# CENTURION PIPELINE L.P. — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 420145028
- **title:** CENTURION PIPELINE L.P. — Notice of Probable Violation
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2014-11-10
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 195.202, 195.432(b), 195.452(h)(2), 195.452(h)(4).
- **machine formats:** - **json:** https://regulus.evalyn.ai/document/phmsa-enforcement-420145028.json
- **markdown:** https://regulus.evalyn.ai/document/phmsa-enforcement-420145028.md
- **app url:** https://regulus.evalyn.ai/document/phmsa-enforcement-420145028
- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/420145028
**body:**

Notice of Probable Violation involving CENTURION PIPELINE L.P.. PHMSA's enforcement data identifies the cited regulations as 195.202,  195.432(b),  195.452(h)(2),  195.452(h)(4). The case was opened on 2014-11-10 and is reported as closed as of 2019-08-29. Proposed civil penalty: $165,900. Assessed civil penalty: $122,700. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

420145028_Closure Letter_08292019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Closure%20Letter_08292019.pdf

420145028_Closure Letter_08292019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Closure%20Letter_08292019_text.pdf

420145028_Decision on Petition for Reconsideration_06272019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Decision%20on%20Petition%20for%20Reconsideration_06272019.pdf

420145028_Decision on Petition for Reconsideration_06272019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Decision%20on%20Petition%20for%20Reconsideration_06272019_text.pdf

420145028_Final Order_03302017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Final%20Order_03302017.pdf

420145028_Final Order_03302017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Final%20Order_03302017_text.pdf

420145028_NOPV PCP PCO_11102014.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_NOPV%20PCP%20PCO_11102014.pdf

420145028_NOPV PCP PCO_11102014_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_NOPV%20PCP%20PCO_11102014_text.pdf

420145028_Operator Petition for Reconsideration_04242017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Operator%20Petition%20for%20Reconsideration_04242017.pdf

420145028_Operator Response to Notice and Request for Hearing_12172014_.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420145028/420145028_Operator%20Response%20to%20Notice%20and%20Request%20for%20Hearing_12172014_.pdf

420145028_Decision on Petition for Reconsideration_06272019_text.pdf

June 27, 2019
Mr. Mike Prince
Chief Executive Officer
Lotus Midstream, LLC
2150 Town Square Place, Ste 395
Sugar Land, Texas 77479
Re: CPF No. 4-2014-5028
Dear Mr. Prince:
Enclosed please find the Decision on the Petition for Reconsideration filed by your subsidiary,
Centurion Pipeline, LP, in the above-referenced case. For the reasons explained therein, the
Decision affirms the violations in the Final Order but reduces the total civil penalty to $122,700.
When the civil penalty has been paid, this enforcement action will be closed. The Decision
constitutes the final administrative action in this proceeding. Service of the Decision is made
pursuant to 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Alan K. Mayberry
Associate Administrator
for Pipeline Safety
Enclosure
cc: Ms. Mary McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA
Mr. Scott Janoe, Esq., Baker Botts, LLP, 910 Louisiana Street, Houston, Texas 77002
Mr. Mike Morgan, General Manager – Operations, Centurion Pipeline, LP, 5 Greenway
Plaza, Suite 110, Houston, Texas 77046
CERTIFIED MAIL – RETURN RECEIPT REQUESTED



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
__________________________________________
In the Matter of )
Centurion Pipeline, LP, ) CPF No. 4-2014-5028
a subsidiary of Lotus Midstream, LLC, )
)
)
)
Petitioner. )
__________________________________________)
DECISION ON PETITION FOR RECONSIDERATION
Between April 2013 and February 2014, 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 Centurion
Pipeline, LP (Centurion or Petitioner),1 in Texas, New Mexico, and Oklahoma. Centurion
operates approximately 2,500 miles of pipeline transporting crude oil in Texas, Oklahoma, and
New Mexico.2
As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to
Petitioner, by letter dated November 10, 2014, a Notice of Probable Violation, Proposed Civil
Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the
Notice proposed finding that Centurion had committed six violations of 49 C.F.R. Part 195 and
proposed a civil penalty of $165,900 for the alleged violations. The Notice also proposed
ordering certain compliance measures to correct one of the alleged violations.
Centurion responded to the Notice by letter dated December 17, 2014 (Response), contested the
allegations, and requested a hearing. Centurion submitted additional materials on April 20, 2015
(Supplemental Response). An informal hearing was held on April 30, 2015, in Houston, Texas,
before a Presiding Official from the Office of Chief Counsel, PHMSA. After the hearing,
Petitioner provided post-hearing statements for the record, dated June 26, 2015 (Closing), and
September 4, 2015 (Supplemental Closing). Pursuant to § 190.209(b)(7), the Director submitted
a written evaluation of Petitioner’s response material on July 28, 2015 (Recommendation).
1 Centurion is a subsidiary of Lotus Midstream LLC. Lotus Midstream, LLC website, available at
http://www.lotusmidstream.com/about-us (last accessed May 10, 2019). At the time of the inspection, Centurion
was a subsidiary of Occidental Petroleum Corporation.
2 This information is reported by Centurion for 2015 pursuant to 49 C.F.R. § 195.49.



