{"operation":"document","citation":"CPF 420205009","title":"MAGELLAN TERMINALS HOLDINGS, LP — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2020-05-12","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.132(b)(3), 195.202.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420205009.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420205009.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420205009","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420205009","body":"Notice of Probable Violation involving MAGELLAN TERMINALS HOLDINGS, LP. PHMSA's enforcement data identifies the cited regulations as 195.132(b)(3),  195.202. The case was opened on 2020-05-12 and is reported as closed as of 2020-09-17. Proposed civil penalty: $213,268. Assessed civil penalty: $124,400. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420205009_ NOPV PCP_05122020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205009/420205009_%20NOPV%20PCP_05122020.pdf\n\n420205009_ NOPV PCP_05122020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205009/420205009_%20NOPV%20PCP_05122020_text.pdf\n\n420205009_Final Order_09112020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205009/420205009_Final%20Order_09112020.pdf\n\n420205009_Final Order_09112020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205009/420205009_Final%20Order_09112020_text.pdf\n\n420205009_Operator Response to Notice and Request for a Revised Case File and a Revised Proposed Civil Penalty Worksheet_06152020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205009/420205009_Operator%20Response%20to%20Notice%20and%20Request%20for%20a%20Revised%20Case%20File%20and%20a%20Revised%20Proposed%20Civil%20Penalty%20Worksheet_06152020.pdf\n\n420205009_Final Order_09112020_text.pdf\n\nSeptember 11, 2020\nVIA ELECTRONIC MAIL TO: melanie.little@magellanlp.com\nMs. Melanie A. Little\nSenior Vice President, Operations and Environmental, Health, Safety & Security\nMagellan Midstream Partners, LP\nOne Williams Center\nTulsa, Oklahoma 74172\nRe: CPF No. 4-2020-5009\nDear Ms. Little:\nEnclosed please find the Final Order issued to Magellan Terminals Holdings, LP, in the above-\nreferenced case. It makes one finding of violation and assesses a reduced civil penalty of\n$124,400. The penalty payment terms are set forth in the Final Order. This enforcement action\ncloses automatically upon receipt of payment. Service of the Final Order by electronic mail is\neffective upon 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. Michael N. Mears, President and Chief Executive Officer, Magellan Midstream\nPartners, LP, mike.mears@magellanlp.com\nMr. Mark Materna, Director - Pipeline Integrity, Magellan Midstream Partners, LP,\nmark.materna@magellanlp.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 )\n)\n)\nMagellan Terminals Holdings, LP, )\na subsidiary of Magellan Midstream Partners, LP, )\nRespondent. )\n________________________________________________)\n) CPF No. 4-2020-5009\nFINAL ORDER\nBetween April 15-19, and June 3-7, 2019, pursuant to 49 U.S.C. § 60117, a representative 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 Magellan\nTerminals Holdings, LP’s1 (Magellan or Respondent) Breakout Tank #2533 located in Cushing,\nOklahoma, following an accident that allegedly occurred on December 18, 2018. Magellan\noperates four 250,000 bbl gross volume cone roof tanks and associated station piping and\nequipment in Cushing, Oklahoma.2\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated May 12, 2020, a Notice of Probable Violation and Proposed Civil\nPenalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that\nMagellan had violated 49 C.F.R. § 195.202 and proposed assessing a civil penalty of $213,268\nfor the alleged violation.\nMagellan responded to the Notice by letter dated June 15, 2020 (Response). The company did\nnot contest the allegation of violation but provided an explanation of its actions and requested\nthat the proposed civil penalty be reduced. Respondent did not request a hearing and therefore\nhas waived its right to one.\n1 Magellan Terminals Holdings, LP is a subsidiary of Magellan Midstream Partners, LP, see\nhttps://sec report/Document/0001126975-20-000047/exhibit21201910-k htm (identifying subsidiaries of Magellan\nMidstream Partners, LP as of December 31, 2019) (last accessed September 9, 2020).\n2 Pipeline Safety Violation Report, dated May 12, 2020 (Violation Report), at 1 (on file with PHMSA).\n\n\n\nCPF No. 4-2020-5009\nPage 2\nFINDING OF VIOLATION\nIn its Response, Magellan did not contest the allegation in the Notice that it violated 49 C.F.R.\nPart 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.202, which states:\n§ 195.202 Compliance with specifications or standards.\nEach pipeline system must be constructed in accordance with\ncomprehensive written specifications or standards that are consistent with\nthe requirements of this part.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.202 by failing to construct its\nBreakout Tank #2533, located in Cushing, Oklahoma, in accordance with its written\nSpecification For Aboveground Atmospheric Storage Tanks Rev 9, Date 1-25-2017, and in\naccordance with the requirements of § 195.132(b)(3), both of which contain certain requirements\nfor vacuum tests on bottom lap welds for aboveground breakout tanks. Specifically, the Notice\nalleged that an accident investigation of tank #2533, which was placed into service on December\n16, 2018, and had a failure two days later, led to the discovery of a pinhole leak on a bottom\nplate weld seam caused by a localized inadequate penetration weld defect. Following the\naccident, Magellan conducted vacuum box retesting of the bottom plate welds to determine if\nthere were more defects that had not been found and repaired during the construction. The\nvacuum box re-testing revealed that an additional 79 bottom plate welds failed the tests. The\ncompany’s detailed written specifications, Specification For Aboveground Atmospheric Storage\nTanks Rev 9, Date 1-25-2017, requires the welds to be examined by vacuum box testing at the\ntime of construction. The accident investigation and post-accident testing of the welds allegedly\nindicated that the vacuum box testing was performed, but failed to identify approximately 80\ndefective welds on the tank bottom; therefore, the testing was insufficient to follow the\ncompany’s own written specifications.