{"operation":"document","citation":"CPF 420165024","title":"PLAINS MARKETING, L.P. — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2016-07-11","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.64(c)(1).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165024.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165024.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420165024","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420165024","body":"Notice of Probable Violation involving PLAINS MARKETING, L.P.. PHMSA's enforcement data identifies the cited regulation as 195.64(c)(1). The case was opened on 2016-07-11 and is reported as closed as of 2018-01-03. Proposed civil penalty: $33,500. Assessed civil penalty: $22,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420165024_Final Order_11302017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165024/420165024_Final%20Order_11302017.pdf\n\n420165024_Final Order_11302017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165024/420165024_Final%20Order_11302017_text.pdf\n\n420165024_NOPV  PCP_07112016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165024/420165024_NOPV%20%20PCP_07112016.pdf\n\n420165024_NOPV  PCP_07112016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165024/420165024_NOPV%20%20PCP_07112016_text.pdf\n\n420165024_Operator Response to Notice_08112016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420165024/420165024_Operator%20Response%20to%20Notice_08112016.pdf\n\n420165024_Final Order_11302017_text.pdf\n\nNovember 30, 2017\nMr. Greg Armstrong\nChairman and CEO\nPlains All American Pipeline, LP\n333 Clay Street, Suite 1600\nHouston, Texas 77002\nRe: CPF No. 4-2016-5024\nDear Mr. Armstrong:\nEnclosed please find the Final Order issued in the above-referenced case. It makes one finding\nof violation and assesses a reduced civil penalty of $22,000. The penalty payment terms are set\nforth in the Final Order. This enforcement action closes automatically upon receipt of payment.\nService of the Final Order by certified mail is effective upon the date of mailing as provided\nunder 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: Director, Southwest Region, Office of Pipeline Safety, PHMSA\nMr. Wm. Dean Gore, Jr., Vice President – Environmental & Regulatory Compliance,\nPlains All American 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____________________________________\n)\nIn the Matter of )\n)\nPlains All American Pipeline, LP, ) CPF No. 4-2016-5024\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nOn May 16, 2016, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous\nMaterials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), inspected the\nNational Registry of Pipeline and LNG Operators notification records of Plains Marketing, LP, a\nsubsidiary of Plains All American Pipeline, LP (Plains or Respondent). Plains owns and\noperates a large network of pipelines, terminals, storage, and gathering assets in crude-oil and\nnatural-gas-liquids-producing basins, transportation corridors, and at major market hubs in the\nUnited States and Canada.1\nAs a result of the records inspection, the Director, Southwest Region, OPS (Director), issued to\nPlains Marketing, LP, by letter dated July 11, 2016, a Notice of Probable Violation and Proposed\nCivil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding\nthat the company had violated 49 C.F.R. § 195.64(c)(1)(i) and proposed assessing a civil penalty\nof $33,500 for the alleged violation.\nPlains responded to the Notice on behalf of Plains Marketing, LP, by letter dated August 11,\n2016 (Response), and sent a supplemental response by letter dated November 29, 2016\n(Supplemental Response) (collectively, Responses). Plains contested the allegation of violation\nand requested that the Notice be withdrawn and replaced with a warning letter. Respondent did\nnot request a hearing and therefore has waived its right to one.\nFINDING OF VIOLATION\nThe Notice alleged that Respondent violated 49 C.F.R. Part 195 as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.64(c)(1)(i), which states:\n1 Plains website, available at https://www.plainsallamerican.com/ (last accessed September 19, 2017).\n\n\n\nCPF No. 4-2016-5024\nPage 2\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 not\nlater 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; . . . .\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.64(c)(1)(i) by failing to notify\nPHMSA of the construction of a pipeline facility costing $10 million or more not later than 60\ndays before such event occurred. Specifically, the Notice alleged that Plains failed to inform\nPHMSA of the proposed construction of 10 breakout tanks3 in Oklahoma at least 60 days in\nadvance of the anticipated construction start dates.4 Instead, the Notice alleged that Plains\nsubmitted three late construction notifications for the breakout tanks.