{"operation":"document","citation":"CPF 420185023","title":"TARGA NGL PIPE LINE CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2018-11-14","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.446(c)(4), 195.452(g), 195.452(j)(2), 195.452(k).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420185023.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420185023.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420185023","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420185023","body":"Notice of Probable Violation involving TARGA NGL PIPE LINE CO. PHMSA's enforcement data identifies the cited regulations as 195.446(c)(4),  195.452(g),  195.452(j)(2),  195.452(k). The case was opened on 2018-11-14 and is reported as closed as of 2021-12-07. Proposed civil penalty: $146,100. Assessed civil penalty: $146,100. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420185023_Closure Letter_12072021_(16-153611S).pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_Closure%20Letter_12072021_(16-153611S).pdf\n\n420185023_Closure Letter_12072021_(16-153611S)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_Closure%20Letter_12072021_(16-153611S)_text.pdf\n\n420185023_Final Order_09112020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_Final%20Order_09112020.pdf\n\n420185023_Final Order_09112020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_Final%20Order_09112020_text.pdf\n\n420185023_NOPV PCP PCO_11142018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_NOPV%20PCP%20PCO_11142018.pdf\n\n420185023_NOPV PCP PCO_11142018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_NOPV%20PCP%20PCO_11142018_text.pdf\n\n420185023_Operator Request for Hearing and Statement of Issues_01312019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_Operator%20Request%20for%20Hearing%20and%20Statement%20of%20Issues_01312019.pdf\n\n420185023_Operator Response to Notice and Request for Hearing_01312019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420185023/420185023_Operator%20Response%20to%20Notice%20and%20Request%20for%20Hearing_01312019.pdf\n\n420185023_Final Order_09112020_text.pdf\n\nSeptember 11, 2020\nVIA ELECTRONIC MAIL TO: bgrantham@targaresources.com\nMr. Bill Grantham\nVice President - Operations\nTarga NGL Pipeline Company, LLC\n811 Louisiana, Suite 2100\nHouston, Texas 77002\nRe: CPF No. 4-2018-5023\nDear Mr. Grantham:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a civil penalty of $146,100, and specifies actions that need to be taken by\nTarga NGL Pipeline Company, LLC, to comply with the pipeline safety regulations. The\npenalty payment terms are set forth in the Final Order. When the civil penalty has been paid and\nthe terms of the compliance order completed, as determined by the Director, Southwest Region,\nthis enforcement action will be closed. Service of the Final Order by electronic mail is effective\nupon the date of transmission 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: Ms. Mary L. McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA\nMr. Matthew J. Meloy, Chief Executive Officer, Targa Resources Operating, LLC,\nmmeloy@targaresources.com\nMr. Gregg Johnson, Director of Pipeline Compliance, Targa Resources Corporation,\ngjohnson@targaresources.com\nMs. Julie Pabon, Senior Counsel, Targa Resources Corporation, jpabon@targaresources.com\nCONFIRMATION OF 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 )\nTarga NGL Pipeline Company, LLC, ) CPF No. 4-2018-5023\na subsidiary of Targa Resources Corporation, )\n)\n)\n)\nRespondent. )\n__________________________________________)\nFINAL ORDER\nFrom June 13 through June 30, 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 Targa NGL Pipeline Company, LLC’s\n(Targa or Respondent) facilities and records pertaining to the company’s Product Pipeline\nSystem, which includes a 12-inch natural gas liquids (NGL) pipeline running from Sulphur,\nLouisiana, to Mont Belvieu, Texas, and a control room located in Hackberry, Louisiana.1 Targa\nis a subsidiary of Targa Resources Corporation,2 which provides integrated midstream services\nin North America.3\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated November 14, 2018, 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 Targa had committed four violations of 49 C.F.R. Part 195 and\nproposed assessing a civil penalty of $146,100 for the alleged violations. The Notice also\nproposed ordering Respondent to take certain measures to correct the alleged violations.\nAfter requesting and receiving an extension of time, Targa responded to the Notice by letter\ndated January 31, 2019 (Response). Targa contested all of the allegations and requested a\nhearing. Targa also requested an informal meeting with Southwest Region staff to resolve the\nNotice. On April 3, 2019, Targa met with Southwest Region at Southwest Region’s Office in\n1 See Pipeline Safety Violation Report (Violation Report), (November 14, 2018) (on file with PHMSA), at 1.