BOARDWALK PETROCHEMICAL PIPELINE, LLC — Notice of Probable Violation

party submissionOfficial PDF420135019_Operator Response to Notice_10292013.pdf#

420135019_Final Order_10232014_text.pdf, page 1Official PDFOCTOBER 23, 2014 Mr. Al Williams President Chevron Pipe Line Company, LLC 4800 Fournace Place Bellaire, TX 77401 Re: CPF No. 4-2013-5019 Dear Mr. Williams: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $33,100, and specifies actions that need to be taken by Chevron Pipe Line Company, LLC, to comply with the pipeline safety regulations. This is to acknowledge receipt of payment of the full penalty amount, by wire transfer, dated March 25, 2014. When the terms of the compliance order have been completed, as determined by the Director, Southwest Region, this enforcement action will be 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. R. M. Seeley, Director, Southwest Region, OPS Mr. James M. Barnum, General Manager, Operations-Transition, Chevron Pipe Line Company, LLC, 4800 Fournace Place, Bellaire, Texas 77401 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420135019_Final Order_10232014_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 ) Chevron Pipe Line Company, LLC, ) CPF No. 4-2013-5019 ) ) ) Respondent. ) _________________________________________ ) FINAL ORDER Between April 16 and June 14, 2013, 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 on-site pipeline safety inspection of the facilities and records of Chevron Pipe Line Company, LLC (Chevron or Respondent), at the company’s Evangeline Ethylene Pipeline (Evangeline Pipeline) facilities in Houston, Texas. Chevron is an indirect, wholly- owned subsidiary of Chevron Corporation. Chevron operates pipeline assets that transport crude oil, refined petroleum products, liquefied petroleum gas, natural gas and chemicals throughout the United States.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated September 25, 2013, 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 Chevron had violated 49 C.F.R. § 195.452(e)(1), and proposed assessing a civil penalty of $33,100 for the alleged violation. The Notice also proposed that Respondent be required to take certain measures to correct the alleged violation. Chevron responded to the Notice, by letter dated October 29, 2013 (Response). Respondent did not contest the allegations of violation, but provided information concerning the corrective actions it has taken to comply with the Proposed Compliance Order and paid proposed civil penalty of $33,100, as provided in 49 C.F.R. § 190.227. Payment of the penalty will serve to close the case with prejudice to Respondent. FINDING OF VIOLATION In its Response, Chevron, did not contest the allegation in the Notice that it violated 49 C.F.R. Part 195, as follows: 1 See http://www.chevronpipeline.com/about/ (current as of June 10, 2014).#

420135019_Final Order_10232014_text.pdf, page 32 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(e)(1), which states: § 195.452 Pipeline integrity management in high consequence areas. (a) . . . (e) What are the risk factors for establishing an assessment schedule (for both the baseline and continual integrity assessments)? (1) An operator must establish an integrity assessment schedule that prioritizes pipeline segments for assessment (see paragraphs (d)(1) and (j)(3) of this section). An operator must base the assessment schedule on all risk factors that reflect the risk conditions on the pipeline segment. The factors an operator must consider include, but are not limited to: (i) Results of the previous integrity assessment, defect type and size that the assessment method can detect, and defect growth rate; (ii) Pipe size, material, manufacturing information, coating type and condition, and seam type; (iii) Leak history, repair history and cathodic protection history; (iv) Product transported; (v) Operating stress level; (vi) Existing or projected activities in the area; (vii) Local environmental factors that could affect the pipeline (e.g., corrosivity of soil, subsidence, climatic); (viii) Geo-technical hazards; and (ix) Physical support of the segment such as by a cable suspension bridge. The Notice alleged that Respondent violated 49 C.F.R. § 195.452(e)(1) by failing (1) to properly consider and evaluate all the risks associated with the Evangeline Pipeline, and (2) to factor-in the leak history of the Evangeline Pipeline when performing an integrity assessment for the pipeline. Integrity Management is an important part of the safety protocol for operators of pipelines, and provides assurance that operators are properly assessing the risks along particular segments of pipeline and taking steps to mitigate those risks. Specifically, the Notice alleged that Chevron did not properly consider all of the relevant risk factors in determining the assessment schedule for the Evangeline Pipeline because it did not consider the line’s leak history. As a result, Chevron did not select an internal inspection method capable of assessing seam-integrity issues stemming from known risk factors. The Notice further alleged that the Evangeline Pipeline is a 16-inch, .312/.314 wt.(wall thickness), X52 LF (low frequency) electric-resistance welded pipe manufactured in 1953 at the Youngstown Sheet and Tube Company, NY. On May 10, 2012, in preparation for its 2012 reassessment, Chevron completed a review of: (1) its 2007 reassessment findings; and (2) multiple reports of leaks on the Evangeline Pipeline from 2007 to 2012. Based on the review, Chevron allegedly selected a geometry and magnetic flux leakage tool for its 2012 reassessment method. However, the Evangeline Pipeline had two documented seam leaks in 2011, but those leaks were not considered during the company’s assessment process. According to the Notice, Chevron was aware that the Evangeline Pipeline had been manufactured before 1962 and was susceptible to longitudinal seam failure but still failed to select an assessment tool or method capable of assessing the long seam.#

