{"operation":"document","citation":"CPF 420131019","title":"FLORIDA GAS TRANSMISSION CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2013-11-21","effective_on":null,"summary":"CLOSED notice of probable violation citing 191.5(a), 192.463(a), 192.469.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420131019.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420131019.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420131019","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420131019","body":"Notice of Probable Violation involving FLORIDA GAS TRANSMISSION CO. PHMSA's enforcement data identifies the cited regulations as 191.5(a),  192.463(a),  192.469. The case was opened on 2013-11-21 and is reported as closed as of 2016-08-17. Proposed civil penalty: $197,200. Assessed civil penalty: $197,200. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420131019_Closure Letter_08172016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420131019/420131019_Closure%20Letter_08172016.pdf\n\n420131019_Closure Letter_08172016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420131019/420131019_Closure%20Letter_08172016_text.pdf\n\n420131019_Final Order_12142015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420131019/420131019_Final%20Order_12142015.pdf\n\n420131019_Final Order_12142015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420131019/420131019_Final%20Order_12142015_text.pdf\n\n420131019_NOPV PCP PCO_11212013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420131019/420131019_NOPV%20PCP%20PCO_11212013.pdf\n\n420131019_NOPV PCP PCO_11212013_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420131019/420131019_NOPV%20PCP%20PCO_11212013_text.pdf\n\n420131019_Operator Response to Notice_12202013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420131019/420131019_Operator%20Response%20to%20Notice_12202013.pdf\n\n420131019_NOPV PCP PCO_11212013_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nNovember 21, 2013\nMr. Ryan Coffey\nExecutive Vice President, Operations\nFlorida Gas Transmission Company, LLC\n800 Sonterra Blvd., #400\nSan Antonio, TX 78258\nCPF 4-2013-1019\nDear Mr. Coffey:\nOn February 13 - 14, 2012, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49\nUnited States Code conducted an incident investigation for the rupture that occurred on the\nFlorida Gas Transmission (FGT) 30” LAMEB-8 natural gas pipeline in East Baton Rouge,\nLouisiana.\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. § 191.5 Immediate notice of certain incidents.\n(a) At the earliest practicable moment following discovery, each operator shall give\nnotice in accordance with paragraph (b) of this section of each incident as defined in\n191.3.\n\n\n\nFlorida Gas failed to make notice to the National Response Center (NRC) at the earliest\npractical moment following discovery of their February 13, 2012, rupture in East Baton\nRouge, Louisiana.\nAlarms were received in the control room at 2:26 am, and FGT indicated on their\nPHMSA Form 7100.2, Part A, 19a, that the local time operator identified the incident was\n2:30 am. The operator did not make a call to the NRC until 5:14 am on February 13,\n2012, which is 2 hours and 48 minutes after the rupture occurred at 2:26 am.\n2. § 192.463 External corrosion control: Cathodic protection\n(a) Each cathodic protection system required by this subpart must provide a level of\ncathodic protection that complies with one or more of the applicable criteria\ncontained in appendix D of this part. If none of these criteria is applicable, the\ncathodic protection system must provide a level of cathodic protection at least equal\nto that provided by compliance with one of more of these criteria.\nFGT did not have adequate cathodic protection on the LAMEB-8 30” pipeline in the area\ndownstream of the Zachary Compressor Station (Station 8). On February 13, 2012, at\n2:26 am, Florida Gas Transmission experienced a rupture caused by external corrosion of\ntheir pipeline in East Baton Rouge, LA.\nFGT close interval survey (CIS) results for the section of pipeline downstream of the\nZachary Compressor station indicated inadequate levels of cathodic protection. In\naddition, FGT’s quarterly reports submitted in response to a Safety Order issued as a\nresult of this incident (4-2012-1001S) also concluded “Analysis of the integrity sheets\nidentified areas of deficient CP.”\nFrom the close interval survey data (labeled Station 8 to Amite River), the CIS\ndownstream of the Deerford Tap test station (168+52) indicated cathodic protection\nlevels below -850 mV and upstream and downstream of the Big Mac Rectifier test station\n(370+87) a large area of potentials below -600 mV.