{"operation":"document","citation":"CPF 420163002","title":"SABINE PASS LNG, L.P. (Cheniere) — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2016-10-17","effective_on":null,"summary":"CLOSED notice of probable violation citing 191.22(c)(1).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420163002.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420163002.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420163002","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420163002","body":"Notice of Probable Violation involving SABINE PASS LNG, L.P. (Cheniere). PHMSA's enforcement data identifies the cited regulation as 191.22(c)(1). The case was opened on 2016-10-17 and is reported as closed as of 2017-07-11. Proposed civil penalty: $32,400. Assessed civil penalty: $32,400. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420163002_ NOPV PCP_10172016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420163002/420163002_%20NOPV%20PCP_10172016_text.pdf\n\n420163002_Final Order_06052017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420163002/420163002_Final%20Order_06052017.pdf\n\n420163002_Final Order_06052017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420163002/420163002_Final%20Order_06052017_text.pdf\n\n420163002_NOPV PCP_10172016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420163002/420163002_NOPV%20PCP_10172016.pdf\n\n420163002_Operator Response to Notice_11282016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420163002/420163002_Operator%20Response%20to%20Notice_11282016.pdf\n\n420163002_Final Order_06052017_text.pdf\n\nJune 5, 2017\nMr. Jack A. Fusco\nPresident and Chief Executive Officer\nCheniere Energy, Inc.\n700 Milam Street\nHouston, TX 77002\nRe: CPF No. 4-2016-3002\nDear Mr. Fusco:\nEnclosed please find the Final Order issued in the above-referenced case. It makes a finding of\nviolation and assesses a civil penalty of $32,400 against Sabine Pass LNG, LP, a subsidiary of\nCheniere Energy, Inc. The penalty payment terms are set forth in the Final Order. This\nenforcement action closes automatically upon receipt of payment. Service of the Final Order by\ncertified mail is deemed effective as provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Jon Manning, Acting Director, Southwest Region, Office of Pipeline Safety, PHMSA\nMr. R. Keith Teague, Vice President, Asset Group, Sabine Pass LNG, 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____________________________________\n)\nIn the Matter of )\n)\nSabine Pass LNG, LP, ) CPF No. 4-2016-3002\na subsidiary of Cheniere Energy, Inc., )\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom June 24, 2016, to August 17, 2016, pursuant to 49 U.S.C. § 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of the facilities and records of Sabine Pass\nLNG, LP (SPLNG or Respondent), in Louisiana. Sabine Pass LNG, LP, is a wholly-owned\nsubsidiary of Cheniere Energy, Inc. (Cheniere), which owns the Sabine Pass LNG Terminal.1\nThe Sabine Pass LNG Terminal is located on over 1,000 acres of land along the Sabine Pass\nRiver in Cameron Parish, Louisiana, with an expected nominal production capacity of 27 million\nmetric tons per annum of liquefied natural gas (LNG).\n2\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated October 17, 2016, a Notice of Probable Violation and Proposed Civil\nPenalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that\nSPLNG had violated 49 C.F.R. § 191.22, and proposed assessing a civil penalty of $32,400 for\nthe alleged violation.\nSPLNG responded to the Notice by letter dated November 28, 2016 (Response). The company\ncontested the allegation and requested that the proposed civil penalty be reconsidered.\nRespondent did not request a hearing and therefore has waived its right to one.\nThe Notice alleged that Respondent violated 49 C.F.R. Part 191, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 191.22(c)(1), which states:\nFINDING OF VIOLATION\n1 Pipeline Safety Violation Report (Violation Report), (October 18, 2016) (on file with PHMSA), at 1.\n2 Cheniere Energy, Inc., website, available at http://www.cheniere.com/terminals/sabine-pass/ (last accessed\nFebruary 8, 2017).\n\n\n\nCPF No. 4-2016-3002\nPage 2\n§ 191.22 National Registry of Pipeline and LNG Operators.\n(a) ….\n(c) Changes. Each operator of a gas pipeline, gas pipeline facility, underground\nnatural gas storage facility, LNG plant, or LNG facility must notify PHMSA\nelectronically through the National Registry of Pipeline, Underground Natural Gas\nStorage Facility, and LNG Operators at http://opsweb.phmsa.dot.gov of certain\nevents.\n(1) An operator must notify PHMSA of any of the following events not later\nthan 60 days before the event occurs . . .\n(iii) Construction of a new LNG plant or LNG facility . . . .\nThe Notice alleged that Respondent violated 49 C.F.R. § 191.22(c)(1) by failing to electronically\nnotify PHMSA not later than 60 days before the construction of a new LNG facility.