{"operation":"document","citation":"CPF 420175003","title":"PHILLIPS 66 PIPELINE LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2017-02-13","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.432(b).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420175003.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420175003.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420175003","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420175003","body":"Notice of Probable Violation involving PHILLIPS 66 PIPELINE LLC. PHMSA's enforcement data identifies the cited regulation as 195.432(b). The case was opened on 2017-02-13 and is reported as closed as of 2018-05-14. Proposed civil penalty: $62,200. Assessed civil penalty: $62,200. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420175003_Closure Letter_05142018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420175003/420175003_Closure%20Letter_05142018.pdf\n\n420175003_Closure Letter_05142018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420175003/420175003_Closure%20Letter_05142018_text.pdf\n\n420175003_Final Order_02132018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420175003/420175003_Final%20Order_02132018.pdf\n\n420175003_Final Order_02132018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420175003/420175003_Final%20Order_02132018_text.pdf\n\n420175003_NOPV PCP PCO_02132017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420175003/420175003_NOPV%20PCP%20PCO_02132017.pdf\n\n420175003_NOPV PCP PCO_02132017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420175003/420175003_NOPV%20PCP%20PCO_02132017_text.pdf\n\n420175003_Operator Response to Notice and Request for Hearing_03172017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420175003/420175003_Operator%20Response%20to%20Notice%20and%20Request%20for%20Hearing_03172017.pdf\n\n420175003_NOPV PCP PCO_02132017_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nFebruary 13, 2017\nMr. Todd Denton\nPresident\nPhillips 66 Pipeline, LLC\n1075 West Sam Houston Pkwy N\nSuite 200, N82005\nHouston, Texas 77043\nCPF 4-2017-5003\nDear Mr. Denton:\nOn October 31, 2016 through November 2, 2016, representatives of the Pipeline and Hazardous\nMaterials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter\n601 of 49 United States Code inspected your Beaumont Terminal facility in Nederland, Texas.\nAs a result of the inspection, it is alleged that you have committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations. The item inspected and the\nprobable violation is:\n\n\n\n1. § 195.432 Inspection of in-service breakout tanks\n(b) Each operator must inspect the physical integrity of in-service atmospheric and\nlow-pressure steel above-ground breakout tanks according to API Std. 653 (except\nsection 6.4.3, Alternative Internal Inspection Interval) (incorporated by reference,\nsee §195.3). However, if structural conditions prevent access to the tank bottom, its\nintegrity may be assessed according to a plan included in the operations and\nmaintenance manual under §195.402(c)(3). The risk-based internal inspection\nprocedures in API Std. 653, section 6.4.3 cannot be used to determine the internal\ninspection interval.\nOn three occasions Phillips 66 failed to conduct internal inspections of their in-service breakout\ntanks at their required inspection dates in accordance with requirements of API Standard 653\nsection 6.4. Three tanks (designated by Phillips 66 as 122, 126 and 129) had properly established\nthe following deadlines for internal inspection under section 6.4.2:\nTank 122: October 10, 2011\nTank 126: January 3, 2013\nTank 129: April 7, 2012\nAt the time of the inspection the required inspections had not been completed.\nTank 122 was constructed in 1975 with the most recent internal inspection conducted September\n11-16, 2001. Due to the installation of new lining, the previous operator established a re-inspection\ndate of October 10, 2011 under API Standard 653 section 6.4.2.2. Tank 122 had not been re-\ninspected to this interval when the previous operator completed a Risk Based Inspection on August\n31, 2013 to re-establish the interval under API Standard 653 Section 6.4.3. This analysis was\ncompleted 692 days after the internal inspection was due.\nTank 126 was constructed in 1979 with the most recent internal inspection report conducted\nJanuary 3, 2003. Due to the unknown effectiveness of cathodic protection, the previous operator\nestablished a re-inspection date of January 3, 2013 under API Standard 653 Section 6.4.2.2. Tank\n126 had not been re-inspected to this interval when the previous operator completed a Risk Based\nInspection on August 31, 2013 to re-establish the interval under API Standard 652 Section 6.4.3.\nThis analysis was completed 241 days after the internal inspection was due.\nTank 129 was constructed in 2002 and the previous operator set the first internal inspection date\nto April 7, 2012. On June 20, 2006 a tank bottom scan was completed, and inspection date was\nextended to June 20, 2016 based on results. Upon purchasing the asset, Phillips 66 personnel\nevaluated the interval and determined the inspection date to be April 7, 2012.\n2\n\n\n\nPhillips 66 provided most recent internal inspection reports and documentation setting the re-\ninspection deadlines to the dates listed above.\nDuring the inspection, operator personnel provided a timeline stating planned inspection dates in\nlate 2016 (Tanks 122 and 129), and 2017 (Tank 126).\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, the\nmaximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to\nexceed $1,000,000 for related series of violations. The Compliance Officer has reviewed the\ncircumstances and supporting documentation involved in the above probable violation(s) and has\nrecommended that you be preliminarily assessed a civil penalty of $62,200.