\n3. § 192.469 External corrosion control: Test Stations\nEach pipeline under cathodic protection required by this subpart must have\nsufficient test stations or other contact points for electrical measurement to\ndetermine the adequacy of cathodic protection.\n2\n\n\n\nFlorida Gas did not have sufficient test stations to measure the adequacy of cathodic\nprotection on the LAMEB-8 30” pipeline. FGT cathodic protection annual survey results\nfor both 2010 and 2011 indicate adequate levels of cathodic protection recorded as the\ndesignated test stations; however, the close interval survey results for that same area\nidentified cathodic protection levels below the -850 mV criteria selected. The lack of test\nstations prevented FGT from identifying areas of low potential during their annual\ncathodic protection monitoring.\nProposed Civil Penalty\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000\nper violation per day the violation persists up to a maximum of $2,000,000 for a related series of\nviolations. For violations occurring prior to January 4, 2012, the maximum penalty may not\nexceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a\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 $197,200 as follows:\nItem number PENALTY\nItem 2 $158,400\nItem 3 $ 38,800\nWarning Items\nWith respect to Item 1, we have reviewed the circumstances and supporting documents involved\nin this case and have decided not to conduct additional enforcement action or penalty assessment\nproceedings at this time. We advise you to promptly correct these item(s). Failure to do so may\nresult in additional enforcement action.\nProposed Compliance Order\nWith respect to Item 3 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous\nMaterials Safety Administration proposes to issue a Compliance Order to Florida Gas\nTransmission. Please refer to the Proposed Compliance Order, which is enclosed and made a\npart of this Notice.\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. All\nmaterial you submit in response to this enforcement action may be made publicly available. If\nyou believe that any portion of your responsive material qualifies for confidential treatment\nunder 5 U.S.C. 552(b), along with the complete original document you must provide a second\ncopy of the document with the portions you believe qualify for confidential treatment redacted\n3\n\n\n\nand an explanation of why you believe the redacted information qualifies for confidential\ntreatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice,\nthis constitutes a waiver of your right to contest the allegations in this Notice and authorizes the\nAssociate Administrator for Pipeline Safety to find facts as alleged in this Notice without further\nnotice to you and to issue a Final Order.\nIn your correspondence on this matter, please refer to CPF 4-2013-1019 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 Materials Safety Administration\nEnclosures: Proposed Compliance Order\nResponse Options for Pipeline Operators in Compliance Proceedings\n4\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 Florida Gas Transmission Company, LLC a\nCompliance Order incorporating the following remedial requirements to ensure the compliance\nof Florida Gas Transmission Company, LLC with the pipeline safety regulations:\n1. 2. 3. In regard to Item Number 3 of the Notice pertaining to cathodic protection test\nstations, FGT shall review the existing test stations on the LAMEB-8 30” pipeline\nand install additional test stations to adequately determine the effectiveness of\ncathodic protection on the pipeline.\nFGT shall conduct the review of the existing test stations and install new stations\nwithin 6 months of this Order.\nIt is requested (not mandated) that FGT maintain documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit\nthe total to R.M. Seeley, Director, Southwest Region, Pipeline and Hazardous\nMaterials Safety Administration. It is requested that these costs be reported in\ntwo categories: 1) total cost associated with preparation/revision of plans,\nprocedures, studies and analyses, and 2) total cost associated with replacements,\nadditions and other changes to pipeline infrastructure.\n5\n\n420131019_Final Order_12142015_text.pdf\n\nDecember 14, 2015\nMr. Luke Fletcher\nChief Executive Officer & President\nFlorida Gas Transmission Company, LLC\n800 E Sonterra Blvd\nSan Antonio, TX 78258\nRe: CPF No. 4-2013-1019\nDear Mr. Fletcher:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a civil penalty of $197,200, and modifies actions that need to be taken by\nFlorida Gas Transmission Company, LLC to comply with the pipeline safety regulations. The\npenalty payment terms are set forth in the Final Order. When the civil penalty has been paid and\nthe terms of the compliance order completed, as determined by the Director, Southwest Region,\nthis enforcement action will be closed. Service of this Final Order is made pursuant to 49 C.F.R.