{"operation":"document","citation":"CPF 420145001","title":"PHILLIPS 66 PIPELINE LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2014-02-04","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.402(a), 195.404(b)(2), 195.505(b), 195.505(c), 195.52(b)(6), 195.52(b)(7), 195.52(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420145001.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420145001.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420145001","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420145001","body":"Notice of Probable Violation involving PHILLIPS 66 PIPELINE LLC. PHMSA's enforcement data identifies the cited regulations as 195.402(a),  195.404(b)(2),  195.505(b),  195.505(c),  195.52(b)(6),  195.52(b)(7),  195.52(c). The case was opened on 2014-02-04 and is reported as closed as of 2015-06-17. Proposed civil penalty: $364,200. Assessed civil penalty: $364,200. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420145001_Closure_06172015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145001/420145001_Closure_06172015.pdf\n\n420145001_Closure_06172015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145001/420145001_Closure_06172015_text.pdf\n\n420145001_Final Order_04172015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145001/420145001_Final%20Order_04172015.pdf\n\n420145001_Final Order_04172015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145001/420145001_Final%20Order_04172015_text.pdf\n\n420145001_NOPV PCP PCO_02042014.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145001/420145001_NOPV%20PCP%20PCO_02042014.pdf\n\n420145001_NOPV PCP PCO_02042014_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145001/420145001_NOPV%20PCP%20PCO_02042014_text.pdf\n\n420145001_Operator Response to Notice_03052014.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145001/420145001_Operator%20Response%20to%20Notice_03052014.pdf\n\n420145001_Closure_06172015_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nJune 17, 2015\nMr. Todd Denton\nPresident\nPhillips 66 Pipeline, LLC\n3010 Briarpark Drive\nP. O. Box 4428\nHouston, TX 77042\nCPF 4-2014-5001\nDear Mr. Denton:\nOn August 19, 2013, Phillips 66 Pipeline, LLC (Phillips 66) experienced an excavation related\naccident on its Wood River 12-inch Products Line (WR-01) Ponca City to Glenpool Segment.\nAs a result of this accident, 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 accident investigation and reviewed procedures, plans and\nrecords.\nAs a result of the investigation, a Notice of Probable Violation, with a Proposed Civil Penalty\nand Proposed Compliance Order (NOPV) was issued under case file CPF 4-2014-5001 to\nPhillips 66 in a letter dated February 4, 2014. On April 17, 2015, PHMSA issued a Final Order\nin the matter which was received by Phillips 66 on April 27, 2015. In a letter dated May 21,\n2015, Phillips 66 responded to the Final Order with a letter summarizing its actions and\nrequesting closure of the case.\nThis letter is to inform you no further action is necessary and this case is now closed. Thank you\nfor your cooperation.\nSincerely,\nR. M. Seeley\nDirector, Southwest Region\nPipeline and Hazardous Materials Safety Administration\n\n420145001_NOPV PCP PCO_02042014_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nFebruary 4, 2014\nMr. Todd Denton\nPresident\nPhillips 66 Pipeline, LLC\n3010 Briarpark Drive\nHouston, TX 77042\nCPF 4-2014-5001\nDear Mr. Denton:\nOn multiple occasions from August 20 through December 16, 2013, representatives of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to\nChapter 601 of 49 United States Code conducted an investigation of the accident that occurred on the\nWood River 12-inch Products Line (WR-01) Ponca City to Glenpool Segment on August 19, 2013.\nAs a result of the investigation, 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 violations\nare:\n1. §195.52 Immediate notice of certain accidents.\n(b) Information required. Each notice required by paragraph (a) of this section must be made\nto the National Response Center either by telephone to 800-424-8802\n(in Washington, DC, 202-267-2675) or electronically at http://www.nrc.uscg.mil and must\ninclude the following information:\n(6) Initial estimate of amount of product released in accordance with paragraph (c) of this\nsection.\n(c) Calculation. A pipeline operator must have a written procedure to calculate and provide a\nreasonable initial estimate of the amount of released product.