{"operation":"document","citation":"CPF 420135007","title":"PLAINS PIPELINE, L.P. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2013-04-05","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.205(a), 195.402(a), 195.430, 195.432(a), 195.563, 195.571.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420135007.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420135007.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420135007","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420135007","body":"Notice of Probable Violation involving PLAINS PIPELINE, L.P.. PHMSA's enforcement data identifies the cited regulations as 195.205(a),  195.402(a),  195.430,  195.432(a),  195.563,  195.571. The case was opened on 2013-04-05 and is reported as closed as of 2017-12-28. Proposed civil penalty: $103,400. Assessed civil penalty: $102,900. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420135007_Closure Letter_12282017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420135007/420135007_Closure%20Letter_12282017.pdf\n\n420135007_Closure Letter_12282017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420135007/420135007_Closure%20Letter_12282017_text.pdf\n\n420135007_Final Order_05222015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420135007/420135007_Final%20Order_05222015.pdf\n\n420135007_Final Order_05222015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420135007/420135007_Final%20Order_05222015_text.pdf\n\n420135007_NOPV PCP PCO_04052013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420135007/420135007_NOPV%20PCP%20PCO_04052013.pdf\n\n420135007_NOPV PCP PCO_04052013_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420135007/420135007_NOPV%20PCP%20PCO_04052013_text.pdf\n\n420135007_Operator Response and Request for a Hearing_05102013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420135007/420135007_Operator%20Response%20and%20Request%20for%20a%20Hearing_05102013.pdf\n\n420135007_NOPV PCP PCO_04052013_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nApril 5, 2013\nMr. Troy Valenzuela\nVice President, Environmental, Health, & Safety\nPlains Pipeline, L.P.\nP.O. Box 4648\nHouston, TX 77210-4648\nCPF 4-2013-5007\nDear Mr. Valenzuela:\nOn various dates in 2011 and 2012, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your Plains\nPipeline, L.P., Cushing Terminal (Plains, the Operator) in Cushing, OK.\nAs a result of the inspection, it appears that you have committed probable violations of the Pipeline\nSafety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable\nviolation(s) are:\n1. §195.205 Repair, alteration and reconstruction of aboveground breakout tanks that have been\nin service.\n(a) Aboveground breakout tanks that have been repaired, altered, or reconstructed and returned\nto service must be capable of withstanding the internal pressure produced by the hazardous liquid\nto be stored therein and any anticipated external loads. (b) After October 2, 2000, compliance\nwith paragraph (a) of this section requires the following for the tanks specified: (1) For tanks\ndesigned for approximately atmospheric pressure constructed of carbon and low alloy steel,\nwelded or riveted, and non-refrigerated and tanks built to API Standard 650 or its predecessor\nStandard 12C, repair, alteration, and reconstruction must be in accordance with API Standard\n653.\n\n\n\nPlains does not have complete documentation showing that all repairs recommended by the API 653\ninspections were completed or alternatively if the Operator decided that certain recommended repairs\nwere not necessary, the engineering justification for why the repairs were not made. In some cases the\nOperator has bid proposals from vendors and Authorization for Expenditure (AFE) documents, but these\ndocuments do not clearly show that the work was actually completed.\n2. §195.402 Procedural manual for operations, maintenance, and emergencies.\n(a) General. Each operator shall prepare and follow for each pipeline system a manual of written\nprocedures for conducting normal operations and maintenance activities and handling abnormal\noperations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months,\nbut at least once each calendar year, and appropriate changes made as necessary to insure that the\nmanual is effective. This manual shall be prepared before initial operations of a pipeline system\ncommence, and appropriate parts shall be kept at locations where operations and maintenance\nactivities are conducted.\nPlains did not follow its procedure, P – 195.432(b), Inspection of In-Service Breakout Tanks, which\naccording to Item 1m of its inspection procedure, in place at the time of the PHMSA inspection,\nrequired a security inspection as part of the monthly breakout tank inspection. However, the Plains\nmonthly Tank Inspection record, Form 505, did not include any documentation that the security\ninspections had been performed. The Operator also did not have other records showing that the monthly\nsecurity inspections had been performed.