\n§ 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Rod Seeley, Director, Southwest Region, PHMSA\nMr. Bob Hogfoss and Ms. Catherine Little, Hunton & Williams LLP,\nBank of America Plaza, Suite 4100, 600 Peachtree Street, N.E., Atlanta, GA 30308\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\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 )\nFlorida Gas Transmission Company, LLC, ) CPF No. 4-2013-1019\n)\n)\n)\nRespondent. )\n_________________________________________ )\nFINAL ORDER\nOn February 13-14, 2012, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nconducted an investigation of a rupture that occurred on a gas pipeline operated by Florida Gas\nTransmission Company, LLC (FGT or Respondent) in East Baton Rouge, Louisiana.1\nAs a result of the investigation, the Director, Southwest Region, OPS (Director), issued a Notice\nof Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice) to\nRespondent on November 21, 2013. In accordance with 49 C.F.R. § 190.207, the Notice alleged\nthat FGT committed two violations of the natural gas pipeline safety regulations, proposed a civil\npenalty of $197,200, and proposed certain corrective action. The Notice also contained one\nwarning item under 49 C.F.R. § 190.205.\nFGT responded to the Notice on December 20, 2013, contested the alleged violations and\nrequested a hearing. Additional written materials were submitted by Respondent on June 13,\n2014. In accordance with 49 C.F.R. § 190.211, a hearing was held on June 25, 2014, in Houston,\nTexas, before a Presiding Official from the Office of Chief Counsel, PHMSA. Respondent\nsubmitted a post-hearing brief and additional materials on August 8, 2014. The Director\nsubmitted a written evaluation of Respondent’s response material on January 7, 2015.\n1 FGT operates approximately 5,400 miles of natural gas pipelines from Texas to Florida, as reported by\nFGT for the 2014 calendar year pursuant to 49 C.F.R. § 191.17. FGT is a subsidiary of Energy Transfer\nPartners, L.P. (ETP). Other subsidiaries of ETP include Panhandle Eastern Pipe Line Co., Sunoco\nPipeline L.P., Mid-Valley Pipeline Co., West Texas Gulf Pipe Line Co., and Trunkline Gas Co.\n\n\n\nCPF No. 4-2013-1019\nPage 2\nBACKGROUND\nOn February 13, 2012, at 2:26 a.m., a rupture occurred on the FGT LAMEB-8 natural gas\npipeline in East Baton Rouge, Louisiana, downstream of the Zachary Compressor Station.2 FGT\nGas Control contacted the Zachary Station at 2:30 a.m. to report that one of the station’s\ncompressor engines had gone offline.3 During the conversation, two more compressors went\noffline and a pressure drop was noted. The pressure drop resulted in the automatic closure of the\nmainline valve.\nThe Zachary Station Operations Manager arrived at the site of the failure and confirmed a\nrupture had occurred. Local fire departments were already onsite when the Operations Manager\narrived. Persons within a half-mile of the area were evacuated.4\nAs a result of the incident, the Director issued a Notice of Proposed Safety Order to FGT on\nFebruary 24, 2012. PHMSA and FGT executed a Consent Agreement to resolve that matter on\nMay 1, 2012.5 The Consent Agreement required FGT to arrange for metallurgical examination\nof the failed pipe, to perform additional corrosion control evaluations, and to take other actions.\nThe results of the metallurgical examination determined the “failure occurred as a result of wall\nsection thinning and subsequent tensile overload due to external corrosion.”6\nThe incident caused estimated property damage of $13,000.7 As of April 30, 2013, the total\nestimated cost associated with the incident, including cost of performing actions under the\nConsent Agreement was $2.32 million.8 The terms of the Consent Agreement were satisfied and\nthat matter was closed by the Director on December 19, 2013.9 A few weeks before closing the\nConsent Agreement, the Director issued the Notice in this case, alleging two violations of the\nsafety regulations related to corrosion control.\nFINDINGS OF VIOLATION\nItem 2 and Item 3 of the Notice alleged that Respondent committed violations of 49 C.F.R.\n§§ 192.463(a) and 192.469, respectively. The alleged violations were as follows:\n2 OPS Pipeline Safety Violation Report at 11 (Nov. 25, 2013).\n3 Violation Report, Exhibit A(2) – FGT Incident Report PHMSA Form 7100.2 at 13 (rev. Jul. 3, 2013).\n4 FGT Prehearing Submission at 4 (Jun. 13, 2014).\n5 Florida Gas Transmission Co., CPF No. 4-2012-1001S, 2012 WL 3144498 (May 25, 2012).\n6 Violation Report, Exhibit A(3) – FGT Fifth Quarterly Report at 3 (Apr. 30, 2013).