CENTURION PIPELINE L.P. — Notice of Probable Violation

party submissionOfficial PDF420115013_Operator Response to NOPV_09162011.pdf#

420115013_NOPV PCP PCO_08172011_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLAINCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED August 17, 2011 Centurion Pipeline LP Bill Boyer, President 5 Greenway Plaza, Suite 100 Houston, TX 77046 CPF 4-2011-5013 Dear Mr. Boyer: Following an accident on October 10, 2010, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code investigated a crude oil release that occurred at Slaughter Station, near Sundown, TX. PHMSA conducted its investigation (onsite and in-office) between October 2010 and July 2011. As a result of the accident investigation, 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 violation(s) are: 1. §195.52 Telephonic notice of certain accidents (a) At the earliest practicable moment following discovery of a release of the hazardous liquid or carbon dioxide transported resulting in an event described in §195.50, the operator of the system shall give notice, in accordance with paragraph (b) of this section, of any failure that: (3) Caused estimated property damage, including cost of cleanup and recovery, value of lost product, and damage to the property of the operator or others, or both, exceeding $50,000;#

420115013_NOPV PCP PCO_08172011_text.pdf, page 2Centurion failed to give notice at the earliest practicable moment following discovery of a crude oil release to the National Response Center (NRC). The crude oil release was discovered at approximately 7:35 AM on October 11, 2010 in Slaughter Station, near Sundown, TX by the “Gauger,” and was reported to the Centurion control center in Houston, TX at approximately 7:45 AM. The control center Director then performed a quick calculation to determine the release amount utilizing breakout tanks hourly reports and meter snapshot reports. He estimated the release to be approximately 10,000 barrels. This information was then immediately provided to the Vice President of Operations and Director of HES/Regulatory/compliance. Centurion did not make a report to NRC (Report Number 956628) until 2:16 PM on 10/11/10, approximately 7 hours after the crude oil release was discovered by the Gauger. 2. §195.402 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted Centurion failed to follow its written procedure P#195.432(b) “Inspection of In-service Break out Tanks,” dated February 2004 in that it did not conduct a monthly inspection of tank #6688 for August, 2009. This procedure gives the steps required for periodic in- service tank inspection including monthly external break out tank inspection. Centurion reviews and certifies annually that this procedure is accurate and current. Centurion did not conduct the tank inspection for tank #6688 in August, 2009 as required per procedure P# 195.432(b) despite leaks discovered on the flange and packing of the mixer during the preceding months: June 2009 and July 2009. PHMSA reviewed monthly breakout tanks inspection records from March 2008 to September 2010 for tank #6688. There is no tank inspection record for August 2009. Centurion’s summary of monthly breakout tank inspection records which were stored in the Maximo work order data system showed a work order was generated to conduct inspection by 8/24/2009 (target date), but the inspection was not conducted until 9/02/2009 and subsequent inspections were conducted on 10/06/2009 (9/24/2009-target date), 11/03/2009 (10/24/2009-target date), and 12/03/2009 (11/03/2009-target date). 3. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: 2#

420115013_NOPV PCP PCO_08172011_text.pdf, page 3(g) Identify those covered tasks and the intervals at which evaluation of the individual's qualifications is needed Centurion failed to follow its OQ program by not re-qualifying control center personnel using the frequency prescribed by the Centurion OQ program. Centurion OQ program (latest revision March 2010), cover task “O1- Operate Pipeline System from Control Center” , specifies the reevaluation frequency for this covered task to be 1 year “Due to the criticality of the Control Center operations” . This has been in Centurion’s OQ program since 2004. During the investigation PHMSA reviewed the Performance Evaluation Form for task O1 for several employees. The review revealed that several individuals were not evaluated every year but approximately every three or four years. The operations coordinator, who evaluates the control center controllers, confirmed the re-evaluation frequency practice at Centurion has been 3 years. 4. §195.54 Accident reports (b) Whenever an operator receives any changes in the information reported or additions to the original report on DOT Form 7000-1, it shall file a supplemental report within 30 days. Centurion failed to update the crude oil release amount on the accident report. The original accident report was filed on 11/10/2010 (report # 20100240-15363) and indicated 10,000 bbls crude oil release. Centurion has filed 3 supplemental accident reports: 11/17/2010 (report #20100240-15375), 12/08/2010 (report #20100240-15436), and 12/10/2010 (report #20100240- 15454), and no update on the spill amount was provided on the supplemental reports. Centurion reported 10,000 barrels of crude oil release based of an assumption that the leak began at approximately 7:45 AM 10/11/2010 and the Centurion’s “Leak, Maintenance and Exposed Pipe Report” showed the crude oil release amount was 10,000 bbls. During the investigation, PHMSA reviewed the SCADA records and determined that the leak most likely occurred at 5:00 PM on October 10, 2010 and that approximately 18,600 bbls were most likely released. PHMSA’s investigation also revealed that the vacuum truck records (99 loads) showed approximately 11,750 bbls of product were removed. Centurion did not update the written report for the amount spilled. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation 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 $ 39,000 as follows: Item number PENALTY 1 $ 7,500 3 $ 31,500 Warning Items With respect to item 2 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment 3#

