through its subsidiaries, owns or leases approximately 2,500 miles of\npetroleum product pipelines.2\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated January 20, 2010, 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 Holly Energy had committed various violations of 49 C.F.R. Part\n195, proposed assessing a civil penalty of $92,500 for the alleged violations, and proposed\nordering Respondent to take certain measures to correct two of the alleged violations. The\nNotice also proposed finding that Respondent had committed certain other probable violations of\n49 C.F.R. Part 195 and warning Respondent to take appropriate corrective action or be subject to\nfuture enforcement action.\nHolly Energy responded to the Notice by letters dated February 22, 2010, March 19, 2010, and\nApril 16, 2010, April 26, 2010, and April 28, 2010 (collectively, Response). Holly Energy\ninitially contested two of the allegations, presented information seeking mitigation of the\nproposed penalty, and requested a hearing. By letter dated March 19, 2010, Respondent\n1 Pipeline Safety Violation Report (Violation Report), (November 30, 2009 through December 3, 2009), at 1.\n2 Holly Corporation, http://www.hollycorp.com (last visited February 17, 2011). See also SEC Form 10-K, Holly\nEnergy Partners, L.P., February 16, 2011, at 5.\n\n\n\n2\nwithdrew its request for a hearing and thereby authorized the entry of this Final Order without\nfurther notice.3\nFINDINGS OF VIOLATION\nIn its Response, Holly Energy did not contest the allegations in the Notice that it violated 49\nC.F.R. Part 195 as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.310(a), which states:\n§ 195.310 Records.\n(a) A record must be made of each pressure test required by this\nsubpart, and the record of the latest test must be retained as long as the\nfacility tested is in use.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.310(a) by failing to retain records\nof the latest pressure tests for three of its eleven pipeline segments. Holly Energy was required\nto retain these records for as long as the facility tested is in use.\nSpecifically, the Notice alleged that during the November 30, 2009 inspection at the Big Springs\noffice location, Holly Energy informed the PHMSA inspector that the records of the pressure test\nfor three of eleven pipeline segments were missing. Although Holly Energy took precautionary\naction by reducing the maximum operating pressure by 20%, it could not produce documentation\nof the test charts and readings for the following pipeline system segments: Trust X-6 – Big\nSpring to Hawley, Trust 6/8 – Colorado City to Merkel, and Trust 6/8 – Throckmorton to Archer.\nHolly Energy must retain these records to demonstrate that these segments have been pressure\ntested in accordance with Subpart E of Part 195.\nIn its Response, Holly Energy did not contest this allegation of violation and instead noted its\nintent to retest these pipeline segments. On April 16, 2010, Holly Energy sent a subsequent\nresponse confirming that they had retested these pipeline segments and providing the hydrostatic\ntest report for PHMSA’s review. PHMSA has confirmed that the results were satisfactory.\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49\nC.F.R. § 195.310(a) by failing to retain records of the latest pressure tests for three of its eleven\npipeline segments.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(c)(6) which states:\n3 In its Response dated February 22, 2010, Holly Energy initially requested a hearing to address Items 1 and 5\ncontained in the Notice. By letter dated March 19, 2010, Respondent withdrew its request for a hearing and thereby\nauthorized the entry of this Final Order without further notice.\n\n\n\n3\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) ….\n(c) Maintenance and normal operations. The manual required by\nparagraph (a) of this section must include procedures for the following to\nprovide safety during maintenance and normal operations….\n(6) Minimizing the potential for hazards identified under paragraph\n(c)(4) of this section and the possibility of recurrence of accidents\nanalyzed under paragraph (c)(5) of this section.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.402(c)(6) by failing to have\nprocedures to minimize the potential for hazards identified under paragraph (c)(4) and reduce the\npossibility of the recurrence of accidents analyzed under paragraph (c)(5). Section 195.402(c)(4)\nrequires an operator to determine which pipelines would require an immediate response to\nprevent hazards to the public if a failure occurred and § 195.402(c)(5) requires an operator to\nanalyze pipeline accidents to determine the cause.\nAlthough Holly Energy reported the 2005 and 2006 accidents under PHMSA Hazardous Liquid\nAccident Report IDs 20050342 – 5586 and 20060309 – 5584, Respondent was unable to produce\ndocuments related to an investigation to determine the cause and minimize the recurrence of\nthese events. Further, Holly Energy was unable to demonstrate that it reviewed its damage\nprevention program after these two failures which were a result of second-party excavation by\nthe same contractor. Respondent did not contest this allegation of violation but noted that the\ncompany was in the process of implementing detailed company procedures for incident\ninvestigations.\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49\nC.F.R. § 195.402(c)(6) by failing to have procedures to minimize the potential for facilities\nhazards and the possibility of recurrence of accidents.\nItem 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.432(d) which states:\n§ 195.432 Inspection of in-service breakout tanks.