\n7 FGT Incident Report PHMSA Form 7100.2 at 3. In its Prehearing Submission at 2, however,\nRespondent contended there was no property damage associated with the incident.\n8 FGT Fifth Quarterly Report at 5.\n9 Prehearing Submission at 3.\n\n\n\nCPF No. 4-2013-1019\nPage 3\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.463(a), which states:\n§ 192.463 External corrosion control: Cathodic protection.\n(a) Each cathodic protection system required by this subpart must\nprovide a level of cathodic protection that complies with one or more of\nthe applicable criteria contained in appendix D of this part. If none of\nthese criteria is applicable, the cathodic protection system must provide a\nlevel of cathodic protection at least equal to that provided by compliance\nwith one or more of these criteria.\nThe Notice alleged Respondent violated § 192.463(a) by failing to provide an adequate level of\ncathodic protection on the pipeline. Specifically, the Notice alleged that Respondent performed\na close interval survey (CIS) of the LAMEB-8 pipeline in 2012 following the rupture. Data from\nthe CIS indicated there were areas on the pipeline that did not have cathodic protection that met\nthe applicable -850mV criteria.\nRespondent contested the allegation and explained that cathodic protection surveys performed\nfor two consecutive years prior to the incident indicated the pipeline had adequate cathodic\nprotection. Following the post-incident CIS in which deficiencies were identified, Respondent\ninstalled new groundbeds and rectifiers to increase the level of cathodic protection and remediate\nthe deficiencies. Respondent argued no violation occurred because the Company promptly\nresponded to the CIS by taking corrective action. Respondent also argued the proposed penalty\nshould be lower in light of the good faith corrective action taken prior to receiving the Notice.\nApplicable Safety Standards\nBuried steel pipelines that transports gas must have cathodic protection to protect against the\nrisks of external corrosion.\n10 Criteria for determining the adequacy of cathodic protection are\nlisted in Appendix D of 49 C.F.R. Part 192.11 One of the criteria is a measured potential\nof -850mV with reference to a saturated copper-copper sulfate half-cell with the protective\ncurrent applied, known as the -850mV criteria.12\nOperators must monitor their cathodic protection systems to ensure the protection meets the\napplicable criteria. Monitoring is conducted through regular tests or surveys of the cathodic\nprotection system.\n13 If a survey identifies potentials that do not meet applicable criteria, an\noperator must take “prompt remedial action” to correct the deficiency.\n14 In most instances,\n10 §§ 192.455 and 192.457.\n11 § 192.463.\n12 49 C.F.R. Part 192, Appendix D, paragraph (I)(A)(1).\n13 § 192.465(a).\n14 § 192.465(d).\n\n\n\nCPF No. 4-2013-1019\nPage 4\n“prompt remedial action” means the deficiency must be corrected before the next regular\ninspection cycle of the cathodic protection.15\nDiscussion\nPHMSA reviews the record to determine whether the cathodic protection on Respondent’s\npipeline was adequate under the regulation. Results from the CIS performed in 2012 indicated\nthat protection levels did not meet the -850mV criteria in the area of the failure. Quarterly\nreports filed by FGT under the Consent Agreement also noted areas of deficient cathodic\nprotection.\n16 This evidence shows the pipeline did not have adequate cathodic protection.\nWhile Respondent argued that it promptly corrected the deficiencies identified by the 2012 CIS,\nevidence shows the deficiencies were actually known for several years. In a document referred\nto as the “Root Cause Failure Analysis Report” (RCFA), FGT provided factual information in\nresponse to questions related to the failure that occurred February 13, 2012.17 The RCFA\ndocumented that low potentials were identified in 2009 during an earlier CIS.\n18 The RCFA also\ndocumented that not all of the low potentials were remediated.\nFor example, Question 26 of the RCFA asks if all low potentials from the 2009 CIS were\naddressed. FGT answered that they were not, and that the most severe deficiency at a line\ncrossing had its budget for remediation turned down three straight years.19 Likewise, FGT\nanswered Question 31 stating the pipeline failure occurred at a low potential area that was\ndocumented in two previous surveys “but was not investigated or remediated.”20 This evidence\ndemonstrates Respondent’s pipeline had inadequate cathodic protection leading up to the failure\nthat were not promptly remediated.\nAccordingly, having reviewed the record, I find Respondent violated § 192.463(a) by failing to\nprovide a level of cathodic protection on its pipeline that complied with applicable criteria. FGT\nhas already taken corrective action to address these low potential areas.