\n\n\n\nThe operator failed to provide an initial estimate of the amount of product released when making a\ntelephonic notification of an accident. At 12:47 p.m. (CST) on August 19, 2013, Phillips 66 reported a spill\nto the National Response Center (NRC), Report No. 1057576, on their Wood River 12-inch Products Line\n(WR-01) Ponca City to Glenpool Segment near Cleveland, Oklahoma. Phillips 66 reported “0” as the\namount of product released at the time of the notification.\nPhillips 66 updated their NRC report on August 20, 2013, at 3:47 p.m. (Report No. 1057689) after\nconversations with PHMSA concerning NRC requirements. At that time, Phillips 66 estimated the amount\nof product released as 500 bbls.\n2. §195.52 Immediate notice of certain accidents.\n(b) Information required. Each notice required by paragraph (a) of this section must be made\nto the National Response Center either by telephone to 800-424-8802 (in Washington, DC,\n202-267-2675) or electronically at http://www.nrc.uscg.mil and must include the following\ninformation:\n(7) All other significant facts known by the operator that are relevant to the cause of the\nfailure or extent of the damages.\nThe operator failed to provide all significant and relevant facts when making the telephonic notification of\nthe accident that occurred on their Wood River 12-inch Products Line (WR-01) Ponca City to Glenpool\nSegment near Cleveland, Oklahoma on August 19, 2013.\nPhillips 66 reported NRC Report No. 1057576 on August 19, 2013 at 12:47 p.m. (CST) and did not provide\nall of the significant and relevant details known by the operator at the time of the accident. The Phillips 66\nemployee reporting the incident stated that the pipeline “developed” a leak. The timeline later submitted by\nPhillips 66, indicates supervisory personnel, field notifications and Duty Officer calls were completed and\nan initial briefing call was completed by 12:30 p.m. (CST) on Monday, August 19, 2013. Phillips 66\npersonnel were aware at the time of the initial call that the line was struck by their contractor performing\nmaintenance work but did not report those facts when the initial NRC report was made.\n3. §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\nwritten procedures for conducting normal operations and maintenance activities and\nhandling abnormal operations and emergencies. This manual shall be reviewed at not\nexceeding 15 months, but at least once each calendar year, and appropriate changes made as\nnecessary to insure that manual is effective. This manual shall be prepared before initial\noperations of a pipeline system commence, and appropriate parts shall be kept at locations\nwhere operations and maintenance activities are conducted.\nThe operator failed to follow their procedures for uncovering their pipeline during maintenance activities.\nOn August 19, 2013, Phillips 66 was performing maintenance activities on their pipeline that required the\npipeline to be exposed. Phillips 66 did not follow their procedure P66PL-MPR-4010; Excavations.\nPhillips 66 Pipeline LLC manual P66PL-MPR-4010; Excavations; Section 6.8.2.1. - states that “Extreme\ncare shall be exercised in initially uncovering the pipeline. Mechanical equipment may be used while a\n2\n\n\n\ndesignated representative spotter utilizing a probe or alternative means is constantly monitoring the depth\nof digging.”\nAt the time of the accident, the pipeline was still in the process of being uncovered using mechanical\nequipment without a designated spotter monitoring the depth of digging.\n4. §195.505 Qualification program\nEach operator shall have and follow a written qualification program. The program shall\ninclude provisions to:\n(b) Ensure through evaluation that individuals performing covered tasks are qualified.\n(c) Allow individuals that are not qualified pursuant to this subpart to perform a covered task\nif directed and observed by an individual that is qualified;\nThe operator failed to ensure that the person designated as the “Spotter” was qualified or that he was\ndirected and observed by an individual that was qualified. On August 19, 2013, Phillips 66 was performing\nmaintenance activities on their pipeline that required the pipeline to be exposed. This activity required a\nqualified person per covered task PR4010.2. The employee designated as the Spotter was not qualified to\nperform the task. While other individuals were on site and qualified per PR4010.2 they were neither\ndirecting nor observing the unqualified individual or performing the Spotter tasks themselves.\n5. §195.404 Maps and Records\n(b) Each operator shall maintain for at least 3 years daily operating records that indicate--\n(2) Any emergency or abnormal operation to which § 195.402 apply.