{"operation":"document","citation":"CPF 420155018","title":"CHAPARRAL ENERGY, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2015-09-18","effective_on":null,"summary":"CLOSED notice of probable violation citing 190.233(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420155018.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420155018.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420155018","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420155018","body":"Notice of Probable Violation involving CHAPARRAL ENERGY, LLC. PHMSA's enforcement data identifies the cited regulation as 190.233(a). The case was opened on 2015-09-18 and is reported as closed as of 2017-01-17. Proposed civil penalty: $115,200. Assessed civil penalty: $0. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420155018_Final Order_01172017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155018/420155018_Final%20Order_01172017.pdf\n\n420155018_Final Order_01172017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155018/420155018_Final%20Order_01172017_text.pdf\n\n420155018_NOPV PCP PCO_09182015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155018/420155018_NOPV%20PCP%20PCO_09182015.pdf\n\n420155018_NOPV PCP PCO_09182015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155018/420155018_NOPV%20PCP%20PCO_09182015_text.pdf\n\n420155018_Operator Prehearing Submission_03212016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155018/420155018_Operator%20Prehearing%20Submission_03212016.pdf\n\n420155018_Operator Response to Notice and Request for Hearing_10162015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420155018/420155018_Operator%20Response%20to%20Notice%20and%20Request%20for%20Hearing_10162015.pdf\n\n420155018_Final Order_01172017_text.pdf\n\nJanuary 17, 2017\nMr. Mark A. Fischer\nChairman and CEO\nChaparral Energy, LLC\n701 Cedar Lake Blvd.\nOklahoma City, OK 73114\nRe: CPF No. 4-2015-5018\nDear Mr. Fischer:\nEnclosed please find the Final Order issued in the above-referenced case. It withdraws the\nallegation of a violation. This enforcement action is now closed. Service of the Final Order by\ncertified mail is deemed effective upon the date of mailing, or as otherwise provided under 49\nC.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Rod Seeley, Director, Southwest Region, OPS\nMr. Ahren Scott Tryon, Tryon Law Firm, 4148 Hockaday Drive Dallas, Texas 75229\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)\nChaparral Energy, LLC, ) CPF No. 4-2015-5018\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom August 25 - September 17, 2015, pursuant to 49 U.S.C. § 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), investigated an accident that occurred on Chaparral Energy, LLC’s (Chaparral or\nRespondent) Coffeyville 8\" carbon dioxide (CO2) pipeline in Shidler, Oklahoma. The\nCoffeyville 8\" pipeline experienced a failure on August 25, 2015. Following the failure,\nPHMSA issued a Corrective Action Order (CAO) to Chaparral on August 28, 2015.1\nChaparral’s Coffeyville Pipeline System consists of 67.5 miles of 8\" CO2 pipeline running from\nthe Coffeyville Resources Nitrogen Fertilizer Plant in Coffeyville, Kansas to the North Burbank\nproduction field near Shidler, Oklahoma.\nFollowing the accident investigation, on September 18, 2015, the Director, Southwest Region,\nOPS (Director) issued a Notice of Probable Violation, Proposed Civil Penalty, and Proposed\nCompliance Order (Notice) to Chaparral for allegedly failing to comply with the pressure\nrestriction contained in the CAO. In accordance with 49 C.F.R. § 190.207, the Notice proposed\nfinding that Chaparral had violated the Corrective Action Order and proposed assessing a civil\npenalty of $115,200 for the alleged violation. The Notice also proposed ordering Respondent to\ntake certain measures to correct the alleged violation.\nRespondent responded to the Notice by letter dated March 21, 2016 (Response). Chaparral\ncontested the allegation and requested a hearing. In accordance with 49 C.F.R. § 190.211, a\ntelephonic hearing was held on March 31, 2016, before a Presiding Official from the Office of\nChief Counsel, PHMSA. After the hearing, Respondent submitted written statements for the\nrecord by letters dated June 27, 2016 (Closing), August 29, 2016, and November 15, 2016.\nPursuant to § 190.209(b)(7), the Director submitted a written evaluation of Respondent’s\nresponse material on July 27, 2016.\n1 Chaparral Energy, LLC, CPF No. 4-2015-5017H, Corrective Action Order (Aug. 28, 2015).