420135019_Final Order_10232014_text.pdf, page 43 Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.452(e)(1) by (1) failing to properly consider and evaluate all the risks associated with the Evangeline Pipeline, and (2) failing to factor-in the leak history when performing an integrity assessment for the Evangeline Pipeline. This finding of violation will be considered a prior offense 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 $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 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; 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 $33,100 for the violation cited above. Item 1: The Notice proposed a civil penalty of $33,100 for Respondent’s violation of 49 C.F.R. § 195.452(e)(1), for failing (1) to properly consider and evaluate all the risks associated with the Evangeline Pipeline, and (2) failing to factor-in the leak history of the Evangeline Pipeline when performing an integrity assessment of the line. Chevron neither contested the allegation nor presented any evidence or argument justifying elimination or reduction of the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $33,100 for violation of 49 C.F.R. § 195.452(e)(1). In summary, having reviewed the record and considered the assessment criteria for the Item cited above, I assess Respondent a total civil penalty of $33,100 for violation of 49 C.F.R. § 195.452(e)(1), which has been paid in full. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 1 in the Notice for violation of 49 C.F.R. § 195.452(e)(1). Under 49 U.S.C. § 60118(a), each person who engages in the transportation of [gas] [hazardous liquids] or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with the pipeline safety regulations applicable to its operations:#

420135019_Final Order_10232014_text.pdf, page 54 1. With respect to the violation of § 195.452(e)(1) (Item 1): a. In regard to Item Number 1 of the Notice, pertaining to Chevron’s failure to properly consider risks for the Evangeline Pipeline, Chevron must assess the Evangeline Pipeline by a method prescribed in Appendix G of its Pipeline Integrity Management Program Manual. b. Chevron shall complete the assessment of the Evangeline Pipeline within 30 days of receiving this Final Order. c. It is requested (not mandated) that Chevron Pipe Line Company, LLC maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Mr. R.M. Seeley, Director, Southwest Region, 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. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent and demonstrating good cause for an extension. Failure to comply with this Order may result in the administrative assessment of civil penalties not to exceed $200,000 for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. Under 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA will accept petitions received no later than 20 days after receipt of service of this Final Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of any civil penalty assessed. Unless the Associate Administrator, upon request, grants a stay, all other terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

420135019_Closure_09182015_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED September 18, 2015 Mr. Randall Curry President Chevron Petrochemical Pipeline LLC 4800 Fournace Place Bellaire, TX 77401 CPF 4-2013-5019 Dear Mr. Curry: Between April 16 and June 14, 2013, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected the Chevron Petrochemical Pipeline LLC (Chevron) maintenance and integrity management records for the Evangeline Ethylene Pipeline system in Houston, TX. As a result of the inspection, Chevron was issued a Notice of Probable Violation (NOPV), Civil Penalty (CP), and Proposed Compliance Order (PCO) on September 25, 2015. Chevron submitted its response to the NOPV and PCO on October 29, 2013, but did not request a hearing. The submittal was received in my office on October 31, 2014. On September 22 and 24, 2014, PHMSA Southwest Region visited Chevron’s office in Bellaire, TX to review hydro- test records for the Evangeline. Based on PHMSA’s review of the of the hydro-test records, the tests were not determined to be valid due to indications of unaccounted for pressure loss during the test. Since Boardwalk’s acquisition of the Evangeline, a CAO (CPF 4-2014-5027H) was issued requiring an Integrity Verification and Remediation Plan be developed. This letter is to inform you no further action is necessary and this case is now closed. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#