\n(a) ….\n(b) Each operator shall inspect the physical integrity of in-service\natmospheric and low-pressure steel aboveground breakout tanks according\nsection 4 of API Standard 653. However, if structural conditions prevents\naccess to the tank bottom, the bottom integrity may be assessed according\nto a plan included in the operations and maintenance manual under\n§ 195.402(c)(3)….\n4\n4 This regulation was amended on August 11, 2010, after the inspection occurred and the Notice was issued. The\namendment eliminated the reference to Section 4 of API Standard 653. In addition, when this inspection occurred,\nAPI 653, 3rd edition, December 2001, including addendum 1 (2003) was incorporated by reference into the pipeline\nsafety regulations. Effective October 1, 2010, PHMSA replaced this edition with API 653, 3rd edition, December\n2001, including addendum 1 (September 2003), addendum 2 (November 2005), addendum 3 (February 2008), and\nerrata (April 2008). The former edition is the version that applies in this case since it was controlling at the time of\nthe inspection.\n\n\n\n4\n(d) The intervals of inspection specified by documents referenced in\nparagraphs (b) and (c) of this section begin on May 3, 1999, or on the\noperator’s last recorded date of the inspection, whichever is earlier.\nThe Notice alleged that Respondent violated 49 C.F.R. § 194.432(d) by failing to inspect in-\nservice aboveground breakout tanks within the inspection intervals set forth in the API Standard\n653 (“the Standard”), incorporated by reference in the pipeline safety regulations. Specifically,\nAPI 653, Section 6.4.2.1, requires that operators calculate internal inspection intervals “by\ncorrosion rates measured during previous inspections or anticipated based on experience with\ntanks in similar service….in no case, however, shall internal inspection intervals exceed 20\nyears.\n”5 However, if the corrosion rates are unknown and similar service experience is not\navailable to estimate the bottom plate minimum thickness, the maximum inspection interval is\nnot to exceed 10 years.6\nThe Notice alleged that Holly Energy could not provide a corrosion rate to establish the\ninspection interval for Tanks 8 and 9. Yet, it had set the internal inspection intervals at a\nmaximum of 20 years for Tanks 8 and 9, scheduling the next inspection for 2016. Since the\ncorrosion rate was unknown, the 10 year maximum interval for inspections of the tank bottom\napplies. Internal inspection summary reports provided to Holly Energy from the previous owner\nindicated that an API 653 internal inspection was performed on Tanks 8 and 9 at the Wichita\nFalls Terminal in 1996. Therefore, the next inspection should have occurred in 2006.\nIn its Response dated February 22, 2010, Holly Energy did not contest the allegation. Instead,\nthe company stated that it had emptied Tank 9 and removed it from service during the third\nquarter of 2009.7 In addition, Respondent stated that it removed Tank 8 from service in January\n2010 to begin the inspection process and determine the corrosion rate in accordance with Section\nrequired to inspect these tanks in 2006 and failed to do so.\n4.4.7 of API Standard 653.8 These facts are not relevant to the violation since Respondent was\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49\nC.F.R. § 195.432(d) by failing to inspect the in-service aboveground breakout tanks at the\nWichita Falls Terminal within the inspection intervals set forth in the API Standard 653.\nItem 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.571, which states:\n5 AM. PETROLEUM INST, “TANK INSPECTION, REPAIR, ALTERATION, AND RECONSTRUCTION,” API STANDARD 653\n§6.4.2.1 (December 2001).\n6 API STANDARD 653 § 6.4.2.2.\n7 Response dated February 22, 2010, at 2.\n8 The repairs on Tank 8 were completed on February 17, 2010 and the tank was returned to service on April 15,\n2010.\n\n\n\n5\n§ 195.571 What criteria must I use to determine the adequacy of\ncathodic protection?\nCathodic protection required by this subpart must comply with one or\nmore of the applicable criteria and other considerations for cathodic\nprotection contained in paragraphs 6.2 and 6.3 of NACE Standard RP\n0169 (incorporated by reference, see § 195.3).9\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.571 by failing to demonstrate\nadequate cathodic protection at multiple locations on its pipeline system. Specifically, Holly\nEnergy was required to maintain adequate cathodic protection on its pipeline system to meet the\nminimum criteria established by its corrosion control procedures. Paragraph 6.1 of Holly\nEnergy’s procedures, 6.0 HEP-O&M-195.563 (Cathodic Protection), states, in relevant part,\nthat “[s]ufficient current must flow from soil to pipe to maintain a constant voltage difference at\nthe soil-metal interface of 0.25 volt (approximately -0.85 volt between pipe and copper sulfate\nelectrode in contact with soil) or more.”10 However, the Notice alleged that the PHMSA\ninspector reviewed pipe to soil readings for the annual survey periods for 2005-2008 for Mile\nPosts 103.2 to 111.7 of the Trust pipeline and the inspector found twenty-seven readings that did\nnot meet this minimum criteria.11\nIn its Response, Holly Energy acknowledged that the records provided at the time of the\ninspection demonstrated that the minimum criteria were not met for the 2005-2008 annual\nsurveys. The company noted that it corrected these conditions for the specified locations prior\nto the 2009 inspection by installing two additional rectifiers and all readings taken in 2009 were\nabove or at the minimum criteria.