{"operation":"document","citation":"CPF 420155012","title":"WEST TEXAS GULF PIPELINE CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2015-04-27","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.401(b)(1), 195.422(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420155012.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420155012.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420155012","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420155012","body":"Notice of Probable Violation involving WEST TEXAS GULF PIPELINE CO. PHMSA's enforcement data identifies the cited regulations as 195.401(b)(1),  195.422(a). The case was opened on 2015-04-27 and is reported as closed as of 2016-12-27. Proposed civil penalty: $207,300. Assessed civil penalty: $207,300. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420155012_Final Order_12012016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155012/420155012_Final%20Order_12012016.pdf\n\n420155012_Final Order_12012016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155012/420155012_Final%20Order_12012016_text.pdf\n\n420155012_NOPV PCP_04272015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155012/420155012_NOPV%20PCP_04272015.pdf\n\n420155012_NOPV PCP_04272015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155012/420155012_NOPV%20PCP_04272015_text.pdf\n\n420155012_Operator Response and Request for Hearing_05222015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155012/420155012_Operator%20Response%20and%20Request%20for%20Hearing_05222015.pdf\n\n420155012_Final Order_12012016_text.pdf\n\nDecember 1, 2016\nMr. Michael J. Hennigan\nPresident and Chief Executive Officer\nSunoco Pipeline, LP\n1818 Market Street, Suite 1500\nPhiladelphia, PA 19106\nRe: CPF No. 4-2015-5012\nDear Mr. Hennigan:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation and assesses a total civil penalty of $207,300. This is to acknowledge receipt of\npayment of $40,300, by wire transfer dated May 22, 2015. Item 1 of this enforcement action is\nnow closed. With respect to Item 2, the penalty payment terms are set forth in the Final Order,\nwhich will close automatically upon receipt of payment of the remaining $167,000. Service of\nthe Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise\nprovided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nActing Associate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Rodrick M. Seeley, Director, Southwest Region, OPS\nMr. David R. Chalson, Senior Vice President, Operations, Sunoco Pipeline, LP\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n____________________________________\nIn the Matter of )\nSunoco Pipeline, LP, ) CPF No. 4-2015-5012\n)\n)\n)\nRespondent. )\n___________________________________ )\nFINAL ORDER\nOn March 1, 2015, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), initiated\nan investigation of an incident involving the hazardous liquid pipeline system owned by West\nTexas Gulf Pipeline Company and operated by Sunoco Pipeline, LP (SPLP or Respondent).\nRespondent’s 580-mile system transports crude oil from West Texas gathering lines and\ninterconnects to Corsicana and Nederland, Texas markets.1\nThe investigation arose out of a failure near Dawson, Texas. On February 25, 2015, SPLP\nreported to the National Response Center a release of crude oil at Mile Post (MP) 257 on the\nBlum-to-Wortham section of Respondent’s pipeline system (Failure). The leak released\napproximately 30 barrels of oil. The OPS Southwest Region received a copy of the telephonic\nnotice and contacted SPLP to initiate an investigation.\nAs a result of the investigation, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated April 27, 2015, a Notice of Probable Violation and Proposed Civil\nPenalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that\nSPLP had committed various violations of 49 C.F.R. Part 195 and proposed assessing a total\ncivil penalty of $207,300 for the alleged violations.\nRespondent responded to the Notice by letter dated May 22, 2015 (Response). SPLP did not\ncontest the allegation of violation of 49 C.F.R. § 195.422 (Item 1) and paid the proposed civil\npenalty of $40,300, as provided in 49 C.F.R. § 190.227. Payment of the penalty serves to close\nthis portion of the case with prejudice. Respondent did contest the allegation of violation of\n49 C.F.R. § 195.401(b) (Item 2) and requested a hearing.\nBy subsequent letter dated December 2, 2015 (Supplemental Response), SPLP withdrew its\nrequest for a hearing and presented information seeking reduction of the proposed penalty with\n1 Pipeline Safety Violation Report (Violation Report) (April 21, 2015), (on file with PHMSA), at 1.\n\n\n\nCPF No. 4-2015-5012\nPage 2\nrespect to Item 2, which authorized the entry of this Final Order without further notice. SPLP\nalso indicated that by its decision not to contest this allegation, the company did not “admit the\naccuracy of the factual or legal assertions set forth in the [Notice].”2\nFINDINGS OF VIOLATION\nIn its Response and Supplemental Response, SPLP did not contest the allegations in the Notice\nthat it violated 49 C.