{"operation":"document","citation":"CPF 520045010","title":"BELLE FOURCHE PIPELINE CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2004-05-19","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.266(a), 195.302(a), 195.303, 195.402(a), 195.402(c)(11), 195.402(c)(13), 195.402(c)(7), 195.403(b)(1), 195.404(a)(1)(vii), 195.406, 195.408(b)(1), 195.410(c), 195.428(a), 195.432(b), 195.434, 195.436, 195.54(a), 195.559(f), 195.561(b), 195.563(e), 195.567, 195.567(c), 195.569, 195.573(e), 195.583(c), 195.589(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520045010.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520045010.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520045010","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520045010","body":"Notice of Probable Violation involving BELLE FOURCHE PIPELINE CO. PHMSA's enforcement data identifies the cited regulations as 195,  195.266(a),  195.302(a),  195.303,  195.402(a),  195.402(c)(11),  195.402(c)(13),  195.402(c)(7),  195.403(b)(1),  195.404(a)(1)(vii),  195.406,  195.408(b)(1),  195.410(c),  195.428(a),  195.432(b),  195.434,  195.436,  195.54(a),  195.559(f),  195.561(b),  195.563(e),  195.567,  195.567(c),  195.569,  195.573(e),  195.583(c),  195.589(c). The case was opened on 2004-05-19 and is reported as closed as of 2010-12-01. Proposed civil penalty: $67,500. Assessed civil penalty: $41,500. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520045010_closure letter_12012010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_closure%20letter_12012010.pdf\n\n520045010_closure letter_12012010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_closure%20letter_12012010_text.pdf\n\n520045010_Decision On Petition For Reconsideration_07152009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_Decision%20On%20Petition%20For%20Reconsideration_07152009.pdf\n\n520045010_Decision On Petition For Reconsideration_07152009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_Decision%20On%20Petition%20For%20Reconsideration_07152009_text.pdf\n\n520045010_final order_12112006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_final%20order_12112006.pdf\n\n520045010_final order_12112006_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_final%20order_12112006_text.pdf\n\n520045010_petition for reconsideration_02152007.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_petition%20for%20reconsideration_02152007.pdf\n\nCPF_5-2004_5010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/CPF_5-2004_5010.pdf\n\n520045010_Decision On Petition For Reconsideration_07152009_text.pdf\n\nVIA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 0390 0005 6162 5579]\nMr. Hank A. True III\nPresident\nBelle Fourche Pipeline Company\n455 North Poplar Street\nP. O. Box 2360\nCasper, WY 82602\nRE: CPF No. 5-2004-5010\nDear Mr. True:\nEnclosed is this agency’s decision on the Petition for Reconsideration filed by Belle Fourche\nPipeline Company in the above-referenced case. For the reasons stated in the decision, the\nPetition is granted in part and denied in part. When the terms of the Compliance Order have\nbeen completed, as determined by the Director, Western Region, this enforcement action will be\nclosed. Your receipt of this decision constitutes service under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure:\ncc: Mr. Manuel A. Lojo, Esq., Belle Fourche Pipeline Company\nMr. Chris Hoidal, Director, Western Region, PHMSA\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n______________________________\n)\nIn the Matter of )\n)\nBelle Fourche Pipeline Company, ) CPF No. 5-2004-5010\n)\nPetitioner. )\n______________________________)\nDECISION ON PETITION FOR RECONSIDERATION\nOn December 11, 2006, pursuant to 49 C.F.R. § 190.213, the Acting Associate Administrator for\nPipeline Safety, Pipeline and Hazardous Materials Safety Administration (PHMSA), issued a\nFinal Order finding that Belle Fourche Pipeline Company (Belle Fourche or Petitioner) had\nfor four of the violations, and ordering the company to take certain actions to comply with the\npertinent regulations.\nviolated various pipeline safety regulations,1 assessing Petitioner a total civil penalty of $61,500\nOn December 18 and 22, 2006, Belle Fourche received personal service of the Final Order,2\nand\non December 29, 2006, the company paid the entire penalty. Six weeks later, on February 16,\n2007, Belle Fourche filed this Petition for Reconsideration (Petition) pursuant to 49 C.F.R.\n§ 190.215. By letter dated February 17, 2009, PHMSA granted Petitioner an additional 60 days\nto supplement the record, and Belle Fourche did so by letter dated April 15, 2009.