\n3. §195.430 Firefighting equipment.\nEach operator shall maintain adequate firefighting equipment at each pump station and breakout\ntank area. The equipment must be-\n(a) In proper operating condition at all times;\n(b) Plainly marked so that its identity as firefighting equipment is clear; and,\n(c) Located so that it is easily accessible during a fire.\n§195.10 Responsibility of operator for compliance with this part.\nAn operator may make arrangements with another person for the performance of any action required by\nthis part. However, the operator is not thereby relieved from the responsibility for compliance with any\nrequirement of this part.\nPlains does not maintain adequate firefighting equipment at their Cushing Terminal but instead relies on\nthe local public firefighting agency (Cushing Fire Department) and a volunteer alliance of area pipeline\noperators (Safety Alliance of Cushing, SAC) to provide equipment to satisfy this requirement. The\nOperator’s policy allows employees to attempt to extinguish only small fires using small portable fire\nextinguishers but requires personnel to call on the local firefighting agency to respond to larger fires.\nBut, Plains does not have adequate verification that the local public firefighting agency and SAC have\nadequate capability to respond to a fire at the Plains Cushing Terminal.\n2\n\n\n\n4. §195.432 Inspection of in-service breakout tanks.\n(a) Except for breakout tanks inspected under paragraphs (b) and (c) of this section, each\noperator shall, at intervals not exceeding 15 months, but at least once each calendar year, inspect\neach in-service breakout tank.\n(b) Each operator must inspect the physical integrity of in-service atmospheric and low-pressure\nsteel aboveground breakout tanks according to API Standard 653 (incorporated by reference, see\n§ 195.3). However, if structural conditions prevent access to the tank bottom, the bottom integrity\nmay be assessed according to a plan included in the operations and maintenance manual under §\n195.402(c)(3).\nThe breakout tank internal inspection intervals for thirty (30) tanks initially presented to PHMSA during\nthe inspection were not correctly established according to the requirements of API Standard 653. For\nexample, Plains records showed that tanks 2300, 2400, 2500, and 2600 were completed on July 1, 2002\nand had an internal inspection interval established of fourteen (14) years. Plains did not have a similar\nservice assessment performed according to Appendix H of API Standard 653 and did not have\nprocedures for establishing the internal inspection intervals using a risk-based methodology according to\nparagraph 6.4.3 of API Standard 653. Consequently, the Operator was required to establish the internal\ninspection interval according to paragraph 6.4.2.2 of the version of API Standard 653 incorporated by\nreference, which states, “When corrosion rates are not known and similar service experience is not\navailable to estimate the bottom plate minimum thickness at the next inspection, the internal inspection\ninterval shall not exceed 10 years.” This required internal inspections of the tanks with a construction\ndate of July 1, 2002 to be completed by July 1, 2012. The internal inspection intervals for twenty six\nadditional tanks (2700 through 5300) had similar issues and require initial internal inspections be\nperformed by dates ranging from July 1, 2013 to April 7, 2020 depending on the construction date.\nPlains revised the inspection intervals and provided new data to PHMSA.\n5. §195.563 Which pipelines must have cathodic protection?\n(d) Bare pipelines, breakout tank areas, and buried pumping station piping must have cathodic\nprotection in places where regulations in effect before January 28, 2002 required cathodic\nprotection as a result of electrical inspections. See previous editions of this part in 49 CFR, parts\n186 to 199.\n§195.565 How do I install cathodic protection on breakout tanks?\nAfter October 2, 2000, when you install cathodic protection under Sec. 195.563(a) to protect the bottom\nof an aboveground breakout tank of more than 500 barrels (79.5m3) capacity built to API Specification\n12F, API Standard 620, or API Standard 650 (or its predecessor Standard 12C), you must install the\nsystem in accordance with API Recommended Practice 651. However, installation of the system need\nnot comply with API Recommended Practice 651 on any tank for which you note in the corrosion\ncontrol procedures established under Sec. 195.402(c)(3) why compliance with all or certain provisions\nof API Recommended Practice 651 is not necessary for the safety of the tank.\n§195.553 What special definitions apply to this subpart?\nBuried means covered or in contact with soil.