CPF No. 4-2014-5028
Page 2
On March 30, 2017, pursuant to 49 C.F.R. § 190.213, PHMSA issued a Final Order in this
proceeding, finding that Centurion had committed violations of §§ 195.432(b) (Items 1, 2, and
3), 195.202 and 195.264 (Item 4), 195.452(h)(2) (Item 5), and 195.452(h)(4) (Item 6), as alleged
in the Notice. The Final Order assessed a reduced civil penalty of $137,100, and ordered
corrective action with respect to Item 4, as set forth in the Compliance Order.3
In accordance with 49 C.F.R. § 190.243, Centurion filed a timely Petition for Reconsideration
(Petition) of the Final Order on April 24, 2017, seeking reconsideration of Items 1-3, 5 and 6 and
the civil penalties associated with them.4 Centurion did not seek reconsideration of Item 4 or the
associated Compliance Order. The filing of the Petition automatically stayed payment of the
assessed civil penalties pursuant to § 190.243(c), but did not stay the corrective actions required
under the Compliance Order. The Compliance Order for Item 4 has been completed, so is not
included in this Decision.
Pursuant to 49 C.F.R. § 190.243, an operator may petition the Associate Administrator for
reconsideration of a final order issued under § 190.213. A petition must be received no later than
20 days after receipt of the order by the respondent, and must contain a statement of the
complaint and an explanation as to why the order should be reconsidered. If the operator
requests consideration of additional facts or arguments that were not presented prior to issuance
of the final order, the operator must submit the reasons why they were not previously presented.
Reconsideration is not a right to appeal or to seek a de novo review of the record. A decision on
a petition for reconsideration may be issued without further proceedings. Once issued, that
decision becomes the final administrative action in the enforcement proceeding.
In its Petition, Centurion continued to argue against PHMSA’s interpretations of 49 C.F.R.
§§ 195.432 and 195.452 in Items 1-3, 5 and 6, repeating many of the same arguments and citing
the same information contained in Petitioner’s previous submissions and addressed in the Final
Order. Centurion also presented certain new information and new arguments, but failed to
present a valid rationale for why this new information and arguments should be considered.
PHMSA is not obliged to consider them and may dismiss those portions of the Petition without
further consideration. However, despite these procedural grounds for dismissal, I have
considered the substance of the Petition as discussed in greater detail below and still find it
lacking. Finally, Centurion characterized the Petition as an attempt to clarify certain of its
previous statements, which Petitioner asserted PHMSA “may have misinterpreted and/or
misapplied.”5
Discussion
A. Inspection of In-Service Breakout Tanks (49 C.F.R. 195.432)
3 Centurion Pipeline, LP CPF No. 4-2014-5028 (March 30, 2017), available at
https://primis.phmsa.dot.gov/comm/reports/enforce/FOCPEvent opid 0 html?nocache=7530# TP 1 tab 3.
4 Petition, at 1.
5 Petition, at 2.