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.422(a), which states:\n§ 195.422 Pipeline repairs.\n(a) Each operator shall, in repairing its pipeline systems, insure that\nthe repairs are made in a safe manner and are made so as to prevent\ndamage to persons or property.\n(b) No operator may use any pipe, valve, or fitting, for replacement in\nrepairing pipeline facilities, unless it is designed and constructed as required\nby this part.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.422(a) by failing to insure that the\npipeline repair it performed was made in a safe manner and made so as to prevent damage to\npersons or property. Specifically, the Notice alleged that on or about February 25-26, 2015, in\nresponse to the Failure, SPLP first installed a repair at the site of the Failure, and then installed a\nsecond repair at an adjacent area of external corrosion. The second repair was made on a non-\nthrough-wall anomaly adjacent to the failure origin with a PLIDCO © Smith+Clamp™. The\nPLIDCO © Smith+Clamp™ is a pinhole-leak-repair clamp intended for through-wall pinhole\nleaks, but only as a leak-stoppage device. It is not intended as a permanent repair unless it also\nincludes a PLIDCO © Weld+Cap™, which Respondent did not install. The installation of the\nPLIDCO © Smith+Clamp™ was not an appropriate use of the product for the second repair and\nwas not used in a manner consistent with the manufacturer’s installation instructions or design.\nThe Notice alleged that the device used for the second repair was neither intended nor designed\nfor use as a permanent repair, and therefore, the installation was not made in a safe manner so as\nto prevent damage to persons or property.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.422(a) by failing to insure that a\npipeline repair was made in a safe manner and made so as to prevent damage to persons or\nproperty.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.401(b)(1), which states:\n§ 195.401 General requirements.\n(a) . . . .\n2 Supplemental Response, at 1.\n\n\n\nCPF No. 4-2015-5012\nPage 3\n(b) An operator must make repairs on its pipeline system according to\nthe following requirements:\n(1) Non integrity management repairs. Whenever an operator discovers\nany condition that could adversely affect the safe operation of its pipeline\nsystem, it must correct the condition within a reasonable time. However, if\nthe condition is of such a nature that it presents an immediate hazard to\npersons or property, the operator may not operate the affected part of the\nsystem until it has corrected the unsafe condition. . . .\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.401(b)(1) by failing to correct,\nwithin a reasonable time, a condition that could adversely affect the safe operation of its pipeline\nsystem. Specifically, the Notice alleged that SPLP had sufficient information when it performed\nin-line inspections (ILI) on the pipeline segment from Blum Station to Wortham Station in 2006\nand again in September 2011 to know that an unsafe condition existed but failed to correct it.\nAccording to the Notice, the company’s 2006 ILI data showed the Failure site “as a feature at\nWheel Count 247894.01” and identified the feature as having approximately 17% metal loss.\nThe 2011 ILI data showed the same feature as having approximately 68% metal loss. Based\nupon the calculated corrosion growth and assuming a straight-line basis for its continued growth,\nthe feature at the leak site was allegedly experiencing a corrosion growth rate of approximately\n10.2% per year. This growth rate would predict a through-wall leak in less than five years.\nSPLP, however, did not schedule its next ILI assessment until 2016, which was beyond the\npredicted and actual remaining life of the feature at the Failure site.\nThe Notice further alleged that Respondent’s integrity management program (IMP) in place in\n2011 contributed to SPLP’s failure to correct this known condition within a reasonable time.\nAccording to the Notice, SPLP stated “that they did not have a process to look for variances\nbetween the [ILI vendor’s] Draft Final to Final Report revisions or re-grading of features. . .” As\nsuch, SPLP neither recognized the accelerated corrosion growth nor took prompt action to\ncorrect it.\nRespondent did not contest this allegation of violation, but asked for mitigation of the proposed\ncivil penalty, which I will address in the “Assessment of Penalty” section below. Accordingly,\nbased upon a review of all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.401(b)(1) by failing to correct, within a reasonable time, a condition that could adversely\naffect the safe operation of its pipeline system.\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\n\n\n\nCPF No. 4-2015-5012\nPage 4\nrelated series of violations.3 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 civil\npenalty of $167,000 for the violation in Item 2 cited above.