\n3\n\n\n\nPlains did not maintain cathodic protection on at least sixteen (16) Cushing Terminal breakout tanks\naccording to the requirements of 49 CFR 195.563(d) and 49 CFR 195.565, and did not have supporting\ndocumentation needed to adequately justify why compliance with the provisions of API 651 is not\nnecessary for the safety of the tank. The Operator originally installed impressed current cathodic\nprotection systems on breakout tanks in the Cushing Terminal at the time of construction. Consistent\nwith the requirements of 49 CFR 195.563(d), the installation of impressed current cathodic protection\nsystems on these tanks indicates that Plains had determined that cathodic protection of the tank bottoms\nwas needed. At a later date, Plains discontinued the cathodic protection and instead implemented the\nuse of Vapor Phase Corrosion Inhibitor but did not provide supporting documentation justifying these\nactions.\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 applicable\ncriteria and other considerations for cathodic protection contained in paragraphs 6.2 and 6.3 of\nNACE SP 0169 (incorporated by reference, see § 195.3).\n§195.565 How do I install cathodic protection on breakout tanks?\nAfter October 2, 2000, when you install cathodic protection under Sec. 195.563(a) to protect the bottom\nof an aboveground breakout tank of more than 500 barrels (79.5m3) capacity built to API Specification\n12F, API Standard 620, or API Standard 650 (or its predecessor Standard 12C), you must install the\nsystem in accordance with API Recommended Practice 651. However, installation of the system need\nnot comply with API Recommended Practice 651 on any tank for which you note in the corrosion\ncontrol procedures established under Sec. 195.402(c)(3) why compliance with all or certain provisions\nof API Recommended Practice 651 is not necessary for the safety of the tank.\nPlains did not meet one or more of the applicable criteria for cathodic protection on twenty seven (27)\nbreakout tanks in the Cushing Terminal as required by 49 CFR 195.571 and 49 CFR 195.565. For\nexample, the annual 2010 and 2011 reference cells survey shows that there was no cathodic protection\non tank 1800. Another example is on tank 2000 where one of the year 2011 energized readings was -\n0.657 mV and the IR free reading was -0.483 mV. The Operator has a note that the 100 mV criterion\nwas used, but there was not adequate information (native potential) on the Operator’s record to\ndetermine if the 100 mV criterion was met. Other examples where at least one of the reference cells\nduring the 2011 survey were not meeting one of the criteria include tanks 1900, 2100, 2200, 2300, 2400,\n2500, 2600, 2700, 2800, 2900, 3000, 3100, 3200, 3300, 3400, 3500, 3600, 3700, 3800 3900, 4000, 4300,\n4400, 5000, and 5300.\nProposed Civil Penalty\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for\neach violation for each day the violation persists up to a maximum of $1,000,000 for any related series\nof violations. The Compliance Officer has reviewed the circumstances and supporting documentation\ninvolved in the above probable violation(s) and has recommended that you be preliminarily assessed a\ncivil penalty of $103,400 as follows:\nItem number PENALTY\n4\n\n\n\n5 $32,800\n6 $70,600\nWarning Items\nWith respect to item(s) 1 through 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 advised that\nfailure to do so may result in Plains being subject to additional enforcement action.\nProposed Compliance Order\nWith respect to item(s) 5 and 6 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous\nMaterials Safety Administration proposes to issue a Compliance Order to Plains. Please refer to the\nProposed Compliance Order, which is enclosed and made a part of this Notice.\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in\nCompliance Proceedings. Please refer to this document and note the response options. Be advised that\nall material you submit in response to this enforcement action is subject to being made publicly\navailable. If you 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 copy of\nthe document with the portions you believe qualify for confidential treatment redacted and an\nexplanation of why you believe the redacted information qualifies for confidential treatment under 5\nU.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver\nof your right to contest the allegations in this Notice and authorizes the Associate Administrator for\nPipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final\nOrder.\nIn your correspondence on this matter, please refer to CPF 4-2013-5007 and for each document you\nsubmit, 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\n5\n\n\n\nPROPOSED COMPLIANCE ORDER\nPursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration\n(PHMSA) proposes to issue to Plains a Compliance Order incorporating the following remedial\nrequirements to ensure the compliance of Plains with the pipeline safety regulations:\n1. 