CPF No. 4-2014-5028
Page 3
Item 1 in the Final Order found that Centurion violated 49 C.F.R. § 195.432(b), which states:
§ 195.432 Inspection of in-service breakout tanks.
(a) ….
(b) Each operator must inspect the physical integrity of in-service
atmospheric and low-pressure steel above-ground breakout tanks according
to API Std 653 (except section 6.4.3, Alternative Internal Inspection
Interval) (incorporated by reference, see § 195.3). However, if structural
conditions prevent access to the tank bottom, its integrity may be assessed
according to a plan included in the operations and maintenance manual
under § 195.402(c)(3)…6
The Final Order found that Petitioner violated 49 C.F.R. § 195.432(b) by failing to conduct
monthly Routine In-Service Inspections of breakout Tanks 6832 and 6833 according to
American Petroleum Institute Standard 653 (API 653) and assessed a civil penalty of $20,800 for
the violation.7 At the time of its inspection, PHMSA requested tank-inspection reports for
Petitioner’s breakout tanks for years 2010 through 2013; however, Centurion could not provide
monthly inspection reports for breakout Tanks 6832 and 6833 for calendar year 2010, January
2011, February 2011, March 2011, April 2011, and August 2011. PHMSA found that the
absence of records supported the finding of violation, particularly since Centurion was required
to keep records of monthly breakout-tank inspections pursuant to
§ 195.404(c)(3).8
In the Petition, Centurion contended that Item 1 of the Final Order should be withdrawn for lack
of sufficient evidence. Centurion acknowledged “in retrospect” that it may not have provided a
sufficiently detailed explanation of the evidence it had provided at the hearing to show that the
company had complied with the requirement to conduct monthly visual inspection of the tanks
and that it did not have records for 37 of the 1,248 required inspections for the five tanks at the
company’s Wasson Facility. Centurion presented four objections to the finding of violation: (1)
that “standing alone, evidence of missing records is not proof that an inspection was not
performed – only that a record was not kept;”9 (2) that the company had a robust pipeline
inspection program, as well as other compliance inspection programs that looked for similar
issues, and therefore it was “less likely” that a violation had occurred; (3) that Centurion’s
breakout Tanks 6832 and 6833 were co-located with other tanks for which Centurion had records
of the same Routine In-Service Inspections during the relevant time period; and (4) that
Centurion had performed and documented visual inspections for breakout Tanks 6832 and 6833
6 API 653, Section 6.3.1.2, states that the length of time between Routine In-Service Inspections shall not exceed
one month.
7 The Notice originally proposed civil penalty of $42,400 for Item 1, however, the penalty was reduced to $20,800
for the reasons set forth in the Final Order (at page 12).
8 Section 195.404(c)(3) requires operators to maintain a record for each required inspection.
9 Petition, at 11.



CPF No. 4-2014-5028
Page 4
that “were essentially identical” to those that were required under API 653.10 Based on these
assertions, Centurion contended that the preponderance of the evidence supported the conclusion
that the company had conducted all of the required monthly Routine In-Service Inspections but
had simply failed to maintain adequate records of those inspections.11
I disagree. Centurion previously raised argument (1) in response to the Notice and PHMSA
rejected it in the Final Order. Specifically, PHMSA found that Petitioner’s failure to have any
records of performing the required inspections constituted credible evidence that Centurion did
not perform the inspections as required. As noted in the Final Order, the company “presented no
evidence that the inspections actually took place.” If there had been affidavits or other evidence
presented at the hearing that supported Centurion’s claim that the inspections had actually taken
place, then perhaps there would be a closer question of whether PHMSA had met its burden of
proving the violation. However, in the absence of such evidence, PHMSA was justified in
relying upon a lack of records that Centurion was separately obliged to keep under
§ 195.404(c)(3) and Centurion’s own procedures.12
With regard to arguments (2), (3) and (4), Petitioner attempts to demonstrate compliance with
§ 195.432(b) and the API 653 inspection requirements by presenting evidence that is either
unsubstantiated or not determinative of compliance. For example, the fact that Petitioner has
procedures for the performance of tank inspections does not demonstrate the procedures were
followed or that the tank inspections took place as required by the regulation. Just because an
operator has procedures to perform a certain task is immaterial to whether such tasks were
actually performed or performed properly. Similarly, the location of breakout Tanks 6832 and
6833 near other tanks for which Centurion conducted monthly Routine In-Service Inspections in
January 2010 through April 2011 and August 2011 also does not demonstrate that the requisite
API 653 inspection was performed on Tanks 6832 and 6833 during the period at issue. Having a
“robust, systematic approach” to inspections also does not demonstrate that the required
inspections were performed.
Finally, with regard to Centurion’s argument that it performed and documented other visual
inspections that were “essentially identical” to those required by API 653, I note that Section
6.3.1.3 of API 653 reads:
This routine in-service inspection shall include a visual inspection
of the tank's exterior surfaces. Evidence of leaks; shell distortions;
signs of settlement; corrosion; and condition of the foundation, paint
10 When a civil penalty is assessed for more than one instance of a violation (e.g., 37 tanks with missed inspections), each
additional instance beyond the first typically elevates the total penalty by less than the amount assessed for the first instance, with
each additional instance representing a smaller increase in proportion to the total. See, e.g., Plains Pipeline, LP, CPF No. 4-2013-
5007, n.61, 2015 WL 4397455, at *17 (May 22, 2015) (explaining that each additional tank out of compliance elevated the civil
penalty by less than the amount assessed for the first).
11 Petition, at 11.
12 Pipeline Safety Violation Report (Violation Report), (October 23, 2014) (on file with PHMSA), at 4.