\n2 Targa Resources Corporation, 10-K, 2019 Annual Report, filed February 20, 2020, available at\nhttps://www.targaresources.com/sec-filings/sec-filing/10-k/0001564590-20-005598 (last accessed on September 2,\n2020).\n3 Targa Resources Corporation website, available at https://www.targaresources.com/about-us/overview (last\naccessed on September 2, 2020).\n\n\n\nCPF No. 4-2018-5023\nPage 2\nHouston, Texas, and as a result of these discussions, Targa withdrew its request for a hearing and\nsubmitted a written response dated April 30, 2019.4 Accordingly, pursuant to 49 C.F.R.\n§ 190.208, the submission of a written response authorizes the Associate Administrator to issue\nthis Final Order without further proceedings.\nFINDINGS 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. § 195.446(c)(4), which states:\n§ 195.446 Control room management.\n(a) . . .\n(c) Provide adequate information. Each operator must provide its\ncontrollers with the information, tools, processes and procedures necessary\nfor the controllers to carry out the roles and responsibilities the operator has\ndefined by performing each of the following:\n(1) . . .\n(4) Test any backup SCADA systems at least once each calendar year,\nbut at intervals not to exceed 15 months; and . . .\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.446(c)(4) by failing to test its\nbackup Supervisory Control and Data Acquisition (SCADA) system in 2013, 2014, or 2015.\nSpecifically, the Notice alleged that Targa had not performed the required test on its backup\nSCADA system since the regulation first came into effect on August 1, 2012 (74 FR 63329).\nDuring their inspection, OPS inspectors requested copies of any documentation demonstrating\nthat the tests had been performed on the backup SCADA system. Targa was unable to provide\nany documentation indicating that it had performed such testing.\nIn its Response, Targa contested the alleged violation and requested that it be withdrawn. Targa\nargued that it does not have a “backup SCADA system” and claimed that the at-issue server is\nactually a “replacement server” located in the Hackberry Control Center, and does not meet the\nPart 195 definition of a SCADA system.5 Targa explained that the at-issue server “is only one\npart of the ‘computer-based system’ that Targa uses to perform [Control Room Management\n(CRM)]-related functions, and Targa has tested all aspects of its primary SCADA system,\nincluding the server, on an annual basis.”6 The company also claimed “that the replacement\nserver does not serve as a substitute for the primary SCADA system under any ordinary\nunderstanding of the term ‘backup,’” but “simply provides Targa with the ability to continue\n4 The Response also addressed a separate Notice of Amendment, CPF 4-2018-5024M, which was closed April 30,\n2020.\n5 See 49 C.F.R. § 195.2.\n6 Response, at 3.\n\n\n\nCPF No. 4-2018-5023\nPage 3\noperating the primary SCADA system if the primary server becomes unavailable.” It is for these\nreasons that Targa contended that its CRM procedures “state that the Company does not have a\nbackup SCADA system.”7\nTarga further argued that its replacement server is not part of an “independent or redundant\nsyste[m] that provide[s] similar functionality to the primary SCADA system,” as described in\nPHMSA’s CRM Frequently Asked Questions (FAQs) guidance.8 Specifically, Targa argued that\n“[t]he replacement server does not operate independently from the primary SCADA system – it\nonly operates as part of and in conjunction with the primary system” and is “no different than\nany other spare part or component that Targa keeps in stock for future use.”9\nI disagree. First, I find that within Targa’s own argument against the “replacement server” being\na “back-up SCADA system,” the company has in fact described a SCADA system that serves the\npurpose of a backup server. Part 195 defines the term “SCADA system” as a “computer-based\nsystem or systems used by a controller in a control room that collects and displays information\nabout a pipeline facility and may have the ability to send commands back to the pipeline\nfacility,” but does not define the term “backup SCADA system.” See 49 C.F.R. § 195.2.\nHowever, the Merriam-Webster Dictionary defines “backup” as something “that serves as a\nsubstitute or support.”10 In its Response, the company describes its “replacement server” as\nallowing the primary SCADA system to continue to operate when the primary SCADA server\nbecomes unavailable.11 This description supports the plain language definitional meaning of\n“backup.”