\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 Phillips 66 Pipeline\nLLC. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this\nNotice.\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in\nCompliance 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 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 the\ndocument with the portions you believe qualify for confidential treatment redacted and an\nexplanation of why you believe the redacted information qualifies for confidential treatment under\n5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a\nwaiver of your right to contest the allegations in this Notice and authorizes the Associate\nAdministrator for Pipeline Safety to find facts as alleged in this Notice without further notice to\nyou and to issue a Final Order.\n3\n\n\n\nIn your correspondence on this matter, please refer to CPF 4-2017-5003 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\n4\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 Phillips 66 Pipeline LLC (Phillips 66) a Compliance\nOrder incorporating the following remedial requirements to ensure the compliance of Phillips 66\nwith the pipeline safety regulations:\n1. 2. 3. In regard to Item Number 1 of the Notice pertaining to Phillips 66 failure to\ncomplete internal inspections for Tanks 122, 126 and 129, Phillips 66 must perform\ninspections in accordance with API Standard 653 Section 6.4 and provide\ndocumentation to indicate that Tanks 122, 126 and 129 have been inspected.\nProvide PHMSA with documentation that verifies completion of number 1 within\n90 days following the receipt of the final order.\nIt is requested (not mandated) that Phillips 66 maintain documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit the\ntotal to R.M. Seeley, Director, Southwest Region, Pipeline and Hazardous\nMaterials Safety Administration. It is requested that these costs be reported in two\ncategories: 1) total cost associated with preparation/revision of plans, procedures,\nstudies and analyses, and 2) total cost associated with replacements, additions and\nother changes to pipeline infrastructure.\n5\n\n420175003_Final Order_02132018_text.pdf\n\nFebruary 13, 2018\nMr. Todd Denton\nPresident\nPhillips 66 Pipeline, LLC\n1075 West Sam Houston Parkway N\nSuite 200, N82005\nHouston, TX 77043\nRe: CPF No. 4-2017-5003\nDear Mr. Denton:\nEnclosed please find the Final Order issued in the above-referenced case. It makes one finding\nof violation, assesses a civil penalty of $62,200, and specifies actions that need to be taken by\nPhillips 66 Pipeline, LLC to comply with the pipeline safety regulations. The penalty payment\nterms are set forth in the Final Order. When the civil penalty has been paid and the terms of the\ncompliance order completed, as determined by the Director, Southwest Region, this enforcement\naction will be closed. Service of the Final Order by certified mail is effective upon the date of\nmailing 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: Acting Director, Southwest Region, Office of Pipeline Safety, PHMSA\nMr. Van P. Williams, Senior Counsel, Phillips 66 Pipeline, LLC\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 )\nPhillips 66 Pipeline, LLC, ) CPF No. 4-2017-5003\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nOn October 31, 2016, pursuant to 49 U.S.C. § 60117, representatives 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 Phillips 66\nPipeline, LLC (Phillips 66 or Respondent), in Nederland, Texas. Phillips 66 is the owner and\noperator of petroleum products, crude oil, and natural gas pipeline systems across the United\nStates.1\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated February 13, 2017, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the\nNotice proposed finding that Phillips 66 violated 49 C.F.R. § 195.432(b), and proposed assessing\na civil penalty of $62,200 for the alleged violation. The Notice also proposed ordering\nRespondent to take certain measures to correct the alleged violation.\nPhillips 66 responded to the Notice by letter dated March 16, 2017 (Response). The company\ncontested the allegation and requested a hearing, which was subsequently held on August 23,\n2017, in Houston, Texas, before a Presiding Official from the Office of Chief Counsel. At the\nhearing, Respondent was represented by counsel.\nFINDING OF VIOLATION\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.432(b), which states:\n§ 195.432 Inspection of in-service breakout tanks.\n(a) . . .\n(b) Each operator must inspect the physical integrity of in-service\n1 http://www.phillips66midstream.com/EN/Pages/pipelines.aspx (accessed November 21, 2017).\n\n\n\nCPF No. 4-2017-5003\nPage 2\natmospheric and low-pressure steel above-ground breakout tanks\naccording to API Std 653 (except section 6.4.3, Alternative Internal\nInspection Interval) (incorporated by reference, see § 195.3). However, if\nstructural conditions prevent access to the tank bottom, its integrity may\nbe assessed according to a plan included in the operations and\nmaintenance manual under § 195.402(c)(3). The risk-based internal\ninspection procedures in API Std 653, section 6.4.3 cannot be used to\ndetermine the internal inspection interval.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.432(b), by failing to inspect the\nphysical integrity of in-service atmospheric and low-pressure steel above-ground breakout tanks\naccording to API Std 653 (except section 6.4.3, Alternative Internal Inspection Interval)\n(incorporated by reference, see § 195.3). Specifically, the Notice alleged that Phillips 66 failed\nto conduct an inspection of Tanks 122, 126, and 129 by their required inspection date in\naccordance with API Standard 653 section 6.4.