{"operation":"document","citation":"CPF 420205010","title":"ROSE ROCK MIDSTREAM OPERATING, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"current","official":true,"published_on":"2020-05-26","effective_on":null,"summary":"OPEN notice of probable violation citing 195.406(a), 195.420(b), 195.432(b), 195.452(f)(8).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-420205010.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-420205010.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-420205010","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/420205010","body":"Notice of Probable Violation involving ROSE ROCK MIDSTREAM OPERATING, LLC. PHMSA's enforcement data identifies the cited regulations as 195.406(a),  195.420(b),  195.432(b),  195.452(f)(8). The case was opened on 2020-05-26 and is reported as open. Proposed civil penalty: $84,200. Assessed civil penalty: $67,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n420205010_Final Order_11062020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205010/420205010_Final%20Order_11062020.pdf\n\n420205010_Final Order_11062020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205010/420205010_Final%20Order_11062020_text.pdf\n\n420205010_NOPV PCP PCO_05262020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205010/420205010_NOPV%20PCP%20PCO_05262020.pdf\n\n420205010_NOPV PCP PCO_05262020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205010/420205010_NOPV%20PCP%20PCO_05262020_text.pdf\n\n420205010_Operator Response to Notice _07102020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/420205010/420205010_Operator%20Response%20to%20Notice%20_07102020.pdf\n\n420205010_NOPV PCP PCO_05262020_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nELECTRONIC MAIL - RETURN RECEIPT REQUESTED\nMay 26, 2020\nGreg McIlwain\nSenior Vice President, Operations\nRose Rock Midstream, L.P.\n1300 Main Street\nHouston, Texas 77002\nCPF 4-2020-5010\nDear Mr. McIlwain:\nOn July 23, 2018 through July 19, 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 Rose Rock Midstream L.P. (Rose Rock) Pipeline\nsystem in the Oklahoma and Kansas operating areas. At the time of the inspection these assets\nwere operated by Rose Rock Midstream L.P. (Operator ID 31476), a subsidiary of SemGroup\nCorporation. Energy Transfer LP merged with SemGroup Corporation in December 2019 and\nacquired its assets, including Rose Rock. As a result of the inspection, it is alleged that you have\ncommitted probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal\nRegulations (CFR). The items inspected and the probable violations are:\n1. §195.406 Maximum operating pressure.\n(a) Except for surge pressures and other variations from normal operations,\nno operator may operate a pipeline at a pressure that exceeds any of the following:\n(1) The internal design pressure of the pipe determined in accordance\nwith §195.106. However, for steel pipe in pipelines being converted under §195.5,\nif one or more factors of the design formula (§195.106) are unknown, one of the\nfollowing pressures is to be used as design pressure:\n(i) Eighty percent of the first test pressure that produces yield under section\nN5.0 of Appendix N of ASME/ANSI B31.8 (incorporated by\nreference, see §195.3), reduced by the appropriate factors in §§195.106(a)\nand (e); or\n\n\n\n(ii) If the pipe is 12¾ inch (324mm) or less outside diameter and is not tested\nto yield under this paragraph, 200 psi (1379 kPa)\n(2) The design pressure of any other component of the pipeline.\n(3) Eighty percent of the test pressure for any part of the pipeline which has been\npressure tested under Subpart E of this part.\n(4) Eighty percent of the factory test pressure or of the prototype test pressure\nfor any individually installed component which is excepted from testing\nunder §195.305.\n(5) For pipelines under §195.302(b)(1) and (b)(2)(i), that have not been pressure\ntested under Subpart E of this part, 80 percent of the test pressure or highest\noperating pressure to which the pipeline was subjected for 4 or more continuous\nhours that can be demonstrated by recording charts or logs made at the time the\ntest or operations were conducted.\nRose Rock failed to establish a maximum operating pressure (MOP) for its Riverside to Hanston\nand Hanston to Hudson pipeline segments in accordance with 49 CFR § 195.406. The pipeline\nhas been operating without an established MOP.\nRose Rock failed to maintain records of pressure tests or operational pressures for two of twelve\npipeline segments and were unable to locate records for the Riverside to Hanston and Hanston to\nHudson segments of line at the time of the PHMSA inspection to demonstrate the two segments\nwere testing in accordance with Subpart E to establish an MOP.