# GENESIS OFFSHORE HOLDINGS, LLC — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 420192001
- **title:** GENESIS OFFSHORE HOLDINGS, LLC — Notice of Probable Violation
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2019-01-28
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 192.479(a), 192.605(a), 192.605(c)(4).
- **machine formats:** - **json:** https://regulus.evalyn.ai/document/phmsa-enforcement-420192001.json
- **markdown:** https://regulus.evalyn.ai/document/phmsa-enforcement-420192001.md
- **app url:** https://regulus.evalyn.ai/document/phmsa-enforcement-420192001
- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/420192001
**body:**

Notice of Probable Violation involving GENESIS OFFSHORE HOLDINGS, LLC. PHMSA's enforcement data identifies the cited regulations as 192.479(a),  192.605(a),  192.605(c)(4). The case was opened on 2019-01-28 and is reported as closed as of 2020-01-24. Proposed civil penalty: $52,400. Assessed civil penalty: $52,400. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

420192001_Final Order_01242020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420192001/420192001_Final%20Order_01242020.pdf

420192001_Final Order_01242020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420192001/420192001_Final%20Order_01242020_text.pdf

420192001_NOPV PCP PCO_01282019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420192001/420192001_NOPV%20PCP%20PCO_01282019.pdf

420192001_NOPV PCP PCO_01282019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420192001/420192001_NOPV%20PCP%20PCO_01282019_text.pdf

420192001_Operator Response to Notice_02262019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420192001/420192001_Operator%20Response%20to%20Notice_02262019.pdf

420192001_NOPV PCP PCO_01282019_text.pdf

NOTICE OF PROBABLE VIOLATION
PROPOSED CIVIL PENALTY
and
PROPOSED COMPLIANCE ORDER
CERTIFIED MAIL - RETURN RECEIPT REQUESTED
January 28, 2019
Jeff Gifford
Vice President
GENESIS OFFSHORE HOLDINGS, LLC
919 Milam St. Suite 2100
Houston, Texas 77002
CPF 4-2019-2001
Dear Mr. Gifford:
On, March 6, 2017 through June 12, 2017, a representative of the Pipeline and Hazardous Materials
Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49
United States Code (U.S.C.) inspected procedures, records, and facilities for your Viosca Knoll,
Independence Trail, Anaconda, and High Island offshore gas pipeline systems in the Gulf of
Mexico.
As a result of the inspection, it is alleged that you have committed probable violations of the
Pipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected
and the probable violations are:



1. §192.605 Procedural manual for operations, maintenance, and emergencies.
(c) Abnormal operation. For transmission lines, the manual required by paragraph (a) of this
section must include procedures for the following to provide safety when operating design
limits have been exceeded:
(4) Periodically reviewing the response of operator personnel to determine the effectiveness
of the procedures controlling abnormal operation and taking corrective action where
deficiencies are found.
Genesis Offshore Holdings failed to follow its O&M Gas Manual procedure for conducting
periodic reviews. Genesis could not provide records to show the periodic reviews were conducted
for work done by operating personnel.
Genesis O&M Procedure Manual – Gas - Abnormal Operation (Section 300) 3.3 requires that the
Pipeline Control Room Manager and all Location Supervisors shall periodically review the
response of their personnel to determine the effectiveness of these abnormal operation procedures
and take corrective action where deficiencies are found. Additionally, Section 200, 2.0, item 4
requires that Form 201A to be completed for everyone during the effectiveness review.
During the audit, PHMSA requested a copy of form 201A as an example of record review. Genesis
provided a copy of form 601A, which is the form referred to in O&M Procedure Manual -Liquid,
but it applies to both gas and liquid systems which is inconsistent with O&M Procedure Manual -
Gas requirements.
2. §192.605 Procedural manual for operations, maintenance, and emergencies.
(a) General. Each operator shall prepare and follow for each pipeline, a manual of written
procedures for conducting operations and maintenance activities and for emergency
response. For transmission lines, the manual must also include procedures for handling
abnormal operations. This manual must be reviewed and updated by the operator at intervals
not exceeding 15 months, but at least once each calendar year. This manual must be prepared
before operations of a pipeline system commence. Appropriate parts of the manual must be
kept at locations where operations and maintenance activities are conducted.
Genesis failed to follow its procedure (Abnormal Operation - Section 300 in the O&M
Section 3.1) using the appropriate forms to document and record the communications and
actions taken by the field personnel and control room during and after Abnormal Operation
Condition.
During the audit, the PHMSA inspector reviewed two Abnormal Operation Conditions
listed on console 4 in the Control Room report (9/27/2016_AC Power Fail, and
11/20/2016_Outgoing Valve shows open). The PHMSA inspector noticed that there were
no forms or documentation generated as per the procedure to record the communications
and actions taken by the field personnel. Genesis informed the PHMSA inspector, they
only use phone calls and e-mail to communicate such actions.
2



