{"operation":"document","citation":"CPF 420165023","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":"2016-07-07","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.64(c)(1).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165023.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165023.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165023","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420165023","body":"Notice of Probable Violation involving SHELL PIPELINE CO., L.P.. PHMSA's enforcement data identifies the cited regulation as 195.64(c)(1). The case was opened on 2016-07-07 and is reported as closed as of 2018-02-28. 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\n420165023_Final Order_01182018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165023/420165023_Final%20Order_01182018.pdf\n\n420165023_Final Order_01182018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165023/420165023_Final%20Order_01182018_text.pdf\n\n420165023_NOPV PCP_07072016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165023/420165023_NOPV%20PCP_07072016.pdf\n\n420165023_NOPV PCP_07072016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165023/420165023_NOPV%20PCP_07072016_text.pdf\n\n420165023_Operator Reponse to Notice_08082016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165023/420165023_Operator%20Reponse%20to%20Notice_08082016.pdf\n\n420165023_Operator Reponse to Notice_08082016.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nShell Pipeline Company LP\nOne Shell Plaza\nAugust 8, 2016\n910 Louisiana Street\n42nd Floor\nMr. R.M. Seeley\nHouston, Texas 77002-5316\nPipeline and Hazardous Materials Safety Administration\nDirector, Southwest Region\n8701 South Gessner, Suite 1110\nHouston, TX 77074\nSUBJECT: NOPV-PCP-PCO, CPF 4-2016-5023\nDear Mr. Seeley:\nShell Pipeline Company LP (SPLC) acknowledges the receipt of CPF 4-2016-5023 Notice of\nProbable Violation (NOPV) and Proposed Civil Penalty (PCP) from the Pipeline and Hazardous\nMaterials Safety Administration (PHMSA) on July 18, 2016. SPLC is committed to operational\nexcellence and full compliance with federal, state and local regulations. SPLC is also committed to\nstriving to meet PHMSA expectations above the requitements of 49 CFR 195; however the\nrequirements of 49 CFR 195 alone are what should be used in determining probable violations.\nResponse to Notice of Proposed Violation\nOn August 12, 2015, SPLC submitted a notification of proposed construction for the construction\nof 30 miles of pipeline in the Gulf of Mexico. SPLC reported the expected date for start of\nconstruction to be September 1, 2015. This would have been only 19 days prior to construction\ninstead of the 60 days required by the regulation but not the 233 days late as alleged by PHMSA.\nAnd in fact, field construction activities were delayed and did not begin until work on the crossing\npreparation started on December 17, 2015.\nPHMSA alleges that \"construction\" began on February 20, 2015. This date is based on the dates\nthat some of the purchase orders for the pipe were issued. While Advisory Bulletin ADB 2014-03\ndoes encourage operators to make notification based on pipe purchase, ROW purchase and other\nactivities that occut prior to field \"construction\" the ADB itself acknowledges that this is guidance\nand not a requirement. Specifically it states, \"While the notification prior to the fust occurring construction-\nrelated activity is strongly encouraged and will benefit both PHMSA and the operator, tbese activities may not\nnecessarily represent the commencement of construction for purposes of triggering the minimum 60- day notice period in\nthe regulations subject to enforcement by PHMSA.\" Thereforc, the date of purchase of the pipe does not\nnecessarily constitute \"construction\" and this definition presented through an advisory bulletin\nshould not be used in an enforcement action.\nFurthermore, SPLC disagrees with the assertion in the Pipeline Safety Violation Report \"Section E6\n- Circumstances\" that the violation was discovered by PHMSA. SPLC believes in being open and\nfully cooperating with our regulators, and we believe that the record bears that out in this instance.\n\n\n\nThere was no intent to hide a violation and by submitting the notification, SPLC went on record\nthat the construction was planned to start less than 60 days from the submittal. As was the case\nwith CPF 4-2016-5010, it is unclear to SPLC what other notification could have been provided to\nPHMSA in this instance. SPLC would like to know what the expectation is to self repott this type\nof instance in the future if a deadline for a report is missed.\nResponse to Proposed Civil Penalty\nIn accotdance with the Response Options for Pipeline Operators in Compliance Proceedings, SPLC\nbelieves that the proposed penalty should be reviewed in light of the contested allegations presented\nabove.\nThank you for yout consideration. We look forward to hearing your response. If you have any\nquestions regarding this response or need any additional information, please contact Deborah Price\nat (713) 241-2035.