\nPetitioner seeks reconsideration of only two of the seven Findings of Violation in the Final\nOrder. First, Belle Fourche contests the finding in Item 3 that Belle Fourche incorrectly applied\n49 C.F.R. § 195.303, the regulation providing a risk-based alternative to the pressure-testing\nrequirements of 49 C.F.R. § 195.302, as applied to three of Belle Fourche’s pipeline segments\nconstructed with pre-1970 electric resistance-welded and lapwelded (ERW) pipe. Second,\nPetitioner contests the finding in Item 10 that Belle Fourche incorrectly applied 49 C.F.R.\n1 49 C.F.R. §§ 195.1(a), (b)(1)-(4), 195.50(b), 195.54(a), 195.303, 195.402(a), 195.406, 195.408, 195.428(a),\n195.432(b), and 195.436.\n2 On December 18, 2006, Mr. Greg Vineyard signed a U.S. Postal Service Domestic Return Receipt, PS Form 3811,\nat Petitioner’s official corporate mailing address, acknowledging receipt of the Final Order on behalf of Mr. Manual\nA. Lojo, counsel for Belle Fourche.\nhttps://wyobiz.wy.gov/Ecommerce/Common/FilingDetail.aspx?FilingNum=1980-000073155 (corporate information\non Belle Fourche obtained on January 21, 2009, from official website of the Wyoming Secretary of State). On\nDecember 22, 2006, Mr. Vineyard signed another PS Form 3811, at Petitioner’s Casper, Wyoming office,\nacknowledging receipt of the Final Order on behalf of Mr. Hank A. True III, president of Belle Fourche.\n\n\n\n2\n§ 195.406(a)(1) in establishing the maximum operating pressure (MOP) of two other pipeline\nsegments because the company lacked adequate documentation of the design specifications or\nmaterials testing of the pipe in those segments. The Final Order assessed Belle Fourche a civil\npenalty of $20,000 for Item 10 and directed it to take certain actions to correct the violations\nfound in both Items 3 and 10. No penalty was assessed for Item 3.\nAs provided in 49 C.F.R. § 190.215(a)-(e), the pipeline safety regulations afford a respondent the\nopportunity to file a petition with the Associate Administrator for reconsideration of a final\norder. The purpose of this procedure is not to provide a right of appeal or de novo review, but to\nallow for the presentation of previously unknown or unavailable information or arguments and to\npermit the agency to reconsider and correct any errors in the final order. Consistent with these\nprinciples, the regulations provide that the Associate Administrator is not obliged to consider\nrepetitious information, arguments, or petitions, and that a petitioner must provide valid reasons\nwhy any additional facts or arguments were not presented in a timely manner.\nIt is clear from the record in this case that the Petition could be summarily dismissed as untimely\nfiled. Under the controlling regulation, a petition must be “received no later than 20 days after\nservice of the final order upon the respondent.\nuntil approximately seven weeks after the president of Belle Fourche and its counsel received\npersonal service of the Final Order. Furthermore, Petitioner has not offered any valid reason\nwhy the additional evidence and arguments raised in this Petition were not submitted prior to\nissuance of the Final Order. Despite these deficiencies, I have reviewed the entire record of\nthese proceedings as a matter of administrative discretion and concluded that the case presents a\nsignificant legal question that should be addressed. Based upon such review and for the reasons\ncited below, I am granting the Petition in part and denying it in part.\n”3 PHMSA did not receive the Petition in this case\nI. Discussion\nA. Item 3 - Belle Fourche’s Violation of 49 C.F.R. § 195.303\nItem 3 of the Final Order found that Belle Fourche failed to comply with 49 C.F.R.\n§ 195.303, as applied to three pipeline segments constructed with pre-1970 ERW pipe.\nBefore discussing the specific circumstances of Petitioner’s request for reconsideration, I\nwill provide some useful background information on 49 C.F.R. § 195.302, the regulation\nthat imposes a pressure-testing requirement on all hazardous liquid pipelines, and 49\nC.F.R. § 195.303, the regulation that establishes an elective, risk-based alternative to such\ntesting.\n3 49 C.F.R. § 190.215(a).\n\n\n\n3\nSection 195.302 prohibits the operation of a hazardous liquid pipeline that has not been\nsubjected to a valid pressure test.4 However, that regulation includes certain exemptions,\ntwo of which are relevant to this proceeding. First, an interstate hazardous liquid pipeline\nconstructed before January 8, 1971, may be operated without a pressure test, so long as\nthe operator of that line established its MOP under 49 C.F.R. § 195.406(a)(5) on or\nbefore December 7, 1998.5 This exemption ensures that an adequate margin of safety\nexists in the absence of a pressure test6 by limiting the MOP of such a line to no more\nthan “80 percent of the test pressure or highest operating pressure to which the pipeline\nwas subjected for 4 or more continuous hours that can be demonstrated by recording\ncharts or logs made at the time the test or operations were conducted.”7\nSecond, older hazardous liquid pipelines, including those constructed with pre-1970\nERW pipe, may be operated without a pressure test if the operator elects to use the risk-\nbased alternative provided in 49 C.F.R. § 195.303 and a pressure test is not otherwise\nrequired under the criteria specified in that regulation.