\nAt the hearing, Respondent did not contest this allegation of violation, and voluntarily agreed to\nan inspection schedule with the Region. Accordingly, based upon a review of all of the\nevidence, I find that Respondent violated 49 C.F.R. § 195.432(b) by failing to inspect the\nphysical integrity of in-service atmospheric and low-pressure steel above-ground breakout tanks\naccording to API Std 653 (except section 6.4.3, Alternative Internal Inspection Interval)\n(incorporated by reference, see § 195.3).\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.2 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 $62,200 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $62,200 for Respondent’s violation of 49 C.F.R.\n§ 195.432(b), for failing to inspect the physical integrity of in-service atmospheric and low-\n2 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. 4-2017-5003\nPage 3\npressure steel above-ground breakout tanks according to API Std 653. At the hearing, Phillips\n66 did not contest the allegation or present any evidence or argument justifying a reduction in the\nproposed penalty. Accordingly, having reviewed the record and considered the assessment\ncriteria, I assess Respondent a civil penalty of $62,200 for violation of 49 C.F.R. § 195.432(b).\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a total civil penalty of $62,200.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Item 1 in the Notice for violation of\n49 C.F.R. § 195.432(b). Under 49 U.S.C. § 60118(a), each person who engages in the\ntransportation of hazardous liquids or who owns or operates a pipeline facility is required to\ncomply with the applicable safety standards established under chapter 601. Pursuant to the\nauthority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the\nfollowing actions to ensure compliance with the pipeline safety regulations applicable to its\noperations:\n1. 2. 3. 4. 5. With respect to the violation of § 195.432(b) (Item 1), Respondent must remove\nTank 126, the remaining tank in service, from service within 15 days following\nreceipt of the Final Order. Phillips 66 must provide PHMSA with documentation that\nverifies completion of this item within 15 days following receipt of the Final Order.\nPhillips 66 must provide PHMSA with a written plan outlining the timing for\ncompleting the internal inspection for Tank 126 in accordance with API 653, within\n15 days following receipt of the Final Order. Following submission of this written\nplan, Phillips 66 must provide monthly status reports to PHMSA documenting the\ncompany’s progress in completing the internal inspection for Tank 126 in accordance\nwith their written plan.\nPhillips 66 must provide PHMSA with preliminary and final inspection reports\nregarding the internal inspections of Tanks 122, 126, and 129 within 10 days that\nPhillips 66 receives and/or completes the reports.\nAll documentation pertaining to the above compliance items should be sent to the\nDirector of the Southwest Region, Pipeline and Hazardous Materials Safety\nAdministration.\nIt is requested (not mandated) that Phillips 66 maintain documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit the\ntotal to the Director, Southwest Region, Pipeline and Hazardous Materials Safety\nAdministration. It is requested that these costs be reported in two categories: 1) total\ncost associated with preparation/revision of plans, procedures, studies and analyses:\nand 2) total cost associated with replacements, additions and other changes to\npipeline infrastructure.\n\n\n\nCPF No. 4-2017-5003\nPage 4\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nFailure to comply with this Order may result in the administrative assessment of civil penalties\nnot to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), for each violation for\neach day the violation continues or in referral to the Attorney General for appropriate relief in a\ndistrict court 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 this\nFinal Order by Respondent. Any petition submitted must contain a statement of the issue(s) and\nmeet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays\nthe payment of any civil penalty assessed. The other terms of the order, including corrective\naction, remain in effect unless the Associate Administrator, upon request, grants a stay. The\nterms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R.\n§ 190.5.\nFebruary 13, 2018\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n420175003_Closure Letter_05142018_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nMay 14, 2018\nMr. Todd Denton\nPresident\nPhillips 66 Pipeline LLC\n1075 W Sam Houston Pkwy\nN. Suite 200 N812-03\nHouston, TX 77043\nCPF 4-2017-5003\nDear Mr. Denton:\nOn February 13, 2018, the Pipeline and Hazardous Materials Safety Administration (PHMSA)\nissued to Phillips 66 Pipeline LLC a Final Order in the above-referenced case. This Order included\na Compliance Order and Civil Penalty assessment. Based on our review of the documentation you\nprovided and confirmation of payment of the civil penalty, it has been determined that you have\ncomplied with the terms of this Order.\nAccordingly, this case is now closed and no further action is contemplated with respect to the\nmatters involved in this case. Thank you for your cooperation in this matter.\nSincerely,\nMary L. McDaniel, P.E.\nDirector, Southwest Region\nOffice of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration","truncated":false,"body_characters":20669}