2. 3. 4. In regard to Item Number 5 of the Notice pertaining to Plains failing to install cathodic\nprotection on some of its breakout tanks, the Operator must install cathodic protection to\nprotect the bottom of each unprotected breakout tank as required by the applicable\nprovisions in 49 CFR 195. Volatile Corrosion Inhibitor (VCI) may be used in\nconjunction with cathodic protection but cannot be used as a substitute for a cathodic\nprotection system.\nIn regard to Item Number 6 of the Notice pertaining to failing to achieve adequate\ncathodic protection on some of the breakout tanks in the Cushing Terminal, Plains must\ntake appropriate actions to remedy all cathodic protection deficiencies and show by\nstructure-to-soil measurements that one or more of the cathodic protection criteria listed\nin NACE SP0169 or API RP651 has been achieved.\nIn regard to Item Number 5 of the Notice, Plains must submit, for PHMSA approval, a\nplan to install cathodic protection on each unprotected breakout tank within 30 days of\nreceipt of this Order. The Operator must then complete installation of the cathodic\nprotection systems within 1 year of receiving PHMSA approval for the plan. In regard to\nItem Number 6 of the Notice, Plains must submit to PHMSA within 1 year, structure-to-\nsoil readings for every tank in the Cushing Terminal that show that at least one of the\ncathodic protection criteria required by 49 CFR 195 has been met.\nIt is requested (not mandated) that Plains maintain documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit the total\nto R. M. Seeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety\nAdministration. It is requested that these costs be reported in two categories: 1) total cost\nassociated with preparation/revision of plans, procedures, studies and analyses, and 2)\ntotal cost associated with replacements, additions and other changes to pipeline\ninfrastructure.\n6\n\n420135007_Final Order_05222015_text.pdf\n\nMay 22, 2015\nHarry N. Pefanis\nPresident\nPlains All American Pipeline, L.P.\nPlains Pipeline, L.P.\n333 Clay Street, Suite 1600\nHouston, TX 77002\nRe: CPF No. 4-2013-5007\nDear Mr. Pefanis:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a reduced civil penalty of $102,900, and specifies corrective action that must\nbe completed. The penalty payment terms are set forth in the Final Order. When the civil\npenalty has been paid and the terms of the compliance order completed, as determined by the\nDirector, Southwest Region, this enforcement action will be closed. Service of the Final Order is\nmade pursuant to 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. R.M. Seeley, Director, Southwest Region, OPS\nMr. Trent M. Doyle and Mr. Eric P. Gotting, Keller and Heckman LLP\n1001 G Street NW, Ste 500 West, Washington, D.C. 20001\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 )\nPlains Pipeline, L.P., ) CPF No. 4-2013-5007\n)\n)\n)\nRespondent. )\n___________________________________ )\nFINAL ORDER\nDuring 2011 and 2012, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nconducted an on-site pipeline safety inspection of the records and procedures of Plains Pipeline,\nL.P. (Plains or Respondent) in Cushing, Oklahoma.1\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued a Notice of\nProbable Violation, Proposed Civil Penalty, and Proposed Compliance Order on April 5, 2013\n(Notice). In accordance with 49 C.F.R. § 190.207, the Notice alleged that Respondent\ncommitted two violations of the pipeline safety regulations, proposed a civil penalty of $103,400,\nand proposed certain corrective action. In addition, the Notice included several warning items\nadvising Respondent to correct other probable violations.\nPlains responded to the Notice and requested a hearing by letter dated May 10, 2013 (Response).\nPlains submitted additional documents on July 29, 2013 (Pre-hearing Submission). In\naccordance with 49 C.F.R. § 190.211, a hearing was held on August 7, 2013, in Houston, Texas,\nbefore a Presiding Official from the Office of Chief Counsel, PHMSA. After the hearing,\nRespondent submitted additional documentation on September 13, 2013 (Post-hearing Brief) and\nMay 29, 2014 (Second Post-hearing Statement).\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondent committed two violations of the hazardous liquid pipeline\nsafety regulations in 49 C.F.R. Part 195, as follows:\n1 Plains is a subsidiary of Plains All American Pipeline, L.P., and operates approximately 6,000 miles of\npipeline transporting crude oil and refined products in Oklahoma, Wyoming, and other states, as reported\nby Plains for 2013 pursuant to 49 C.F.R. § 195.49.\n\n\n\nCPF No. 4-2013-5007\nPage 2\nItem 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.563, which states:\n§ 195.563 Which pipelines must have cathodic protection?