{"operation":"document","citation":"CPF 420177001","title":"ENERGY XXI USA, INC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2017-05-16","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.402(a), 195.402(c)(13), 195.440(c), 195.505(b).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420177001.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420177001.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420177001","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420177001","body":"Notice of Probable Violation involving ENERGY XXI USA, INC. PHMSA's enforcement data identifies the cited regulations as 195.402(a),  195.402(c)(13),  195.440(c),  195.505(b). The case was opened on 2017-05-16 and is reported as closed as of 2018-06-15. Proposed civil penalty: $37,100. Assessed civil penalty: $37,100. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420177001_Final Order_06152018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420177001/420177001_Final%20Order_06152018.pdf\n\n420177001_Final Order_06152018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420177001/420177001_Final%20Order_06152018_text.pdf\n\n420177001_NOPV PCP_05162017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420177001/420177001_NOPV%20PCP_05162017.pdf\n\n420177001_NOPV PCP_05162017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420177001/420177001_NOPV%20PCP_05162017_text.pdf\n\n420177001_Operator Response to Notice_06092017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420177001/420177001_Operator%20Response%20to%20Notice_06092017.pdf\n\n420177001_Final Order_06152018_text.pdf\n\nJune 15, 2018\nMr. Douglas E. Brooks\nPresident and CEO\nEnergy XXI Gulf Coast, Inc.\n1021 Main Street, Suite 2626\nHouston, TX 77002\nRe: CPF No. 4-2017-7001\nDear Mr. Brooks:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation and assesses a civil penalty of $37,100. This is to acknowledge receipt of payment of\nthe full penalty amount, by wire transfer, dated June 13, 2017. This enforcement action is now\nclosed. Service of the Final Order by certified mail is effective upon the date of mailing as\nprovided 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: Ms. Mary McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA\nMr. Keith Acker, Energy XXI USA, Inc., 1021 Main Street, Suite 2626,\nHouston, TX 77002\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 )\nEnergy XXI USA, Inc., ) CPF No. 4-2017-7001\n)\n)\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom February 23 through April 14, 2016, pursuant to 49 U.S.C. § 60117, representatives 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 Energy\nXXI USA, Inc. (EXXI or Respondent), in the West Delta, Grand Isle, Grand Isle - South\nAddition, West Delta - South Addition, South Pass - South and East Addition, and Mississippi\nCanyon Areas in the Gulf of Mexico and Grand Isle, Louisiana. EXXI is a predecessor-in-\ninterest of Energy XXI Gulf Coast, Inc. (EGC), a situation resulting from Chapter 11 bankruptcy\npetitions filed by EXXI and other predecessors-in-interest of EGC.1 EGC is an oil and natural\ngas development and production company with assets located in the U.S. waters of the Gulf of\nMexico and onshore in Louisiana and Texas.2\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated May 16, 2017, a Notice of Probable Violation and Proposed Civil\nPenalty (Notice), which also included a warning pursuant to 49 C.F.R. § 190.205. In accordance\nwith 49 C.F.R. § 190.207, the Notice proposed finding that EXXI had committed three violations\nof 49 C.F.R. Part 195 and proposed assessing a civil penalty of $37,100 for the alleged\nviolations. The warning item required no further action, but warned the operator to correct the\nprobable violations or face possible future enforcement action.\nEXXI responded to the Notice by letter dated June 9, 2017 (Response). The company did not\ncontest the allegations of violation and paid the proposed civil penalty of $37,100. In accordance\nwith 49 C.F.R. § 190.208(a)(1), such payment authorizes the Associate Administrator to make\nfindings of violation and to issue this final order without further proceedings.\n1 Energy XXI Gulf Coast, Inc., Form 10-KT Transition Report filed February 22, 2017, available at\nhttps://ir.energyxxi.com/annual-reports/content/0001144204-17-010398/0001144204-17-010398.pdf.\n2 Energy XXI Gulf Coast, Inc.’s website, available at https://www.energyxxi.com/about (last accessed March 23,\n2018).\n\n\n\nCPF No. 4-2017-7001\nPage 2\nFINDINGS OF VIOLATION\nIn its Response, EXXI did not contest the allegations in the Notice that it violated 49 C.F.R. Part\n195, as follows:\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.440(c), which states:\n§ 195.440 Public awareness.\n(a) . . . .\n(c) The operator must follow the general program recommendations,\nincluding baseline and supplemental requirements of [American Petroleum\nInstitute Recommended Practice (API RP)] 1162, unless the operator\nprovides justification in its program or procedural manual as to why\ncompliance with all or certain provisions of the recommended practice is\nnot practicable and not necessary for safety.