420135019_NOPV PCP PCO_09252013_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED September 25, 2013 Mr. Randall Curry President Chevron Petrochemical Pipeline LLC 4800 Fournace Place Bellaire, TX 77401 CPF 4-2013-5019 Dear Mr. Curry: Between April 16 and June 14, 2013, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code inspected your maintenance and integrity management records for the Evangeline Ethylene Pipeline system in Houston, TX. As a result of the inspection, it appears that you have committed a probable violation of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The item inspected and the probable violation is: 1. § 195.452(e)(1) - Pipeline integrity management in high consequence areas. (e) What are the risk factors for establishing an assessment schedule (for both the baseline and continual integrity assessments)? (1) An operator must establish an integrity assessment schedule that prioritizes pipeline segments for assessment (see paragraphs (d)(1) and (j)(3) of this section). An operator must base the assessment#

420135019_NOPV PCP PCO_09252013_text.pdf, page 2schedule on all risk factors that reflect the risk conditions on the pipeline segment. The factors an operator must consider include, but are not limited to: (i) Results of the previous integrity assessment, defect type and size that the assessment method can detect, and defect growth rate; (ii) Pipe size, material, manufacturing information, coating type and condition, and seam type; (iii) Leak history, repair history and cathodic protection history; (iv) Product transported; (v) Operating stress level; (vi) Existing or projected activities in the area; (vii) Local environmental factors that could affect the pipeline (e.g., corrosivity of soil, subsidence, climatic), (viii) geo-technical hazards; and (ix) Physical support of the segment such as by a cable suspension bridge. Chevron did not properly consider and evaluate all the risks in order to properly establish an assessment schedule using an acceptable assessment method and did not use its leak history when performing the evaluation. Chevron did not select an internal inspection tool capable of assessing seam integrity issues based on known risk factors associated with the Evangeline Ethylene Pipeline (Evangeline). The Evangeline is a 16”, .312/.314 wt., X52 LF (low frequency) ERW (electric resistance welded) pipe manufactured in 1953 at the Youngstown Sheet and Tube Company, NY. On May 10, 2012, Chevron completed its review of the 2007 reassessment findings as well as leaks found from 2007 through 2012. Based on their risk analysis, Chevron selected a geometry and MFL tool for its 2012 reassessment method. The Evangeline had two seam related leaks in 2011; however Chevron failed to include that data in its risk analysis for the 2012 reassessment method determination. Chevron’s Pipeline Integrity Management Program Manual procedure for continual evaluation and assessment, Section 3.3.1 – “Reassessment Intervals and Methods”, makes reference to Appendix G, Integrity Assessment Process for Gas or Hazardous Liquids – Flowchart F1 and Sheet F1.1. Appendix G contains numerous flowcharts which outline the process for determining which ILI tool should be used for LF ERW pipe manufactured before 1962. Knowing that the Evangeline was manufactured before 1962, and is susceptible to longitudinal seam failure, the Evangeline should have been assessed in June 2012 by a tool capable of assessing the long seam. If those tools were not available, then a hydro-test should have been performed. This tool selection process is contained in Chevron’s assessment method determination flowcharts A2, A3, A3.1, and A3.2. 2#

420135019_NOPV PCP PCO_09252013_text.pdf, page 3Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a related series of violations. For violations occurring prior to January 4, 2012, the maximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a 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 $33,100. Proposed Compliance Order With respect to item 1 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Chevron Petrochemical Pipeline LLC. 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. All material you submit in response to this enforcement action may be 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 4-2013-5019 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 Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 3#

420135019_NOPV PCP PCO_09252013_text.pdf, page 4PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Chevron Petrochemical Pipeline LLC a Compliance Order incorporating the following remedial requirements to ensure the compliance of Chevron Petrochemical Pipeline LLC with the pipeline safety regulations: 1. 2. 3. In regard to Item Number 1 of the Notice pertaining to Chevron’s failure to properly consider risks for the Evangeline Ethylene Pipeline. Chevron must assess the Evangeline Pipeline by a method prescribed in Appendix G of its Pipeline Integrity Management Program Manual. Chevron shall complete the assessment of the Evangeline Pipeline within 30 days of receiving the final order. It is requested (not mandated) that Chevron Petrochemical Pipeline LLC maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Mr. R. M. Seeley, Director, Southwest Region, 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. 4#