420115013_NOPV PCP PCO_08172011_text.pdf, page 4proceedings at this time. We advise you to promptly correct these item(s). Be advised that failure to do so may result in Centurion being subject to additional enforcement action. Proposed Compliance Order With respect to items 3 and 4 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Centurion. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed 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. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If 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. In your correspondence on this matter, please refer to CPF 4-2011-5013 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosure: Response Options for Pipeline Operators in Compliance Proceedings 4#

420115013_NOPV PCP PCO_08172011_text.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Centurion a Compliance Order incorporating the following remedial requirements to ensure the compliance of Centurion with the pipeline safety regulations: 1. In regard to Item Number 3 of the Notice pertaining to Centurion’s OQ program. Centurion must review their written program and supporting documents and ensure the instructions are internally consistent. Centurion must re-qualify all appropriate personnel for Task “O1- Operate Pipeline System from Control Center” on an annual basis per their written program. 2. In regard to Item Number 4 of the Notice pertaining to written accident reports. Centurion must file a supplemental report with the updated volume spilled. 3. Centurion must complete items 1 and 2 within 30 days of final order. 4. It is requested (not mandated) that Centurion maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, Southwest, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. 5#

420115013_NOPV PCP PCO_08172011.pdf, page 1Official PDFu.s. Department 8701 South Gessner, Suite 1110 of Transportation Houston, TX 77074 pipeline and Hazardous Materials Safety Administration NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLAINCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED August 17,2011 Centurion Pipeline LP Bill Boyer, President 5 Greenway Plaza, Suite 100 Houston, TX 77046 CPF 4-2011-5013 Dear Mr. Boyer: Following an accident on October 10, 2010, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code investigated a crude oil release that occurred at Slaughter Station, near Sundown, TX. PHMSA conducted its investigation (onsite and in-office) between October 2010 and July 2011. As a result of the accident investigation, 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 violation(s) are: 1. §195.52 Telephonic notice of certain accidents (a) At the earliest practicable moment following discovery of a release of the hazardous liquid or carbon dioxide transported resulting in an event described in § 195.50, the operator of the system shall give notice, in accordance with paragraph (b) of this section, of any failure that: (3) Caused estimated property damage, including cost of cleanup and recovery, value of lost product, and damage to the property of the operator or others, or both, exceeding $50,000;#

420115013_NOPV PCP PCO_08172011.pdf, page 22. 3. Centurion failed to give notice at the earliest practicable moment following discovery of a crude oil release to the National Response Center (NRC). The crude oil release was discovered at approximately 7:35 AM on October 11, 2010 in Slaughter Station, near Sundown, TX by the "Gauger," and was reported to the Centurion control center in Houston, TX at approximately 7:45 AM. The control center Director then performed a quick calculation to determine the release amount utilizing breakout tanks hourly reports and meter snapshot reports. He estimated the release to be approximately 10,000 barrels. This information was then immediately provided to the Vice President of Operations and Director of HESlRegulatory/compliance. Centurion did not make a report to NRC (Report Number 956628) until 2:16 PM on 10/11/10, approximately 7 hours after the crude oil release was discovered by the Gauger. §195.402 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted Centurion failed to follow its written procedure P#195.432(b) "Inspection of In-service Break out Tanks," dated February 2004 in that it did not conduct a monthly inspection of tank #6688 for August, 2009. This procedure gives the steps required for periodic inservice tank inspection including monthly external break out tank inspection. Centurion reviews and certifies annually that this procedure is accurate and current. Centurion did not conduct the tank inspection for tank #6688 in August, 2009 as required per procedure P# 195.432(b) despite leaks discovered on the flange and packing of the mixer during the preceding months: June 2009 and July 2009. PHMSA reviewed monthly breakout tanks inspection records from March 2008 to September 2010 for tank #6688. There is no tank inspection record for August 2009. Centurion's summary of monthly breakout tank inspection records which were stored in the Maximo work order data system showed a work order was generated to conduct inspection by 8/2412009 (target date), but the inspection was not conducted until 9/0212009 and subsequent inspections were conducted on 10/0612009 (9124/2009-target date), 1110312009 (l012412009-target date), and 12/0312009 (l1l0312009-target date). § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: 2#