\nSecond, I also find Targa’s assertion that its replacement server is not part of an “independent or\nredundant syste[m] that provide[s] similar functionality to the primary SCADA system,” as\ndescribed in PHMSA’s CRM FAQs, to be misplaced.12 By its own admission, Targa has\ndescribed its replacement server as a redundant server. Targa specifically stated that the\nreplacement server “only operates as part of and in conjunction with the primary system,” and\n“[i]n other words,…is no different than any other spare part or component that Targa keeps in\nstock for potential future use.”13 Through this explanation, Targa has described the “replacement\nserver” as providing “similar functionality to the primary SCADA system” as described in\nPHMSA’s CRM FAQs.14\n7 Id.\n8 PHMSA CRM FAQ C.08, available at https://www.phmsa.dot.gov/pipeline/control-room-management/control-\nroom-management-faqs (last accessed on September 2, 2020).\n9 Response, at 3.\n10 https://www merriam-webster.com/dictionary/backup (last accessed on September 2, 2020).\n11 Id.\n12 PHMSA CRM FAQ C.08; and Response, at 3.\n13 Response, at 3.\n14 PHMSA CRM FAQ C.08.\n\n\n\nCPF No. 4-2018-5023\nPage 4\nThird, Targa's own Lake Charles Area Hurricane Preparedness Plan states that its IT group must\n“remove the back-up SCADA I/O server from the Hackberry and relocate it to the offsite control\nroom, at the Frac Plan, on standby” (emphasis added).15 Therefore, contrary to Targa’s\narguments, its own procedures refer to its “replacement server” as a backup SCADA server.\nNotably, Targa does not contest the allegation that it failed to test its backup SCADA system, but\nsimply contests that it has a backup SCADA system. Given that I find Targa’s “replacement\nserver” to be a “backup SCADA system” for the foregoing reasons, I further find, after\nconsidering all of the evidence, including the lack of documentation, that Respondent violated 49\nC.F.R. § 195.446(c)(4) by failing to test its backup SCADA system in 2013, 2014, and 2015.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(g), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . .\n(g) What is an information analysis? In periodically evaluating the\nintegrity of each pipeline segment (paragraph (j) of this section), an operator\nmust analyze all available information about the integrity of the entire\npipeline and the consequences of a failure. This information includes:\n(1) Information critical to determining the potential for, and preventing,\ndamage due to excavation, including current and planned damage\nprevention activities, and development or planned development along the\npipeline segment;\n(2) Data gathered through the integrity assessment required under this\nsection;\n(3) Data gathered in conjunction with other inspections, tests,\nsurveillance and patrols required by this Part, including, corrosion control\nmonitoring and cathodic protection surveys; and\n(4) Information about how a failure would affect the high consequence\narea, such as location of the water intake.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(g) by failing to analyze all\navailable information about the integrity of Targa’s entire pipeline and the consequences of a\npotential failure. Specifically, the Notice alleged that Targa was unable to provide any records\ndemonstrating that it had actually performed this type of information analysis to identify risks\nrelating to the integrity of its pipeline. Instead, Targa provided a single three-page document\nfrom 2008 that was hand-labeled “2008 Risk Analysis” and that contained a list of variables and\ncodes that appear to have been part of some risk analysis process conducted that year. Based on\nthis information, the Notice alleged that Targa had failed to conduct an information analysis\nabout the integrity of the pipeline since 2008 that (1) integrated all relevant threats in Targa’s\nrisk model and risk ranking, including the results of integrity assessments, (2) compared how\nthreats had been eliminated and/or reduced from higher to lower risks during that period, and (3)\n15 Violation Report, Exhibit A.\n\n\n\nCPF No. 4-2018-5023\nPage 5\nshowed a progression of the risk models over the last three years to ensure that new information\nhad been properly integrated into the risk models.\nIn its Response, Targa contested the allegation of violation, presenting several arguments why it\nbelieved that it had complied with § 195.452(g). First, it contended that paragraph (g) “identifies\nfour broad categories of information and data that an operator must consider” in meeting its\nobligation to conduct an information analysis and argued that the Notice did not allege a failure\nto analyze any of those four categories.16 Instead, Targa contended that the allegations all related\nto the sufficiency of Targa’s process for conducting periodic evaluations and assessments of\npipeline integrity, and that the obligation to conduct evaluations and assessments actually fell\nunder a different integrity management (IM) regulation, § 195.452(j). Second, Targa argued that\nnone of the