\n(a) Each buried or submerged pipeline that is constructed, relocated,\nreplaced, or otherwise changed after the applicable date in §195.401(c)\nmust have cathodic protection. The cathodic protection must be in\noperation not later than 1 year after the pipeline is constructed, relocated,\nreplaced, or otherwise changed, as applicable . . . .\n(d) Bare pipelines, breakout tank areas, and buried pumping station\npiping must have cathodic protection in places where regulations in effect\nbefore January 28, 2002 required cathodic protection as a result of\nelectrical inspections. See previous editions of this part in 49 CFR, parts\n186 to 199.\n§ 195.565 How do I install cathodic protection on breakout tanks?\nAfter October 2, 2000, when you install cathodic protection under\n§ 195.563(a) to protect the bottom of an aboveground breakout tank . . . .\nyou must install the system in accordance with API Recommended\nPractice 651. However, installation of the system need not comply with\nAPI Recommended Practice 651 on any tank for which you note in the\ncorrosion control procedures established under § 195.402(c)(3) why\ncompliance with all or certain provisions of API Recommended Practice\n651 is not necessary for the safety of the tank.\nThe Notice alleged that Respondent failed to have cathodic protection in accordance with\n§ 195.563 on breakout tanks at the Cushing Terminal. Specifically, the Notice alleged that\nbetween 2007 and 2011, Respondent replaced cathodic protection systems on at least 16 tanks\nwith systems that used volatile corrosion inhibitors and resistance probes (VCI). The Notice\nalleged that §§ 195.563 and 195.565 require cathodic protection and do not permit the use of\nVCI as a substitute for cathodic protection. The Notice further alleged Respondent did not have\nsupporting documentation in its corrosion control procedures under § 195.565 to justify why\ncompliance with the provisions of API Recommended Practice 651 (API RP 651) was not\n2\nnecessary.\nIn its written submissions and at the hearing, Respondent contested the alleged violation and\nargued that the use of VCI in lieu of cathodic protection is permitted under §§ 195.563 and\n195.565. Respondent explained that it began using VCI in 2006 when the original cathodic\nprotection systems on certain breakout tanks became difficult to maintain. The tanks were\noriginally constructed with dielectric high density polyethylene (HDPE) liners approximately\none foot below each tank bottom. Due to the presence of the liners, Respondent found there was\ninadequate space to easily replace the cathodic protection anodes as they began to deteriorate.\nRetrofitting the tanks with new cathodic protection systems was found to be cost prohibitive, as\nit would involve taking the tank out of service, removing the tank bottom and liner, and installing\n2 API RP 651 is incorporated by reference at § 195.3.\n\n\n\nCPF No. 4-2013-5007\nPage 3\na new tank floor.3 Also, since the HDPE liner was non-conductive, Respondent could not simply\nincrease the impressed current.\nRespondent concluded that VCI was an available alternative to cathodic protection. VCI\ninvolves the injection of a vapor corrosion inhibitor slurry into the space between the tank floor\nand liner. Electrical resistance probes are installed to monitor corrosion rates in real-time.\nRespondent stated that it installed VCI on 22 tanks between 2006 and 2012. For some of the\ntanks equipped with VCI, where possible, Respondent kept the original cathodic protection\nsystem in operation. For other tanks, VCI completely replaced cathodic protection. According\nto Respondent, VCI is a “proven technology with an established history of providing corrosion\nprotection.”4\nRespondent argued that §§ 195.563 and 195.565 allow operators to use VCI instead of cathodic\nprotection. Respondent noted that § 195.565 allows operators to document “why compliance\nwith all or certain provisions of API Recommended Practice 651 is not necessary for the safety\nof the tank.”5 Respondent stated that cathodic protection is not necessary for its tanks because\nVCI provides adequate corrosion control. Respondent produced documentation, including its\nprocedures for using VCI, a memorandum from a VCI vendor with information about the\ntechnology, expert reports, technical and engineering documentation, and a summary of\ncorrosion rate monitoring data for the breakout tanks.\nRespondent also argued that its own use of VCI at the Cushing Terminal was previously audited\nand approved by OPS in 2009. By approving the Company’s procedures for using VCI, Plains\ncontended that OPS adopted the position that VCI is an acceptable substitute for cathodic\nprotection. Respondent argued further that OPS may not change its position to accept VCI.