420115013_NOPV PCP PCO_08172011.pdf, page 3(g) Identify those covered tasks and the intervals at which evaluation of the individual's qualifications is needed Centurion failed to follow its OQ program by not re-qualifying control center personnel using the frequency prescribed by the Centurion OQ program. Centurion OQ program (latest revision March 2010), cover task "01 Operate Pipeline System from Control Center", specifies the reevaluation frequency for this covered task to be 1 year "Due to the criticality of the Control Center operations". This has been in Centurion's OQ program since 2004. During the investigation PHMSA reviewed the Performance Evaluation Form for task 01 for several employees. The review revealed that several individuals were not evaluated every year but approximately every three or four years. The operations coordinator, who evaluates the control center controllers, confirmed the re-evaluation frequency practice at Centurion has been 3 years. 4. §195.54 Accident reports (b) Whenever an operator receives any changes in the information reported or additions to the original report on DOT Form 7000-1, it shall file a supplemental report within 30 days. Centurion failed to update the crude oil release amount on the accident report. The original accident report was filed on 1111012010 (report # 20100240-15363) and indicated 10,000 bbls crude oil release. Centurion has filed 3 supplemental accident reports: 11117/2010 (report #20100240-15375), 1210812010 (report #20100240-15436), and 12/1012010 (report #2010024015454), and no update on the spill amount was provided on the supplemental reports. Centurion reported 10,000 barrels of crude oil release based of an assumption that the leak began at approximately 7:45 AM 10/1112010 and the Centurion's "Leak, Maintenance and Exposed Pipe Report" showed the crude oil release amount was 10,000 bbls. During the investigation, PHMSA reviewed the SCADA records and determined that the leak most likely occurred at 5:00 PM on October 10, 2010 and that approximately 18,600 bbls were most likely released. PHMSA's investigation also revealed that the vacuum truck records (99 loads) showed approximately 11,750 bbls of product were removed. Centurion did not update the written report for the amount spilled. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation 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 $ 39,000 as follows: Item number PENALTY 1 $ 7,500 3 $ 31,500 Warning Items With respect to item 2 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment 3#

420115013_NOPV PCP PCO_08172011.pdf, page 4proceedings at this time. We advise you to promptly correct these item(s). Be advised that failure to do so may result in Centurion being subject to additional enforcement action. Proposed Compliance Order With respect to items 3 and 4 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Centurion. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed 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. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.c. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 V.S.c. 552(b). If 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. In your correspondence on this matter, please refer to CPF 4-2011-5013 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosure: Response Options/or Pipeline Operators in Compliance Proceedings 4#

420115013_NOPV PCP PCO_08172011.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Centurion a Compliance Order incorporating the following remedial requirements to ensure the compliance of Centurion with the pipeline safety regulations: 1. 2. 3. 4. In regard to Item Number 3 of the Notice pertaining to Centurion's OQ program. Centurion must review their written program and supporting documents and ensure the instructions are internally consistent. Centurion must re-qualify all appropriate personnel for Task "01- Operate Pipeline System from Control Center" on an annual basis per their written program. In regard to Item Number 4 of the Notice pertaining to written accident reports. Centurion must file a supplemental report with the updated volume spilled. Centurion must complete items 1 and 2 within 30 days of final order. It is requested (not mandated) that Centurion maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, Southwest, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. 5#