evidence in the record shows that Targa failed to comply with § 195.452(g). The\n2011 events cited in the Violation Report17 were purportedly outside the five-year statute of\nlimitations and, therefore, could not be relied upon as evidence to substantiate the alleged\nviolation. According to Targa, the only event cited in the Violation Report that occurred within\nthe five-year statute of limitations was a 2015 pipeline modification project for the removal of an\nabove-ground casing, which did not constitute a repair, but, rather, was aimed at reducing the\nlikelihood of atmospheric corrosion or third-party damage and was therefore unrelated to the\nrequirements of § 195.452(g).18\nThird, Targa contended that it had provided OPS with evidence indicating that it had analyzed\n“integrity-related information” by producing certain reports for the company’s Risk Management\nand Insurance Department. Targa stated that it had also “analyzed integrity-related information\nin completing a risk analysis in accordance with § 195.452(e) to establish an integrity assessment\nschedule, address integrity issues, and identify additional [preventive and mitigative (P&M)]\nmeasures.”19\nI find Targa’s arguments to be unpersuasive. First, it appears that Targa is misinterpreting the\nalleged violation and, consequently, conflating the obligations of §§ 195.452(g) and 195.452(j).\nSection 195.452(g) requires an operator to conduct a discrete analysis that integrates all available\ninformation about the integrity of the entire pipeline and the consequences of a failure, while\n§ 195.452(j) requires an operator to continue to assess and periodically evaluate its line pipe\nsegments to maintain their integrity. Specifically, under § 195.452(g), the term “information\nanalysis” constitutes a defined process that serves as the fundamental mechanism for assembling\nand analyzing the broadest possible range of available information about the integrity of a\npipeline and using that information to evaluate periodically the condition or integrity of each\npipeline segment under paragraph (j). An adequate information analysis is not just a collection\nof data but an actual analysis of that data in a coherent and integrated manner. Paragraph (g) lists\n16 Response, at 6.\n17 Violation Report, at 12.\n18 Response, at 6.\n19 Id., at 6-7.\n\n\n\nCPF No. 4-2018-5023\nPage 6\nexamples of the types of information that must be included in this data-gathering process and\nincludes such things as damage prevention data, in-line inspection (ILI) data, patrolling data,\ncathodic protection surveys, and information related to the potential consequences of a pipeline\nfailure within a High Consequence Area (HCA). Here, the alleged violation relates to Targa’s\nfailure to conduct an analysis of all available information, such as third-party damage incidents,\nhydrotest ruptures, and the discovery of hook cracks on longitudinal seam welds in 2011,20 as\nrequired by § 195.452(g).\nSecond, regarding the contention that there is no evidence in the record to support an alleged\nviolation of § 195.452(g), that is exactly the basis for the allegation. Targa was unable to\nprovide any documentation or other evidence to demonstrate how it had complied with\n§ 195.452(g), given the events and new information that had arisen since 2008. Therefore, the\nvery lack of evidence demonstrating that it had performed an information analysis since 2008\nsupports a finding of violation. Third, Targa claims that it had provided OPS with reports that it\nhad submitted to its Risk Management and Insurance Department, yet it is unclear what reports\nTarga is referring to nor is there any evidence of any such reports in the record. Finally, I find\nthat Targa’s statute of limitation argument lacks merit. Section 195.452(g) creates an on-going\nobligation for operators to analyze all available information about the integrity of the entire\npipeline and the consequences of a failure. The failure of Targa to perform any information\nanalysis since 2008, especially in light of the events that occurred in 2011 and 2015 and should\nhave triggered an information analysis, provides further indication that Respondent did not\ncomply with § 195.452(g).\nAccordingly, after considering all of the evidence, including the lack of documentation\ndemonstrating compliance, I find that Respondent violated 49 C.F.R. § 195.452(g) by failing to\nanalyze all available information about the integrity of the entire pipeline and the consequences\nof a failure.\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(2), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . .\n(j) What is a continual process of evaluation and assessment to\nmaintain a pipeline's integrity? –\n(1) . . .