CPF No. 4-2014-5028
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coatings, insulation systems, and appurtenances should be
documented for follow-up action by an authorized inspector.
I have reviewed the Wasson Tank Inspection Records for Tanks 6832 and 6833 that have been
provided by Petitioner and attached as Exhibit L to the Petition.13 These records, however, do
not address the requirements of API 653, nor do they specify that an inspection was actually
performed. The records also do not document the additional inspections such as environmental,
health and safety reviews, monthly tank gauging, and mixer and thief-hatch checks that
Centurion contends took place.
In summary, the record supports, by a preponderance of the evidence, the finding that Petitioner
failed to comply with § 195.432(b) and the API 653 Routine In-Service Inspection requirements.
Petitioner also asked that the civil penalty of $20,000 for this Item either be eliminated or
reduced. Centurion did not make any explicit argument in its Petition as to why the penalty
should be reduced under PHMSA’s penalty assessment criteria, but I have nevertheless reviewed
both the penalty criteria and how they were applied for this Item. Finally, I have reviewed the
Final Order, which already reduced the civil penalty from the proposed amount of $42,400 down
to $20,800 on the ground that the company “discovered the non-compliance and took
documented action to address the issue” prior to the PHMSA inspection.14 Finding no reason to
modify the findings or to reduce further the penalty assessed in the Final Order, PHMSA affirms
the violation of § 195.432(b) and the reduced civil penalty of $20,800.
Item 2 in the Final Order found that Centurion violated 49 C.F.R. § 195.432(b), as quoted above,
by failing to conduct “External Inspections”15 of four breakout tanks (Tanks 6688, 6965, 6948,
and 2722) within the required five-year interval, in accordance with API 653, and assessed a civil
penalty of $23,600 for the violation. Specifically, it found that with respect to Tank 6688,
Centurion had performed an External Inspection on February 5, 2008, but not again until March
7, 2014, exceeding the five-year interval by 394 days. With respect to Tank 6965, the Final Order
found that Centurion had performed an External Inspection on August 7, 2008, but not again until
October 10, 2013, exceeding the five-year interval by 63 days. With respect to Tank 6948, the
Final Order found that Centurion had performed an External Inspection on June 10, 2008, but not
13 Exhibit L to the Petition. This new evidence was presented for the first time with the Petition. Under 49 C.F.R.
§ 190.243(b), if the Petitioner seeks consideration of additional facts or arguments, “the respondent must submit the
reasons why they were not presented prior to issuance of the final order.” The Petitioner failed to present any
plausible reason why this evidence was not presented earlier, except that “Centurion did not anticipate PHMSA’s
interpretations on certain legal and factual issues.” Response, at 2. Such a rationale, of course, could be made for
virtually any new evidence that an operator may seek to present for the first time in a petition. Nevertheless, this
new evidence has been considered and is found to be irrelevant.
14 Final Order, at 12.
15 Section 6.3.2.1 of API 653 states: “All tanks shall be given a visual external inspection by an authorized
inspector. This inspection shall be called the external inspection and must be conducted at least every 5 years or
RCA/4N years (where RCA is the difference between the measured shell thickness and the minimum required
thickness in mils, and N is the shell corrosion rate in mils per year) whichever is less. Tanks may be in operation
during this inspection.”