\nSpecifically, the Notice alleged that on June 28, 2016, SPLNG submitted an Operator\nIdentification assignment request to PHMSA for LNG Train 5, which is part of Cheniere’s\nSabine Pass LNG project. The construction project described in the request included an\nanticipated start date for field work activities of January 4, 2016. It was confirmed that\nconstruction of LNG Train 5 began prior to June 28, 2016. Accordingly, SPLNG should have\nsubmitted its notification not later than 60 days before January 4, 2016, or by November 5, 2015,\nin order to provide PHMSA the requisite notice of construction of a new LNG facility.\nIn its Response, SPLNG argued that LNG Trains 1 through 6 are process units to the whole\nplant, rather than separate facilities. SPLNG stated it provided a New Construction Notification\nfor the Sabine Pass Liquefaction Project on October 11, 2012, and the initial project included the\naddition of four LNG Liquefaction Trains. Subsequently, an expansion of the liquefaction\nfacility included LNG Trains 5 and 6, both of which are within the original property boundary.\nSPLNG further argued that its updated notification on June 28, 2016, was at the direction of a\nPHMSA representative and was not meant to construe each LNG Train as separate and distinct\nprojects.\nSection 191.22(c)(1)(iii) requires each operator to notify PHMSA electronically 60 days before\nthe construction of a new LNG facility. An LNG facility is defined in 49 C.F.R. § 193.2007 as “a\npipeline facility that is used for liquefying natural gas or synthetic gas or transferring, storing, or\nvaporizing liquefied natural gas.” A pipeline facility is defined in 49 C.F.R. § 193.2007 as “new\nand existing piping, rights-of-way, and any equipment, facility, or building used in the\ntransportation of gas or in the treatment of gas during the course of transportation.” Pursuant to\nthese definitions, SPLNG’s Train 5 is an LNG facility and SPLNG was required to notify\nPHMSA of its construction not later than 60 days before the event. In this case, SPLNG should\nhave submitted its notification for Train 5 by November 5, 2015, in order to provide PHMSA the\nrequisite notice.\nSPLNG’s Application for Authorization Under Section 3 of the Natural Gas Act, submitted to\nthe Federal Energy Regulatory Commission, stated LNG Trains 1 and 2 were to be part of the\nLiquefaction Project Stage 1, and LNG Trains 3 and 4 were to be part of Liquefaction Project\n\n\n\nCPF No. 4-2016-3002\nPage 3\nStage 2.3 The Project Description described the LNG Trains in terms of liquefaction capacity\nand as containing treatment facilities and equipment for removing solids and liquefying the\nnatural gas.4 SPLNG then filed an Application for Authorization Under Section 3 of the Natural\nGas Act for LNG Trains 5 and 6 in September 2013. This demonstrates that the notification of\nthe first project did not include LNG Train 5 within its scope, and LNG Train 5 was a separate\nfacility requiring an electronic notification to PHMSA.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 191.22(c)(1) by failing to electronically notify PHMSA not later than 60 days before the\nconstruction of LNG Train 5 of Cheniere’s Sabine Pass LNG Project.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken 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\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 $32,400 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $32,400 for Respondent’s violation of 49 C.F.R.\n§ 191.22(c)(1), for failing to electronically notify PHMSA not later than 60 days before the\nconstruction of LNG Train 5 of Cheniere’s Sabine Pass LNG project. As discussed above,\nSPLNG argued in favor of a penalty elimination or reduction because Respondent treats the LNG\nTrains as units to the whole plant and not as separate facilities requiring separate construction\nnotifications. This argument is rejected because Respondent submitted separate notifications for\nTrains 1-4 and Trains 5-6 and the notification for Train 5 was not timely under the regulation.\nThe gravity of the violation in this case was slight in that pipeline safety and integrity was\nminimally affected by the failure to adequately notify PHMSA of the construction. However, I\nfind that, with respect to culpability, Respondent failed to take appropriate action to comply with\na clearly applicable requirement. Even though SPLNG stated it did not consider each LNG Train\na separate LNG facility, PHMSA’s regulations clearly define LNG facilities to include those\nfacilities used for liquefying natural gas just as Respondent’s LNG Trains are used.\n3 Violation Report, Ex. A, FERC Submittal #20110131-5069.\n4 Id., at 2.\n\n\n\nCPF No. 4-2016-3002\nPage 4\nWith respect to the good faith of Respondent in attempting to comply with the pipeline safety\nregulations, I find that Sabine did not make a reasonable interpretation of the requirement. By\nSPLNG’s own description in its FERC Application, SPLNG acknowledged the LNG Trains\nperform the same function as an LNG facility and in the practical sense treated the LNG Trains\nas LNG facilities with equipment and facilities used to liquefy natural gas.