\n(2) Evaluation. An operator must conduct a periodic evaluation as\nfrequently as needed to assure pipeline integrity. An operator must base the\nfrequency of evaluation on risk factors specific to its pipeline, including the\nfactors specified in paragraph (e) of this section. The evaluation must\nconsider the results of the baseline and periodic integrity assessments,\ninformation analysis (paragraph (g) of this section), and decisions about\nremediation, and preventive and mitigative actions (paragraphs (h) and (i)\nof this section).\n20 Violation Report at 12.\n\n\n\nCPF No. 4-2018-5023\nPage 7\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(2) by failing to conduct\nperiodic evaluations and failing to set a frequency for periodic evaluations to be performed on a\nconsistent basis to ensure pipeline integrity. Specifically, the Notice alleged that Targa was\nunable to provide PHMSA inspectors with copies of any periodic evaluations that had been\nperformed. The Notice further alleged that Targa’s Manager of Regulatory Compliance stated to\nthe PHMSA inspectors that he did not believe that several of the risk factors identified on its\npipeline were significant enough to warrant a periodic evaluation. Finally, the Notice also\nidentified the following four instances of integrity issues for which there was no documentation\nof an evaluation having been performed or being included in any evaluation: (1) a safety-related\ncondition report about third-party damage that occurred in 2011 and resulted in the replacement\nof over 820 feet of pipe; (2) multiple ruptures as a result of a 2011 hydro-test; (3) the 2011\ndiscovery of hook cracks on longitudinal seam welds; and (4) several other pipeline\nmodifications/repairs in each of 2011 and 2015.\nIn its Response, Targa contested the alleged violation and requested that it be withdrawn. Targa\nargued that the evidence shows that it met the requirements of § 195.452(j)(2) and “that any\nshortcomings that may exist relate solely to maintaining appropriate documentation.”21\nSpecifically, Targa claimed that its Integrity Management Plan (IMP) included a process for\nperforming periodic pipeline integrity evaluations, and that the frequency of such evaluations\nwas dependent on changes in specific risk factors.22 The company further argued that OPS’\ninterpretation of § 195.452(j) in the Notice was “flawed” and “overbroad and unduly\nburdensome.”23\nIn particular, Targa contended that there is nothing in the IM regulations that would require\nTarga to perform a periodic evaluation when the above-cited events occurred, including ones that\nfall outside the five-year statute of limitations. Targa claimed that it followed it IMP and\nsatisfied the requirements of § 195.452(j)(2) when it conducted “periodic evaluations in\nconnection with reports submitted to its Risk Management and Insurance Department, including\nresults of integrity assessments, information analyses, remediation measures, and [preventive and\nmitigative (P&M)] measures.”24 Finally, Targa reiterated its statute of limitations argument for a\nmajority of the evidence used to support the alleged violation, and further claimed that the 2015\npipeline modification project mentioned in the Notice, which falls within the five-year statute of\nlimitations, would not have warranted a periodic pipeline integrity evaluation.\nI am unpersuaded by Targa’s arguments. Section 195.452(j)(2) requires operators to conduct\nperiodic evaluations “as frequently as needed” to ensure pipeline integrity. While the Notice\nidentified four specific instances when such evaluations should have been completed, there is no\nevidence that Targa conducted any periodic assessments and evaluations in order to maintain the\nintegrity of its pipeline. Therefore, Targa cannot substantiate its claim that it completed periodic\n21 Response, at 9.\n22 Id.\n23 Response, at 10.\n24 Id.\n\n\n\nCPF No. 4-2018-5023\nPage 8\nevaluations and made appropriate changes to the assessment method and schedule based on\nchanges in identified risk factors.\nAs for the argument that Targa satisfied the requirements of § 195.452(j)(2) by conducting\nperiodic evaluations in connection with reports submitted to its Risk Management and Insurance\nDepartment, again it is unclear what reports Targa is referring to, plus there is no evidence of\nthese reports anywhere in the record. Furthermore, Targa’s claim that this alleged violation is\nbarred due to the statute of limitations is unfounded. As discussed for Item 2 above, the\nobligation for operators to conduct periodic evaluations is on-going and covers risk factors that\nare not tied to a single fixed date but are continuing in nature.\nAccordingly, after considering all of the evidence, including the lack of documentation\ndemonstrating compliance, I find that Respondent violated 49 C.F.R. § 195.452(j)(2) by failing\nto conduct periodic evaluations and failing to set a frequency for periodic evaluations to be\nperformed on a consistent basis to ensure pipeline integrity.