\nThe operator failed to provide records to demonstrate that a Hot Work Permit required by Phillips 66 HSE\nHot Work Permit Policy, was obtained for the repair work performed on August 20, 2013, following the\nexcavation damage. Phillips 66 procedure P66PL-MPR-4010 Excavations; Section 6-6.3.8 state that a Hot\nWork Permit should be obtained prior to beginning excavations and refer to the Phillips 66 – Health and\nSafety Hot Work Permit Policy (Rev. 3/2007-12-01). PHMSA requested the Hot Work Permits for the\nrepair work performed on August 20, 2013. According to an email received from the compliance\nsupervisor dated December 16, 2013, the permit for the requested day could not be located.\nProposed Civil Penalty\nUnder 49 United States Code, §60122, you are subject to a civil penalty not to exceed $200,000 per\nviolation per day the violation persists up to a maximum of $2,000,000 for a related series of violations.\nFor violations occurring prior to January 4, 2012, the maximum penalty may not exceed $100,000 per\nviolation per day, with a maximum penalty not to exceed $1,000,000 for a related series of violations. The\nCompliance Officer has reviewed the circumstances and supporting documentation involved in the above\nprobable violations and has recommended that you be preliminarily assessed a civil penalty of $364,200 as\nfollows:\n3\n\n\n\nItem number PENALTY\nItem 1 $ 30,200\nItem 3 $167,000\nItem 4 $167,000\nWarning Items\nWith respect to Items 2 and 5, we have reviewed the circumstances and supporting documents involved in\nthis case and have decided not to conduct additional enforcement action or penalty assessment proceedings\nat this time. We advise you to promptly correct these item(s). Failure to do so may result in additional\nenforcement action.\nProposed Compliance Order\nWith respect to Item 1, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials\nSafety Administration proposes to issue a Compliance Order to Phillips 66. Please refer to the Proposed\nCompliance 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. All material you\nsubmit in response to this enforcement action may be made publicly available. If you believe that any\nportion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with\nthe complete original document you must provide a second copy of the document with the portions you\nbelieve qualify for confidential treatment redacted and an explanation of why you believe the redacted\ninformation qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30\ndays of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice\nand authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice\nwithout further notice to you and to issue a Final Order.\nIn your correspondence on this matter, please refer to CPF 4-2014-5001 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\n4\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 Phillips 66 a Compliance Order incorporating the following remedial\nrequirements to ensure the compliance of Phillips 66 with the pipeline safety regulations:\n1. 2. 3. In regard to Item Number 1 of the Notice pertaining to telephonic notification of the initial\nestimate of the amount of product released:\nPhillips 66 Pipeline LLC manual (P66PL-MR-2827) contains a procedure titled PHMSA\nHazardous Liquid Pipeline Accident and Incident Reporting Guidelines Rev. 7, Section 5.\nAction Required, Section 5.2 Telephonic Notification (number 9). These procedures state\n“Initial estimate of amount of product released (needs to be reported within 48 hours of\ndiscovery). If working the spill amount, tell the NRC that you will get back with them\nwithin 48 hours.” This procedure includes a reporting time of 48 hours which is not\nreflected in the 49 CFR195.52 (b)(6). Phillips 66 shall revise these procedures to ensure\nthat an initial estimate is reported to the National Response Center when a release occurs.\nPhillips 66 shall provide the revised procedures within 30 days after receipt of a\nFinal Order.\nIt is requested (not mandated) that Phillips 66 maintain documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit the total to\nR. M. Seeley, Director, Southwest, 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) total\ncost associated with replacements, additions and other changes to pipeline infrastructure.