\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49\nC.F.R. § 195.571 by failing to demonstrate adequate cathodic protection at multiple locations on\nits pipeline system during the 2005-2008 survey periods.\nItem 7: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(e), which states, in\nrelevant part:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) ….\n(e) Corrective action. You must correct any identified deficiency in\ncorrosion control as required by § 195.401(b)….\n9 When this inspection occurred, NACE Standard RP 0169-2002, “Control of External Corrosion on Underground or\nSubmerged Metallic Piping Systems” was incorporated by reference into the pipeline safety regulations. Effective\nOctober 1, 2010, PHMSA replaced this edition with NACE SP0169-2007, Standard Practice, “Control of External\nCorrosion on Underground or Submerged Metallic Piping Systems”, reaffirmed March 15, 2007. The former\nedition is the version that applies in this case since it was controlling at the time of the inspection.\n10 O&M Manual, Volume 2 – Section H-195-002 (Reviewed July 2009), 6.0 HEP-O&M-195.563 (Cathodic\nProtection), Paragraph 6.1, page 12.\n11 Violation Report, at 5-6.\n\n\n\n6\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.573(e) by failing to correct\ndeficiencies in corrosion control as required by § 195.401(b). The latter regulation requires\noperators to correct any condition that could adversely affect the safe operation of its pipeline\nwithin a reasonable time.12 Specifically, the Notice alleged that Holly Energy did not correct the\ndeficiencies in corrosion control identified in Item 6 within a reasonable time. During the\ninspection, Respondent stated that the appropriate timing for these corrective actions was one\nyear or before the next inspection, however, PHMSA inspectors confirmed that the corrosion\ncontrol deficiencies persisted beyond one inspection cycle.13\nRespondent did not contest this allegation of violation. In its Response, Holly Energy\nacknowledged that the corrosion control deficiencies were not corrected within the timeframes\nset forth in the company procedures. Respondent recognized and corrected this issue prior to the\ninspection by completing a test point survey on June 30, 2009.\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49\nC.F.R. § 195.573 by failing to timely correct deficiencies in corrosion control.\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. 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 Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s\nability to pay the penalty and any effect that the penalty may have on its ability to continue doing\nbusiness; and the good faith of Respondent in attempting to comply with the pipeline safety\nregulations. In addition, I may consider the economic benefit gained from the violation without\nany reduction because of subsequent damages, and such other matters as justice may require.\nThe Notice proposed a total civil penalty of $92,500 for the violations cited above.\nItem 2: The Notice proposed a civil penalty of $22,500 for Respondent’s violation of 49 C.F.R.\n§ 195.402(c)(6), for by failing to have procedures to minimize the potential for hazards identified\nunder paragraph (c)(4) and reduce the possibility of the recurrence of accidents analyzed under\nparagraph (c)(5). In its Response dated February 22, 2010, Holly Energy argued that it\nrecognized the deficiency in its process and has recognized that more in-depth procedural steps\nand a formalized process are required to ensure that documentation is maintained.\nWhile Holly Energy has proposed modifications to its accident investigation and damage\nprevention programs under the NOA that was issued at the same time as this Notice, and the\ncompany’s response to the NOA proposes revisions to its procedures, these changes occurred\nafter the 2005 and 2006 accidents and therefore do not cure the violation. Holly Energy’s two\nASSESSMENT OF PENALTY\n12 See 49 C.F.R. § 195.401(b).\n13 Notice, at 6.\n\n\n\n7\nexcavation accidents posed significant risk to public safety and the environment. Accordingly,\nhaving reviewed the record and considered the assessment criteria, I assess Respondent a civil\npenalty of $22,500 for violation of 49 C.F.R. § 195.402(c)(6).\nItem 6: The Notice proposed a civil penalty of $35,000 for Respondent’s violation of 49 C.F.R.\n§ 195.571, for failing to demonstrate adequate cathodic protection at multiple locations on its\npipeline system.\nIn its Response dated February 22, 2010, Holly Energy indicated that it recognized the\ndeficiencies in its cathodic protection procedures and corrected the conditions in 2009, prior to\nthe inspection. Specifically, Holly Energy installed two additional rectifiers on the affected\nsegments which provided adequate cathodic protection.\nAlthough Holly Energy corrected this Item prior to PHMSA’s inspection, the violation persisted\nfor four years. Holly Energy’s pipe-to-soil readings for the Trust pipeline between Mile Posts\n103.2 and 111.7 failed to meet the minimum criteria for the 2005, 2006, 2007, and 2008 annual\nsurveys. Therefore, the corrective actions taken in the year 2009 do not cure the violation. Holly\nEnergy’s failure to adequately protect the pipeline from external corrosion by cathodic protection\nincreases the risk of corrosion failures and increases the likelihood of active corrosion occurring.\nAdditionally, Holly Energy’s failure to maintain adequate cathodic protection can lead to metal\nloss and possible through-wall corrosion failures that could have resulted in a release of product\ninto the environment. Ac","truncated":true,"body_characters":46567}