\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(k), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . .\n(k) What methods to measure program effectiveness must be used? An\noperator's program must include methods to measure whether the program\nis effective in assessing and evaluating the integrity of each pipeline\nsegment and in protecting the high consequence areas. See Appendix C of\nthis part for guidance on methods that can be used to evaluate a program's\neffectiveness.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(k) by failing to measure the\neffectiveness of its IMP in order to protect HCAs. Specifically, the Notice provided the\nfollowing examples to support its allegation that Targa failed to measure the effectiveness of its\nIMP: (1) the metrics in Targa’s IMP did not consider measures that reflect the effectiveness of\nexisting P&M measures; (2) the failure to identify deficiencies that were indicative of\nprogrammatic breakdowns in Targa’s IMP; and (3) the failure to provide evidence of feedback\non corrective action programs, P&M measure decisions, and the threat and risk analysis\nprocess.25\nIn its Response, Targa contested this alleged violation and requested that it be withdrawn. Targa\nargued that § 195.452(k) is a performance-based regulation that provides operators with the\nability “to determine how best to comply with the requirements given their unique pipeline\n25 See Appendix C of Part 195, Section V, Methods to measure performance, and API 1160, Managing System\nIntegrity for Hazardous Liquid Pipelines, for examples of metrics that operators can utilize to measure performance\nunder § 195.452(k). For examples of published final orders applying paragraph (k), see\nhttps://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/Hazardous Liquid IM Enforcement Guidance 12 7 2\n015.pdf, at 145-147.\n\n\n\nCPF No. 4-2018-5023\nPage 9\nsystems.”26 Targa argued that that there are no prescriptive requirements in § 195.452(k), but,\nrather, minimum methods of measuring IMP program effectiveness. In this case, Targa claimed\nthat the evidence shows that it satisfied that requirement and “that any shortcomings in the\nprogram relate solely to maintain adequate documentation.”27 To support its claim, Targa\nexplained that its “IMP provides the metrics used to evaluate the company’s IMP at section 8,”\nand that it “updates its performance metrics on an annual basis.”28 Targa further stated that it\n“applies these performance metrics in completing a report submitted to Targa’s Risk\nManagement and Insurance Department.”29 The company explained that this report is then used\nby management to assess the performance of its IMP and improve it as necessary. Finally, Targa\nclaimed its performance metrics demonstrated that its IMP is effective because the metrics allow\nfor tracking of integrity issues.\nOnce again, I am unpersuaded by Targa’s arguments. While Respondent is correct that\n§ 195.452(k) is a performance-based regulation, there is no evidence that Targa either complied\nwith the requirements of § 195.452(k) or followed its own IMP, as described in its Response.\nSpecifically, Targa has presented no evidence to support its argument that it actually utilized the\nmetrics it had established to conduct reviews of its IMP effectiveness. The company claims that\nSection 8 of its IMP provides the metrics that it uses for program evaluation but presented no\nevidence that such evaluations were actually conducted or what were the results of those\nevaluations. It claimed that its performance metrics were updated on an annual basis, but did not\nsubmit any of them for the record. It claimed that these metrics were applied in reports\nsubmitted to its Risk Management and Insurance Department, but submitted no copies of those\nreports as part of this proceeding. It claimed that these reports were then used by its\nmanagement to assess the performance of its IMP and improve the IMP as necessary, but\nsubmitted no such reports into evidence. Finally, the company argued that “any shortcomings in\nthe program relate solely to maintaining adequate documentation.”30 However, Targa failed to\npresent any other proof, parole or otherwise, to show that these program evaluations actually\ntook place. In short, it appears that Targa had a whole program on paper to measure program\neffectiveness but no evidence that it actually performed such evaluations.\nAccordingly, after considering all of the evidence, I find that Targa violated § 195.452(k) by\nfailing to measure whether its IMP was effective in assessing and evaluating the integrity of each\npipeline segment and in protecting HCAs.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\n26 Response, at 12.\n27 Id.\n28 Id.\n29 Id.\n30 Id.