CPF No. 4-2014-5028
Page 6
again until March 7, 2014, exceeding the five-year interval by 258 days. Finally, with respect to
Tank 2722, the Final Order found that Centurion had performed an External Inspection on October
23, 2007, but not again until June 21, 2013, exceeding the five-year interval by 240 days.
In its Petition, Centurion stated that it did not seek reconsideration of the finding of violation for
three of the four tanks (Tanks 6688, 6948, and 2722), but only for Tank 6965, on the basis that it
had complied with § 195.432(b) and API 653 because the required External Inspection was
performed within five “calendar years.” Petitioner argued: (1) that API 653 uses the colloquial
term “year;” (2) that commentary from the API Committee (Committee) and legal precedent
support the proposition that the term “year” may be understood to mean “calendar year” for
compliance purposes; and (3) that PHMSA improperly interpreted API 653 as cited in a
previously-issued administrative final order.16
Centurion previously raised arguments (1) and (2) in response to the Notice and PHMSA
rejected them in the Final Order. Specifically, PHMSA found that in a 2010 enforcement action,
the agency had determined that the five-year inspection period required by § 195.432(b) meant
five periods of 365 days each. In that case, PHMSA found that a pipeline operator had violated
§ 195.432(b) when the company exceeded an inspection interval of five consecutive 365-day
periods, even though the operator had performed an inspection within five calendar years.17
Petitioner’s contention regarding development of the API 653 consensus standard was also
rejected. Petitioner had argued that a Committee-member representative from a pipeline
operator had proposed changing the language in API 653 to make “years” effectively be
“calendar years.”18 However, this proposed change from “years” to “calendar years” was not
adopted, as seen by the plain language of Section 6.3.2.1 of API 653. Therefore, Centurion’s
argument that API 653 should be read to mean “calendar years” fails because the proposal to
make such a change was not accepted by the Committee. Moreover, a proposal by an API
committee member in the development of a standard is not persuasive or controlling on
PHMSA’s interpretation of its own regulations.
Furthermore, I find Petitioner’s reliance on two federal cases in support of its argument for
Centurion’s interpretation of the term “year” to be unpersuasive and irrelevant. Specifically,
Petitioner argues that courts permit the construction of a term to its natural or ordinary meaning
absence a statutory definition.19 While neither the Federal Pipeline Safety Laws nor 49 C.F.R.
Parts 190-199 defines the term “year,” PHMSA has previously interpreted it to be 365 days in its
adjudication of enforcement matters. Additionally, Black’s Law Dictionary defines “year” as “a
consecutive 365-day period beginning at any point” or “a span of twelve months.”20 Similarly,
16 Enbridge Pipelines (Ozark), L.L.C., CPF No. 4-2010-5008, 2010 WL 65316*38 (Aug. 17, 2010).
17 Id. (finding violations of the five-year inspection interval for a number of tanks that were inspected within five
calendar years, but not within five periods of 365 days).
18 Petition, at Exhibit C. See also Supplemental Response, at 8-9 and Appx. B.
19 Petition, at 10.
20 Black’s Law Dictionary (10th ed. 2014), which notably provides a separate definition for “calendar year.”



CPF No. 4-2014-5028
Page 7
Merriam-Webster’s definition of “year” indicates that it is a period “required for one revolution
of the earth around the sun.”21
Finally, with regard to argument (3), Petitioner argued that PHMSA should not rely on the 2010
Final Order because the operator in that case did not contest the violation and agreed to correct
the noncompliance. Again, I disagree. I find no reason why an uncontested finding of violation
in a published final order should somehow be discounted or dismissed as precedent just because
an operator chose not to challenge the facts or law underlying an allegation of violation. Further,
I find that even were PHMSA to conclude that the 2010 final order is merely informative, the
earlier enforcement action still provided fair notice to Centurion and the regulated community
that PHMSA has interpreted § 195.432(b) and API 653 to mean that the visual external-
inspection interval must not exceed five consecutive periods of 365 days each, rather than five
calendar years.
Accordingly, finding no reason to modify the findings in the Final Order, PHMSA affirms the
finding of violation of § 195.432(b) and the civil penalty of $23,600.
Item 3 in the Final Order found that Centurion violated 49 C.F.R. § 195.432(b), as quoted above,
by failing to make Ultrasonic Thickness (UT) measurements of breakout tanks at intervals not to
exceed five years, in accordance with API 653, and assessed a civil penalty of $23,600 for the
violation. As discussed above, with respect to Tank 6688, it found that Centurion had performed
an External Inspection on February 5, 2008, but not again until March 7, 2014, exceeding the
five-year interval by 394 days. With respect to Tank 6965, it found that Centurion had
performed an External Inspection on August 7, 2008, but not again until October 10, 2013,
exceeding the five-year interval by 63 days. With respect to Tank 6948, it found that Centurion
had performed an External Inspection on June 10, 2008, but not again until March 7, 2014,
exceeding the five-year interval by 258 days. Finally, with respect to Tank 2722, it found that
Centurion had performed an External Inspection on October 23, 2007, but not again until June
21, 2013, exceeding the five-year internal by 240 days.
In the Petition, Centurion argued that the finding of violation in Item 3 should be withdrawn
because the company knew the corrosion rates for its tanks, therefore making them subject to the
longer interval for UT testing found in Section 6.3.3.2.b of API 653, and not the five-year
interval for tanks with unknown corrosions rates under Section 6.3.3.2.a.22 Specifically,
Centurion contended that it had calculated the corrosion rates for the tanks at issue in accordance
with API 653 by comparing the actual wall-thickness data for each tank with past and historical
tank records. Centurion argued that its calculation method was consistent with API 653 Section
6.3.3.1, which states, in relevant part: “External, ultrasonic thickness measurements of the shell
21 Merriam Webster Dictionary website, available at https://www.merriam-webster.com/dictionary/year (last
accessed on May 10, 2019).
22 Section 6.3.2.2(a) of API 653 states: “When used, the ultrasonic thickness measurements shall be made at
intervals not to exceed the following: (a) When the corrosion rate is not known, the maximum interval shall be 5
years. Corrosion rates may be estimated from tanks in similar service based on thickness measurements taken at an
interval not exceeding 5 years.”