\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. § 195.202 by failing to construct its\nBreakout Tank #2533, located in Cushing, Oklahoma, in accordance with its own written\nspecifications, and in accordance with the requirements of § 195.132(b)(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.3 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\n3 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.\n\n\n\nCPF No. 4-2020-5009\nPage 3\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 $213,268 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $213,268 for Respondent’s violation of 49\nC.F.R. § 195.202, for failing to construct its Breakout Tank #2533, located in Cushing,\nOklahoma, in accordance with its own written specifications, and in accordance with the\nrequirements of § 195.132(b)(3). In its Response, Magellan stated that certain information\ncontained in the Case File and used to calculate the proposed civil penalty was incorrect.\nSpecifically, Magellan stated that the actual release volume from the incident was 1.00 barrel of\ncrude oil, of which 0.50 barrel was recovered, not 1,000 barrels released with 950 barrels\nrecovered, as stated in the Civil Penalty Worksheet. Magellan relied on the Final 7000-1 Report,\ndate July 9, 2019, in support. In addition, Magellan stated that the violation occurred prior to\nNovember 27, 2018, not after as alleged in the Civil Penalty Worksheet. For violations\noccurring prior to November 27, 2018, but before July 31, 2019, the maximum total penalty for a\nsingle violation is $213,268, while a violation that occurred between November 2, 2015, and\nNovember 27, 2018, carries a maximum penalty for a single violation of $209,002. In support,\nMagellan relied on the vacuum box testing report showing that the violation (failure to follow its\nprocedures for vacuum testing) occurred on June 29, 2018. Magellan did not contest the\nproposed civil penalty calculation on any of the other assessment criteria used to calculate the\nproposed civil penalty in this case. The Director conceded Magellan’s corrections to the record\nand recommended that the penalty be reduced accordingly.\nUpon review of the record and the Civil Penalty Worksheet, I find it is appropriate to reduce the\nproposed penalty under 49 C.F.R. § 190.225(b)(2) in consideration of such other matters as\njustice may require. Specifically, the proposed penalty was based largely on the fact that this\naccident was considered a reportable incident under 49 C.F.R. § 195.50. However, since the\nincident involved a spill of only 1.00 barrel of oil, of which 0.50 barrel was recovered, and the\namount spilled was similar to amounts that would not be considered reportable under § 195.50, I\nfind it is appropriate in this case to reduce the penalty to an amount that would ordinarily be\nassessed for a non-reportable incident, or $124,400.4\nBased upon the foregoing, I assess Respondent a reduced civil penalty of $124,400 for violation\nof 49 C.F.R. § 195.202.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations (49\nC.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169.\n4 Respondent also objected to the proposed penalty amount due to the date that the violation occurred. Since that\ndate only affects a proposed penalty amount when it involves a maximum per-day penalty, the date becomes\nimmaterial when the maximum penalty is not reached.\n\n\n\nCPF No. 4-2020-5009\nPage 4\nThe Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $124,400 civil penalty will result in accrual of interest at the current annual\nrate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nUnder 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final\nOrder to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey\nAvenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of\nChief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of the\nFinal Order by Respondent. Any petition submitted must contain a brief statement of the issue(s)\nand meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically\nstays the payment of any civil penalty assessed. The other terms of the order, including any\ncorrective action, remain in effect unless the Associate Administrator, upon request, grants a\nstay. If Respondent submits payment of the civil penalty, the Final Order becomes the final\nadministrative decision and the right to petition for reconsideration is waived.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nSeptember 11, 2020\n___________________________________ _________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n420205009_ NOPV PCP_05122020_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nand\nPROPOSED CIVIL PENALTY\nELECTRONIC MAIL - RETURN RECEIPT REQUESTED\nMay 12, 2020\nMichael N. Mears\nPresident and CEO\nMagellan Midstream Partners, LP\nOne Williams Center\nP.O. Box 22186\nTulsa, Oklahoma 74172\nCPF 4-2020-5009\nDear Mr. Mears:\nBetween April 15-19 and June 3-7, 2019, a representative of the Pipeline and Hazardous Materials\nSafety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49\nUnited States Code (U.S.C.) inspected your subsidiary, Magellan Terminals Holdings, LP’s\nBreakout Tank #2533 located in Cushing, Oklahoma following an accident that occurred on\nDecember 18, 2018.