3. §192.479 Atmospheric corrosion control: General
(a) Each operator must clean and coat each pipeline or portion of pipeline that is
exposed to the atmosphere, except pipelines under paragraph (c) of this section.
Genesis failed to clean and coat portions of their pipeline exposed to the atmosphere at the
30” HVLT-301D valve area and at the 30” HVRT-304A valve area. The PHMSA inspector
observed disbonded coating, atmospheric corrosion, and severe pitting on flanges, risers,
valves, and the pipeline.
Proposed Civil Penalty
Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed
$213,268 per violation per day the violation persists, up to a maximum of $2,132,679 for a related
series of violations. For violation occurring on or after November 2, 2015 and before November
27, 2018, the maximum penalty may not exceed $209,002 per violation per day, with a maximum
penalty not to exceed $2,090,022. For violations occurring prior to November 2, 2015, the
maximum penalty may not exceed $200,000 per violation per day, with a maximum penalty not to
exceed $2,000,000 for a related series of violations. The Compliance Officer has reviewed the
circumstances and supporting documentation involved in the above probable violations and has
recommended that you be preliminarily assessed a civil penalty of $52,400 as follows:
Item number
PENALTY
2
3
$24,500
$27,900
Warning Items
With respect to item 1 we have reviewed the circumstances and supporting documents involved in
this case and have decided not to conduct additional enforcement action or penalty assessment
proceedings at this time. We advise you to promptly correct this item. Failure to do so may result
in additional enforcement action.
Proposed Compliance Order
With respect to item 3 pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials Safety
Administration proposes to issue a Compliance Order to GENESIS OFFSHORE HOLDINGS,
LLC. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this
Notice.
Response to this Notice
Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in
Compliance Proceedings. Please refer to this document and note the response options. All
3



material you submit in response to this enforcement action may be made publicly available. If you
believe that any portion of your responsive material qualifies for confidential treatment under 5
U.S.C. 552(b), along with the complete original document you must provide a second copy of the
document with the portions you believe qualify for confidential treatment redacted and an
explanation of why you believe the redacted information qualifies for confidential treatment under
5 U.S.C. 552(b).
Following the receipt of this Notice, you have 30 days to submit written comments, or request a
hearing under 49 CFR § 190.211. If you do not respond within 30 days of receipt of this Notice,
this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the
Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further
notice to you and to issue a Final Order. If you are responding to this Notice, we propose that you
submit your correspondence to my office within 30 days from receipt of this Notice. This period
may be extended by written request for good cause.
In your correspondence on this matter, please refer to CPF 4-2019-2001 and, for each document
you submit, please provide a copy in electronic format whenever possible.
Sincerely,
Mary L. McDaniel, P.E.
Director, Southwest Region
Pipeline and Hazardous Materials Safety Administration
Enclosures: Proposed Compliance Order
Response Options for Pipeline Operators in Compliance Proceedings
4



PROPOSED COMPLIANCE ORDER
Pursuant to 49 United States Code §60118, the Pipeline and Hazardous Materials Safety
Administration (PHMSA) proposes to issue to GENESIS OFFSHORE HOLDINGS, LLC
a Compliance Order incorporating the following remedial requirements to ensure the compliance
of GENESIS OFFSHORE HOLDINGS, LLC with the pipeline safety regulations:
1. 2. In regard to Item Number 3 of the Notice pertaining to atmospheric corrosion and
coating damage on portions of pipeline that are exposed to the atmosphere on
platform HIA-573 on HIOS gas gathering system, Genesis must complete remedial
action and submit documentation to PHMSA’s Southwest Region Director within
30 days of issuance of the Final Order.
It is requested (not mandated) that GENESIS OFFSHORE HOLDINGS, LLC
maintain documentation of the safety improvement costs associated with fulfilling
this Compliance Order and submit the total to the Director, Southwest Region,
Pipeline and Hazardous Materials Safety Administration. It is requested that these
costs be reported in two categories: 1) total cost associated with
preparation/revision of plans, procedures, studies and analyses, and 2) total cost
associated with replacements, additions and other changes to pipeline
infrastructure.
5