\nAt the hearing, OPS denied ever taking a position during the prior audit that Respondent could\ndiscontinue the use of cathodic protection without a special permit.\n6\nA. Whether §§ 195.563 and 195.565 allow the use of VCI in lieu of cathodic protection\nTo determine whether it was permissible for Respondent to replace cathodic protection with\nVCI, PHMSA examines the plain language of the rule. PHMSA has adopted safety standards in\n49 C.F.R. Part 195, Subpart H (§§ 195.551 – 195.589) to reduce the risks of pipeline accidents\ncaused by corrosion. Among other things, the standards govern corrosion prevention, inspection,\nmonitoring, corrosion repair, and employee qualifications.\n3 Post-hearing Brief at 2.\n4 Respondent also indicated that VCI has been specifically accepted by various States as an alternative to\ncathodic protection for “storage tanks.” Response at 5.\n5 § 195.565.\n6 See § 190.341. A special permit is an order by which PHMSA waives compliance with a pipeline\nsafety regulation upon a showing by the operator that it would not be inconsistent with pipeline safety.\n\n\n\nCPF No. 4-2013-5007\nPage 4\nCathodic protection is a method of protecting steel pipelines from corrosion by making the pipe\nact as the cathode of an electrochemical cell. Section 195.563 is titled “Which pipelines must\nhave cathodic protection?” and states that “each buried or submerged pipeline . . . must have\ncathodic protection.”7 The term buried means covered or in contact with the soil.8 The term\npipeline means all parts of the pipeline facility through which hazardous liquids move, including\nbreakout tanks.9 Accordingly, this rule states that each breakout tank in contact with the soil\nmust have cathodic protection.10\nThe next regulation, § 195.565 is titled “How do I install cathodic protection on breakout tanks?”\nand states that when operators install cathodic protection to protect the bottom of an\naboveground breakout tank as required under § 195.563(a), the installation must be consistent\nwith API RP 651, Cathodic Protection of Aboveground Petroleum Storage Tanks. API RP 651\nis a consensus standard containing recommended practices and procedures for designing,\noperating, and maintaining cathodic protection systems on the bottom of breakout tanks.\nCompliance with API RP 651 is not always required, however. Section 195.565 states that an\noperator is not required to follow the provisions of API RP 651 if the operator demonstrates that\nall or certain provisions of the recommended practice are not necessary for the safety of the tank.\nRespondent argued that § 195.565 allows operators to protect against corrosion using something\nother than cathodic protection.11 Respondent bases this assertion on the fact that § 195.565\npermits operators under certain circumstances to forego compliance with API RP 651. In\naddition, certain provisions in the recommended practice recognize that cathodic protection may\nnot be appropriate in some situations, such as when there is an impervious liner.12 Respondent\nnoted the recommended practice is not particularly prescriptive and “identifies factors to\nconsider when deciding whether or not to use cathodic protection.”13\nPHMSA finds § 195.563 is clear from its title and text of the rule that each breakout tank in\ncontact with the soil must have cathodic protection. Cathodic protection is explicitly required by\nthe regulation and there is no qualification or exception to this statement in the rule.\nPHMSA disagrees with Respondent’s interpretation that § 195.565 allows it to employ VCI in\nlieu of cathodic protection. Section 195.565 reaffirms the requirement to have cathodic\nprotection by stating in the first sentence: “when you install cathodic protection under\n§ 195.563(a) . . . .” The title of § 195.565 also clarifies that the purpose of the rule is to explain\n7 § 195.563(a). The applicability date for interstate pipelines was March 31, 1970. § 195.401(c).\n8 § 195.553.\n9 § 195.2.\n10 In addition, under § 195.563(d) certain other types of facilities, such as bare pipelines and certain\nbreakout tank areas must have cathodic protection in places where regulations in effect before January 28,\n2002, required cathodic protection as a result of electrical inspections.\n11 Pre-hearing Submission at 5-6.\n12 Pre-hearing Submission at 6-7.\n13 Post-hearing Brief at 10.\n\n\n\nCPF No. 4-2013-5007\nPage 5\nhow cathodic protection is to be installed on breakout tanks. Even if API RP 651 itself discusses\nalternative corrosion control methods or recognizes certain instances where another method may\nbe used, the requirements stated in the regulations control. In this instance, the regulations\nexplicitly require cathodic protection. VCI does not meet the regulatory requirement.