\n15 See, e.g., CenterPoint Energy Gas Transmission Co., CPF No. 4-2005-1008, Item 1, 2008 WL 565345,\nat *1 (Feb. 11, 2008) (stating “PHMSA considers remedial action to be prompt if . . . all necessary\nremedial actions have been completed by the next scheduled monitoring”).\n16 FGT Fifth Quarterly Report at 3.\n17 Violation Report at 26; Exhibit A(5) – FGT Root Cause Failure Analysis (RCFA) Report.\n18 RCFA Report at 1-2.\n19 Violation Report at 12; RCFA Report at 2.\n20 Violation Report at 12; RCFA Report at 2.\n\n\n\nCPF No. 4-2013-1019\nPage 5\nItem 3. The Notice alleged Respondent violated 49 C.F.R. § 192.469, which states:\n§ 192.469 External corrosion control: Test stations.\nEach pipeline under cathodic protection required by this subpart must\nhave sufficient test stations or other contact points for electrical\nmeasurement to determine the adequacy of cathodic protection.\nThe Notice alleged that Respondent violated § 192.469 by failing to have sufficient test stations\nto determine the adequacy of cathodic protection on its pipeline. Specifically, the Notice alleged\nthat cathodic protection surveys using test stations in 2010 and 2011 indicated there was\nadequate cathodic protection, even though there were areas that did not have adequate protection\nas documented in a CIS.\nRespondent argued that the pipeline has sufficient test stations to determine the adequacy of\ncathodic protection. The test stations, Respondent explained, are spaced at distances consistent\nwith industry practice. In the judgment of FGT’s corrosion control personnel, they are sufficient\nto ensure there is adequate cathodic protection. Respondent noted the regulation does not\nspecify a uniform distance between stations and PHMSA guidance recognizes spacing may vary\nwidely depending upon local conditions.21\nApplicable Safety Standards\nOperators of gas pipelines that have cathodic protection must test the cathodic protection at\nregular intervals to ensure it meets applicable requirements for corrosion control.22 Test stations\nare the locations on a pipeline designated by the operator where cathodic protection readings are\ntaken.23 Periodic surveys typically involve taking readings at those test stations. Operators may\nalso perform CIS, which tests the cathodic protection at much shorter distances. For example,\nCIS may test the protection every two to three feet along the pipeline, whereas survey test\nstations may be much farther apart.24\nPipelines must have a “sufficient” number of test stations so that when performing a survey, the\noperator can determine if cathodic protection is adequate.25 The regulation does not establish a\nspecific number of test stations or specific distance between test stations, but does establish a\nperformance-based minimum level of safety that must be achieved.26 Rather than establishing a\n21 Prehearing Submission at 2, citing PHMSA’s Corrosion Enforcement Guidance for Part 192. A copy\nof the guidance was not included in the record, but the latest revision is available on the PHMSA website\nat: http://www.phmsa.dot.gov/foia/e-reading-room (accessed Nov. 19, 2015).\n22 § 192.465(a).\n23 PHMSA Part 192 Corrosion Enforcement Guidance at 94, § 192.469 (rev. Dec. 9, 2014).\n24 See PHMSA Stakeholder Awareness and Outreach Pipeline Glossary on the PHMSA website at:\nhttp://primis.phmsa.dot.gov/comm/glossary (link to “Close Interval Survey”) (accessed Nov. 19, 2015).\n25 § 192.469.\n26 Tennessee Gas Pipeline Co., CPF No. 4-2012-1020, at 3, 2013 WL 8284480, at *2 (Dec. 26, 2013).\n\n\n\nCPF No. 4-2013-1019\nPage 6\nuniform distance for test stations, the rule provides operators flexibility to achieve compliance in\na manner appropriate for their pipeline system, as long as the minimum level of safety is being\nachieved.27 In this case, test stations on Respondent’s pipeline must be sufficient to enable FGT\nto determine if the protection is adequate and if there are any deficiencies.\nDiscussion\nPHMSA reviews the record to determine whether test stations on Respondent’s pipeline were\nsufficient to assess the adequacy of cathodic protection. As noted above, Respondent performed\na CIS in 2009 that identified areas with inadequate cathodic protection. Upgrades were made to\naddress some of the deficiencies, including increasing rectifiers, but not all deficiencies were\nremediated.\n28 When Respondent conducted surveys using test stations in 2010 and 2011, the\nsurveys found no deficiencies in the cathodic protection. The 2012 CIS confirmed, however,\nthat deficiencies still existed on the line. These deficiencies were not identified by the test\nstations in 2010 and 2011.