420192001_Final Order_01242020_text.pdf

January 24, 2020
Mr. Grant E. Sims
Chief Executive Officer
Genesis Energy, LP
919 Milam Street, Suite 2100
Houston, Texas 77002
Re: CPF No. 4-2019-2001
Dear Mr. Sims:
Enclosed please find the Final Order issued in the above-referenced case to your subsidiary,
Genesis Offshore Holdings, LLC (Genesis). It makes findings of violation and assesses a civil
penalty of $52,400. It further finds that Genesis has completed the actions specified in the Notice
to comply with the pipeline safety regulations. Therefore, when the civil penalty has been paid,
this enforcement action will be closed. Service of the Final Order by certified mail is effective
upon the date of mailing, as provided under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Alan K. Mayberry
Associate Administrator
for Pipeline Safety
Enclosure
cc: Ms. Mary McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA
Mr. Jeffrey W. Gifford, Vice President, HSSE, Genesis Energy, LP, 919 Milam Street,
Suite 2100, Houston, Texas 77002
CERTIFIED MAIL - RETURN RECEIPT REQUESTED



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
____________________________________
In the Matter of )
Genesis Offshore Holdings, LLC, ) CPF No. 4-2019-2001
a subsidiary of Genesis Energy, LP, )
)
)
)
Respondent. )
____________________________________)
FINAL ORDER
From March 6 through June 12, 2017, pursuant to 49 U.S.C. § 60117, a representative of the
Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety
(OPS), conducted an on-site pipeline safety inspection of the facilities and records of Genesis
Offshore Holdings, LLC’s (Genesis or Respondent) offshore gas pipeline systems in the Gulf of
Mexico. Genesis is a subsidiary of Genesis Energy, LP, which has approximately 1,000 miles of
offshore gas pipelines in the Gulf of Mexico.1
As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent,
by letter dated January 28, 2019, a Notice of Probable Violation, Proposed Civil Penalty, and
Proposed Compliance Order (Notice), which also included a warning pursuant to 49 C.F.R.
§ 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Genesis had
committed two violations of 49 C.F.R. Part 192 and proposed assessing a civil penalty of $52,400
for the alleged violations. The Notice also proposed ordering Respondent to take certain measures
to correct one of the alleged violations. The warning item required no further action but warned the
operator to correct the probable violation or face possible future enforcement action.
Genesis Energy, LP, on behalf of Genesis, responded to the Notice by letter dated February 26,
2019 (Response). The company did not expressly contest either of the two allegations of violation,
but did offer additional information in response to the Notice. Respondent did not request a hearing
and therefore has waived its right to one.
FINDINGS OF VIOLATION
The Notice alleged that Respondent violated 49 C.F.R. Part 192, as follows:
1 Genesis Energy, LP’s website, available at https://www.genesisenergy.com/operations/pipeline/offshore/naturalgas/
(last accessed January 16, 2020).