\n5\n\n420145001_Final Order_04172015_text.pdf\n\nApril 17, 2015\nMr. Todd Denton\nPresident\nPhillips 66 Pipeline, LLC\n3010 Briarpark Drive\nNinth Floor\nHouston, TX 77042\nRe: CPF No. 4-2014-5001\nDear Mr. Denton:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a civil penalty of $364,200, and specifies actions that need to be taken by\nPhillips 66 Pipeline, LLC, to comply with the pipeline safety regulations. The penalty payment\nterms are set forth in the Final Order. When the civil penalty has been paid and the terms of the\ncompliance order completed, as determined by the Director, Southwest Region, this enforcement\naction will be closed. Service of the Final Order by certified mail is deemed effective upon the\ndate of mailing, or as otherwise provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. R.M. Seeley, Director, Southwest Region, OPS\nMr. Todd Tullio, Manager, Regulatory Compliance, Phillips 66 Pipeline, LLC\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____________________________________\n)\nIn the Matter of )\n)\nPhillips 66 Pipeline, LLC, ) CPF No. 4-2014-5001\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nBetween August 20 and December 16, 2013, pursuant to 49 U.S.C. § 60117, representatives of\nthe Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an investigation of an accident involving the hazardous liquid pipeline system\nof Phillips 66 Pipeline, LLC (Phillips 66 or Respondent). Phillips 66 Pipeline, LLC, a wholly-\nowned subsidiary of Phillips 66, operates more than 12,000 miles of pipelines in the United\nStates transporting both raw and finished petroleum products.1\nThe investigation arose out of an accident that occurred as the result of excavator damage on the\nWood River 12-inch Products Line (WR-01), Ponca City to Glenpool Segment, near Cleveland,\nOklahoma, on August 19, 2013 (Accident).\nAs a result of the investigation, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated February 4, 2014, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice), which also included a warning pursuant to\n49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that\nPhillips had committed various violations of 49 C.F.R. Part 195 and assessing a civil penalty of\n$364,200 for the alleged violations. The warning items required no further action, but warned\nthe operator to correct the probable violations or face future potential enforcement action.\nPhillips 66 responded to the Notice by letter dated March 5, 2014 (Response). The company did\nnot contest the allegations of violation, but offered additional information in response to the\nNotice, and requested that the proposed civil penalty be reduced or eliminated.2 Respondent did\nnot request a hearing and therefore has waived its right to one.\n1 See http://www.phillips66pipeline.com/EN/Pages/index.aspx (last accessed August 15, 2014).\n2 Response at 1.\n\n\n\nCPF No: 4-2014-5001\nPage 2\nFINDINGS OF VIOLATION\nThe Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.52(b), which states in\nrelevant part:\n§ 195.52 Immediate notice of certain accidents.\n(a) Notice requirements. At the earliest practicable moment following\ndiscovery of a release of the hazardous liquid or carbon dioxide\ntransported resulting in an event described in § 195.50, the operator of the\nsystem must give notice, in accordance with paragraph (b) of this section,\nof any failure that:\n(1) . . . .\n(b) Information required. Each notice required by paragraph (a) of this\nsection must be made to the National Response Center either by telephone\nto 800-424-8802 (in Washington, DC, 202-267-2675) or electronically at\nhttp://www.nrc.uscg.mil and must include the following information:\n(1) . . . .\n(6) Initial estimate of amount of product released in accordance with\nparagraph (c) of this section. . . .\n(c) Calculation. A pipeline operator must have a written procedure to\ncalculate and provide a reasonable initial estimate of the amount of\nreleased product.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.52(b) by failing to provide an\ninitial estimate of the amount of product released in its telephonic notification of the Accident to\nthe National Response Center (NRC). Specifically, the Notice alleged that Phillips 66 reported\nthe amount of product released to the NRC as “0,” despite its knowledge that product had been\nreleased.\nIn its Response, Phillips 66 noted that in its initial report of the release to the NRC, the company\nstated that there had been an “unknown” amount of product released. The company explained\nthat “the NRC inserted the zero as the form requires a numerical entry,” and therefore the actual\nNRC report stated “Qty Released: 0 UNKNOWN AMOUNT.” Phillips 66 stated that it “used\nits written procedures and was unable to provide an estimate during the initial notification to\nNRC” but that the company provided an estimate of 500 barrels the following day.