\n8 Those criteria require that each\npipeline segment be classified on the basis of several risk indicators, such as location,\nproduct, volume, and probability of failure,\n9 and that a pressure test be performed on any\nsegment constructed with pre-1970 ERW pipe unless a supplementary engineering\nanalysis shows that the line is not susceptible to longitudinal seam failure.10\nIn this case, the Final Order found that Petitioner elected to use the 49 C.F.R. § 195.303\nrisk-based alternative to pressure testing for three pipeline segments constructed with pre-\n1970 ERW pipe.\n11\nIt also found that while Belle Fourche had performed a metallurgical\nseam evaluation on samples from one of those lines (i.e., the Donkey Creek to Guernsey\nline), Petitioner was not able to adequately document that the pipe used throughout that\nline was qualitatively similar to the samples tested. The Final Order further found that\nPetitioner had not completed an adequate seam analysis of the Alzada to Belle Creek or\nthe Belle Creek to Highway 14-16 pipeline segments. Therefore, the Final Order\n4 Specifically, that regulation provides that “no operator may operate a pipeline unless it has been pressure tested\nunder this [Subpart E] without leakage.” 49 C.F.R. § 195.302(a). The specific terms and conditions that must be\nfollowed in conducting such tests, including test-pressure and time requirements, are prescribed in 49 C.F.R. §§\n195.304-310.\n5 49 C.F.R. § 195.302(b)(1)(i), (c)(1)(ii).\n6 Department of Transportation, Research and Special Programs Administration, Pressure Testing Older Hazardous\nLiquid and Carbon Dioxide Pipelines, 59 Fed. Reg. 29379 (Jun. 7, 1994) (providing reasons or bases for the\nadoption of 49 C.F.R. § 195.302).\n7 49 C.F.R. § 195.406(a)(5).\n8 49 C.F.R. § 195.302(b)(4).\n9 49 C.F.R. § 195.303(a)-(b).\n10 49 C.F.R. § 195.303(c)-(d).\n11 Those pipeline segments were the 8-inch Alzada to Belle Creek line, the 10-inch Belle Creek to Highway 14-16\nline, and the 12-inch Donkey Creek to Guernsey line.\n\n\n\n4\nconcluded that Belle Fourche violated § 195.303 as applied to each of these three\nsegments.\nWhile not entirely clear, Petitioner appears to seek reconsideration of these findings on\nthe basis of 49 C.F.R. §§ 195.302(b)(1)(i) and (c)(1)(ii). In particular, Petitioner\ncontends that the three segments in question were all constructed prior to January 8,\n1971, thereby qualifying for the § 195.302(b)(1)(i) exception to mandatory pressure\ntesting. On April 15, 2009, Belle Fourche also submitted a pressure chart from October\n14, 2000, showing that “the Donkey Creek line” was continuously operated on that date\nat 1440 psi for more than four hours. Petitioner therefore argues that the “lawful” MOP\nof that line under §§ 195.302(b)(1)(i), (c)(1)(ii) and 195.406(a)(5) is 1150 psi (or 80% of\n1440 psi), and that Item 3 of the Final Order should be withdrawn.\nPetitioner’s argument, however, is not persuasive. First, Belle Fourche elected not to\nseek an exemption from the mandatory pressure-testing requirement under\n§§ 195.302(b)(1)(i) and (c)(1)(ii) for the three segments at issue.\nPetitioner’s compliance with those regulations is not relevant to whether it violated the\nrequirements of § 195.303, the regulation that Belle Fourche chose to apply to these three\npipeline segments.\n12 Therefore,\nSecond, even if §§ 195.302(b)(1)(i) and (c)(1)(ii) were somehow relevant to Petitioner’s\nviolation of § 195.303, Belle Fourche has not shown that it established the MOP of the\nDonkey Creek line under § 195.406(a)(5) on or before December 7, 1998. On the\ncontrary, Petitioner’s pressure chart for that line is dated October 14, 2000, nearly two\nyears after the deadline for establishing MOP on the basis of the highest continuous\n4-hour operating pressure. Accordingly, Belle Fourche has not shown that it complied\nwith §§ 195.302(b)(1)(i) and (c)(1)(ii), even if those regulations were applicable.\nIn sum, an operator is not required to use the risk-based alternative provided in\n§ 195.303. However, if an operator elects to use that alternative and the segment in\nquestion is constructed with pre-1970 ERW pipe, then a valid engineering analysis must\nbe performed to rebut the presumption that the line is susceptible to longitudinal seam\nfailure and therefore requires pressure testing.