CPF No. 4-2014-5028
Page 8
can be a means of determining a rate of uniform general corrosion while the tank is in service.”
Finally, Centurion contended that PHMSA had not cited to any evidence to show that
Centurion’s methodology was inconsistent with API 653.
With its Petition, Centurion supplemented the evidentiary record with an API 653 Internal
Inspection Report for Tank 6688; the remaining records had been previously provided and
considered by PHMSA in making its determination in the Final Order. Nevertheless, I have
carefully reviewed all of the evidence and find that Centurion has again fallen short of providing
PHMSA with evidence demonstrating that it had actually calculated the corrosion rates, and
therefore knew the corrosion rates of the tanks at issue at the time of the PHMSA inspection.
The records provided by Centurion show that Petitioner did not calculate the corrosion rates in
2007 and 2008 when it conducted those External Inspections. The records with calculated
corrosion rates are from 2013 and 2014, and are only for Tanks 6965 and 2722.23 As a matter of
fact, the API 653 In-Service Inspection Report with the calculated corrosion rate for Tank 6865
was dated March 7, 2014, which was after the PHMSA inspection. Additionally, these records
show that Centurion did not calculate the corrosion rate for all the “courses” of the tank, even
though the company had the necessary data to perform said calculations. Finally, Centurion
conceded in its Petition that it does not have records of calculated corrosion rates.24 Therefore,
since Centurion did not know the corrosion rates for Tanks 6688, 6968, 6948, and 2722 when it
performed the External Inspections, those tanks were subject to the five-year interval of API 653
Section 6.3.3.2.a.
Finding no reason to modify the findings in the Final Order, PHMSA affirms the violation of
§ 195.432(b) and the civil penalty of $23,600.
B. Pipeline Integrity Management in High Consequence Areas (49 C.F.R. 195.452)
Item 5 in the Final Order found that Centurion violated 49 C.F.R. § 195.452(h)(2), which states:
§ 195.452 Pipeline integrity management in high consequence areas.
(a) ….
(h) What actions must an operator take to address integrity issues?...
(2) Discovery of condition. Discovery of a condition occurs when an
operator has adequate information about the condition to determine that the
condition presents a potential threat to the integrity of the pipeline. An
operator must promptly, but no later than 180 days after an integrity
assessment, obtain sufficient information about a condition to make that
determination, unless the operator can demonstrate that the 180-day period
is impracticable.
The Final Order determined that Petitioner violated 49 C.F.R. § 195.452(h)(2) by failing to
obtain sufficient information about an anomalous condition to determine, no later than 180
days after an integrity assessment, if the condition presented a potential threat to the integrity
23 Pre-Hearing Brief, at Appendix A.
24 Petition, at 9, FN 4.