\nItem 2: The Notice proposed a civil penalty of $167,000 for Respondent’s violation of\n49 C.F.R. § 195.401(b)(1), for failing to correct, within a reasonable time, a condition that could\nadversely affect the safe operation of its pipeline system. As noted above, SPLP did not contest\nthe allegation of violation but argued that PHMSA should consider reducing the proposed\npenalty. The company presented several arguments in favor of a penalty reduction. First, the\ncompany stated that it disagreed with the assertion that its IMP lacked a process to identify\nvariances between what it termed the ILI vendor’s “electronic final report” and its final written\nreport in hard-copy format.4 On the contrary, SPLP asserted that there were documented\nprocedures in place designed to capture variances between the two versions and to make them\nknown to SPLP.5\nRespondent asserted that the initial “electronic final report” from the ILI vendor in 2011\nindicated a 45% metal loss of the feature located at Wheel Count 247894.01. The final report in\nhard copy, however, indicated that the anomaly had an estimated 68% metal loss. According to\nSPLP, its vendor failed to notify Respondent of this variance between the two reports or\notherwise to make SPLP aware of the vendor’s revision, as was required under SPLP’s “ILI\nVendor Requirements” document. As a result, the company stated that it then set the\nreassessment interval at five years, based on the historic corrosion growth rate from 17% in 2006\nto 45% in 2011. Respondent also argued that the metal-loss deviations could not be directly\nattributed to corrosion growth. Finally, Respondent noted that since the time of the 2011 ILI\ndata analysis, it had made procedural modifications to its ILI reporting process, including\nelimination of electronic final reports.\nI reject the argument that any possible mistakes or shortcomings by SPLP’s vendor should serve\nas a basis for reducing the proposed penalty. Even acknowledging that Respondent may have had\nprocesses in place, SPLP itself concedes that the procedures were not strictly followed.6 It is\nimportant to note that “[i]nformation about the actions of Respondent’s ILI vendor are\n3 The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, Pub. L. No. 112-90, § 2(a)(1), 125 Stat.\n1904, January 3, 2012, increased the civil penalty liability for violating a pipeline safety standard to $200,000 per\nviolation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.\n4 Supplemental Response, at 3.\n5 Respondent did not submit for the record copies of the actual procedures referenced in its Response.\n6 Supplemental Response, at 4.\n\n\n\nCPF No. 4-2015-5012\nPage 5\nimmaterial to the assessment of a civil penalty. . . .” In the Matter of Tesoro Refining and\nMarketing Company (Tesoro), Final Order, CPF No. 5-2007-5031 (Dec. 28, 2009) (available at\nwww.phsma.dot.gov/pipeline/enforcement). As the operator of a hazardous liquid pipeline,\nSPLP is ultimately accountable for reviewing all reports from its contractors and agents and\nmaking sure that any conditions that could adversely affect the safe operation of its pipeline are\npromptly corrected.\nI would also note that the penalty for this Item was not calculated or related in any way to\nSPLP’s procedures, but rather Respondent’s failure to discover an unsafe condition and promptly\ncarry out needed repairs. I find that, with respect to culpability, Respondent failed to take\nappropriate action to comply with a clearly applicable requirement by reviewing the vendor’s\nfinal report, which showed the increased metal loss, and taking prompt action to correct the\ncondition.\nSecond, SPLP argued that the “nature, circumstances and gravity of the alleged violation were\ncomparatively minor… especially when the amount assessed in this instance is compared to\nother penalties assessed by PHMSA for similar circumstances.”7 I disagree. The gravity of the\nviolation in this case was quite serious, insofar as it was a causal factor in the Failure. Because\nof the violation, pipeline integrity was significantly compromised and resulted in a release of\ncrude oil that harmed the environment.8 In fact, SPLP is fortunate that the amount of the spill\nwas small and its impact limited; it could have easily resulted in a spill with far greater\nconsequences.\nThird, Respondent claimed that the violation related to 2011, before the statutory maximum civil\npenalty amount was increased.9 Respondent argued that because the Notice does not appear to\nallege a multi-day violation, the maximum civil penalty amount should be no greater than\n$100,000. In this case, SPLP failed to schedule an assessment prior to the condition reaching the\npoint at which it affected the pipeline's integrity. As stated in the Violation Report,\nthe violation was not limited to a single point in time, but, rather, constituted an ongoing failure\nto correct an unsafe condition that continued for 1,043 days,10 well past the 2012 effective date\nfor the increased maximum civil penalty amounts. I find that the penalty proposed for this Item\nwas based upon the $200,000 maximum daily penalty that went into effect in January 2012 and\nthat the penalty was appropriately calculated.11\n7 Id., at 4-5.