\n\n\n\nCPF No. 4-2018-5023\nPage 10\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.31 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; any effect that\nthe penalty may have on its ability to continue doing business; and the good faith of Respondent\nin attempting to comply with the pipeline safety regulations. In addition, I may consider the\neconomic benefit gained from the violation without any reduction because of subsequent\ndamages, and such other matters as justice may require. The Notice proposed a total civil\npenalty of $146,100 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $38,100 for Respondent’s violation of 49 C.F.R.\n§ 195.446(c), for failing to test its backup SCADA system in 2013, 2014, and 2015. In its\nResponse, Targa requested that the proposed civil penalty associated with Item 2 be reduced or\nwithdrawn should PHMSA find that Respondent violated § 195.446(c). Targa contended that\nOPS had incorrectly assessed the gravity of the violation by selecting the criterion that stated\n“[p]ipeline safety or integrity was compromised in an HCA or an HCA ‘could affect’ segment.”\nTarga argued that pipeline safety would only be minimally affected by a failure to conduct\nannual testing of a backup SCADA system, and that the control room regulations are not\nspecifically linked to HCA segments. The company further argued that there is no evidence in\nthe record that “Targa’s failure to treat the replacement server as a backup SCADA system\ncompromised the integrity of any HCA segments.”32 Additionally, Targa argued that it was not\nafforded “a good faith credit for reasonably interpreting the regulation as not applying to a\nreplacement server for SCADA system.”33 Further, Targa argued that OPS’ interpretation was\ninconsistent with the “text, structure, and history of § 195.446(c), and the CRM FAQs do not\nprovide Targa with fair notice of PHMSA’s contrary position prior to the inspection.”34 For the\nreasons detailed below, I am not persuaded that either elimination or reduction of the proposed\npenalty is warranted.\nFirst, OPS is correct in its assertion that more than half of Targa’s pipeline system is located in\nHCAs.35 A failure to test a backup SCADA system, whose purpose is to collect and display\ninformation about a pipeline facility located in an HCA and to send commands back to that\n31 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.\n32 Response, at 4.\n33 Id.\n34 Id.\n35 Hazardous Liquid Annual Data – 2010 to Present, Targa NGL Pipe Line Company (OPID 30626), available at\nhttps://www.phmsa.dot.gov/data-and-statistics/pipeline/gas-distribution-gas-gathering-gas-transmission-hazardous-\nliquids (last accessed on August 27, 2020).\n\n\n\nCPF No. 4-2018-5023\nPage 11\nfacility, inherently compromises the integrity of such facilities by increasing the likelihood of a\nrelease in an environmentally sensitive area. Since the company presented no evidence that it\ntested its backup SCADA system at the required annual interval, there is no indication whether\nthe backup SCADA system would have properly worked if Targa’s SCADA system had failed.\nFurthermore, the fact that § 195.446(c) is not specifically tied to an HCA requirement, unlike the\nIM regulations, is insufficient to support the argument that pipeline safety was only minimally\nimpacted. Therefore, I find that the violation compromised pipeline safety in an HCA, and thus,\nthe violation was properly assessed under the “Gravity” criterion.\nI also find Targa’s request for a “good faith” credit to be unjustified. Targa’s own Lake Charles\nArea Hurricane Preparedness Plan labeled the system in the Hackberry Control Center as a\n“backup server.” Pursuant to its own procedures, Targa had an obligation to test the at-issue\nserver at the required intervals, based on the plain language of §195.446(c). Additionally, as\ndiscussed above in the “Findings of Violation” section, Targa’s own interpretation of a “backup\nSCADA system” is inconsistent with the Part 195 definition of a “SCADA system,” the plain\nlanguage meaning of “backup,” and PHMSA’s published CRM FAQs. As such, a “good faith”\ncredit should not be given on this basis, nor is there any merit in the company’s fair notice\nargument as the company’s own designation or description of its backup system is consistent\nwith the plain-language reading of the regulation. I therefore find Targa’s interpretation of the\nrequirement of § 195.446(c) to be unreasonable and that the company failed to provide a credible\njustification for its lack of compliance. Accordingly, having reviewed the record and considered\nthe assessment criteria, I assess Respondent a civil penalty of $38,100 for violation of 49 C.F.R.\n§ 195.446(c).\nItem 2: The Notice proposed a civil penalty of $36,000 for Respondent’s violation of 49 C.F.R.