420115013_Final Order_04302012_text.pdf, page 1Official PDFAPR 30 2012 Mr. Bill Boyer President Centurion Pipeline, LP 5 Greenway Plaza Houston, TX 77046 Re: CPF No. 4-2011-5013 Dear Mr. Boyer: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation and assesses a civil penalty of $39,000. This is to acknowledge receipt of payment of the full penalty amount, by wire transfer, dated September 16, 2011. It further finds that Centurion Pipeline, LP, has completed the actions specified in the Notice to comply with the pipeline safety regulations. Therefore, this enforcement action is now closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided 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 cc: Mr. Rod M. Seeley, Director, Southwest Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420115013_Final Order_04302012_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 ) ) Centurion Pipeline, LP, ) CPF No. 4-2011-5013 ) Respondent. ) ____________________________________) FINAL ORDER Between October 2010 and July 2011, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an investigation of an accident involving Centurion Pipeline, LP’s (Centurion or Respondent) hazardous liquid pipeline system at the company’s Slaughter Station near Sundown, Texas. Centurion, a subsidiary of Occidental Petroleum Corporation, operates approximately 2,750 miles of pipelines from southeast New Mexico to Cushing, Oklahoma. 1 The investigation arose out of an October 10, 2010 accident during which approximately 10,000 barrels of crude oil were released at Slaughter Station. As a result of the investigation, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated August 17, 2011, 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 Centurion had failed to report the accident at the earliest practicable moment, in violation of 49 C.F.R. § 195.52, and had committed various other violations of 49 C.F.R. Part 195. The Notice proposed assessing a civil penalty of $39,000 and ordering Respondent to take certain measures to correct the alleged violations. The Notice also included a warning item, which required no further action but warned the operator to correct the probable violation or face future possible enforcement action. Centurion responded to the Notice by letter dated September 16, 2011 (Response). The company did not contest the allegations of violation and paid the proposed civil penalty of $39,000, as provided in 49 C.F.R. § 190.227. The company also provided information concerning the corrective actions it had taken and submitted copies of its revised procedures. Payment of the penalty serves to close the case with prejudice to Respondent. Centurion did not request a hearing and therefore has waived its right to one. 1 http://www.centurionpipeline.com (last accessed April 20, 2012).#

420115013_Final Order_04302012_text.pdf, page 32 FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.52(a)(3), which states: § 195.52 Telephonic notice of certain accidents. (a) At the earliest practicable moment following discovery of a release of the hazardous liquid or carbon dioxide transported resulting in an event described in § 195.50, the operator of the system shall give notice, in accordance with paragraph (b) of this section, of any failure that: (1) . . . (3) Caused estimated property damage, including cost of cleanup and recovery, value of lost product, and damage to the property of the operator or others, or both, exceeding $50,000. The Notice alleged that Respondent violated 49 C.F.R. § 195.52(a)(3) by failing to file a telephonic notice with the National Response Center (NRC) at the earliest practicable moment following discovery of a release of product that met the threshold of § 195.50. The Notice alleged that Centurion’s accident at Slaughter Station met the reporting criteria of § 195.52 because it caused estimated property damage, including cleanup and recovery, value of lost was discovered at 7:35 a.m. on the morning of October 11, 2010, and was reported to product, and damage to the property of the operator or others exceeding $50,000.2 The release Centurion’s Central Control at 7:45 a.m. However, Centurion did not make the telephonic notice to the NRC until 2:16 p.m., almost seven hours later (Report No. 956628). Section 195.52 requires that operators report accidents meeting the criteria in § 195.50 at the “earliest practicable moment following discovery.” Historically, PHMSA has interpreted this as being between 1-2 hours because the circumstances surrounding most liquid pipeline accidents have shown that operators generally have sufficient opportunity within a few hours to make an informed decision as to whether or not they must make an emergency notification to the NRC. In addition, PHMSA has consistently communicated to the industry its need to evaluate the cause of incidents early on and not to wait until after evidence has become outdated or stale. PHMSA has issued two alert notices, dated April 15, 1991 (ALN-91-01) and August 30, 2002 (ADB-02- 04), providing guidance to the industry on PHMSA’s understanding of the term “earliest practicable moment. bulletins state that PHMSA interprets the term “earliest practicable moment” as being between 1- 2 hours. ”3 This guidance and the interpretation letters preceding the advisory In its Response, Centurion did not contest this allegation of violation. Accordingly, after considering all of the evidence, I find that Centurion violated 49 C.F.R. § 195.52(a)(3) by failing to report this accident at the earliest practicable moment. 2 Centurion notified the NRC after making the decision that the cleanup costs could exceed $50,000. Centurion listed the estimated costs to the operator in its initial Accident Report at $64,130. See Report No. 20100240-15363, Pipeline Safety Violation Report (Violation Report), (August 17, 2011) (on file with PHMSA), Exhibit D. 3 See http://www.phmsa.dot.gov/pipeline/regs/advisory-bulletin for a list of PHMSA advisory bulletins.#