\nSincerely,\nSal Dir\nDeborah Price\nIntegrity & Regulatory Services Manager\nShell Pipeline Company LP\n\n420165023_Final Order_01182018_text.pdf\n\nJanuary 18, 2018\nMr. Greg Smith\nPresident\nShell Pipeline Company, LP\nTwo Shell Plaza\n777 Walker Street\nHouston, TX 77022\nRe: CPF No. 4-2016-5023\nDear Mr. Smith:\nEnclosed please find the Final Order issued in the above-referenced case. It makes one finding\nof violation and assesses a civil penalty of $25,900. The penalty payment terms are set forth in\nthe Final Order. This enforcement action closes automatically upon receipt of payment. Service\nof the Final Order by certified mail is effective upon the date of mailing as provided under\n49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Director, Southwest Region, Office of Pipeline Safety, PHMSA\nMs. Deborah Price, Integrity & Regulatory Services Manager, Shell Pipeline Company\nLP, One Shell Plaza, 910 Louisiana Street, 42nd Floor, Houston, TX, 77022\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 )\nShell Pipeline Company, LP, ) CPF No. 4-2016-5023\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom April 14 through June 28, 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 inspection of the records of Shell Pipeline Company, LP (SPLC or\nRespondent), in Houston, Texas. SPLC owns and operates seven tank farms across the United\nStates, and transports more than 1.5 billion barrels of crude oil and refined products annually\nthrough 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 July 7, 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\nSPLC had violated 49 C.F.R. § 195.64(c) and proposed assessing a civil penalty of $25,900 for\nthe alleged violation.\nSPLC responded to the Notice by letter dated August 8, 2016 (Response). The company\ncontested the allegation, offered additional information in response to the Notice, and requested\nthat the proposed civil penalty be reviewed in light of the additional information presented.\nRespondent did not request a hearing and therefore has waived its right to one.\nFINDING OF VIOLATION\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.64(c)(1), which states:\n§ 195.64 National Registry of Pipeline and LNG Operators.\n(a) …\n(c) Changes. Each operator must notify PHMSA electronically through\n1 Shell Pipeline Company, LP website, available at http://www.shell.us/business-customers/shell-pipeline/about-\nshell-pipeline.html (last accessed August 16, 2017).\n\n\n\nCPF No. 4-2016-5023\nPage 2\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 not\nlater than 60 days before the event occurs:\n(i) Construction or any planned rehabilitation, replacement, modifica-\ntion, upgrade, uprate, or update of a facility, other than a section of line pipe,\nthat costs $10 million or more. If 60 day notice is not feasible because of an\nemergency, an operator must notify PHMSA as soon as practicable;\n(ii) Construction of 10 or more miles of a new hazardous liquid\npipeline;.…2\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.64(c)(1) by failing to notify\nPHMSA of the construction of 10 or more miles of new hazardous liquid pipeline at least 60\ndays before such event occurred. Specifically, the Notice alleged that SPLC failed to provide\nPHMSA with proper notification of SPLC’s “Amberjack Debottleneck” construction project,\nwhich consisted of more than 30 miles of pipeline in the Gulf of Mexico. According to the\nNotice, on August 12, 2015, SPLC submitted a notification for construction of 10 or more miles\nof new or replacement hazardous liquid pipeline, with an anticipated start date for construction\nactivities of September 1, 2015.3 However, based on information provided by SPLC following\nsubmittal of the notification, OPS alleged that the Amberjack Debottleneck construction project\nhad actually started construction on February 20, 2015, approximately six months before the\nnotification date. Consequently, PHMSA alleged that “the notification should have been\nsubmitted no later than December 22, 2014 in order to provide PHMSA the required 60 day\nnotice prior to construction.”\nIn its Response, SPLC admitted that it had submitted its construction notification only 19 days\nprior to its anticipated construction start date of September 1, 2015.4 However, Respondent\nchallenged the February 20, 2015 date that PHMSA stated should have been used by Shell as the\nstart of construction activities. SPLC noted that this date was “based on the dates that some of\nthe purchase orders for the pipe were issued.”5 Referring to PHMSA’s Advisory\nBulletin PHMSA-2014-0017 (Advisory Bulletin), SPLC argued that the date of purchasing pipe\ndoes not necessarily constitute a construction-related activity that would trigger a notification to\n2 The Notice mistakenly included subparagraph (iii) of § 195.64(c)(1): “Construction of a new hazardous liquid\npipeline facility.” This subparagraph was not a provision of 49 C.F.R. § 195.64(c)(1) in effect at the time SPLC\nsubmitted its notification on August 12, 2015, or when PHMSA either conducted its inspection from April to June\n2016, or issued the Notice on July 7, 2016. Since this subparagraph is not at issue in this Item, any error is harmless.\n3 Operator Registry Notification G-20150812-8307.\n4 Although SPLC stated that field construction activities were delayed and did not begin until December 17, 2015,\nthe notification submitted by SPLC on August 12, 2015, noted that the anticipated start date for field construction\nactivities was September 1, 2015. See Pipeline Safety Violation Report (Violation Report), (July 7, 2016) (on file\nwith PHMSA), at 20-23.\n5 Response, at 1. See also Violation Report, Exhibit A.\n\n\n\nCPF No. 4-2016-5023\nPage 3\nPHMSA.6 required:\nAccording to SPLC, the following language from the Advisory Bulletin confirmed\nthat the list of construction-related activities cited in the bulletin was only suggestive and not\nWhile the notification prior to the first occurring construction-related\nactivity is strongly encouraged and will benefit both PHMSA and the\noperator, these activities may not necessarily represent the commencement\nof construction for purposes of triggering the minimum 60-day notice\nperiod in the regulations subject to enforcement by PHMSA.