\nThe company also argued that it relied upon guidance in PHMSA’s Advisory Bulletin ADB-\n2013-013 to conclude that an estimate of the amount of product released was not required until\n48 hours after the initial notification. The company quoted the following statement from the\nAdvisory Bulletin: “The information required to be reported includes the name of the operator,\nthe name and telephone number of the person making the report, the location of the incident, the\nnumber of fatalities and injuries, and all other significant facts that are relevant to the cause of\n3 Pipeline Safety: Accident and Incident Notification Time Limit, 78 Fed. Reg. 6402 (Jan. 30, 2013).\n\n\n\nCPF No: 4-2014-5001\nPage 3\nthe incident or extent of the damages.” The company argued that the Advisory Bulletin does not\nspecifically require an estimate of volume in an operator’s initial notification, and that language\nfrom the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 only required that\nan estimate of the amount of product released be provided in a revised notice within 48 hours of\nthe accident.4\nI disagree. I find that the Advisory Bulletin did not attempt to list every item required in\n§ 195.52 notifications. Indeed, the stated purpose of the Advisory Bulletin was\n“…[t]o advise owners and operators of gas and hazardous liquids\npipeline systems and LNG facilities that they should contact the NRC\nwithin one hour of discovery of a pipeline incident and should also file\nadditional telephonic reports if there are significant changes in the…\nproduct release estimates or the extent of damages” (emphasis added).\nThe introductory summary of the Bulletin stated that\n“…[o]wners and operators… are already required to provide telephonic\nreports of pipeline incidents and accidents to the National Response\nCenter (NRC) promptly, accurately, and fully communicate the\nestimated extent of the damage” (emphasis added).\nThe entirety of the Advisory Bulletin merely reinforces the existing regulatory requirement that\noperators provide an estimate of the quantity of product released during the initial notification,\nand that this quantity be updated within 48 hours if there are any significant changes to the\nestimate.\nThe Advisory Bulletin does not change the clear meaning and intent of the regulation. The\nregulation plainly states that notification must be made at the earliest practicable moment\nfollowing an accident, and must include an initial estimate of amount of product released in\naccordance with a written procedure to calculate and provide a reasonable initial estimate of the\namount of released product. The Advisory Bulletin provided guidance as to the timing of the\ninitial notification, but did not purport to change the requirements regarding the content of the\nnotification.\nPhillips 66 further explained that it had “used its written procedures and was unable to provide\nan estimate during the initial notification to NRC.” The company did not provide an explanation\nas to why it was unable to provide an estimate, or how its written procedures were followed, or\nwhy the procedures were unsuccessful in providing the company with an estimate of the quantity\nreleased.\nA pipeline rupture can conceivably release less than one barrel or thousands of barrels of\nproduct. The regulation requires an early estimate of the quantity released for purposes of\nproviding the National Response Center and PHMSA with a general idea of the size of the\n4 Id. at 3.\n\n\n\nCPF No: 4-2014-5001\nPage 4\naccident, the extent of possible environmental damage, and the scope of the cleanup effort that is\nlikely to be required. It should be noted that the initial NRC report’s listing of “0 UNKNOWN\nAMOUNT” was accompanied by a description stating “unknown amount of gasoline spilled in\nthe ditch.” Accordingly, after considering all of the evidence and the legal issues presented, I\nfind that Respondent violated 49 C.F.R. § 195.52(b) by failing to provide the NRC with an initial\nestimate of the amount of product that was released in its initial telephonic notification of the\nAccident.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states:\n§ 195.402 Procedural manual for operations, maintenance, and\nemergencies.\n(a) General. Each operator shall prepare and follow for each pipeline\nsystem a manual of written procedures for conducting normal operations\nand maintenance activities and handling abnormal operations and\nemergencies. This manual shall be reviewed at intervals not exceeding 15\nmonths, but at least once each calendar year, and appropriate changes made\nas necessary to insure that the manual is effective. This manual shall be\nprepared before initial operations of a pipeline system commence, and\nappropriate parts shall be kept at locations where operations and\nmaintenance activities are conducted.