\n2. §195.420 Valve Maintenance.\n(b) Each operator shall, at intervals not exceeding 71∕2 months, but at least\ntwice each calendar year, inspect each mainline valve to determine that it is\nfunctioning properly.\nRose Rock failed to inspect each mainline valve to determine that it is functioning properly at\nintervals not exceeding 7½ months, but at least twice each calendar year. Rose Rock was unable\nto provide documentation to validate the inspection of several valves in their system for calendar\nyear 2018.\nSix (6) valves in the Kansas area had no documentation to verify they were inspected in the 2nd\nhalf of 2018. The valves had been inspected prior to and after, as their inspection scheduled\ndesignated with no maintenance issues.\n\n\n\n3. §195.432 Inspection of in-service breakout tanks.\n(b) Each operator must inspect the physical integrity of in-service atmospheric and\nlow-pressure steel above-ground breakout tanks according to API Std 653 (except\nsection 6.4.3, Alternative Internal Inspection Interval) (incorporated by\nreference, see §195.3). However, if structural conditions prevent access to the tank\nbottom, its integrity may be assessed according to a plan included in the operations\nand maintenance manual under §195.402(c)(3). The risk-based internal inspection\nprocedures in API Std 653, section 6.4.3 cannot be used to determine the internal\ninspection interval.\nRose Rock failed to complete an external in-service breakout tank (BOT) inspection on two tanks\nin accordance with API 653 Section 6.3 Inspections from the Outside of the Tank. API 653 Section\n6.3 requires external in-service BOT inspections every 5 years.\nPHMSA’s review of the certified API 653 inspection documents provided by Rose Rock at the\ntime of the inspection found that at the Kansas Tank Farm two BOTs exceeded the 5-year\nrequirement by 24 (Tank 1008) to 49 days (Tank 0301). At the Cushing Tank Farm, thirteen BOTs\nexceeded the 5-year requirement by 17 (Tank 3505) to 179 days (Tank 2534).\n4. §195.432 Inspection of in-service breakout tanks.\n(b) Each operator must inspect the physical integrity of in-service atmospheric and\nlow-pressure steel above-ground breakout tanks according to API Std 653 (except\nsection 6.4.3, Alternative Internal Inspection Interval) (incorporated by\nreference, see §195.3). However, if structural conditions prevent access to the tank\nbottom, its integrity may be assessed according to a plan included in the operations\nand maintenance manual under §195.402(c)(3). The risk-based internal inspection\nprocedures in API Std 653, section 6.4.3 cannot be used to determine the internal\ninspection interval.\nRose Rock failed to complete an initial internal out-of-service BOT inspection on three tanks in\naccordance with API 653 Section 6.4 Internal Inspection. API 653 Section 6.4 requires initial\ninternal out-of-service inspections within the first 10 years of operation.\nAt the time of the PHMSA inspection, Tanks #2524 (in-service 3/1/2009), #2525 (in-service\n1/31/2009), #3504 (in-service 2/24/2009), and #3505 (in-service 6/24/2009) were still in-service.\nFor each of the tanks had not been taken out of service to perform the initial internal out-of-service\ninspections within the first ten years of operation as required.\nRose Rock provided information following the inspection to demonstrate the Tanks were\ninspected or removed from service for inspection following our inspection.\n\n\n\n5. §195.452 Pipeline Integrity Management\n(f) What are the elements of an integrity management program? An integrity\nmanagement program begins with the initial framework. An operator must\ncontinually change the program to reflect operating experience, conclusions drawn\nfrom results of the integrity assessments, and other maintenance and surveillance\ndata, and evaluation of consequences of a failure on the high consequence area. An\noperator must include, at minimum, each of the following elements in its written\nintegrity management program: Rose Rock failed to comply with the requirements\nof their IM plan.\n(8) A process for review of integrity assessment results and information analysis by a\nperson qualified to evaluate the results and information (see paragraph (h)(2) of this\nsection).\nRose Rock failed to perform its review of integrity assessment results and information analysis by\na person qualified to evaluate the results and information in accordance with §195.452(f)(8). Rose\nRock’s written Integrity Management Plan Section 1.3 Responsible Person identifies the Pipeline\nIntegrity Specialist as the responsible party to perform Tasks to develop, analyze, and collaborate\nwith other departments to implement the Integrity Management Plan.