\n13 There is no factual dispute here that the\nthree segments at issue were all constructed, at least in part, with pre-1970 ERW pipe,14\nand that Petitioner elected to use the § 195.303 risk-based alternative to pressure testing\nfor those lines. Since the record does not reflect any valid engineering analysis to rebut\nthe presumption of longitudinal seam failure for any of the three lines, I must deny\n12 Belle Fourche’s written procedures at the time of the inspection, attached as Exhibit 4 to the OPS inspector’s\noriginal violation report, state that the company had “elected to follow the risk-based alternative to pressure testing\nper 195.303” for these three lines.\n13 49 C.F.R. § 195.303(c)-(d).\n14 The record indicates that the Alzada to Belle Creek line was constructed in 1966 with ERW pipe, that the Belle\nCreek to Highway 14-16 line was constructed in 1966 with ERW pipe, and that the Donkey Creek to Guernsey line\nwas constructed in 1968 with ERW pipe.\n\n\n\n5\nPetitioner’s request for reconsideration of Item 3 of the Final Order and affirm the finding\nthat Belle Fourche violated 49 C.F.R. § 195.303.\nB. Item 10 - Belle Fourche’s Violation of 49 C.F.R. § 195.406\nItem 10 of the Final Order found that Petitioner failed to comply with 49 C.F.R.\n§ 195.406 in calculating the MOP of two lines constructed with pre-1970 ERW pipe.\nSpecifically, it found that Belle Fourche lacked adequate documentation of the specified\nminimum yield strength (SMYS) and other material specifications of the pipe in the Twentymile\nto Guernsey line and the Highway 450 Station to 12-inch Junction line. The Final Order also\nfound that as a result of such inadequate documentation, Petitioner had to use certain default\nvalues in establishing the MOP for those two lines under § 195.406(a)(1), the regulation that\nlimits MOP on the basis of the internal design pressure of the pipe. Because the company had\nexceeded the MOP that PHMSA concluded should have been calculated on the basis of these\ndefault values, the Final Order concluded that Belle Fourche violated 49 C.F.R. § 195.406.\nHaving carefully reviewed the entire record, I conclude that the Finding of Violation in Item 10\ncannot be sustained, yet not for the reasons cited by Petitioner.\n15 Section 195.406(a)(1) limits\nthe MOP of hazardous liquid pipelines on the basis of their internal design pressure, a value that\nis determined by using a formula set forth in 49 C.F.R. § 195.106.\npreviously determined that pipelines designed, constructed, and installed prior to April 1, 1970,\nare not subject to the requirements of § 195.406(a)(1).\n16 However, PHMSA has\nSpecifically, in response to a request from the American Petroleum Institute on the relationship\nbetween 49 C.F.R. §§ 195.106 and 195.406(a)(1) and the potential retroactive application of\nthose regulations to existing pipelines, PHMSA’s predecessor agency, the Materials\nTransportation Bureau, issued a formal letter of interpretation.\n17 Dated October 15, 1976, the\nletter states that “§ 195.406(a)(1) only applies to pipelines to which § 195.106 applies (i.e.,\npipelines which are constructed, relocated, or otherwise changed on or after April 1, 1970, the\neffective date of [section] 195.106).”18\nIt also states that “[w]here § 195.406(a)(1) is\ninapplicable, one of the other standards in [section] 195.406(a) would govern the maximum\n15 In its Petition, Belle Fourche asserts arguments previously considered and rejected in the Final Order. First,\nPetitioner argues that it has shown through credible evidence that the SMYS of the pipe used in one of the disputed\nlines is 60,000 psi, and that the SMYS of the pipe used in the other line is 42,000 psi. Petitioner also introduces, as\nExhibit 2 to its Petition, an affidavit from the company’s long-time superintendent of operations, Mr. Lyle Sessions,\nto corroborate the evidence previously submitted with its Response, including a construction map that allegedly\nshows the SMYS and other specifications of the pipe used in the two segments in question. Given the ultimate\ndisposition of the Finding of Violation in Item 10, further consideration of this evidence is unnecessary.\n16 Under 49 C.F.R. § 195.106, the internal design pressure of a pipe is calculated by inputting certain specific criteria\ninto a predetermined formula.\n17 Operating Pressure for Platform Piping; Interpretation, Department of Transportation, Materials Transportation\nBureau, Docket No. OPSO-35 (Oct. 15, 1976).\n18 Id.\n\n\n\n6\nallowable operating pressure.” This 1976 letter of interpretation remains valid today and is\nconsistent with the long-standing statutory prohibition, currently codified at 49 U.S.C.\n§ 60104(b), on the retroactive application of design, construction, and initial testing standards to\npipelines in existence when such standards are adopted.19\nIt is undisputed that the Twentymile to Guernsey line and Highway 450 Station to 12-inch\nJunction line were both designed, constructed, and installed in 1968, several years before the\neffective dates of 49 C.F.R. §§ 195.406(a)(1) and 195.106.20\nTherefore, in accordance with the\n1976 letter of interpretation and the statutory prohibition on retroactive application of design and\nconstruction standards, I find that Belle Fourche had no obligation to consider § 195.406(a)(1) in\nestablishing the MOP of these two pipeline segments. Accordingly, I grant the Petition as to\nItem 10 of the Final Order and withdraw the Finding of Violation with respect to 49 C.F.R.