\nThe facts presented in this case are similar to a prior enforcement action involving another\noperator.29 In that case, the operator performed a CIS in 2008 that identified cathodic protection\ndeficiencies. The company took remedial measures and installed additional test stations. The\nnext year, it conducted a survey using test stations and found no deficiencies. When the\ncompany performed another CIS in 2010, numerous locations were identified that still had\ninadequate cathodic protection from 2008. PHMSA concluded that the operator had failed to\ncomply with the requirement in § 192.469 to have sufficient test stations, noting the company\nshould have done more to determine if the test stations added in 2008 were adequate.\nWhile FGT argued that its test stations were appropriately spaced, the evidence demonstrates\nRespondent’s pipeline did not have sufficient test stations to determine the adequacy of cathodic\nprotection. The surveys conducted by Respondent at test stations in 2010 and 2011 did not\ndetect inadequate cathodic protection areas that were detected by CIS in 2009 and 2012.\nAccordingly, having reviewed the record, I find Respondent violated § 192.469 by failing to\nhave sufficient test stations to determine the adequacy of cathodic protection.\nThe findings of violation in this Order will be considered prior offenses in any subsequent\nenforcement action taken against Respondent.\n27 See, e.g., Magellan Pipeline Co., CPF No. 4-2012-5010, at 9, 2014 WL 5431188, at *8 (Sept. 2, 2014)\n(discussing performance-based line marker requirements).\n28 RCFA Report at 1-2.\n29 Spectra Energy Trans., LLC, CPF No. 3-2013-1005, at 2, 2015 WL 1885172, at *1 (Mar. 11, 2015).\n\n\n\nCPF No. 4-2013-1019\nPage 7\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any\nrelated series of violations. The Notice proposed a civil penalty of $197,200 for the violations\ncited above.\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225,\nPHMSA must consider the following criteria: the nature, circumstances and gravity of the\nviolation, including adverse impact on the environment; the degree of Respondent’s culpability;\nthe history of Respondent’s prior offenses; the good faith of Respondent in attempting to comply\nwith the pipeline safety regulations; and the effect on Respondent’s ability to continue in\nbusiness. In addition, PHMSA may consider economic benefit gained from the violation without\nany reduction because of subsequent damages, and such other matters as justice may require.\nItem 2: The Notice proposed a civil penalty of $158,400 for Respondent’s failure to provide an\nadequate level of cathodic protection on its pipeline in violation of § 192.463(a).\nThe proposed penalty amount was based on factual assertions in the Violation Report relevant to\neach of the penalty assessment criteria in § 190.225. With regard to the nature and\ncircumstances of the violation, the Report noted that the violation was a result of conduct by\nFGT and that it was discovered by PHMSA. With regard to gravity, the Report noted the\nviolation was a causal factor in a pipeline incident, as defined in § 191.3, and that low cathodic\nprotection levels contributed to corrosion of the pipe that ruptured. The pipeline incident caused\nevacuations and property damage.\nWith regard to the degree of Respondent’s culpability and good faith, the Violation Report\nsuggested that no reduction to the penalty was appropriate under these factors because FGT\nfailed to take appropriate action to comply with a requirement that was clearly applicable. The\nViolation Report also noted a history of five offenses in the five-year period prior to issuance of\nthe Notice.\nRespondent argued the proposed penalty should be reduced to reflect proactive and good faith\nefforts by FGT to remediate deficiencies prior to issuance of the Notice. Respondent installed\nnew groundbeds and rectifiers after the 2012 CIS to improve cathodic protection. FGT also\nimplemented extensive corrective measures under the Consent Agreement. Respondent noted\nthat a subsequent CIS performed in 2013 demonstrated all low potentials have been remediated.\nWhen considering good faith of a respondent under the assessment criteria, PHMSA looks at the\nactions the operator was taking in attempting to comply with the regulation when the violation\noccurred.30 A respondent’s actions after a violation was discovered to remediate the violation\ngenerally do not warrant reducing a penalty because the operator already has an affirmative duty\nto correct known compliance issues.31\n30 City of Richmond, Virginia, CPF No. 1-2013-0001, 2014 WL 2875598 (May 2, 2014).\n31 § 192.603(a).