\nUpon consideration of Respondent’s arguments, I am unconvinced that a penalty reduction is\nwarranted. Accordingly, having reviewed the record and considered the assessment criteria for\nthe Item cited above, I assess Respondent a civil penalty of $32,400 for violation of 49 C.F.R.\n§ 191.22(c)(1).\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 $32,400 civil penalty will result in accrual of interest at the current annual rate\nin 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.\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 the Final Order by the\nRespondent, 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 49\nC.F.R. § 190.5.\nJune 5, 2017\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n420163002_ NOPV PCP_10172016_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nand\nPROPOSED CIVIL PENALTY\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nOctober 17, 2016\nMr. R. Keith Teague\nSabine Pass LNG, L.P.\n700 Milam Street\nHouston, TX 77002\nCPF 4-2016-3002\nDear Mr. Teague:\nFrom June 24, 2016 to August 17, 2016, representatives of the Pipeline and Hazardous Materials\nSafety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49\nUnited States Code inspected your late submittal of an operator registry notification by Sabine\nPass LNG, L.P., a wholly owned subsidiary of Cheniere Energy.\nAs a result of the late submittal, it appears that you have committed a probable violation of the\nPipeline Safety Regulations, Title 49, and Code of Federal Regulations. The items inspected and\nthe probable violation is:\n\n\n\n1. §191.22 National Registry of Pipeline and LNG operators.\n(c) Changes. Each operator of a gas pipeline, gas pipeline facility, LNG plant or\nLNG facility must notify PHMSA electronically through the National Registry of\nPipeline and LNG Operators at http://opsweb.phmsa.dot.gov, of certain events.\n(1) An operator must notify PHMSA of any of the following events not later than 60\ndays before the event occurs:\n(i) Construction or any planned rehabilitation, replacement, modification, upgrade,\nuprate, or update of a facility, other than a section of line pipe that costs $10 million\nor more. If 60 day notice is not feasible because of an emergency, an operator must\nnotify PHMSA as soon as practicable;\n(ii) Construction of 10 or more miles of a new pipeline; or\n(iii) Construction of a new LNG plant or LNG facility.\nSabine Pass LNG failed to provide adequate notification for the construction of Train 5 which is\na part of Cheniere’s Sabine Pass LNG project as required by 49 CFR §191.21(c)(1). On June 28,\n2016, Sabine Pass LNG submitted an OPID assignment request to PHMSA (J-20160628-11783).\nThe construction project described in this submittal had an anticipated start date of field work\nactivities on January 4, 2016 which was before the notification date. Sabine Pass LNG’s\nrepresentative and Cheniere’s website confirmed that construction began prior to the date of\noperator registry notification. The notification should have been submitted no later than\nNovember 5, 2015 in order to provide PHMSA the required 60 day notice prior to construction\nas required by §191.21(c)(1). As a result, Sabine Pass LNG notified PHMSA 236 days late.\nProposed Civil Penalty\nUnder 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $205,638\nper violation per day the violation persists up to a maximum of $2,056,380 for a related series of\nviolations. For violations occurring between January 4, 2012 to August 1, 2016, the maximum\npenalty may not exceed $200,000 per violation per day, with a maximum penalty not to exceed\n$2,000,000 for a related series of violations. For violations occurring prior to January 4, 2012,\nthe maximum penalty may not exceed $100,000 per violation per day, with maximum penalty\nnot to exceed $1,000,000 for related series of violations. Also, for LNG facilities, an additional\npenalty of not more than $75,123 for each violation may be imposed. The Compliance Officer\nhas reviewed the circumstances and supporting documentation involved in the above probable\nviolation and has recommended that you be preliminarily assessed a civil penalty of $32,400.\n2\n\n\n\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 submit in response to this enforcement action may be made publicly available. If you\nbelieve that any portion of your responsive material qualifies for confidential treatment under 5\nU.S.C. 552(b), along with the complete original document you must provide a second copy of\nthe document with the portions you believe qualify for confidential treatment redacted and an\nexplanation of why you believe the redacted information qualifies for confidential treatment\nunder 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this\nconstitutes 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 4-2016-3002 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\nEnclosure: Response Options for Pipeline Operators in Compliance Proceedings\n3","truncated":false,"body_characters":18526}