420115013_Final Order_04302012_text.pdf, page 43 Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(g), which states: § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) . . . (g) Identify those covered tasks and the intervals at which evaluation of the individual’s qualifications is needed. The Notice alleged that Respondent violated 49 C.F.R. § 195.505(g) by failing to follow its own operator qualification (OQ) program. Specifically, it alleged that Centurion failed to re-qualify control center personnel as frequently as prescribed by the company’s OQ program, which stated that the re-evaluation interval for Task O-1, “Operate Pipeline System from Control Center,” was one year. PHMSA inspectors discovered, however, that Centurion had only been re-evaluating control center personnel every three to four years. In its Response, Centurion did not contest the alleged violation and confirmed that it had re- qualified all Control Center operators as of May 25, 2011. Centurion also reviewed and revised its procedures to ensure that the required annual frequency of review was consistently applied. Accordingly, I find that Respondent violated 49 C.F.R. § 195.505(g) by failing to follow its own written OQ program. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.54(b), which states: § 195.54 Accident reports. (a) Each operator that experiences an accident that is required to be reported under § 195.50 shall as soon as practicable, but not later than 30 days after discovery of the accident, prepare and file an accident report on DOT Form 7000-1, or a facsimile. (b) Whenever an operator receives any changes in the information reported or additions to the original report on DOT Form 7000-1, it shall file a supplemental report within 30 days. The Notice alleged that Respondent violated 49 C.F.R. § 195.54(b) by failing to file a supplemental accident report within 30 days of receiving changes in the information originally reported. Specifically, it alleged that Centurion failed to update the release amount for its October 10, 2010 accident after learning of revised spill estimates. The original report filed on November 10, 2010 (report # 20100240-15363) indicated that 10,000 barrels had been released. Centurion filed three supplemental accident reports (report #s 20100240-15375, 20100240- 15436, and 20100240-15454) yet provided no updated release amount in any of these reports. During the investigation, PHMSA reviewed Centurion’s Supervisory Control and Data Acquisition (SCADA records and determined that the leak most likely occurred at 5:00 p.m. on October 10, 2010, and that approximately 18,600 barrels had most likely been released. PHMSA inspectors also discovered that the vacuum trucks deployed for cleanup of the accident had removed approximately 11,750 barrels of product, which exceeded Centurion’s original 10,000- barrel release estimate.#

420115013_Final Order_04302012_text.pdf, page 54 Centurion did not contest the probable violation but stated that it had made its best estimate of the release amount using data from its Control Center and volumetric calculations from the amount of oil recovered and the amount of product in the remediated soil. Centurion also stated that in its experience, vacuum trucks usually picked up 4-8% sediment and therefore the 11,750 barrel estimate may not have been accurate. After considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.54(b) by failing to submit a supplemental accident report (DOT Form 7000-1) with an updated spill amount. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative 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. In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must 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. The Notice proposed a total civil penalty of $39,000 for the violations cited above. Item 1: The Notice proposed a civil penalty of $7,500 for Respondent’s violation of 49 C.F.R. § 195.52, for failing to submit a telephonic notice at the earliest practicable moment after discovering a crude oil release at its facility. Centurion did not contest either the allegation of violation or the proposed penalty amount. Accordingly, having reviewed the record and considered the penalty assessment criteria, I assess Respondent a civil penalty of $7,500 which has already been remitted. Item 3: The Notice proposed a civil penalty of $31,500 for Respondent’s violation of 49 C.F.R. § 195.505(g), for failing to follow the company’s own OQ procedures for re- qualifying personnel. Centurion did not contest either the allegation of violation or the proposed penalty amount. Accordingly, having reviewed the record and considered the penalty assessment criteria, I assess Respondent a civil penalty of $31,500, which has already been remitted. In summary, upon review of all the evidence and consideration of the assessment criteria for each of the Items cited above, I assess Respondent a total civil penalty of $39,000, which has already been remitted.#

420115013_Final Order_04302012_text.pdf, page 65 COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 3 and 4 in the Notice for violations of 49 C.F.R. §§ 195.505 and 195.54, respectively. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids or who owns or operates a 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 address the cited violations: Item 3: Centurion has made revisions to its OQ program and supporting documents to ensure that personnel are annually re-qualified for Task O1, “Operate Pipeline System from Control Center.” In addition, on May 25, 2011, Centurion completed re-qualification of all Control Center operators as required by the Proposed Compliance Order. Item 4: Centurion has revised the release volume stated in the DOT 7000-1 Supplemental Accident Form for the October 10, 2010 accident. Accordingly, I find that compliance has been achieved with respect to these violations. Therefore, the compliance terms proposed in the Notice are not included in this Order. WARNING ITEM With respect to Item 2, the Notice alleged a probable violation of Part 195 specifically considered to be a warning item. The warning was for: 49 C.F.R. § 195.402(a) (Item 2) ─ Respondent’s alleged failure to follow its own written procedure for the inspection of in-service breakout tanks (P#195.432(b)). Specifically, the Notice alleged that Respondent failed to conduct a monthly inspection of tank #6688 for August 2009. In its Response, Centurion acknowledged that although it should have completed the inspection in August 2009, it conducted this particular tank inspection on September 2, 2009. If OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject to future enforcement action. The terms and conditions of this Final Order are effective upon receipt of service. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#