CPF No. 4-2019-2001
Page 2
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.605(a), which states:
§ 192.605 Procedural manual for operations, maintenance, and
emergencies.
(a) General. Each operator shall prepare and follow for each pipeline, a manual
of written procedures for conducting operations and maintenance activities and for
emergency response. For transmission lines, the manual must also include
procedures for handling abnormal operations. This manual must be reviewed and
updated by the operator at intervals not exceeding 15 months, but at least once each
calendar year. This manual must be prepared before operations of a pipeline
commence. Appropriate parts of the manual must be kept in locations where
operations and maintenance activities are conducted.
The Notice alleged that Respondent violated 49 C.F.R. § 192.605(a) by failing to follow its own
manual of written procedures for handling abnormal operations. Specifically, the Notice alleged
that Genesis failed to follow Section 3.1 of its Operations and Maintenance (O&M) Manual, which
required that the “cause, consequences, and actions taken regarding the abnormal operation shall be
reported in writing to the affected Operations Area Manager(s). Where appropriate, the report shall
include recommendations to prevent a recurrence.” Section 3.1 goes on to list specific information
that should be included in the report, including, “at a minimum, the date and time of occurrence,
description of the abnormal operation, sequence of events, personnel involved, and steps taken to
rectify the situation.”2 During the inspection, Genesis did not provide any records generated in
accordance with Section 3.1 of its O&M Manual for two abnormal operating conditions (AOCs)
shown on Console 4 in its control room. Instead, Genesis informed PHMSA that phone calls and e-
mails were used to communicate this information.
In its Response, Genesis noted that its control room utilized a different reporting format for AOCs
and that this information had been provided to PHMSA during the 2017 inspection.3 It also noted
that, since the time of the 2017 inspection, Genesis control room staff had held weekly conference
calls to go over the latest AOCs, AOCs that had been corrected, and those that were outstanding.4
Finally, the operator attached a copy of its Form 810.01 Report of Abnormal Operating Conditions
to its Response.5
After reviewing Form 810.01 and Table 1 in Genesis’s Response, I find that neither documents all
of the information required to be reported in writing in Section 3.1 of Genesis’s O&M Manual.
First, it is unclear whether Form 810.01 was provided to PHMSA during the inspection, or if this is
a newly-created or revised form submitted to PHMSA after the inspection. In its Region
2 Pipeline Safety Violation Report (Violation Report), (January 28, 2019) (on file with PHMSA), at Exhibit A,
Violation 2, Genesis Operations and Maintenance – Section 300.
3 Response, at 3 (Table 1, listing out the date, time, and location of the AOC and a narrative section).
4 Id.
5 In its Response to Item 2, the operator also made note of Section 1.3.3 of its Liquids O&M Manual that discusses
reviews for effectiveness. However, this relates to Item 1 in the Notice, which was a warning item and therefore is not
discussed here.



CPF No. 4-2019-2001
Page 3
Recommendation, the Region noted that it was not provided with a copy of Form 810.01 during the
inspection. There is no date on the form, and the operator does not otherwise clarify when the
document was created. Regardless, I do not believe this form captures the requirements of Section
3.1 of Genesis’s O&M Manual. For example, the form does not include the consequences of an
AOC. Second, the table that is included in Genesis’s Response does not include sufficient
information to comply with Section 3.1 of the operator’s O&M Manual. For example, it does not
include steps taken to rectify the AOC. Finally, the operator’s weekly conference calls to discuss
AOCs, while a good practice, do not comport with the requirement in Section 3.1 that these
discussions “shall be reported in writing to the affected Operation Area Manager(s)” (emphasis
added).
Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.
§ 192.605(a) by failing to follow Section 3.1 of its manual of written procedures for recording
abnormal operations.
Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 192.479(a), which states:
§ 192.479 Atmospheric corrosion control: General.
(a) Each operator must clean and coat each pipeline or portion of pipeline that
is exposed to the atmosphere, except pipelines under paragraph (c) of this section.
The Notice alleged that Respondent violated 49 C.F.R. § 192.479(a) by failing to clean and coat
each non-excepted pipeline or portion of pipeline that is exposed to the atmosphere. Specifically,
the Notice alleged that Genesis failed to clean and coat the 30-inch HVLT-201D valve area and the
30-inch HVRT-304A valve area. During the inspection, the PHMSA inspector observed disbonded
coating, atmospheric corrosion, and severe pitting on flanges, risers, valves and the pipeline at these
locations.
Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of
the evidence, I find that Respondent violated 49 C.F.R. § 192.479(a) by failing to clean and coat
each non-excepted pipeline or portion of pipeline that is exposed to the atmosphere.
These findings of violation will be considered prior offenses in any subsequent enforcement action
taken against Respondent.
ASSESSMENT OF PENALTY
Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed
$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related
series of violations.6 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49
C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of
the violation, including adverse impact on the environment; the degree of Respondent’s culpability;
the history of Respondent’s prior offenses; any effect that the penalty may have on its ability to
continue doing business; and the good faith of Respondent in attempting to comply with the
6 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.