\n\n\n\nCPF No. 4-2013-1019\nPage 8\nPHMSA acknowledges the measures taken by FGT to remediate the cathodic protection\ndeficiencies that were discovered. These actions, however, do not warrant reducing the penalty\nbecause they were taken after the incident had occurred, when Respondent was under a\nregulatory obligation to correct the deficiencies.32 For the same reason, Respondent’s efforts to\ncomply with the Consent Agreement do not justify reducing the penalty.\nBased on a review of the record, PHMSA finds the proposed civil penalty is supported by the\nevidence and is appropriate under the applicable assessment criteria. Respondent is assessed a\ncivil penalty of $158,400 for the violation of § 192.463(a).\nItem 3: The Notice proposed a civil penalty of $38,800 for Respondent’s failure to have\nsufficient test stations to determine the adequacy of cathodic protection in violation of § 192.469.\nWith regard to the nature and circumstances of the violation, the Violation Report noted the\nviolation was a result of equipment not being installed and this was discovered by PHMSA.\nWith regard to gravity, the Report suggested that pipeline safety had been “significantly\ncompromised” due to the inability of Respondent to determine the adequacy of cathodic\nprotection during annual surveys, which led to a pipeline failure.\nWith regard to the degree of Respondent’s culpability and good faith, the Violation Report\nsuggested that no reduction was appropriate, because FGT had failed to take appropriate action\nto comply with a requirement that was clearly applicable. The Violation Report likewise noted\nfive prior offenses.\nRespondent argued the penalties for Item 2 and Item 3 should be reduced or withdrawn because\nboth of the violations rely on circumstances of low cathodic protection potentials. Respondent\ncited a prior PHMSA order to support this position.33\nIn the prior final order cited by Respondent, PHMSA found certain violations of the same\nregulation were sufficiently similar that their combined penalties should be below the maximum\namount permissible for a single violation. Specifically, PHMSA found the operator’s alleged\nfailure to evaluate line marking jobs performed by a line locator (Item 6) was essentially the\nsame as the failure to conduct adequate oversight of the line locator (Item 4). Both allegations\ninvolved the same regulatory requirement and the same evidentiary basis, namely, the conduct of\nthe manager responsible for overseeing the line locator.\nThe Agency also found the operator’s alleged failure to follow procedures for correcting\nrepeated encroachments (Item 8) was essentially the same as the failure to take appropriate\naction to address repeated encroachments (Item 7). Even though these two items cited separate\nregulatory requirements, they essentially involved the same requirement and they involved the\n32 § 192.465(d).\n33 Prehearing Submission at 6, citing Colorado Interstate Gas Co., CPF No. 5-2008-1005, at 12, 2009 WL\n5538649 (Nov. 23, 2009).\n\n\n\nCPF No. 4-2013-1019\nPage 9\nsame evidentiary basis: the actions taken or not taken to address repeated encroachments.\nPHMSA found each pair were related for purpose of the civil penalty cap that applies to a single\nrelated series of violations.\nThere have been other enforcement cases in which an operator has argued multiple violations\nwere the same, but PHMSA found they were actually separate and distinct violations. This is\nparticularly the case where the violations involve separate regulatory requirements or required\nproof of different facts. For example, an operator’s failure to perform a risk analysis to consider\nthe threat of flooding was found to be a separate violation from the operator’s failure to have\nprocedures for responding to flooding and other natural disasters.34 Although the violations both\nrelated to an accident caused by flooding, they each involved a separate regulatory requirement\nand separate evidence.\nIn the present matter, Item 2 concerns the requirement to have adequate cathodic protection, and\nItem 3 concerns the requirement to have test stations to enable the monitoring of cathodic\nprotection. These are separate regulatory requirements. In addition, Item 3 requires proof that\nRespondent failed to have a sufficient number of test stations, whereas the sufficiency of test\nstations is not an issue in Item 2. Even though evidence of low cathodic protection readings is\nrelevant to both violations, overlap of some evidence is not a sufficient basis by itself to render\nthe violations a single offense. PHMSA finds Item 2 and Item 3 are separate and distinct\nviolations.\nBased on a review of the record, the proposed civil penalty is supported by the evidence and is\nappropriate under the applicable assessment criteria. Respondent is assessed a civil penalty of\n$38,800 for the violation of § 192.469.\nIn summary, Respondent is assessed a total civil penalty of $197,200 for the violations cited\nabove.