\nPHMSA rejects Respondent’s suggestion that when an operator determines it is unnecessary to\ncomply with API RP 651, as permitted by § 195.565, that means the operator may use something\nother than cathodic protection.14 PHMSA finds no basis in the regulation to support this\ncontention. An operator who documents why it is unnecessary to comply with API RP 651 when\ninstalling cathodic protection is permitted to install the cathodic protection in a manner that does\nnot follow the recommended practice. Nothing in the regulation permits an operator to avoid\ninstallation of cathodic protection entirely.\nMoreover, when PHMSA adopted API RP 651 and other consensus standards in 1999, there was\nalready a 30-year history of explicitly requiring cathodic protection on breakout tanks.15 There\nis no support in the regulatory history, as Respondent might suggest, that PHMSA ever intended\nto create a new exception to the longstanding requirement in 1999. In fact, the regulatory history\ndemonstrates that PHMSA permitted operators to document if a recommended practice is not\nnecessary because such recommended practices do not have the same level of prescriptiveness as\nother types of consensus standards.16\nRespondent pointed out that another regulation, § 195.573(d) “envisions circumstances where\noperators are using something other than cathodic protection.” The title of that regulation also\nrefers more broadly to “corrosion control” instead of cathodic protection.17\nRespondent’s argument ignores the fact that like § 195.565, § 195.573(d) confirms the\nrequirement for operator’s to have cathodic protection. The regulation requires operators to\n“inspect each cathodic protection system” for breakout tanks. The title of the section may be\nworded more broadly because a separate provision concerns unprotected pipe.18\nFor the above reasons, PHMSA finds the plain language of § 195.563 requires cathodic\nprotection for each breakout tank in contact with the soil. Section 195.565 confirms the\nrequirement to install cathodic protection, but provides that the cathodic protection may or may\n14 Post-hearing Brief at 10.\n15 Section 195.242(a) (1970) stated “a cathodic protection system must be installed for all buried facilities\nto mitigate corrosion deterioration that might result in structural failure.” Pipeline meant “all parts of a\ncarrier’s physical facilities . . . including, but not limited to . . . breakout tankage.” § 195.2 (1970).\n16 Adoption of Industry Standards for Breakout Tanks, 63 Fed. Reg. 27903, 27905 (proposed May 21,\n1998) (stating that “codes” and “specifications” were required to be complied with as though they were\nprinted in full into Part 195, but recommended practices were only expected to be followed unless the\noperator documented why compliance is not necessary for safety). See also Adoption of Consensus\nStandards for Breakout Tanks, 64 Fed. Reg. 15926, 15929 (Apr. 2, 1999).\n17 Post-hearing Brief at 13.\n18 § 195.573(b).\n\n\n\nCPF No. 4-2013-5007\nPage 6\nnot have to comply with API RP 651 depending on whether the operator can demonstrate it is\nnot necessary to use the consensus standard. These rules do not permit operators to forgo having\ncathodic protection entirely.\nB. Prior Enforcement Activity\nRespondent argued that during a previous enforcement proceeding, OPS inspected and approved\nthe Company’s practice of using VCI in place of cathodic protection. Specifically, in April\n2008, representatives of OPS conducted an inspection of the pipeline facilities, records, and\nprocedures of Plains. The inspection involved reviewing the Company’s procedures for\noperations and maintenance (O&M). During the inspection, Respondent contended, Plains and\nOPS discussed the use of VCI as an alternative to cathodic protection and OPS did not express\nany concerns.19\nFollowing the inspection, the Director issued to Plains a Notice of Amendment on March 4, 2009\n(NOA). The NOA contained approximately 20 items of apparent inadequacies in the Company’s\nprocedures. One of the alleged inadequacies, Item 5H, concerned the procedures for using VCI.\nThe Item cited § 195.565 and alleged that “Plains does not have procedures for the installation or\nmonitoring of the VpCI system, nor does Plains have it noted why the use of cathodic protection\nis not needed for the tank bottom protection due to the use of the VpCI system.”20\nItem 5H stated further that “Plains must modify the procedures to provide specific details within\nthe O&M manual to include VpCI,” but a separate paragraph at the end of the NOA stated that\nno further action was necessary on this issue. The paragraph read, “In regard to Items . . . 5G\nthrough 5O, listed above, Plains provided finalized documentation . . . of various changes made\nto their O&M Manual. After considering the material provided, PHMSA deemed the\nmodifications adequate, and no further action is required in response to this Notice.”21\nIn February 2010, the Director issued a follow-up letter closing the NOA. The closure letter\nstated that Plains had provided amended procedures in response to all the items. It stated further\nthat after reviewing the amended procedures, “it appears that the inadequacies outlined in this\nNotice of Amendment have been corrected.” The letter concluded by saying “no further action is\nnecessary and this case is now closed.”22\n19 Pre-hearing Submission at 2-3.