\nRose Rock’s Pipeline Integrity Specialist, on several occasions during the inspection, was unable\nto access the integrity management plan documentation, which limited his ability to evaluate the\nresults and information from integrity assessments. Rose Rock’s Integrity Management Plan,\nSection 0.6 Roles and Responsibilities, the Pipeline Integrity Specialist is responsible for\noverseeing and implementing all aspects of the IM plan to include direct access to all parts of the\nIM plan. Without such information, an adequate review cannot be performed.\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. We have reviewed the circumstances and supporting\ndocumentation involved for the above probable violation(s) and recommend that you be\npreliminarily assessed a civil penalty of $84,200 as follows:\nItem number\nPENALTY\n1\n3\n4\n$40,400\n$15,200\n$28,600\nWarning Items\n\n\n\nWith respect to items 2 and 5, we have reviewed the circumstances and supporting documents\ninvolved in this case and have decided not to conduct additional enforcement action or penalty\nassessment proceedings at this time. We advise you to promptly correct this item. Failure to do\nso may result in additional enforcement action.\nProposed Compliance Order\nWith respect to items 1 pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials\nSafety Administration proposes to issue a Compliance Order to Rose Rock Midstream, L.P. Please\nrefer to the Proposed Compliance Order, which is enclosed and made a part of this Notice.\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in\nEnforcement Proceedings. Please refer to this document and note the response options. All\nmaterial you submit in response to this enforcement action may be made publicly available. If you\nbelieve that any portion of your responsive material qualifies for confidential treatment under 5\nU.S.C. 552(b), along with the complete original document you must provide a second copy of the\ndocument with the portions you believe qualify for confidential treatment redacted and an\nexplanation of why you believe the redacted information qualifies for confidential treatment under\n5 U.S.C. 552(b).\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 receipt of this Notice. This period\nmay be extended by written request for good cause.\nIn your correspondence on this matter, please refer to CPF 4-2020-5010 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\nEnclosures: Proposed Compliance Order\nResponse Options for Pipeline Operators in Enforcement Proceedings\n\n\n\nPROPOSED COMPLIANCE ORDER\nPursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) proposes to issue Rose Rock Midstream, L.P. a Compliance Order\nincorporating the following remedial requirements to ensure the compliance of Rose Rock with\nthe pipeline safety regulations:\n1. 2. 3. In regards to Item 1 of the Notice pertaining to missing test records, Rose Rock\nshall maintain a 20% pressure reduction for the segments identified below until\nsuch time Rose Rock provides records to PHMSA that conform to the requirements\nof §195.310 and demonstrate the two segments identified below have been pressure\ntested in accordance with Subpart E of 49 CFR 195.\n Riverside to Hanston\n Hanston to Hudson\nIn regards to Item 1 Rose Rock must provide pressure test records to PHMSA,\nSouthwest Region Director no later than 180 days from Final Order.\nIt is requested (not mandated) that Rose Rock Midstream, L.P. maintain\ndocumentation of the safety improvement costs associated with fulfilling this\nCompliance Order and submit the total to Mary L. McDaniel, P.E., Director,\nSouthwest Region, Pipeline and Hazardous Materials Safety Administration. It is\nrequested that these costs be reported in two categories: 1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses, and 2) total cost\nassociated with replacements, additions and other changes to pipeline\ninfrastructure.\n\n420205010_Final Order_11062020_text.pdf\n\nNovember 6, 2020\nVIA ELECTRONIC MAIL TO: gregory.mcilwain@energytransfer.com\nMr. Greg McIlwain\nSenior Vice President, Operations\nRose Rock Midstream Operating, LLC\nEnergy Transfer, LP\n1300 Main Street\nHouston, Texas 77002\nRe: CPF No. 4-2020-5010\nDear Mr. McIlwain:\nEnclosed please find the Final Order issued in the above-referenced case. It makes findings of\nviolation, assesses a reduced civil penalty of $67,000, and specifies actions that need to be taken\nby Rose Rock Midstream Operating, 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 McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA\nMr. Kelcy Warren, Chief Executive Officer, Energy Transfer, LP,\nkelcy.warren@energytransfer.com\nMr. Todd Nardozzi, Director – Regulatory Compliance, Energy Transfer, LP,\ntodd.nardozzi@energytransfer.