\n\n\n\nCPF No. 4-2015-5018\nPage 2\nBACKGROUND\nRespondent received a call from a landowner regarding a leak on its Coffeyville pipeline system\non August 25, 2015.2 After taking immediate action to verify the location of the pipeline failure,\nRespondent isolated the pipeline segment containing the leak by closing upstream and\ndownstream block valves and then blew down the pipeline segment.\n3\nDuring the afternoon of August 25, 2015, OPS representatives initiated contact with Respondent\nregarding the pipeline leak. Respondent informed OPS that it had isolated the segment of\npipeline containing the leak location (Affected Segment), that CO2 product was not flowing in\nthe pipeline at the time of the leak because the Coffeyville Fertilizer Plant that supplied CO2 to\nthe system was offline, and that pipeline pressure at the leak location at the time of the leak was\napproximately 1,100 psig.4 On August 26, 2015, Respondent informed OPS that it would\nremove and replace the failed section of pipe on that day. After replacing and testing the\nAffected Segment, Respondent returned the Coffeyville pipeline system to service on August 26,\n2015. Between August 26 and August 28, 2015, the Coffeyville pipeline system was operated at\npressures below the system’s maximum operating pressure established pursuant to 49 C.F.R. Part\n195.5\nOn August 26, 2015, OPS notified Respondent by telephone that a CAO would be issued in the\nnext couple of days, and that the CAO would call for the development of a Remedial Work\nPlan.6 On August 28, 2015, OPS issued the CAO and upon receipt Respondent implemented\n“Corrective Action Item 1,” which directed the Company to immediately shut down the entire\nCoffeyville pipeline system.7 Respondent took no other operational action on the pipeline after\nshutting down the pipeline on the afternoon of August 28, 2015. Notably, the Coffeyville\npipeline remained shut down with product in the line at the same pressure it had been operating\nat prior to the shutdown on August 28.8\n2 Response at 2.\n3 Response at 2.\n4 Response at 2.\n5 Response at 2-3.\n6 Response at 3.\n7 Response at 4. Item 1 of the CAO stated “Shutdown of Pipeline. Chaparral must not operate the\nAffected Segment until authorized to do so by the Director.”\n8 Response at 4.\n\n\n\nCPF No. 4-2015-5018\nPage 3\nOn September 8, 2015, Respondent submitted a Restart Plan to the Director for approval as\nrequired by the CAO.9 Respondent’s Restart Plan included a statement regarding “Incremental\nPressure Changes.”10 This section stated that pressure in the pipeline was currently in the range\nof 1,100 psig to 1,300 psig, and that Respondent would actually be decreasing pressure rather\nthan incrementally increasing pressure when it returned the pipeline to service.11 The decrease in\npressure would be in accordance with Corrective Action Item 3, which permitted the pipeline to\nbe returned to service at an operating pressure not to exceed eighty percent (80%) of the actual\noperating pressure in effect immediately prior to the failure. Respondent stated in the Restart\nPlan that it would release CO2 product into the atmosphere until the highest pressure reading\nalong the pipeline system did not exceed 896 psig.12\nOn the morning of September 18, 2015, the Director, Southwest Region, approved Respondent’s\nRestart Plan. That afternoon, OPS served Respondent with the current Notice of Probable\nViolation alleging Respondent violated the CAO by failing to reduce operating pressure on the\nAffected Segment upon receipt of the CAO to 80% of operating pressure at the time of failure.13\nWITHDRAWAL OF ALLEGATION\nThe Notice alleged that Respondent violated the CAO, as follows:\nItem 1: The Notice alleged that Respondent violated the CAO, which states in relevant part:\nCORRECTIVE ACTION 3-\nReturn to Service - After the Director approves the Restart Plan, Chaparral\nmay return the Affected Segment to service but the operating pressure must\nnot exceed eighty percent (80%) of the actual operating pressure in effect\nimmediately prior to the Failure.\nThe Notice alleged that Respondent violated the CAO by failing to lower pressure in the\nAffected Segment upon receipt of the CAO to 80% of the actual operating pressure in effect\nimmediately prior to the Failure. Specifically, the Notice alleged that between August 28, 2015,\nwhen the CAO was received by Respondent, and September 18, 2015, when the Restart Plan was\napproved by the Director, Respondent did not lower the pressure on the Affected Segment to\n80% of the actual operating pressure in effect immediately prior to the Failure.