{"operation":"document","citation":"CPF 420165010","title":"SHELL PIPELINE CO., L.P. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2016-06-29","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.64(c)(1)(i).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165010.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165010.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165010","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420165010","body":"Notice of Probable Violation involving SHELL PIPELINE CO., L.P.. PHMSA's enforcement data identifies the cited regulation as 195.64(c)(1)(i). The case was opened on 2016-06-29 and is reported as closed as of 2016-12-23. Proposed civil penalty: $25,900. Assessed civil penalty: $25,900. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420165010_Final Order_12012016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165010/420165010_Final%20Order_12012016.pdf\n\n420165010_Final Order_12012016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165010/420165010_Final%20Order_12012016_text.pdf\n\n420165010_NOPV PCP_06292016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165010/420165010_NOPV%20PCP_06292016.pdf\n\n420165010_NOPV PCP_06292016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165010/420165010_NOPV%20PCP_06292016_text.pdf\n\n420165010_Operator Response to Notice_07282016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165010/420165010_Operator%20Response%20to%20Notice_07282016.pdf\n\n420165010_Final Order_12012016_text.pdf\n\nDecember 1, 2016\nMr. Greg Smith, President\nShell Pipeline Company, LP\nTwo Shell Plaza\n777 Walker Street\nHouston, TX 77002\nRe: CPF No. 4-2016-5010\nDear Mr. Smith:\nEnclosed please find the Final Order issued in the above-referenced case. It makes a finding of\nviolation and assesses a civil penalty of $25,900. The penalty payment terms are set forth in the\nFinal Order. This enforcement action closes automatically upon receipt of payment. 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. R.M. Seeley, Director, Southwest Region, OPS, PHMSA\nMs. Deborah Price, Integrity & Regulatory Services Manager, Shell Pipeline Company\nLP, One Shell Plaza, 910 Louisiana Street, 42nd Floor, Houston, TX 77002\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\n\n\n\nCPF No. 4-2016-5010\nPage 2\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)\nShell Pipeline Company, LP, ) CPF No. 4-2016-5010\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nOn December 29, 2015, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nconducted an on-site pipeline safety inspection of the facilities and records of Shell Pipeline\nCompany, LP (SPLC or Respondent) in Houston, Texas. SPLC owns and operates seven tank\nfarms across the United States, and transports more than 1.5 billion barrels of crude oil and refined\nproducts annually through 3,800 pipeline miles across the Gulf of Mexico and five states.1\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated June 29, 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 SPLC\nhad violated 49 C.F.R. § 195.64(c)(1) and proposed assessing a civil penalty of $25,900 for the\nalleged violation.\nSPLC responded to the Notice by letter dated July 28, 2016 (Response). The company did not\ncontest the allegation of violation but provided an explanation of its actions and requested that the\nproposed civil penalty be reduced. Respondent did not request a hearing and therefore has waived\nits right to one.\nFINDING OF VIOLATION\nIn its Response, SPLC did not contest the allegation in the Notice that it violated 49 C.F.R. Part\n195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.64(c)(1), which states:\n1 Shell Pipeline Company LP website, available at https://www.shell.us/pipeline (last accessed October 20, 2016).\n\n\n\nCPF No. 4-2016-5010\nPage 3\n§ 195.64 National Registry of Pipeline and LNG Operators.2\n(a) . . . .\n(c) Changes. Each operator must notify PHMSA electronically through\nthe National Registry of Pipeline and LNG Operators at\nhttp://opsweb.phmsa.dot.gov, of certain events.\n(1) An operator must notify PHMSA of any of the following events\nnot later than 60 days before the event occurs:\n(i) Construction or any planned rehabilitation, replacement,\nmodification, upgrade, uprate, or update of a facility, other than a section of\nline pipe, that costs $10 million or more. If 60 day notice is not feasible\nbecause of an emergency, an operator must notify PHMSA as soon as\npracticable;\n(ii) Construction of 10 or more miles of a new hazardous liquid pipeline;\nor . . .