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 )\nRose Rock Midstream Operating, LLC, ) )\n)\n)\nRespondent. )\n____________________________________)\nCPF No. 4-2020-5010\nFINAL ORDER\nFrom July 23, 2018, through July 19, 2019, pursuant to 49 U.S.C. § 60117, a representative of\nthe Pipeline 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 Rose Rock\nMidstream Operating, LLC’s (Rose Rock or Respondent) crude oil pipeline systems in\nOklahoma and Kansas. At the time of the inspection, Rose Rock, a subsidiary of SemGroup\nCorporation, operated the assets covered by this inspection. Energy Transfer, LP (Energy\nTransfer), acquired SemGroup Corporation in December 2019.1\nAs a result of the inspection, the Director, Southwest Region, OPS (Director), issued to\nRespondent, by letter dated May 26, 2020, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice), which also included warning items pursuant\nto 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding\nthat Rose Rock had committed five violations of 49 C.F.R. Part 195 and proposed assessing a\ncivil penalty of $84,200 for the alleged violations. The Notice also proposed ordering\nRespondent to take certain measures to correct the alleged violations. The warning items\nrequired no further action, but warned the operator to correct one of the probable violations or\nface possible future enforcement action.\nAfter receiving an extension of time to respond, Energy Transfer, on behalf of Rose Rock,\nresponded to the Notice by letter dated July 10, 2020 (Response). The company did not contest\nthe allegations of violation but provided an explanation of its actions and requested that the\nproposed civil penalty be reduced. Respondent did not request a hearing and therefore has\nwaived its right to one.\n1 Energy Transfer Press Release, Sept. 16, 2019, available at https://ir.energytransfer.com/news-releases/news-\nrelease-details/energy-transfer-acquire-semgroup-5-billion-transaction (last accessed Oct. 16, 2020).\n\n\n\nCPF No. 4-2020-5010\nPage 2\nFINDINGS OF VIOLATION\nIn its Response, Rose Rock did not contest the allegations 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. § 195.406(a), which states:\n§ 195.406 Maximum operating pressure.\n(a) Except for surge pressures and other variations from normal\noperations no operator may operate a pipeline at a pressure that exceeds any\nof the following:\n(1) The internal design pressure of the pipe determined in accordance\nwith §195.106. However, for steel pipe in pipelines being converted under\n§195.5, if one or more factors of the design formula (§195.106) are\nunknown, one of the following pressures is to be used as design pressure:\n(i) Eighty percent of the first test pressure that produces yield under\nsection N5.0 of Appendix N of ASME/ANSI B31.8 (incorporated by\nreference, see §195.3), reduced by the appropriate factors in §§195.106(a)\nand (e); or\n(ii) If the pipe is 12¾ inch (324 mm) or less outside diameter and is not\ntested to yield under this paragraph, 200 p.s.i. (1379 kPa) gage.\n(2) The design pressure of any other component of the pipeline.\n(3) Eighty percent of the test pressure for any part of the pipeline which\nhas been pressure tested under subpart E of this part.\n(4) Eighty percent of the factory test pressure or of the prototype test\npressure for any individually installed component which is excepted from\ntesting under §195.305.\n(5) For pipelines under §195.302(b)(1) and (b)(2)(i), that have not been\npressure tested under subpart E of this part, 80 percent of the test pressure\nor highest operating pressure to which the pipeline was subjected for 4 or\nmore continuous hours that can be demonstrated by recording charts or logs\nmade at the time the test or operations were conducted.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.406(a) by failing to establish a\nmaximum operating pressure (MOP) for its pipeline segments. Specifically, the Notice alleged\nthat Rose Rock failed to maintain records of pressure tests or operational pressures for the\nRiverside to Hanston pipeline segment and the Hanston to Hudson pipeline segment. Therefore,\nRose Rock failed to demonstrate that MOP was properly established pursuant to 49 C.F.R.\n§ 195.406(a).\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of the\nevidence, I find that Respondent violated 49 C.F.R. § 195.406(a) by failing to establish the MOP\non two pipeline segments.\n\n\n\nCPF No. 4-2020-5010\nPage 3\nItem 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.432(b), which states:\n§ 195.432 Inspection of in-service breakout tanks.