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow its\nmanual of written procedures for conducting normal operations and maintenance activities and\nhandling abnormal operations and emergencies. Specifically, the Notice alleged that the Phillips\n66 procedure for Excavations, P66PL-MPR-4010, required that “[e]xtreme care shall be\nexercised in initially uncovering the pipeline. Mechanical equipment may be used while a\ndesignated representative spotter utilizing a probe or alternative means is constantly monitoring\nthe depth of digging.”5 According to PHMSA, the pipeline, at the time of the Accident, was\nbeing uncovered using a track hoe, but that there was no designated spotter monitoring the depth\nof digging.\nIn its Response, Phillips 66 took issue with two of the factual allegations in the Notice. First, the\ncompany argued that at the time of the Accident, there was indeed a designated spotter observing\nthe excavation process. Phillips 66 stated: “The spotter at the time of the accident was Jovanny\nGarcia, an employee of the contractor and he is an [Operator Qualification (OQ)] qualified\nspotter…. Mr. Garcia was standing in for the designated spotter for the day, Dakota Midkiff,\nwhile that person took a break to use the rest room.”6 Phillips 66 also argued that the two\ncontractor employees had a brief conversation to establish that Mr. Midkiff would be taking a\nbreak and that “Mr. Garcia would then take over for the designated spotter. This was apparent in\nthe written statements of Mr. Garcia and Mr. Midkiff….”\n5 Pipeline Safety Violation Report (Violation Report), (February 4, 2014) (on file with PHMSA), at Exhibit A.\n6 Response at 6.\n\n\n\nCPF No: 4-2014-5001\nPage 5\nHowever, the employees’ written statements do not support this argument. Three contractor\nemployees who were working at the site of the Accident provided statements to the PHMSA\ninvestigator: (1) Riley Neeley, the track hoe operator; (2) Dakota Midkiff, the spotter; and (3)\nJovanny Garcia, a laborer.\n7 Mr. Neeley, the operator of the track hoe, stated that at the time of\nthe accident, Dakota Midkiff had stepped away and that Jovanny Garcia was about 50 feet away\nwatching the digging. Mr. Midkiff, the spotter, also stated that he had stepped away, and that he\n“told Jovanny to watch Riley.” Jovanny Garcia stated: “I was never hired as a spotter, I was\nhired as a labor (sic)…. I was standing on the opposite side of the spotter watching the operator\ndig. Dakota said I’m going to go pee and I said okay.”\nMr. Garcia may be qualified to perform the task of a spotter, but he was not performing that task\nat the time of the Accident in accordance with P66PL-MPR-4010. This procedure required the\nspotter to be constantly monitoring the depth of digging using a probe or alternative means.\nMr. Garcia could not have been doing so while watching from 50 feet away.\nSecond, Phillips 66 argued that at the time of the Accident, the pipeline was not being initially\nuncovered and that therefore its procedures did not require that there be a designated spotter.\nThe company stated that the pipeline had been “previously uncovered and could be visually seen\nby the track hoe operator and spotter.”8 The company also stated that its procedure states: “After\nthe line has been initially located and mechanical excavation is allowed to continue, the pipeline\nalignment shall be kept visible to the equipment operator until completion of the excavation\nprocess.” Phillips 66 argued that the pipeline alignment was visible to the operator of the track\nhoe and that therefore the company had complied with its procedures.\nPhotographs provided by Phillips 66, however, show the track hoe located at the end of an open\ntrench, positioned above the pipeline.9 In the photographs, a portion of the pipeline had been\nuncovered and part of it was still buried. However, there is no date or description of the\nphotographs to provide their context. Mr. Neeley, the operator of the track hoe, stated that at the\ntime of the Accident, he “had 150 ft done and 50 ft to go,”10 which seems to indicate that 50 feet\nof the pipeline had not yet been “initially uncovered.” In addition, the fact that Dakota Midkiff\nwas the designated spotter for the day does not support Respondent’s contention that its\nprocedures did not require that there be a spotter present.\nTaken as a whole, the evidence and the employee statements do not support Respondent’s\nargument that the pipeline had already been uncovered and that no spotter was required.