CPF No. 4-2014-5028
Page 9
of the pipeline and assessed a reduced civil penalty of $28,800. The record shows that on
December 3, 2011, Petitioner completed an integrity assessment using a T.D. Williamson,
Inc. (TDW) SpirALL Magnetic Flux Leakage Multi Data Set tool (SMFL MDS tool or the
tool) as part of its continual reassessment of the 16-inch Bretch to Cushing #2 system. The
180-day deadline to obtain sufficient information was therefore May 31, 2012. Although
Petitioner experienced a 40-day period prior to the 180-day deadline during which it believed
the data might be unusable, the Final Order determined that such delay did not excuse it from
compliance with § 195.452(h)(2).
In the Petition, Centurion argued that the finding of violation for Item 5 should be withdrawn
because (1) the data issues, overall complexity, and novelty of the tool run made it impracticable
to discover the condition within 180 days, and (2) relevant PHMSA precedent supported
Centurion’s position.
With regard to argument (1), § 190.243 requires a petitioner to submit the reasons why any new
facts or arguments were not presented prior to issuance of the final order. Centurion has offered
no explanation as to why it failed to raise this impracticability argument previously, and, in fact,
now expressly contradicts its earlier statements at the hearing and in its Post-Hearing Brief,
which dismissed impracticability. For example, Centurion previously stated:
This case does not turn on the “impracticability” provision in
§ 195.452(h)(2). At the time the 16-inch SMFL MDS was launched, no one
at Centurion believed it would be impracticable to meet the 180-day
deadline. At the time the pig was retrieved in a damaged condition leading
to TDW’s declaration of a “Failed Run,” impracticability was not an issue
because at that time the 180-day clock effectively reset, and Centurion had
to consider a new run. When Centurion shared with TDW its approach to
potentially utilize the data from the damaged tool and TDW determined
there was “usable data” on January 27, 2012, impracticability ceased to be
an issue because Centurion met the 180-day discovery timeframe. Thus,
there was no point in this admittedly rare set of circumstances where
Centurion believed that completing the discovery process within 180 days
after the integrity assessment was impracticable. 25
Based on this prior representation, I find that Centurion has waived its right to raise the argument
of impracticability. Notwithstanding this finding, I have reviewed and carefully considered
Centurion’s new impracticability claim. PHMSA has previously held that “generally it is not an
impracticability where the vendor delay could have been anticipated ahead of time.”26 Centurion
states that the “impracticability of meeting the 180-day deadline stems from Centurion’s use of
state of the art technology in its pipeline integrity program.”27 Centurion claims that it could not
25 Post-Hearing Brief, at 20; Hearing Transcript, at 107: 16-18.
26 ExxonMobil Pipeline Co., CPF 4-2013-5027, 2015 WL 7175715, at *20 (October 1, 2015).
27 Petition, at 7.



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have foreseen the length of time it would take to gather and analyze the data from the in-line
inspection (ILI) run. Centurion emphasized in the record that it used (1) a complex, newly-
commercialized ILI technology tool;28 (2) the tool collected “the largest data set ever amassed in
a single run by TDW;”29 and (3) the run was the longest in TDW’s history.30
PHMSA has previously concluded that while a “delay by a tool vendor might render discovery
within 180 days impracticable, an operator's claim of impracticability requires considering all the
relevant facts of the delay. Where an operator's own actions contributed to the delay, as in the
present case, PHMSA does not consider that the operator is excused from compliance due to an
impracticability.”31 Here, I find that Centurion could have predicted that the 180-day deadline
would be problematic. Factors such as a new tool that had never been run before, the large
amount of data to be collected by the vendor, and the longest run in the vendor’s history, on their
face, contain enough uncertainty and the possibility of difficulties to persuade me that Centurion
could have anticipated a delay ahead of time and taken appropriate measures in advance of the
inspection to ensure timely discovery, as required by the regulation.
Further, Centurion claims that the Final Order “misquotes and misapplies relevant precedent.”
Petitioner cites to a lengthier quote from In the Matter of BP Pipelines (North America) Inc.,
which it alleges changes the application of PHMSA precedent.32 On the contrary, I find that the
complete quote in BP Pipeline supports PHMSA’s reasoning that Centurion had useable data
collected on the date of the tool run. Furthermore, PHMSA precedent has established that it is
the operator’s responsibility to obtain sufficient information under § 195.452(h)(2), except where
impracticable; in this case, however, Centurion fell short of doing so within the 180-day
timeframe.33 Therefore, I reject this argument that PHMSA’s established precedent supports
Centurion’s position.
Finding no reason to modify the findings in the Final Order, PHMSA affirms the violation of
§ 195.452(h)(2). As for the civil penalty, I have reviewed the assessment criteria cited in the
Violation Report, along with the evidence and arguments presented, and find that a reduction in
28 Post-Hearing Brief, at 20; Petition, at 6-7; Hearing Transcript, at 33:9-13
29 Post-Hearing Brief, at 20; Petition, at 6; Hearing Transcript, at 35:11-12, 47:12-21, 54:12-20.
30 Post-Hearing Brief, at 20; Petition, at 6; Hearing Transcript, at 46:5-12, 55:7-8.
31 ExxonMobil Pipeline Co., CPF 4-2013-5027 (Decision on Petition for Reconsideration), 2016 WL 2753318, at *9
(April 1, 2016).
32 “[D]iscovery is not tied solely to the date of the tool run but to the fact that at the completion of a tool run there
are assessment results from which an operator can obtain sufficient information.” BP Pipelines (North America),
Inc., CPF No. 3- 2005-5030, 2006 WL 7129217, at *6 (Sept. 6, 2006)).
33 “Even though § 195.452(h)(2) did not require Respondent to receive a final report within 180 days, it did require
Respondent to obtain ‘sufficient information,’ which means enough information to allow an operator to accurately
and reliably identify, locate, validate, and evaluate pipeline anomalies detected by the integrity assessment and to
properly classify them for repair, if necessary, under § 195.452(h).” Alyeska Pipeline Service Company, CPF No. 5-
2006-5018, Final Order, at 4-5 (issued Jan. 13, 2010)