CPF No. 4-2019-2001
Page 4
pipeline safety regulations. In addition, I may consider the economic benefit gained from the
violation without any reduction because of subsequent damages, and such other matters as justice
may require. The Notice proposed a total civil penalty of $52,400 for the violations cited above.
Item 2: The Notice proposed a civil penalty of $24,500 for Respondent’s violation of 49 C.F.R.
§ 192.605(a), for failing to follow its manual of written procedures for handling abnormal
operations. Genesis failed to comply with a requirement that was clearly applicable and did not
have a reasonable justification for its non-compliance. Accordingly, having reviewed the record
and considered the assessment criteria, I assess Respondent a civil penalty of $24,500 for violation
of 49 C.F.R. § 192.605(a).
Item 3: The Notice proposed a civil penalty of $27,900 for Respondent’s violation of 49 C.F.R.
§ 192.479(a), for failing to clean and coat each non-excepted pipeline or portion of pipeline that is
exposed to the atmosphere. Genesis neither contested the allegation nor presented any evidence or
argument justifying a reduction in, or elimination of, the proposed penalty. The proposed penalty
amount takes into account that Genesis failed to comply with a requirement that was clearly
applicable, and did not have a reasonable justification for its non-compliance. Accordingly, having
reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of
$27,900 for violation of 49 C.F.R. § 192.479(a).
In summary, having reviewed the record and considered the assessment criteria for each of the
Items cited above, I assess Respondent a total civil penalty of $52,400.
Payment of the civil penalty must be made within 20 days of service. Federal regulations (49
C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal Reserve
Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are
contained in the enclosure. Questions concerning wire transfers should be directed to: Financial
Operations Division (AMK-325), Federal Aviation Administration, Mike Monroney Aeronautical
Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169. The Financial Operations
Division telephone number is (405) 954-8845.
Failure to pay the $52,400 civil penalty will result in accrual of interest at the current annual rate in
accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those
same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is
not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in
referral of the matter to the Attorney General for appropriate action in a district court of the United
States.
COMPLIANCE ORDER
The Notice proposed a compliance order with respect to Item 3 in the Notice for violation of 49
C.F.R. § 192.479(a). Under 49 U.S.C. § 60118(a), each person who engages in the transportation of
gas or who owns or operates a pipeline facility is required to comply with the applicable safety
standards established under chapter 601. The Director indicates that Respondent has taken the
following actions specified in the proposed compliance order:



CPF No. 4-2019-2001
Page 5
1. With respect to the violation of § 192.479(a) (Item 3), Respondent has completed
remedial actions and submitted documentation to PHMSA reflecting corrective
actions it has taken on portions of its pipeline exposed to the atmosphere on platform
HIA-573 on the HIOS gas gathering system.
Accordingly, I find that compliance has been achieved with respect to this violation. Therefore, the
compliance terms proposed in the Notice are not included in this Order.
WARNING ITEM
With respect to Item 1, the Notice alleged a probable violation of Part 192 but did not propose a
civil penalty or compliance order for this item. Therefore, this is considered to be a warning
item. The warning was for:
49 C.F.R. § 192.605(c)(4) (Item 1) ─ Respondent’s alleged failure to have a manual
of written procedures for periodically reviewing the response of operator personnel
to determine the effectiveness of the procedures controlling abnormal operation and
taking corrective action where deficiencies are found.
Genesis presented information in its Response showing that it had taken certain actions to address
the cited item. If OPS finds a violation of this provision in a subsequent inspection, Respondent
may be subject to future enforcement action.
Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final
Order to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey
Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of
Chief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the
Final Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)
and meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays
the payment of any civil penalty assessed. The other terms of the order, including any corrective
action, remain in effect unless the Associate Administrator, upon request, grants a stay. If
Respondent submits payment of the civil penalty, the Final Order becomes the final administrative
decision and the right to petition for reconsideration is waived.
The terms and conditions of this Final Order are effective upon service in accordance with 49
C.F.R. § 190.5.
January 24, 2020
____________________________________ ________________________
Alan K. Mayberry Date Issued
Associate Administrator
for Pipeline Safety
- **truncated:** false
- **body characters:** 25602