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.\nThe Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $197,200 civil penalty will result in accrual of interest at the current annual\nrate in 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\n34 ExxonMobil Pipeline Co., CPF No. 5-2013-5007, 2015 WL 780721, at *22 (Jan. 23, 2015). See also,\nEnbridge Energy Partners, L.P., CPF No. 3-2008-5011, 2010 WL 6531629 (Aug. 17, 2010) (evaluating\nmultiple violations and finding none were so related they constituted a single offense).\n\n\n\nCPF No. 4-2013-1019\nPage 10\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to the violation of § 192.469 (Item 3).\nUnder 49 U.S.C. § 60118(a), each person who owns or operates a natural gas pipeline facility is\nrequired to comply with the applicable safety standards established under chapter 601, including\nthose established in 49 C.F.R. Part 192.\nRespondent requested that the proposed compliance order be withdrawn because the Company\nhas already taken actions to satisfy the requirements.35 FGT noted that it has addressed localized\nareas of low potentials by performing CIS in 2012 and 2013, increasing output of existing\nrectifiers, testing cathodic protection at foreign line crossings, installing additional negative\nleads, completing additional test readings, installing new ground beds and rectifiers, and\nrecoating portions of the pipeline.36\nPHMSA recognizes efforts taken by FGT to address deficiencies in cathodic protection. With\nrespect to the proposed compliance order, however, the efforts do not appear to address the\nactions that were proposed to demonstrate compliance with § 192.469. For example, Respondent\ndid not produce documentation demonstrating it has completed a review of existing test stations.\nSince FGT did not satisfy the requirements of the proposed compliance order, the terms are not\nwithdrawn.\nRespondent also requested that the terms of the proposed compliance order be modified to reflect\nthe flexibility permitted by the regulation that allows each operator to determine appropriate\nmeans of complying with § 192.469, whether that be installing additional groundbeds, rectifiers,\nor test stations.37\nAt the hearing, both parties acknowledged that compliance with § 192.469 may be possible\nwithout installing additional test stations if other methods of compliance were available, such as\nfiguring out different protection levels at existing test stations to ensure adequate cathodic\nprotection along the pipeline. I agree with Respondent the compliance order should be modified.\nThe Company will be required to submit its plan for compliance to the Director for approval.\nPursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, FGT is ordered to\ntake the following actions to ensure compliance with the applicable pipeline safety regulations:\n35 Prehearing Submission at 7.\n36 FGT Post-hearing Brief at 3 (Aug. 8, 2014).\n37 FGT Response at 3 (Dec. 20, 2013).\n\n\n\nCPF No. 4-2013-1019\nPage 11\n1. 2. 3. 4. 5. With respect to the violation of § 192.469 (Item 3), FGT must conduct a documented\nreview and analysis of existing test stations and other contact points for electrical\nmeasurement on the LAMEB-8 30” pipeline.\nBased on the documented review and analysis performed under Paragraph 1, FGT must\nidentify additional actions that will ensure future monitoring is capable of determining\nthe adequacy of cathodic protection along the pipeline. Additional actions must include\nthose measures that are necessary to ensure compliance with § 192.469, such as\ninstallation of additional test stations, changing of cathodic protection levels at existing\ntest stations, or other appropriate measures. Include a schedule for completing the\nadditional actions within six months of the date of this Order.\nSubmit the documented review and analysis prepared under Paragraph 1, and the\nidentification of additional actions and schedule prepared under Paragraph 2, to the\nDirector for prior approval within 45 days of the date of this Order.\nSubmit documentation demonstrating completion of the additional actions, as approved\nby the Director under Paragraph 3, within six months of the date of this Order.\nIt is requested that FGT maintain documentation of the safety improvement costs\nassociated with fulfilling this Compliance Order and submit the total to the Director. It is\nrequested that these costs be reported in two categories: (1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses, and (2) total cost\nassociated with replacement, additions or other changes to pipeline infrastructure.\nThe Director may grant an extension of time to comply with any of the requir","truncated":true,"body_characters":44543}