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.402(a) by failing to follow its manual of written procedures for conducting normal\noperations and maintenance activities and handling abnormal operations and emergencies.\n7 Violation Report, Exhibit A.\n8 Response at 5.\n9 Response, Exhibits 5, 6, and 7.\n10 Violation Report, Exhibit A.\n\n\n\nCPF No: 4-2014-5001\nPage 6\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.505, which states, in\nrelevant part:\n§ 195.505 Qualification program.\nEach operator shall have and follow a written qualification program.\nThe program shall include provisions to:\n(a) . . . .\n(b) Ensure through evaluation that individuals performing covered\ntasks are qualified;\n(c) Allow individuals that are not qualified pursuant to this subpart to\nperform a covered task if directed and observed by an individual that is\nqualified;\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.505 by failing to follow its written\nqualification program. Specifically, the Notice alleged that Phillips 66 designated the “spotter”\ntask as a covered task for purposes of its operator qualification (OQ) program, but that on the day\nof the Accident, Phillips 66 failed to ensure that the person designated as the spotter was\nqualified or that he was directed and observed by an individual that was qualified.\nIn its Response, Phillips 66 argued that its contractor “was using the span of control rule in the\nOQ program requirements to have the OQ certified spotter mentor the non-OQ certified\nspotter.”11 The company stated that Mr. Garcia was an operator-qualified spotter who was\nmentoring the designated spotter, Mr. Midkiff.\nHowever, the regulation does not merely require that the operator-qualified individual “mentor”\nthe non-qualified individual; neither does the regulation mention a “span of control rule.”\nRather, the requirement in § 195.505(c) is that a non-qualified person may perform a qualified\ntask, but only if a qualified individual actually directs and observes the non-qualified individual\nas he or she performs the task. According to the contractor employees’ statements, the qualified\nindividual was 50 feet away from the location where the task was supposed to be performed, he\nwas not hired to perform the task on the day in question, and he was not personally directing and\nobserving the individual who was performing the task. Accordingly, after considering all of the\nevidence, I find that Respondent violated 49 C.F.R. § 195.505 by failing to follow its written\nqualification program.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\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\n11 Response at 7.\n\n\n\nCPF No: 4-2014-5001\nPage 7\nrelated series of violations. In determining the amount of a civil penalty under 49 U.S.C.\n§ 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,\ncircumstances, and gravity of the violation, including adverse impact on the environment; the\ndegree of Respondent’s culpability; the history of Respondent’s prior offenses; and any effect\nthat the penalty may have on its ability to continue doing business; and the good faith of\nRespondent in attempting to comply with the pipeline safety regulations. In addition, I may\nconsider the economic benefit gained from the violation without any reduction because of\nsubsequent damages, and such other matters as justice may require. The Notice proposed a total\ncivil penalty of $364,200 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $30,200 for Respondent’s violation of 49 C.F.R.\n§ 195.52(b), by failing to provide an initial estimate of the amount of product released in its\ntelephonic notification of the Accident to the NRC. Respondent argued that an initial estimate of\nthe quantity of product released was not actually required during the initial notification, which is\ncontrary to the plain language in the regulation. Phillips 66 provided no explanation for why it\nwas unable to provide an estimate of the quantity of product released. Accurate and timely\nreporting of information relating to an accident and the extent of resulting damage is critical to\nenable federal, state, and local emergency response officials to respond efficiently and\neffectively to minimize impact to people and the environment. Accordingly, having reviewed\nthe record and considered the assessment criteria, I assess Respondent a civil penalty of $30,200\nfor violation of 49 C.F.R. § 195.52(b).