\n8 Violation Report, at 3.\n9 The amendments enacted by the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (PL 112-90)\nbecame effective January 3, 2012.\n10 Violation Report, at 13.\n11 In previous cases, PHMSA has held that “49 C.F.R. § 195.401(b) places an ongoing obligation on an operator to\ncorrect discovered conditions that could affect the safety of the pipeline. . . .” and “[d]aily violations continue to\noccur until the condition is corrected.” E.g., In the Matter of Equitable Production Company and MarkWest\nHydrocarbon Inc., Final Order, CPF No. 2-2006-5001 (Feb. 17, 2011) (available at\nwww.phmsa.dot.gov/pipeline/enforcement).\n\n\n\nCPF No. 4-2015-5012\nPage 6\nFourth, SPLP argued that it is entitled to a credit for its good-faith efforts, both following the\nFailure and after the Notice was issued, to rectify its procedures for dealing with ILI vendors.\n“There was no knowledge or intent either on the part of the ILI vendor or SPLP to fail to comply\nwith any regulatory requirements.”12 While I acknowledge and commend the steps that\nRespondent took after the Failure and after receiving the Notice to correct the violation and\navoid future accidents, these are the actions that any prudent operator would be expected to take\nunder similar circumstances. PHMSA only recognizes and reduces a proposed penalty for those\ngood-faith efforts taken by an operator to interpret and follow the regulations prior to a violation,\nnot afterwards. As for the fact that there is no evidence that Respondent knowingly or\nintentionally violated the regulation, this level of culpability was already taken into account in\nproposing the penalty amount; otherwise, the penalty would have been higher.\nFinally, SPLP argued that it has no prior history of violating §195.401(b) and that it derived no\neconomic benefit from the procedure that was in place at the time or from the incident itself.\nWhile SPLP is correct that this Item does not constitute what PHMSA terms a “repeat offense”\nof the same regulation, SPLP does have a history of seven prior safety violations within the five\nyears prior to this case. These prior violations did, in fact, serve to properly enhance the\nproposed penalty here.13 As for the economic benefit, the proposed penalty was not based on\nany purported economic gain by the operator.\nConsidering all of SPLP’s argument and the totality of the circumstances surrounding the failure,\nI am unconvinced that a penalty reduction is warranted. While it may be true that the Failure\ncould potentially have been averted had SPLP’s ILI vendor followed the terms of their\nagreement, this does not absolve the operator from full responsibility for the accident that\noccurred. Accordingly, having reviewed the record and considered the assessment criteria, I\nassess Respondent a civil penalty of $167,000 for violation of 49 C.F.R. § 195.401(b).\nIn summary, having reviewed the record and considered the assessment criteria for Item 2 cited\nabove, I assess Respondent a total civil penalty of $167,000.\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,\n6500 S MacArthur Blvd., Oklahoma City, Oklahoma 79169. The Financial Operations Division\ntelephone number is (405) 954-8845.\nFailure to pay the $167,000 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\n12 Supplemental Response, at 5.\n13 See, In the Matter of Sunoco Logistics Partners, LP, Final Order, C.P.F. No. 4-2010-5010 (Aug. 1, 2012) and\nDecision on Petition for Reconsideration (Dec. 31, 2012) (available at www.phmsa.dot.gov/pipeline/enforcement).\n\n\n\nCPF No. 4-2015-5012\nPage 7\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.\nUnder 49 C.F.R. § 190.243, Respondent has the 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 Counsel, PHMSA, at the same address. PHMSA\nwill accept petitions received no later than 20 days after receipt of service of the Final Order by\nthe Respondent, provided they contain a brief statement of the issue(s) and meet all other\nrequirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays the payment of\nany civil penalty assessed but does not stay any other provisions of the Final Order, including\nany required corrective actions. If Respondent submits payment of the civil penalty, the Final\nOrder becomes the final administrative decision and the right to petition for reconsideration is\nwaived.\nThe terms and conditions of this Final Order are effective upon service in accordance with\n49 C.F.R. § 190.5.\nDecember 1, 2016\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nActing Associate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":22046}