\n9 Item 2 of the CAO required that “Prior to resuming operation of the Affected Segment, develop and\nsubmit a written Restart Plan to the Director for prior approval.” Corrective Action Order at 4.\n10 Restart Plan at 4.\n11 Restart Plan at 5.\n12 Response at 4.\n13 Response at 5.\n\n\n\nCPF No. 4-2015-5018\nPage 4\nRespondent has argued that, contrary to the allegation in the Notice, the language of the CAO did\nnot require a pressure reduction upon receipt of the CAO, but rather “explicitly ties the 80%\npressure limitation to the pipeline’s return to service after the Director approves the Restart Plan\nsubmitted by Chaparral.”14 Respondent further argued that it had fully complied with Corrective\nAction Item 3 “exactly as drafted and ordered by PHMSA.”15 Specifically, Respondent shut\ndown the pipeline immediately upon receipt of the CAO, developed and received approval for a\nRestart Plan, and upon that approval, returned the pipeline to service at an operating pressure\nlimitation of 896 psig (80% of actual operating pressure immediately prior to the failure).16\nBecause the Restart Plan was not approved until September 18, 2015, Respondent argued that the\noperating pressure limitation was not applicable until that time.17\nOPS maintained that the CAO established an 80% pressure restriction, calculated to be 896 psig,\nand that Chaparral violated the requirement by shutting in the pipeline at 1107 psig. At the\nhearing, OPS explained that it was unaware Respondent had shut in the line at a pressure higher\nthan allowed until OPS was notified of that fact by the Restart Plan.18 In addition, OPS stated\nthe CAO was issued using language based on the understanding between the parties that the\npipeline was not operating.19\nHaving reviewed the applicable provisions of the CAO, I find the position offered by OPS is not\nsustainable. The plain language of Corrective Action 3 required Respondent to establish a limit\non operating pressure after the Director approved the Restart Plan. Specifically, the language\nstated: “After the Director approves the Restart Plan, Chaparral may return the Affected Segment\nto service but the operating pressure must not exceed eighty percent (80%) of the actual\noperating pressure in effect immediately prior to the Failure.”\nUnlike other corrective action orders that have been issued previously by PHMSA, which\nincluded a requirement to immediately reduce pressure upon receipt of the order, there was\nnothing in the CAO issued in this case that explicitly required Respondent to lower its operating\npressure immediately upon receipt of the CAO.20 For this reason, I conclude Respondent did not\nviolate Corrective Action 3 of the CAO when it waited until after approval of the restart plan to\n14 Response at 5.\n15 Response at 8.\n16 Response at 8.\n17 Closing at 5.\n18 Recommendation at 2; Transcript at 36-37.\n19 Transcript at 120.\n20 See, e.g., Natural Gas Pipeline Company of America, CPF No. 4-2015-1006H, at 4, 2015 WL 3545212,\nat *3 (Apr. 17, 2015); Williams Partners, L.P., CPF No. 1-2015-1013H, at 4, 2015 WL 4652713, at *3\n(Jun. 12, 2015); Tennessee Gas Pipeline Co., CPF No. 4-2015-1009H, at 4, 2015 WL 6758822, at *3\n(Aug. 6, 2015) (requiring the operator to reduce and maintain a twenty percent (20%) pressure reduction\nupon receipt of the order, a provision not included in the CAO issued to Respondent).\n\n\n\nCPF No. 4-2015-5018\nPage 5\nreduce pressure. Accordingly, the Notice is withdrawn. The civil penalty proposed in the Notice\nis not assessed and the proposed compliance terms are not included.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nJanuary 17, 2017\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n420155018_NOPV PCP PCO_09182015_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nSeptember 18, 2015\nMark A. Fischer\nChairman and CEO\nChaparral Energy, LLC\n701 Cedar Lake Blvd.\nOklahoma City, OK 73114\nDear Mr. Fischer: CPF 4-2015-5018\nFrom August 25 - September 17, 2015, a representative of the Pipeline and Hazardous Materials\nSafety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49\nUnited States Code investigated an accident that occurred on your Coffeyville 8” CO2 pipeline\nnear Shidler, Oklahoma. The Coffeyville 8” pipeline experienced a failure on August 25, 2015,\nand as a result PHMSA issued a Corrective Action Order (CAO) to Chaparral on August 28,\n2015.\nAt the time the CAO was issued, it was not known that Chaparral returned the Coffeyville line to\nservice. It was not until a Restart Plan was submitted that PHMSA became aware that Chaparral\nreturned the line to normal service on August 26, 2015. Upon receipt of the CAO on August 28,\n2015, Chaparral shut the line in; however, you did not limit the pressure to the 80% restriction as\nrequired by Corrective Action 3 of the CAO.