\nItem 3: The Notice proposed a civil penalty of $167,000 for Respondent’s violation of\n49 C.F.R. § 195.402(a), for failing to follow its own manual of written procedures for conducting\nnormal operations and maintenance activities and handling abnormal operations and\nemergencies. As discussed above, I found that Phillips 66 failed to follow its own procedure\nrequiring that extreme care be used in the initial excavation of a pipeline and that a qualified\nspotter must observe and monitor any excavation being performed with mechanical equipment.\nRespondent’s failure to follow this procedure was a causal factor in the pipeline being struck by\nexcavation equipment and a release of hazardous liquid,12 an accident that could easily have been\ncatastrophic. Respondent was fully culpable for its failure to follow the procedures it had in\nplace to prevent excavation damage. Accordingly, having reviewed the record and considered\nthe assessment criteria, I assess Respondent a civil penalty of $167,000 for violation of 49 C.F.R.\n§ 195.402(a).\nItem 4: The Notice proposed a civil penalty of $167,000 for Respondent’s violation of\n49 C.F.R. § 195.505, for failing to follow its written qualification program. As discussed above,\nI found that Phillips 66 failed to ensure that the person it had designated as the “spotter” was\nqualified or that he was directed and observed by an individual who was qualified. This error\nwas also a causal factor to the accident,13 resulting in the pipeline being struck by excavation\nequipment and in the release of hazardous liquid. Respondent was fully culpable for its failure to\nensure that covered tasks were being conducted by fully qualified individuals during the pipeline\nexcavation. Accordingly, having reviewed the record and considered the assessment criteria, I\n12 Violation Report at 25.\n13 Id. at 33.\n\n\n\nCPF No: 4-2014-5001\nPage 8\nassess Respondent a civil penalty of $167,000 for violation of 49 C.F.R. § 195.505.\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a total civil penalty of $364,200.\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, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The\nFinancial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $364,200 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\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 Item 1 in the Notice for violation of\n49 C.F.R. § 195.52(b). Under 49 U.S.C. § 60118(a), each person who engages in the\ntransportation of hazardous liquids or who owns or operates a pipeline facility is required to\ncomply with the applicable safety standards established under chapter 601. Pursuant to the\nauthority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the\nfollowing actions to ensure compliance with the pipeline safety regulations applicable to its\noperations:\n1. With respect to the violation of § 195.52(b) (Item 1), Respondent has submitted\ndraft modified procedures regarding DOT/PHMSA telephonic notification of\naccidents and incidents to require that an initial estimate of the amount of product\nreleased is reported to the NRC. Respondent must finalize these procedures and\nsubmit them to the Director within 30 days of receipt of this Final Order.\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nFailure to comply with this Order may result in the administrative assessment of civil penalties\nnot to exceed $200,000 for each violation for each day the violation continues or in referral to the\nAttorney General for appropriate relief in a district court of the United States.\n\n\n\nCPF No: 4-2014-5001\nPage 9\nWARNING ITEMS\nWith respect to Items 2 and 5, the Notice alleged probable violations of Part 195 but did not\npropose a civil penalty or compliance order for these items. Therefore, these are considered to\nbe warning items. The warnings were for:\n49 C.F.R. § 195.52(b) (Item 2) ─ Respondent’s alleged failure to provide all\nsignificant and relevant facts known by the operator when making the telephonic\nnotification of the Accident;14 and\n49 C.F.R. § 195.404(b)(2) (Item 5) ─ Respondent’s alleged failure to maintain\noperating records relating to the Hot Work Permit that was required for the repair\nwork that was performed on August 20, 2013.\nPhillips 66 presented information in its Response showing that it had taken certain actions to\naddress the cited warning items. If OPS finds a violation of any of these items in a subsequent\ninspection, Respondent may be subject to future enforcement action.\nUnder 49 C.F.R. § 190.243, Respondent has a right to submit a Petition for Reconsideration of\nthis Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline\nSafety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC\n20590, with a copy sent to the Office of Chief ","truncated":true,"body_characters":41399}