\n(a) …\n(b) Each operator must inspect the physical integrity of in-service\natmospheric and low-pressure steel above-ground breakout tanks according\nto [American Petroleum Institute (API)] Std 653 (except section 6.4.3,\nAlternative Internal Inspection Interval) (incorporated by reference, see\n§195.3). However, if structural conditions prevent access to the tank\nbottom, its integrity may be assessed according to a plan included in the\noperations and maintenance manual under §195.402(c)(3). The risk-based\ninternal inspection procedures in API Std 653, section 6.4.3 cannot be used\nto determine the internal inspection interval.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.432(b) by failing to complete an\nexternal in-service breakout tank (BOT) inspection in accordance with API Std 653, Section 6.3,\nInspections from the Outside of the Tank, which requires external inspection of in-service BOTs\nevery five years. Specifically, the Notice alleged that Rose Rock exceeded the five-year\ninspection requirement for two BOTs at the Kansas Tank Farm, and 13 BOTs at the Cushing\nTank Farm.\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. § 195.432(b) by failing to inspect in-\nservice BOTs in accordance with API Std 653.\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.432(b), as quoted above,\nby failing to complete an initial internal out-of-service BOT inspection on three tanks in\naccordance with API 653, Section 6.4, Internal Inspection, which requires an inspection within\nthe first 10 years of operation. Specifically, the Notice alleged that Rose Rock failed to take\nTanks #2524 (in-service 3/1/2009), #2525 (in-service 1/31/2009), and #3505 (in-service\n6/24/2009) out of service to perform the initial internal out-of-service inspections within the first\n10 years of operation.\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. § 195.432(b) by failing to complete an\ninitial internal out-of-service BOT inspection on three tanks within the first 10 years of\noperation.\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\n\n\nCPF No. 4-2020-5010\nPage 4\n$200,000 per violation for each day of violation, up to a maximum of $2,000,000 for any related\nseries of violations.2 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and\n49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and\ngravity of the violation, including adverse impact on the environment; the degree of\nRespondent’s culpability; the history of Respondent’s prior offenses; any effect that the penalty\nmay have on its ability to continue doing business; and the good faith of Respondent in\nattempting 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 $84,200 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $40,400 for Respondent’s violation of 49 C.F.R.\n§ 195.406(a), for failing to establish the MOP for two pipeline segments. Rose Rock neither\ncontested the allegation nor presented any evidence or argument justifying a reduction in the\nproposed penalty. In this case, Respondent failed to comply with a requirement that was clearly\napplicable and did not present a reasonable justification for its noncompliance. Accordingly,\nhaving reviewed the record and considered the assessment criteria, I assess Respondent a civil\npenalty of $40,400 for violation of 49 C.F.R. § 195.406(a).\nItem 3: The Notice proposed a civil penalty of $15,200 for Respondent’s violation of 49 C.F.R.\n§ 195.432(b), for failing to complete an external in-service BOT inspection on two tanks within\nthe five-year requirement. Rose Rock neither contested the allegation nor presented any\nevidence or argument justifying a reduction in the proposed penalty. Respondent failed to\ncomply with an applicable requirement, but offered a reasonable justification for its non-\ncompliance and was therefore granted a “Good Faith” credit in the Notice. Accordingly, having\nreviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of\n$15,200 for violation of 49 C.F.R. § 195.432.\nItem 4: The Notice proposed a civil penalty of $28,600 for Respondent’s violation of 49 C.F.R.\n§ 195.432(b), for failing to complete an initial out-of-service BOT inspections on three tanks\nwithin the first 10 years of operation, as required. Respondent did not contest the allegation of\nviolation, but requested a reduction in the proposed penalty amount based on reconsideration of\nthe “Good Faith” penalty assessment criterion found in Part E8 of the Violation Report for this\nitem.3 Respondent failed to comply with an applicable requirement, but offered a reasonable\njustification for its non-compliance. Specifically, Rose Rock stated it reasonably believed it had\nto perform the 10-year initial out-of-service BOT internal inspections within the calendar year of\nthe 10th year of service, not on or prior to the calendar date 10 years after placing the BOT in\nservice.4 Rose Rock further noted that PHMSA had provided a “Good Faith” credit for an\nidentical justification for non-compliance concerning Item 3. In her Region Recommendation,\n2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.