\n§ 195.406.\nRelief Granted\nBased on the information provided in the Petition, a review of the relevant portions of the record,\nand for the reasons stated above, I find that Belle Fourche did not violate 49 C.F.R. § 195.406 in\ncalculating the MOP for the Twentymile to Guernsey and Highway 450 Station to 12-inch\nJunction lines. Therefore, I withdraw Item 10 of the Final Order, the $20,000 civil penalty\nassociated with that Finding of Violation, and the compliance actions related to that finding and\noutlined in paragraph 3 of the Compliance Order. The Final Order is otherwise affirmed.\nA copy of this Final Order shall be forwarded to the Federal Aviation Administration for the\nproper disposition and refund of the $20,000 penalty that was assessed and collected for Item 10\nof the Final Order.\nThis decision on reconsideration is the final administrative action in this proceeding.\n_____________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety\n19 49 U.S.C. § 60104(b) (“Nonapplication.—A design, installation, construction, initial inspection, or initial testing\nstandard does not apply to a pipeline facility existing when the standard is adopted.”); see also, Bowen v.\nGeorgetown University Hosp., 488 U.S. 204, 208-09 (1988) (holding that regulations are presumed not to apply\nretroactively).\n20 The Final Order did not consider whether any of the lines in question had been replaced, relocated, or otherwise\nchanged on or after the date that the applicable standards were adopted. If so, Belle Fourche would be required to\ncomply with 49 C.F.R. §§ 195.106 and 195.406(a)(1) in establishing the MOP of those lines.\n\n520045010_final order_12112006_text.pdf\n\nU 5 Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety Administration\n400 Seventh Street, S W\nWashington, D C 20590\nDEC 1 1\nRECEIVED\nDEC )5 roos\nMr. Hank A. True III\nPresident\nBelle Fourche Pipeline Company\n895 W. River Cross Road\nCasper, WY 82602\nRe: CPF No. 5-2004-5010\nDear Mr. True:\nEnclosed is the Final Order issued by the Acting Associate Administrator for Pipeline Safety\nin the above-referenced case. It withdraws one of the allegations of violation, makes findings of\nviolation and assesses a civil penalty of $61, 500. The Final Order also specifies actions to be\ntaken to comply with the pipeline safety regulations and revision of certain operating and\nmaintenance procedures. The penalty payment terms are set forth in the Final Order. When the\ncivil penalty is paid and the terms of the Compliance Order and Amendment of Procedures are\ncompleted, as determined by the Director, Western Region, this enforcement action will be\nclosed. Your receipt of the Final Order constitutes service under 49 C. F. R. g 190. 5.\nSincerely,\nJames Reynolds\nPipeline Compliance Registry\nPHMSA-Office of Pipeline Safety\nEnclosure\ncc: Mr, Chris Hoidal, P. E.\n,\nMr. Manuel A. Lojo, Esq.\nP. O. Drawer 2360\nCasper, WY 82602\nDirector Western Region, PHMSA\nCERTIFIED MAIL — RETUEIV RECEIPT RE UES TED\n\n\n\nDEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, DC 20590\nIn the Matter of\nBelle Fourche Pipeline Company,\nRespondent\nCPF No. 5-2004-5010\nFINAL ORDER\nBetween August 18 and 22, 2003, pursuant to 49 U. S. C. $ 60117, a representative of the Pipeline\nand Hazardous Materials Safety Administration's (PHMSA's)' Office of Pipeline Safety\nconducted an on-site pipeline safety inspection of Respondent's hazardous liquid pipeline\nfacilities in Montana and Wyoming and supporting Operation and Maintenance records in\nCasper, Wyoming. As a result of the inspection, the Director, Western Region, PHMSA, issued\nto Respondent, by letter dated May 19, 2004, a Notice of Probable Violation, Proposed Civil\nPenalty, Proposed Compliance Order, and Notice of Amendment (Notice). In accordance with\n49 C. F. R. $ 190. 207, the Notice proposed finding that Respondent committed violations of 49\nC. F. R. Part 195, proposed assessing a civil penalty of $67, 500 for the alleged violations, and\nproposed ordering Respondent to take certain measures to correct the alleged violations. The\nNotice also proposed, in accordance with 49 C. F. R. $ 190. 237, that Respondent amend its\nprocedures/plans.\nRespondent responded to the Notice in a letter dated June 24, 2004, later supplemented in a letter\ndated November 2, 2004 per PHMSA's request for additional information (Response).