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.440(c) by failing to follow the\ngeneral program recommendations, including baseline and supplemental requirements of API RP\n1162, unless the operator provides justification in its program or procedural manual as to why\ncompliance with all or certain provisions of the recommended practice is not practicable and not\nnecessary for safety. Specifically, the Notice alleged that EXXI failed to perform a review of its\nPublic Awareness Plan (PAP) to measure effectiveness at the intervals required by API RP 1162\nand the PAP. The Notice alleged that EXXI failed to conduct reviews of its PAP to measure\neffectiveness, no more than four years apart, as required by Sections 8.4 and 8.5 of API RP 1162\nand by Section 13 of EXXI’s PAP. EXXI’s PAP was reviewed and updated on November 24,\n2011. EXXI’s Review and Revision Log (RRL), Version 1, noted that a subsequent review of\nthe PAP was due by April 1, 2015. However, Version 3 of the RRL, dated August 2014,\nchanged the due date of the subsequent PAP review to November 1, 2017, nearly six years after\nthe initial review of the PAP. Respondent did not provide any explanation for the change in due\ndate. EXXI did not complete a subsequent review of its PAP until March 3, 2016.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.440(c) by failing to follow the\ngeneral program recommendations, including baseline and supplemental requirements of API RP\n1162, unless the operator provides justification in its program or procedural manual as to why\ncompliance with all or certain provisions of the recommended practice is not practicable and not\nnecessary for safety.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(b), which states:\n§ 195.505 Qualification program.\nEach operator shall have and follow a written qualification program.\nThe program shall include provisions to:\n(a) . . . .\n(b) Ensure through evaluation that individuals performing covered tasks\nare qualified[.]\n\n\n\nCPF No. 4-2017-7001\nPage 3\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.505(b) by failing to ensure that\nindividuals performing covered tasks were qualified. Specifically, the Notice alleged that EXXI\nconducted an internal inspection of Tank 2052 on February 17, 2012, pursuant to API Standard\n653. EXXI only provided PHMSA with a copy of the sign-in/out log for the inspection.\nRespondent did not provide any documentation to demonstrate that contractors performing the\ninspection and maintenance of Tank 2052 were qualified individuals, the dates of current\nqualification, identification of the covered tasks performed, or qualification methods used.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.505(b) by failing to ensure that\nindividuals performing covered tasks were qualified.\nThese findings of violation will be considered prior offenses 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\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I\nmust consider the following criteria: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent’s culpability; the history\nof Respondent’s prior offenses; and any effect that the penalty may have on its ability to continue\ndoing business; and the good faith of Respondent in attempting to comply with the pipeline\nsafety regulations. In addition, I may consider the economic benefit gained from the violation\nwithout any reduction because of subsequent damages, and such other matters as justice may\nrequire. The Notice proposed a total civil penalty of $37,100 for the violations cited above.\nItem 2: The Notice proposed a civil penalty of $11,200 for Respondent’s violation of 49 C.F.R.\n§ 195.440(c), for failing to follow the general program recommendations, including baseline and\nsupplemental requirements of API RP 1162, unless the operator provides justification in its\nprogram or procedural manual as to why compliance with all or certain provisions of the\nrecommended practice is not practicable and not necessary for safety. EXXI neither contested\nthe allegation nor presented any evidence or argument justifying a reduction in the proposed\npenalty. Accordingly, having reviewed the record and considered the assessment criteria, I\nassess Respondent a civil penalty of $11,200 for violation of 49 C.F.R. § 195.440(c).\nItem 3: The Notice proposed a civil penalty of $25,900 for Respondent’s violation of 49 C.F.R.\n§ 195.505(b), for failing to ensure that individuals performing covered tasks were qualified.\nEXXI neither contested the allegation nor presented any evidence or argument justifying a\nreduction in the proposed penalty. Accordingly, having reviewed the record and considered the\n3 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. 4-2017-7001\nPage 4\nassessment criteria, I assess Respondent a civil penalty of $25,900 for violation of 49 C.F.R.\n§ 195.505(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 $37,100. Respondent paid the\ntotal civil penalty amount of $37,100 by wire transfer on June 13, 2017.\nWARNING ITEM\nWith respect to Item 1, the Notice alleged a probable violation of Part 195 but did not propose a\ncivil penalty or compliance order for this item. Therefore, this is considered to be a warning\nitem. The warning was for:\n49 C.F.R. § 195.402(a) (Item 1) ─ Respondent’s alleged failure to follow\nprocedures requiring EXXI to periodically review the work done by operator\npersonnel to determine the effectiveness of the procedures.\nIf OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject\nto future enforcement action.\nThe terms and conditions of this Final Order are effective upon service in accordance with\n49 C.F.R. § 190.5.\nJune 15, 2018\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":11949}