\nAccording to Shell, the date that it purchased the pipe did not necessarily constitute the\ncommencement of construction in this case and that a “definition presented through an advisory\nbulletin should not be used in an enforcement action.”7\nShell is correct that the Advisory Bulletin is merely guidance, used by PHMSA as an opportunity\nto inform the industry and the public of the benefits of early construction notifications and to\n“strongly encourage” operators to use certain milestones, such as the purchasing and\nmanufacturing of line pipe, to alert PHMSA of a company’s construction plans. While I find\nnothing in the record of this case that would justify the conclusion that “construction” began\nwhen Shell ordered line pipe in February 2015, the company, by its own admission, did file the\n60-day notification only 19 days in advance of the company’s own reported start date of\nSeptember 1, 2015.8\nTherefore, on this basis alone, there is sufficient evidence to find that Respondent failed to\nprovide at least 60 days’ notice of the company’s own reported construction start date.\nAccordingly, after considering the evidence and the legal issues presented, I find that\nRespondent violated 49 C.F.R. § 195.64(c)(1) by failing to notify PHMSA of the construction of\n10 or more miles of new hazardous liquid pipeline at least 60 days before the event occurred.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\n6 See Advisory Bulletin, Pipeline Safety: Construction Notification, 79 FR 54777 (September 9, 2014). In that notice,\nPHMSA provided guidance to operators on the agency’s need for advance notice of certain construction-related\nactivities so that it could schedule its own inspections and reviews and so operators could avoid costly modifications\nor repairs in order to achieve compliance. The advisory notice states:\nAccordingly, PHMSA strongly encourages operators to provide the required\nconstruction-related notification(s) not later than 60 days prior to whichever of the\nfollowing events occurs first: Material purchasing and manufacturing; right-of-way\nacquisition; construction equipment move-in activities; onsite or offsite fabrications; or\nright-of-way clearing, grading and ditching” (emphasis added)\n7 Response, at 1.\n8 Id.\n\n\n\nCPF No. 4-2016-5023\nPage 4\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.9 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 $25,900 for the violation cited above.\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 notify PHMSA of the construction of 10 or more miles of hazardous\nliquid pipeline at least 60 days before such event occurred. As previously mentioned, the Notice\nalleged that SPLC failed to inform PHMSA of the Amberjack Debottleneck construction project\nat least 60 days prior to the anticipated construction start date.\nIn its Response, SPLC disputed that the alleged violation was discovered by PHMSA, as stated\nin Section E6 of the Violation Report.10 Specifically, SPLC argued that by submitting the\nnotification, it “went on record that the construction was planned to start less than 60 days from\nthe submittal.”11\nI disagree. While SPLC argued that it self-reported the violation when it went “on record” with\nits submission of an untimely notification, such a filing is not the same as self-reporting. There\nis no evidence that SPLC proactively informed PHMSA that it had failed to comply with the 60-\nday notice requirement, but, rather, the record shows that SPLC filed a routine construction\nnotice without mentioning that it constituted a violation or affirmatively bringing the violation to\nthe agency’s attention. As discussed above, PHMSA discovered Respondent’s violation of the\n60-day notice requirement during an inspection of SPLC’s construction records. Accordingly, I\nfind that a penalty reduction is not warranted because SPLC did not self-report the violation to\nPHMSA. Furthermore, I have reviewed the record and can find no evidence to suggest that Shell\ndiscovered its non-compliance and took documented action to address the cause of the violation\nbefore PHMSA learned of it. If it had, then it is possible a penalty reduction might be in order.\nIn conclusion, 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).\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n9 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum\nCivil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).\n10 Violation Report, at 7.\n11 Response, at 2.\n\n\n\nCPF No. 4-2016-5023\nPage 5\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, Mike\nMonroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.\nThe Financial Operations Division telephone 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\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 may submit a Petition for Reconsideration of this Final\nOrder to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey\nAvenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of\nChief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the\nFinal Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)\nand meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically\nstays the payment of any civil penalty assessed. The other terms of the order, including any\ncorrective action, remain in effect unless the Associate Administrator, upon request, grants a\nstay. If Respondent submits payment of the civil penalty, the Final Order becomes the final\nadministrative decision and the right to petition for reconsideration is waived. The terms and\nconditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5.\nJanuary 18, 2018\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":19672}