\nSubsequently, PHMSA issued an Amendment to the Notice on April 5, 2005. Respondent\nresponded to the amended Notice in a letter dated May 3, 2005 (May 3, 2005 correspondence\nincluded in \"Response\" ). Respondent contested many of the allegations, offered information to\nexplain the allegations, and requested that the proposed civil penalty be reduced. Respondent did\nnot request a hearing, and therefore has waived its right to one.\n' Effective February 20, 2005, the Pipeline and Hazardous Matenals Safety Administration (PHMSA) succeeded\nResearch and Special Programs Administration as the agency responsible for regulatmg safety in pipehne\ntransportation and hazardous matenals transportation See, section 108 of the Norman Y Mineta Research and\nSpecial Programs Improvement Act (Public Law 108-426, 118 Stat 2423-2429 (November 30, 2004)) See also, 70\nFed Reg 8299 (February 18, 2005) redelegating the pipehne safety authorities and functions to the PHMSA\nAdministrator\n\n\n\nFINDINGS OF VIOLATION\nItem I in the Notice alleged Respondent violated 49 C. F. R. ) 195. 1(a), (b)(1-4) and ) 195. 402(a)\nin that Respondent did not include the 8-inch line segment that connects its 10-inch diameter\npipeline at the Elk Creek pump station to its 12-inch diameter pipeline at the Donkey Creek\npump station in its operations, maintenance, and emergency procedures manual as required by\n49 C. F. R. $195. 402(a).\nIn its June 24, 2004 letter, Respondent indicated that the 8- and 10-inch pipelines at issue had\nbeen purged and abandoned. PHMSA then requested that Respondent provide a map showing\nthe location of those abandoned pipelines. In its November 2, 2004 letter, Respondent provided\na map that depicts only a portion of the pipeline at issue as having been abandoned. The balance\nthat has not been abandoned is depicted on its map as being 8- and 10-inch gathering only. Since\na portion of this line is depicted as being 10-inch, it cannot be a gathering line as per the\ndefinition in 49 C. F. R. $195. 2 that states \"Gathering line means a pipeline 219. 1 mm (8 5/8 in)\nor less nominal outside diameter that transports petroleum from a production facility. \" With the\nchanges to this pipeline system, the Compliance Order below is amended to address\nRespondent's operational changes.\nAccordingly, I find that Respondent violated 49 C. F. R. $ 195. 1 (a), (b){1-4) and $ 195. 402(a) in\nthe Notice.\nItem 2 of the Notice proposed a civil penalty of $25, 500 for violation of 49 C. F. R. $$ 195. 50(b)\nand 195. 54(a) in that Respondent failed to report a 120-barrel spill that occurred at its Alzada\npump station pig launching facilities on June 10, 2003 within the required 30-day period. This\naccident was not reported for 86 days, which was 56 days beyond the 30 days allowed by Federal\nregulation.\nIn its June 24, 2004 letter, Respondent stated that it did not contest the violation but that jt\nrequested the penalty be substantially reduced. In support of the reduction, Respondent stated\nthat the spill was wholly contained within a containment dike and has been used as an\nopportunity to underscore to employees the importance of timely reporting of all spills. Here,\nthe Respondent did not report the spill until a PHMSA inspector observed the spill, which was\n86 days aAer the spill and 56 days aAer the latest that it should have been reported.\nAccordingly, I find that Respondent violated 49 C. F. R. $$ 195. 50{b) and 195. 54(a) in the Notice.\nItem 3 in the Notice alleged Respondent violated 49 C. F. R. ) 195. 303 in that Respondent\nincorrectly applied the Risk-based alternative to pressure testing for the following pipelines:\n1. 8-inch segment between Alzada and Belle Creek built in 1966;\n2. 10-inch line from Belle Creek to Highway 14-16 built in 1966; and\n3. 12-inch line from Donkey Creek to Guernsey built in 1968.\n\n\n\nRespondent did a metallurgical seam evaluation on samples of the 12-inch line in May of 2000,\nbut it did not have sufficient construction documentation to verify that all of the 12-inch line was\nof the same quality as the pipe samples tested. For the 8-inch segment between Alzada and Belle\nCreek and the 10-inch line from Belle Creek to Highway 14-16, Respondent did not complete a\nmetallurgical seam evaluation nor did it hydro test these pipeline segments.\nIn its June 24, 2004 letter, Respondent stated that the Elk Creek line was removed from service\non March 1 and that the Donkey Creek Line has been operating recently at a MOP of less than\n1152.\nAlthough some of Respondent's pipe has been taken out of service, substantial sections of\npipeline manufactured from pre-70 electric resistance weld pipe still have not been\nhydrostatically tested. Respondent's metallurgical analysis of these sections of pipeline is not\nstatistically sufficient nor does Respondent have sufficient construction records to substantiate\nthat the entire pipeline installed is similar to the pipe that received a metallurgical analysis.