\nIn its Responses, Plains provided additional information on the actual construction start dates for\neach breakout tank covered by the three notifications. For the five tanks covered by Notification\nNo. F-20141028-6202, filed on October 28, 2014, Plains acknowledged that the anticipated\nconstruction start date of November 25, 2014, was less than 60 days from the notification date\nfor all of the tanks. However, it argued that for three of the tanks, the actual construction start\ndates were more than 60 days. For the three tanks covered by Notification No. F-20151211-\n9202, filed on December 11, 2015, Plains acknowledged that the anticipated construction start\ndate was July 1, 2015, roughly five months before the notification date and that the actual start\ndates were roughly four months before the notification date. For the four tanks covered by\nNotification No. F-20160428-11144, filed on April 28, 2016, Plains acknowledged that the\nanticipated construction start date of June 1, 2016, was less than 60 days from the notification\ndate for all four tanks but contended that it was more than 60 days prior to the actual construction\nstart dates.\nThe three notifications are summarized below:\n2 49 C.F.R. § 195.64 was amended after issuance of the Notice. Amdt. 195-101, 82 FR 7972 (January 23, 2017).\n3 The NOPV mistakenly totaled the number of breakout tanks at 10 instead of 12.\n4 PHMSA has provided guidance to operators on what constitutes examples of “construction” activities for purposes\nof this notification requirement, including whichever occurs first of the following: material purchasing and\nmanufacturing, right-of-way acquisition, construction equipment move-in activities, onsite or offsite fabrications, or\nright-of-way clearing, grading and ditching. Advisory Bulletin ADB-2014-03 (September 9, 2014).\n\n\n\nCPF No. 4-2016-5024\nPage 3\nNotification No.\nPHMSA\nAnticipated\nActual\nNotification Date Construction Start\nConstruction Start Date\nDate\nreported by Respondent\nF-20141028-6202\nOctober 28, 2014\nNovember 25, 2014\nTank 1720: December 13, 2014*\nTank 1820: December 18, 2014*\nTank 1840: January 17, 2015\nTank 1830: January 24, 2015\nTank 1730: March 1, 2015\nF-20151211-9202\nDecember 11,\n2015\nJuly 1, 2015\nTank 1740: August 3, 2015*\nTank 1750: August 11, 2015*\nTank 1850: August 25, 2015*\nF-20160428-11144\nApril 28, 2016\nJune 1, 2016\nTank 7200: August 3, 2016\nTank 7300: July 19, 2016\nTank 3950: August 19, 2016\nTank 4350: September 14, 2016\n* Indicates tanks whose actual construction Plains admits was started before the expiration of the minimum 60-day\nnotification period.\nPlains explained that generally \"the forecasting and contracting underlying these construction\nprojects include sufficient time to provide timely notifications to PHMSA,\" and that Plains had\nmaintained a good track record of providing timely notifications. In the case of Notification No.\nF-20141028-6202, however, the company's construction schedule resulted in a shorter\nnotification period for two of the tanks, while the other three did not begin actual construction\nuntil after the 60-day period has expired. Therefore, the company admitted that it had begun\nactual construction of two of the tanks less than 60 days from the notification date, thereby\nviolating § 195.64(c)(1).\nIn the case of Notification No. F-20151211-9202, Plains acknowledged that actual construction\nbegan on all three tanks even before the December 11, 2015 notification date. However, Plains\nargued that it had attempted to provide timely notice by supplementing an earlier notification\n(October 28, 2014), in which these tanks had been mistakenly omitted. According to Plains,\nPHMSA had, in previous instances, allowed \"back-dated\" supplemental notifications or\ncorrected notifications to be filed after the 60-day period had expired.? Therefore, Plains argued\nthat \"when it was discovered in November 2015 that eight tanks, instead of five, were under\nconstruction, Plains attempted to revise the original registration.\" At this point, a PHMSA\nemployee allegedly informed Plains that PHMSA had made changes to its online Registry\nSystem that \"prevented post-dated changes to existing Registry entries.\" The company argued\nthat \"[hjad Plains been able to modify the October 28, 2014 notification to add these three tanks\nrequirement.\"\n(as had been allowed in the past), it would not have violated the 60-day notification\n5 Response at 2.\n6 Id.\n7 Response, Attachment.\n8 Response at 2.\n\n\n\nCPF No. 4-2016-5024\nPage 4\nFinally, in the case of Notification No. F-20160428-11144, Plains acknowledged that it “provided\nonly 34 days’ advance notice to PHMSA” before the anticipated construction start date but\nasserted that the notice was made more than 60 days before the actual construction start dates.