\nAs a result of the inspection, it is alleged that you have committed a probable violation of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The item inspected\nand the probable violation is:\n\n\n\n2\n1. §195.202 Compliance with specifications or standards.\nEach pipeline system must be constructed in accordance with comprehensive written\nspecifications or standards that are consistent with the requirements of this part.\n§195.132 Design and construction of aboveground breakout tanks.\n(b) For aboveground breakout tank first placed in service after October 2, 2000,\ncompliance with paragraph (a) of this section requires one of the following:\n(3) Vertical, cylindrical, welded steel tanks with internal pressures at the tank top\napproximating atmospheric pressures (i.e., internal vapor space pressures not greater\nthan 2.5 psig (17.2 kPa), or not greater than the pressure developed by the weight of\nthe tank roof) must be designed and constructed in accordance with API Std 650\n(incorporated by reference, see §195.3).\nMagellan Terminals Holdings, LP (Magellan) failed to construct its Breakout Tank #2533, located\nin Cushing, Oklahoma, in accordance with its written specification for Aboveground Atmospheric\nStorage Tanks Rev 9, Date 1-25-2017. Magellan’s written procedures contain certain\nrequirements for vacuum tests on bottom lap welds.\nSection 5.11 states that “Contractor shall vacuum test 100 percent of the bottom lap welds per API\n650, Section 8.6, for a duration of not less than 5 seconds to 8 to 10 lbf/in2. Also, Section 5.12\nrequires that “Contractor shall provide documentation of completion by means of a weld map\nshowing any defects found, with corresponding documentation showing the defect repair\ninformation.” Section 5.15 states that “Following the completion of the floor welds, the tank floor\nwill be inspected by a 3rd Party inspection company selected by Magellan. This will include a\nvisual inspection of the floor plates and a vacuum test for 100 percent of the bottom lap welds per\nAPI 650, Section 8.6, for a duration of not less than 5 seconds to 8 to 10 lbf/in2.”\nOn December 18, 2018, Magellan notified PHMSA of a release from Tank #2533 (NRC 1233392).\nThe tank was newly constructed and had been placed into service on December 16, 2018. An\ninvestigation of the accident led to the discovery of a pinhole leak on a bottom plate weld seam\ncaused by a localized inadequate penetration weld defect. Following the accident, Magellan\nconducted vacuum box retesting of the bottom plate welds to determine if there were more defects\nthat had not been found and repaired during the construction. The vacuum box re-testing revealed\nthat an additional 79 bottom plate welds failed the tests.\nThe detailed written specifications, “Specification For Aboveground Atmospheric Storage Tanks\nRev 9 Date 1-25-2017,” requires the welds to be examined by vacuum box testing at the time of\nconstruction. The accident investigation and post-accident testing of the welds indicates the\nvacuum box testing was performed, but failed to identify approximately 80 defective welds on the\ntank bottom; therefore, the testing was insufficient to follow the written specification.\n\n\n\n3\nProposed Civil Penalty\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed\n$218,647 per violation per day the violation persists, up to a maximum of $2,186,465 for a related\nseries of violations. For violation occurring on or after November 27, 2018 and before July 31,\n2019, the maximum penalty may not exceed $213,268 per violation per day, with a maximum\npenalty not to exceed $2,132,679. For violation occurring on or after November 2, 2015 and before\nNovember 27, 2018, the maximum penalty may not exceed $209,002 per violation per day, with a\nmaximum penalty not to exceed $2,090,022. For violations occurring prior to November 2, 2015,\nthe maximum penalty may not exceed $200,000 per violation per day, with a maximum penalty\nnot to exceed $2,000,000 for a related series of violations. We have reviewed the circumstances\nand supporting documentation involved for the above probable violation and recommend that you\nbe preliminarily assessed a civil penalty as follows:\nItem number PENALTY\n1 $213,268\nResponse to this Notice\nFollowing the receipt of this Notice, you have 30 days to submit written comments, or request a\nhearing under 49 CFR § 190.211. If you do not respond within 30 days of receipt of this Notice,\nthis constitutes a waiver of your right to contest the allegations in this Notice and authorizes the\nAssociate Administrator for Pipeline Safety to find facts as alleged in this Notice without further\nnotice to you and to issue a Final Order. If you are responding to this Notice, we propose that you\nsubmit your correspondence to my office within 30 days from the receipt of this Notice. This\nperiod may be extended by written request for good cause.\nIn your correspondence on this matter, please refer to CPF 4-2020-5009 and, for each document\nyou submit, please provide a copy in electronic format whenever possible.\nSincerely,\nMary L. McDaniel, P.E.\nDirector, Southwest Region\nPipeline and Hazardous Materials Safety Administration\ncc: Michael Pearson, Vice President, Technical Services, Magellan Terminals Holdings, LP, One\nWilliams Center, P.O. Box 22186, Tulsa, Oklahoma 74172\nEnclosure: Response Options for Pipeline Operators in Enforcement Proceedings","truncated":false,"body_characters":19466}