\n3 Pipeline Safety Violation Report (Violation Report), (May 26, 2020) (on file with PHMSA).\n4 Each of the BOTs that Rose Rock failed to inspect by the regulatory deadline were scheduled to be removed from\nservice within calendar year 2019 prior to PHMSA’s inspection. Response, at 3.\n\n\n\nCPF No. 4-2020-5010\nPage 5\nthe Director agreed that a “Good Faith” credit should also be applied to Item 4.5 Because\nRespondent had already taken concrete action toward inspecting the BOT prior to PHMSA’s\ninspection, I approve the Director’s decision. Accordingly, having reviewed the record and\nconsidered the assessment criteria, I assess Respondent a reduced civil penalty of $11,400 for\nviolation of 49 C.F.R. § 195.432(b).\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a total civil penalty of $67,000.\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.\nThe Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $67,000 civil penalty will result in accrual of interest at the current annual rate\nin 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.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Item 1 in the Notice for the violation of\n49 C.F.R. § 195.406(a). Under 49 U.S.C. § 60118(a), each person who engages in the\ntransportation of hazardous liquids or who owns or operates a pipeline facility is required to\ncomply with the applicable safety standards established under chapter 601. Pursuant to the\nauthority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the\nfollowing actions to ensure compliance with the pipeline safety regulations applicable to its\noperations:\n1. With respect to the violation of § 195.406(a) (Item 1), Respondent must maintain\na 20 percent pressure reduction for the segments identified below until such time\nRose Rock provides records to PHMSA that conform to the requirements of\n§ 195.310 and demonstrate that the two segments identified below have been\npressure tested in accordance with Subpart E of 49 CFR 195.\n Riverside to Hanston\n Hanston to Hudson\n5 Region Recommendation, at 4.\n\n\n\nCPF No. 4-2020-5010\nPage 6\nRespondent must provide pressure test records to the Director no later than 180\ndays from receipt of the Final Order.\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nIt is requested (not mandated) that Respondent maintain documentation of the safety\nimprovement costs associated with fulfilling this Compliance Order and submit the total to Mary\nL. McDaniel, P.E., Director, Southwest Region, Pipeline and Hazardous Materials Safety\nAdministration. It is requested that these costs be reported in two categories: (1) total cost\nassociated with preparation/revision of plans, procedures, studies and analyses; and (2) total cost\nassociated with replacements, additions and other changes to pipeline infrastructure.\nFailure to comply with this Order may result in the administrative assessment of civil penalties\nnot to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), for each violation for\neach day the violation continues or in referral to the Attorney General for appropriate relief in a\ndistrict court of the United States.\nWARNING ITEMS\nWith respect to Items 2 and 5, the Notice alleged probable violations of Part 195, but identified\nthem as warning items pursuant to § 190.205. The warnings were for:\n49 C.F.R. § 195.420(b) (Item 2) ─ Respondent’s alleged failure to inspect, at\nintervals not exceeding 7 ½ months but at least twice each calendar year, each\nmainline valve to determine that it is functioning properly; and\n49 C.F.R. § 195.452(f)(8) (Item 5) ─ Respondent’s alleged failure to perform its\nreview of integrity assessment results and information analysis by a person\nqualified to evaluate the results and information, as required.\nIf OPS finds a violation of any of these items in a subsequent inspection, Respondent may be\nsubject to future enforcement action.\nUnder 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final\nOrder to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey\nAvenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of\nChief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of this\nFinal Order by Respondent. Any petition submitted must contain a statement of the issue(s) and\nmeet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays\nthe payment of any civil penalty assessed. The other terms of the order, including corrective\naction, remain in effect unless the Associate Administrator, upon request, grants a stay.\n\n\n\nCPF No. 4-2020-5010\nPage 7\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nNovember 6, 2020\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":32674}