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the penalty for good faith is warranted for this Item. Specifically, while Centurion’s use of new
and innovative ILI technology does not excuse the company from failing to comply with
§ 195.452(h)(2), it does provide a reasonable rationale for Centurion’s delay in meeting the 180-
day deadline for discovery. Accordingly, a reduced civil penalty of $14,400 is assessed for the
violation.
Item 6 in the Final Order found that Centurion violated 49 C.F.R. § 195.452(h)(4), which states:
§ 195.452 Pipeline integrity management in high consequence areas.
(a) ….
(h) What actions must an operator take to address integrity issues?...
(4) Special requirements for scheduling remediation -- (i) Immediate
repair conditions. An operators’ evaluation and remediation schedule must
provide for immediate repair conditions. To maintain safety, an operator
must temporarily reduce the operating pressure or shut down the pipeline
until the operator completes the repair of these conditions. An operator must
calculate the temporary reduction in operating pressure using the formulas
referenced in paragraph (h)(4)(i)(B) of this section. If no suitable remaining
strength calculation method can be identified, an operator must implement
a minimum 20 percent or greater operating pressure reduction, based on
actual operating pressure for two months prior to the date of inspection,
until the anomaly is repaired. An operator must treat the following
conditions as immediate repair conditions:
(A) Metal loss greater than 80% of nominal wall regardless of
dimensions.
(B) A calculation of the remaining strength of the pipe shows a
predicted burst pressure less than the established maximum operating
pressure at the location of the anomaly. Suitable remaining strength
calculation methods include, but are not limited to, ASME/ANSI B31G
(incorporated by reference, see § 195.3) and PRCI PR-3-805 (R-STRENG)
(incorporated by reference, see § 195.3).
(C) A dent located on the top of the pipeline (above the 4 and 8 o'clock
positions) that has any indication of metal loss, cracking or a stress riser.
(D) A dent located on the top of the pipeline (above the 4 and 8 o'clock
positions) with a depth greater than 6% of the nominal pipe diameter.
(E) An anomaly that in the judgment of the person designated by the
operator to evaluate the assessment results requires immediate action.
The Final Order found that Petitioner violated 49 C.F.R. § 195.452(h)(4) by failing to lower the
operating pressure or shutting down the pipeline upon discovering six immediate-repair
conditions and assessed a civil penalty of $40,300 for the violation. Specifically, PHMSA found
that upon discovering six immediate-repair conditions on July 11, 2012, Centurion failed to
reduce the operating pressure or shut down the pipeline until it completed the repairs on August
3, 2012. The conditions were classified as immediate-repair conditions, which prompted
Petitioner to schedule excavations to validate the conditions. However, the company failed
either “to reduce operating pressure or shut down the pipeline” until the company could



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complete the repair.34 Furthermore, Centurion had enough information to classify the conditions
prior to excavation and did in fact classify them as immediate repairs, thereby obligating the
company to reduce operating pressure or shut down the pipeline even if the classification turned
out to be a conservative estimate.
In the Petition, Centurion argued that the finding of violation in Item 6 should be withdrawn for
the following reasons: (1) Centurion’s ANSI / ASME Standard B31.4 (Std B31.4) calculations
yielded a safe operating pressure that was higher than the operating pressure in use at the time;
and (2) the allegation of violation runs contrary to PHMSA’s own guidance contained in the
preamble of the 2002 final rule amending 49 C.F.R. § 195.452(h)(4), which indicated that
“pressure reductions should be based on an engineering evaluation…… Centurion performed
that calculation and operated its pipeline at a safe o
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