\nThe company argued, in summary, that given Plains’ history of filing timely notifications in the\npast, that the actual construction start dates for all but two of the tanks in question were well after\nthe 60-day notification period, and that the late notifications had only a “limited affect [sic]” on\nthe PHMSA inspector’s schedule, the allegation of violation should be dismissed, along with the\nfines, and replaced with a warning letter.9\nI disagree. The purpose of § 195.64(c)(1)(i) is to ensure that operators provide PHMSA with\nadequate “lead time” to enable the agency to set its own schedule for construction inspections\ninvolving many different operators. This scheduling is difficult, if not impossible, if\n“construction” under the regulation were deemed to begin only when actual construction begins,\nsince that is often a “moving target” due to fluctuating construction conditions and unexpected\ndelays on account of weather, suppliers, and other circumstances beyond an operator’s control.\nMoreover, it is a date that can only be confirmed in retrospect, after construction has already\nbegun. To use such a date would defeat the purpose of the regulation, which is to ensure that\nPHMSA receives adequate advance notice of new pipeline construction. Finally, the anticipated\nconstruction start date is one that the operator itself has used internally to plan and schedule a\ndate to begin construction.\nTherefore, I find in this case that “construction” began at a point no later than the anticipated or\nscheduled construction start date set by Plains. This means that all three notifications violated\n§ 195.64(c)(1)(i) because they provided less than 60 days’ advance notice of the operator’s own\nanticipated construction start dates.\nHowever, as for Notification No. F-20151211-9202, Plains has presented credible evidence in\nthe form of email correspondence between Plains and PHMSA suggesting that PHMSA\nrepresentatives had previously allowed the “back-dating” of supplemental construction\nnotifications. In its Recommendation, the Region failed to provide any evidence refuting\nRespondent’s claim and documentary evidence. Under such circumstances, I find that Plains’\nviolation of the regulation was mitigated by its reasonable, but incorrect, interpretation of §\n195.64(c)(1)(i) and that such mitigating circumstances warrant a penalty reduction, which is\ndiscussed more fully in the “Assessment of Penalty” section below.\nAccordingly, based upon a review of all of the evidence, I find that Respondent violated\n§ 195.64(c)(1)(i) by failing to notify PHMSA of the construction of a pipeline facility costing\n$10 million or more not later than 60 days before such event occurred.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\n9 Response at 3.\n\n\n\nCPF No. 4-2016-5024\nPage 5\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.10 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 $33,500 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $33,500 for Respondent’s violation of 49 C.F.R.\n§ 195.64(c)(1), for failing to timely notify PHMSA of the construction of its breakout tanks in\nOklahoma. For the reasons discussed above, I found that Plains failed to provide timely\nnotifications for the tanks covered by the three notifications. Further, I find that the penalty\nassessment criterion for “culpability” in Part E of the Violation Report should be reduced to\nreflect the fact that Plains did take action to comply with the notification requirement but did not\nachieve compliance. I also find that Plains should receive a “good-faith” credit because it\npresented unrefuted evidence that it had a credible justification for relying on the representations\nof PHMSA regarding the “back-dating” of supplemental notifications. At the same time, I would\nnote that although pipeline safety or integrity was minimally affected, Plains had had a total of\nseven prior offenses of the pipeline safety regulations within the previous five years, which\nrecord serves to increase the amount of the proposed penalty. Based upon the foregoing, I assess\nRespondent a reduced civil penalty of $22,000 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. 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, 6500 S\nMacArthur Blvd., Oklahoma City, Oklahoma 79169. The Financial Operations Division\ntelephone number is (405) 954-8845.\nFailure to pay the $22,000 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\n10 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).\n\n\n\nCPF No. 4-2016-5024\nPage 6\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.\nThe terms and conditions of this Final Order are effective upon service in accordance with\n49 C.F.R. § 190.5.\nNovember 30, 2017\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":17732}