\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.64(c)(1)(i) by failing to timely notify\nPHMSA of its construction project that cost $10 million or more. Specifically, the Notice alleged\nthat SPLC failed to inform PHMSA of the Nederland Reactivation construction project, totaling\n$21 million, sixty days prior to the construction project start date. Instead, SPLC submitted a\nconstruction notification to PHMSA (F-20140415-4643) on April 15, 2014, stating that it planned\nto begin work on the project on May 1, 2014. By filing its Nederland Reactivation construction\nnotification with PHMSA only sixteen days in advance of the reported start date, SPLC violated\nthe sixty day notice requirement set forth in 49 C.F.R. § 195.64(c)(1)(i). Respondent did not\ncontest this allegation of violation.\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.64(c)(1)(i) by failing to notify PHMSA of the start of the Nederland Reactivation\nconstruction project, costing a total of $21 million, no later than sixty days before construction\nbegan. This finding of violation will be considered a prior offense 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\nrelated series of violations.3 In determining the amount of a civil penalty under 49 U.S.C. § 60122\nand 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and\ngravity of the violation, including adverse impact on the environment; the degree of Respondent’s\n2 49 C.F.R. § 195.64 was amended to exclude subsection (c)(1)(iii). See Amdt. 195-100, 80 FR 12762-01, Mar. 11,\n2015.\n3 On June 30, 2016, PHMSA adjusted the maximum penalties for inflation (81 Fed. Reg. 42564). Pursuant to § 190.223,\nany person found to have committed a violation on or after August 1, 2016, is subject to an administrative civil penalty\nnot to exceed $205,638 for each violation for each day the violation continues, with the maximum administrative civil\npenalty not to exceed $2,056,380 for any related series of violations.\n\n\n\nCPF No. 4-2016-5010\nPage 4\nculpability; the history of Respondent’s prior offenses; and any effect that the penalty may have on\nits ability to continue doing business; and the good faith of Respondent in attempting to comply\nwith the pipeline safety regulations. In addition, I may consider the economic benefit gained from\nthe violation without any reduction because of subsequent damages, and such other matters as\njustice may require. The Notice proposed a total civil penalty of $25,900 for the violation cited\nabove.\nItem 1: The Notice proposed a civil penalty of $25,900 for Respondent’s violation of 49 C.F.R.\n§ 195.64(c)(1), for failing to timely notify PHMSA of its Nederland Reactivation construction\nproject, totaling $21 million, within sixty days of the construction project start date. In its\nResponse, SPLC sets forth three reasons why it believes the penalty should be reduced.\nFirst, SPLC argues that because it submitted the late construction notice to PHMSA, it self-\nreported the violation. Therefore, this should change the circumstances of the violation set forth in\nthe Violation Report and reduce the penalty amount.4 However, SPLC did not proactively inform\nPHMSA that it failed to comply with the sixty-day notice requirement set forth in 49 C.F.R.\n§ 195.64(c)(1)(i). Instead, it filed a routine construction notice with PHMSA, taking no\naffirmative steps to alert PHMSA of its late filing and sixty-day notice violation. PHMSA staff\nhad to review the notice and calculate the duration between the filing date and the construction\nstart date to discover that SPLC had violated its sixty day notice requirement. This does not\nconstitute self-reporting. Further, PHMSA later discovered that the construction project did not\nbegin on May 1, 2014 as reported by SPLC. Instead, it began one month earlier on April 1,\n2014—fourteen days before SPLC filed its construction notice with PHMSA. Not only did the\nnotice not accurately reflect the status of the Nederland Reactivation construction project, but\nSPLC had begun construction at the time of the filing and still did not proactively self-report the\nviolation. Therefore, I find that the penalty should not be reduced because SPLC did not self-\nreport the violation to PHMSA.