\nAccordingly, I find that Respondent violated 49 C. F. R. ) 195. 303 in the Notice.\nItem 10 in the Notice Amendment alleged Respondent violated 49 C. F. R. ) 195. 406 in that\nRespondent has not been able to provide adequate records certifying the yield strength {SMYS)\nof 60, 000 psi for the pipe used in construction of its 12. 75-inch, . 219 inch wall thickness pipeline\nsection between Twentymile Station and Guernsey. Respondent has determined the MOP of this\nline section, using 49 C. F. R. )195. 106 with a SMYS of 60, 000 psi, to be 1440 psig. Without\nadequate records or materials testing that certifies the actual material strength of the pipe,\nRespondent cannot use a SMYS any greater than 24, 000 psi, which results in a MOP no greater\nthan 593. 6 psig. Additionally, Respondent's records show that the pressure shutdown switch at\nthe Twentymile station is set at 1440 psig, which is 243% of the design pressure lacking any\npipeline material certification. Respondent normally operates this segment between 900 psig and\n1100 psig.\nRespondent could not provide adequate records certifying the SMYS of 42, 000 psi for the pipe\nused in construction of its 12. 75-inch, . 25 inch wall thickness pipeline section between Highway\n450 Station and the 12-inch mainline Junction. Respondent has determined the MOP of this line\nsection, using 49 C. F. R. )195. 106 with a SMYS of 42, 000 psi, to be 1390 psig. Without\nadequate records or materials testing that certifies the actual material strength of the pipe,\nRespondent cannot use a SMYS any greater than 24, 000 psi, which results in a MOP no greater\nthan 677. 6 psig. Additionally, Respondent's records show that the pressure shutdown switch at\nthe South Hilight station is set at 1300 psig, which is 192 % of the design pressure lacking any\npipeline material certification. Respondent normally operates this segment between 300 psig to\n800 psig.\nIn its November 2, 2004 letter to PHMSA, Respondent provided a township/section map\ndepicting the pipeline rights-of-way as a solid line with an arrow labeled \"333, 055' 12 3/4\n. 219X60 29. 31¹\" pointing to that solid line. Respondent contends that this is a copy of an\noriginal construction map and it shows that the pipeline section in dispute is made from X-60\n\n\n\npipe and not X-52 pipe. Subsequently, it contends that this pipeline was correctly listed as\nhaving a MOP of 1440 psig.\nSince Respondent could not provide further evidence substantiating the material strength of the\npipe used in the construction of either pipeline section originally cited, PHMSA issued an\nAmendment to the May 19, 2004 Notice, dated April 5, 2005. That Amendment changed the\nviolation from incorrectly calculating the MOP for the two pipeline sections to a violation of\nusing a SMYS of 60, 000 psi for calculating the MOP on one pipeline section and using a SMYS\nof 42, 000 psi for the other pipeline section without having sufficient records or materials testing\nor to verify the SMYS of the pipe used in construction of either pipeline.\nRespondent responded to the Amended Notice in a letter dated May 3, 2005. In that response,\nRespondent contends that it is permitted to operate at 80 percent of the highest operating\npressure to which the pipeline was subjected to for four or more continuous hours that can be\ndemonstrated by recording charts of logs made at the time the operations were conducted. It\nmaintains that the Twentymile to Guernsey pipeline has been operated at 1440 psig for four or\nmore continuous hours and it will be retrieving those documents to support this argument.\nRespondent asserts this would allo~ them to establish a MOP of 1152 which is 80'/~ of 1440\npsig. Additionally, Respondent contends that it has pressure tested its Highway 450 section to a\npressure of 1500 psig in 1994 and again in 2005.\n49 C. F. R. $ 195. 106, using Hooke's law, governs how pressure is to be determined under the\ncode. Respondent may use 80 percent of the highest operating pressure recorded for four or\nmore continuous hours in lieu of a pressure test. However, an operator may not operate a\npipeline at a pressure that exceeds either 80 percent of the highest operating pressure or the test\npressure recorded for four or inore continuous hours, the design pressure of the pipe, or the\npressure rating of any component. Though it may have adequate records to allow them to use\n80'/o of an operating pressure in lieu of pressure test, it may not exceed the design pressure of the\npipeline. Without adequate construction records or statistically viable metallurgical testing, it\ncannot use a SMYS any higher than 24, 000 psi.\nAccordingly, I find that Respondent violated 49 C. F. R. $ 195. 406 in the Notice.\nItem 11 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 408(a) and (b)(1) in that\nRespondent does not attend or monitor its Highway 14-16 pump station, which receives crude oil\nfrom tankage.