\n§ 195.452(g), for failing to analyze all available information about the integrity of the entire\npipeline and the consequences of a failure. In its Response, Targa requested that the proposed\ncivil penalty associated with Item 2 be reduced or eliminated should PHMSA decline to\nwithdraw the alleged violation. Targa argued that, “[a]t best, the record shows that Targa failed\nto properly document the results of its information analysis,” and, thus, OPS selected the wrong\npenalty criterion under the “Part E5 – Nature” section of the Violation Report.36 Targa also\nargued that the alleged violation had a minimal impact on pipeline safety because the evidence\nthat OPS relied upon was either “legally irrelevant, relates to events that occurred outside the\nfive-year statute of limitations period, or [was] contradicted by other evidence submitted by\nTarga.”37 Finally, the company argued that it should be awarded a “good faith” credit for the\ncompany’s reasonable interpretation of § 195.452(g). Targa specifically argued that there was\nno indication in the regulatory text that the company was required “to conduct risk comparison\nstudies or analyze progressions of risk models to conduct information analysis.” On the contrary,\nit argued that its understanding that such actions were not necessary reflected “a reasonable\nunderstanding of the regulation.”38 For the reasons detailed below, I am not persuaded that\neither elimination or reduction of the proposed penalty is warranted.\n36 Response, at 7.\n37 Id.\n38 Id.\n\n\n\nCPF No. 4-2018-5023\nPage 12\nAs discussed above in the “Findings of Violation” section, Targa failed to provide PHMSA with\nany documentation showing that the company actually conducted an analysis of all available\ninformation about the integrity of its pipeline and the consequences of a failure, as required by\n§ 195.452(g). The record also does not support Targa’s claim that this alleged violation is\nmerely a records violation. On the contrary, the violation relates to Targa’s failure to perform a\nrequired activity, which, in this case, was an analysis of all available information. Therefore, I\nfind that this violation is not simply a records violation, but, instead, an activities violation as\ncorrectly selected under the “Nature” criterion in the Violation Report.\nI also do not accept Targa’s argument that pipeline safety was minimally impacted. Targa failed\nto conduct an analysis of information about the integrity of its entire pipeline system, and as\nsuch, the entirety of Targa’s pipeline system located in HCAs was compromised by Targa’s\nfailure to evaluate the consequences of a failure, as required by § 195.452(g). The evidence in\nthe record, including the lack of documentation showing that Targa performed the required\nanalysis, supports OPS' assertion that pipeline safety or integrity was compromised in an HCA.\nTherefore, I find that the violation was properly assessed under the “Gravity” criterion.\nFinally, while Targa is correct that “risk comparison studies” and “progressions of risk models to\nconduct information analysis” are not specifically delineated in the text of § 195.452(g), its\nargument that it did not understand the aforementioned actions to be necessary for compliance is\nmisplaced. The Notice provides these actions as simply examples of the types of measures that\nan operator must take to demonstrate compliance with this performance-based regulation. So\neven though Targa may not have performed a risk comparison study or analysis of risk model\nprogression, it does not negate the above finding of violation, which is based on Targa’s lack of\nany discernible action to analyze and integrate all available information about the integrity of the\npipeline and the consequence of a failure. I therefore find that Targa has provided no reasonable\ninterpretation or credible justification for its failure to comply with § 195.452(g), and that\nelimination or reduction of the penalty under good faith is not warranted.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $36,000 for violation of 49 C.F.R. § 195.452(g).\nItem 3: The Notice proposed a civil penalty of $36,000 for Respondent’s violation of 49 C.F.R.\n§ 195.452(j)(2), for failing to conduct periodic evaluations and to set a frequency for when\nperiodic evaluations are to be performed on a consistent basis to ensure pipeline integrity. In its\nResponse, Targa requested that the proposed civil penalty associated with Item 3 be reduced or\neliminated should PHMSA decline to withdraw the alleged violation. Targa argued that “[a]t\nbest, the nature of the probable violation [is] missing or incomplete records documenting the\nresults of Targa’s periodic evaluations” after determining that one was not necessary.39 The\ncompany also argued that the alleged violation had a minimal impact on pipeline safety because\n“the gravity of the alleged violation is limited to records only.”40 ","truncated":true,"body_characters":61254}