\nAs a result, it appears that you have committed a probable violation of the Pipeline Safety\nRegulations, Title 49, Code of Federal Regulations. The item of probable violation is:\n\n\n\n1. CORRECTIVE ACTION 3 – [CPF No. 4-2015-5017H] Corrective Action Order:\nChaparral Energy, LLC\nReturn to Service - After the Director approves the Restart Plan, Chaparral may\nreturn the Affected Segment to service but the operating pressure must not exceed\neighty percent (80%) of the actual operating pressure in effect immediately prior to\nthe Failure.\nChaparral Energy LLC (Chaparral) has the line shut-in, but has failed to reduce the pressure on\ntheir Coffeyville 8” carbon dioxide pipeline following PHMSA’s issuance of a CAO. On August\n25, 2015, Chaparral experienced a reportable failure on your Coffeyville 8” carbon dioxide\npipeline resulting in the release of over 2600 barrels of carbon dioxide while shut in at 1100 psig.\nThe preliminary cause of the failure appears to be external corrosion, but the investigation is still\nongoing.\nOn August 28, 2015, PHMSA issued a CAO (CPF No. 4-2015-5017H) to Chaparral to establish\nan 80% pressure restriction (from the pressure at the time of the release) on your pipeline. The\nCAO 80% pressure restriction would limit the pressure to 896 psig; however, the current\npressure on the pipeline is 1107 psig.\nProposed Civil Penalty\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000\nper violation per day the violation persists up to a maximum of $2,000,000 for a related series of\nviolations. For violations occurring prior to January 4, 2012, the maximum penalty may not\nexceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a\nrelated series of violations. The Compliance Officer has reviewed the circumstances and\nsupporting documentation involved in the above probable violation(s) and has recommended that\nyou be preliminarily assessed a civil penalty of $[total amount] as follows:\nItem number PENALTY\n1 $115,200\nProposed Compliance Order\nWith respect to item 1 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous\nMaterials Safety Administration proposes to issue a Compliance Order to Chaparral. Please refer\nto the Proposed Compliance Order, which is enclosed and made a part of this Notice.\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators\nin Compliance Proceedings. Please refer to this document and note the response options. All\nmaterial you submit in response to this enforcement action may be made publicly available. If\nyou believe that any portion of your responsive material qualifies for confidential treatment\nunder 5 U.S.C. 552(b), along with the complete original document you must provide a second2\n\n\n\ncopy of the document with the portions you believe qualify for confidential treatment redacted\nand an explanation of why you believe the redacted information qualifies for confidential\ntreatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice,\nthis constitutes a waiver of your right to contest the allegations in this Notice and authorizes the\nAssociate Administrator for Pipeline Safety to find facts as alleged in this Notice without further\nnotice to you and to issue a Final Order.\nIn your correspondence on this matter, please refer to CPF 4-2015-5018 and for each document\nyou submit, 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\n3\n\n\n\nPROPOSED COMPLIANCE ORDER\nPursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) proposes to issue to Chaparral a Compliance Order incorporating the\nfollowing remedial requirements to ensure the compliance of Chaparral with the pipeline safety\nregulations:\n1. 2. In regard to Item Number 1 of the Notice pertaining to the failure to reduce the\npressure on the Coffeyville 8” carbon dioxide pipeline, Chaparral must reduce the\npressure on the pipeline to the 80% restricted pressure of 896 psig.\nIt is requested (not mandated) that Chaparral maintain documentation of the\nsafety improvement costs associated with fulfilling this Compliance Order and\nsubmit the total to R.M. Seeley, Director, Southwest Region, Pipeline and\nHazardous Materials Safety Administration. It is requested that these costs be\nreported in two categories: 1) total cost associated with preparation/revision of\nplans, procedures, studies and analyses, and 2) total cost associated with\nreplacements, additions and other changes to pipeline infrastructure.\n4","truncated":false,"body_characters":18934}