\n20 Pre-hearing Submission, Exhibit F, Notice of Amendment at 8. VpCI is a proprietary VCI system.\n21 Pre-hearing Submission, Exhibit F, Notice of Amendment at 12. Respondent indicated that its\nmodified procedures noted explicitly that breakout tanks with HDPE liners were exempt from cathodic\nprotection requirements. Pre-hearing Submission at 4.\n22 Pre-hearing Submission, Exhibit H, Closure Letter. Respondent also noted that in conjunction with the\nNOA, OPS issued a separate notice of probable violation. That case alleged only one violation\nconcerning the use of VCI, but the violation was limited to the identification of “covered tasks” under the\noperator qualification rules. Pre-hearing Submission at 4.\n\n\n\nCPF No. 4-2013-5007\nPage 7\nRespondent argued that by reviewing its procedures and closing the case, OPS officially\naccepted the Company’s use of VCI as a substitute for cathodic protection. Respondent\ncontended that “after reviewing the updated procedures, PHMSA approved them without\nlimitation . . . and as a result interpreted [§] 195.565 to mean that operators like Plains can\nreplace cathodic protection with another technology.”23\nPHMSA disagrees with this contention for several reasons. First, PHMSA dismisses the general\nnotion that by reviewing a company’s procedures in connection with an inspection or notice of\namendment, PHMSA must thereby adopt the operator’s regulatory interpretations. OPS\ninspectors routinely review operators’ procedures during inspections—procedures which may\ndiffer widely due to the specific nature of an operator’s system. It is not reasonable to presume\nthat PHMSA subscribes to an operator’s regulatory interpretations implemented in its\nprocedures, even if the agency finds the operator’s procedures are adequate for safety.\nPHMSA also dismisses the assertion that the NOA and closure letter constituted a regulatory\ninterpretation. PHMSA issues official interpretations through the process codified at 49 C.F.R.\n§ 190.11.24 PHMSA may also interpret a regulation in an enforcement case if necessary to\nresolve conflicting assertions about a regulation’s application.\n25 Whether issued as a standalone\ninterpretation or as part of an enforcement decision, a written interpretation will contain clear\nlanguage that it is the agency’s purpose to decide a question of regulatory application. The\ninterpretation will explain the reasoning behind the particular decision, and if an alternative\ninterpretation was considered and rejected, it will explain why it was not adopted.\nThe 2009 NOA and closure letter documents issued to Plains contained no language indicating\nan interpretation of §§ 195.563 or 195.565. The NOA only contains allegations of procedural\ninadequacies and both documents contain statements of general applicability, such as “the\ninadequacies outlined in this Notice of Amendment have been corrected.” These do not\nconstitute a definitive interpretation of any regulation. Likewise, any conversations between\nPlains and individual inspectors during the audit did not constitute an official interpretation by\nthe agency.\nFurthermore, the NOA proceeding never adjudicated whether Respondent’s procedures complied\nwith §§ 195.563 or 195.565. A notice of amendment issued pursuant to § 190.206 alleges that an\noperator’s plans or procedures are inadequate to assure safe operation of a pipeline facility.26 If\nthere is a finding in the case, it is whether or not the procedures are adequate for safety.\n23 Post-hearing Brief at 9.\n24 Section 190.11 states that operators may obtain a regulatory interpretation by submitting a written\nrequest to PHMSA.\n25 See, e.g., Magellan Pipeline Company, CPF No. 4-2012-5010, Item 1, 2014 WL 5431188 (Sept. 2,\n2014) (interpreting § 195.575(a) to require that operators clear shorted casings, unless the pipeline and\ncasing are electrically interconnected and cathodically protected as a single unit.)\n26 This differs from a notice of probable violation issued pursuant to § 190.207, which alleges an operator\ncommitted a violation of the safety regulations.\n\n\n\nCPF No. 4-2013-5007\nPage 8\nContrary to Respondent’s assertions, there were never any findings rendered in the earlier\nproceeding that “concluded that Plains had complied with Section 195.565.”27\nFor the above reasons, PHMSA rejects Respondent’s contention that the 2009 NOA and closure\nletter constituted an official adoption of agency position by PHMSA. Likewise, the agency\nrejects the","truncated":true,"body_characters":78237}