\nSecond, SPLC argues that the description of the violation in the Violation Report does not reflect\nSPLC’s intention not to misrepresent the scope of its Nederland Reactivation construction project\nto PHMSA.5 The Violation Report states that the description of work on the notification\nsubmitted by SPLC did not adequately represent the work that was actually performed.6\nSpecifically, the notification did not identify the installation of two new pumping units at a cost of\napproximately $13 million. The Violation Report does not state that this was an intentional\nmisrepresentation. In its Response, SPLC alleges that it did not fully understand that it was to\nprovide a complete description of the construction project, including the installation of new\npumps.7 SPLC also argues that this work could be construed as part of the overall “modifications\nto the pump station” that was listed on the notice. This argument is without merit. SPLC is an\nestablished operator that has been constructing pipeline facilities for many years. It should know\nthe difference between modifying existing facilities and constructing new ones. By excluding the\n4 Violation Report, at 7.\n5 Id. at 4-5.\n6 Id. at 4.\n7 Respondent’s Response to the Notice (Response), at 1-2.\n\n\n\nCPF No. 4-2016-5010\nPage 5\nconstruction of two new pump stations in the description of the Nederland Reactivation\nconstruction project, SPLC misrepresented the scope of its project to PHMSA, even if not\nintentional.\nThird, SPLC argues that the civil penalty should be reduced because there is little precedent for\nissuing a fine under this part of the code.8 Section 195.64 is located within Subpart B-Annual,\nAccident, and Safety-Related Condition Reporting of Part 195 governing the transportation of\nhazardous liquids by pipeline. According to 49 C.F.R. § 190.221, “[w]hen a Regional Director has\nreason to believe that a person has committed an act violating 49 U.S.C. 60101 et seq., 33 U.S.C.\n1321(j), or any regulation or order issued thereunder, the Regional Director may initiate\nproceedings under §§ 190.207 through 190.213 to determine the nature and extent of the\nviolations and appropriate civil penalties.” In determining the amount of a civil penalty, the\nAssociate Administrator considers several factors,9 but when there is a clear violation of a\nregulatory standard, I do not find grounds to reduce the penalty merely because PHMSA has not\nhad to issue many violations of this standard in the past. Consequently, I do not find a lack of prior\nviolations of this standard by other operators is a compelling reason for not issuing a civil penalty,\nor reducing the penalty amount, in this case.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $25,900 for violation of 49 C.F.R. § 195.64(c)(1)(i).\nPayment of the civil penalty must be made within 20 days of service of this Final Order. Federal\nregulations (49 C.F.R. § 89.21(b)(3)) require the payment to be made by wire transfer through the\nFederal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be directed\nto: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike Monroney\nAeronautical Center, 6500 S Macarthur Blvd, Oklahoma City, OK 73169. The Financial\nOperations Division telephone number is (405) 954-8845. The Financial Operations Division\ntelephone number is (405) 954-8845.\nFailure to pay the $25,900 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 those\nsame authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is\nnot made within 110 days of service. Furthermore, failure to pay the civil penalty may result in\nreferral of the matter to the Attorney General for appropriate action in a district court of the United\nStates.\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 Safety,\nPHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a\ncopy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA will accept\npetitions received no later than 20 days after receipt of the Final Order by the Respondent,\n8 Response, at 2.\n9 See 49 C.F.R. § 190.225 (listing out civil penalty assessment considerations the Associate Administrator will consider\nand other additional considerations he/she may consider).\n\n\n\nCPF No. 4-2016-5010\nPage 6\nprovided they contain a brief statement of the issue(s) and meet all other requirements of 49\nC.F.R. § 190.243. The filing of a petition automatically stays the payment of any civil penalty\nassessed but does not stay any other provisions of the Final Order, including any required\ncorrective actions. If Respondent submits payment of the civil penalty, the Final Order becomes\nthe final administrative decision and the right to petition for reconsideration is waived.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nDecember 1, 2016\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nActing Associate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":14828}