\nIn its June 24, 2004 Response, Respondent stated that the Highway 14-16 Station is a gathering\nline and it has been since March 1, 2004.\nIt appears that the Highway 14-16 Station injects crude oil into what Respondent labeled on a\nmap transmitted to PHMSA as \"8 inch and 10 inch segments in gathering service only as of\nMarch 2004. \" Since the line that the Highway 14-16 Station injects crude into has pipe that is\n10-inch, this pipeline appears to be transmission and not gathering as per the definition in\n49 C. F. R. $ 195. Therefore, because the Highway 14-16 Station appears to control the delivery\n\n\n\nof crude oil into jurisdictional pipeline, this station must meet the requirements of 49 C. F, R. $\n195. 408.\nAccordingly, I find that Respondent violated 49 C. F. R. ) 195. 408(a) and (b)(1) in the Notice.\nItem 13 in the Notice alleged Respondent violated 49 C. F. R. ) 195. 428(a) in that Respondent's\npressure shutdown switches only receive a functional test which does not ensure that these\nswitches will operate at the correct pressure. Pressure transducers do not receive annual\ncalibration to insure it is transmitting correct pressures.\nRespondent responded to this issue in its June 24, 2004 letter by stating that new procedures\nwould be written and implemented. It provided no documentation showing that all of its\npressure control equipment had been properly tested and inspected, including calibration if\nnecessary.\nAccordingly, I find that Respondent violated 49 C F. R. $ 195. 428(a) in the Notice.\nItem 14 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 432(b) in that Respondent is\nrequired by API 653 Section 4. 3. 1. 2 to conduct a routine in-service inspection once each month.\nRespondent only does a routine inspection of its Sussex breakout tank once each year. During\nthe inspection, Respondent's engineer informed the PHMSA inspector that it did not do monthly\ninspections.\nIn its June 24, 2004 correspondence, Respondent submitted its Sussex Station reports in response\nto this allegation. Respondent directs our attention to the far right column labeled \"Signature\" in\nthese reports where there are employee initials and a handwritten \"VI. \" Respondent contends\nthat the \"VI\" stands for \"Visual Inspection\" and asserts that this indicates compliance with the\nrequirements of section 4 of API Standard 653, claiming that the inspections took place on a\nbasis more frequently than once per month. Although Respondent may rely on the handwritten\n\"VI\" markings as evidence that the tank had been visually inspected on a basis more frequently\nthan once a month, there was not a specific column in Respondent's Sussex Station reports to\nindicate that the tank had been inspected.\nThe evidence does not support an argument that the tank was inspected in accordance with API\n653 Section 4. Respondent must still include a monthly inspection that will incorporate and\ndocument the condition of those items listed under of API 653 Section 4. 3. 1. 3 for the Sussex\nbreakout tank.\nAccordingly, I find that Respondent violated 49 C. F. R. $ 195. 432(b) in the Notice.\nItem 16 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 436 in that there is no\nsecurity fencing at the Elk Creek pump station and the Alzada pump station and pig launcher\nfacilities. The controls and facilities at these pump stations are unmanned and readily accessible\nby the public via state highways that are adjacent to these two stations.\n\n\n\nThe June 24, 2004 response to this issue was that both Alzada station and Elk Creek station had\nbeen abandoned. In its November 2, 2004 Response, Respondent provided evidence to support\nthat the pipeline from Alzada to Elk Creek had been abandoned.\nIt appears that because the Alzada station is associated with the upstream end of this pipeline\nsection it should be considered abandoned. However, the Elk Creek station may still be injecting\ncrude oil into Respondent's \"8'inch and 10-inch segments in gathering service only as March\n2004. \" Since part of this line is 10-inch at least, that portion that is 10-inch is considered to be\ntransmission. It appears that the Elk Creek station injects into this pipeline system and therefore\nit is considered to be a jurisdictional facility. Therefore, the Elk Creek station should have\nincreased security provided.\nAccordingly, I find that Respondent violated 49 C. F. R. $ 195. 436 in the Notice.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\n%WITHDRAWAL OF ALLEGATIOIV\nItem 17 in the Notice alleged that Respondent had violated 49 C. F. R. $ 195. 567 by failing to\ninstall an adequate number of test stations or demonstrate that test stations are at sufficient\nintervals to indicate the adequacy of the cathodic protection system. In its Response, Respondent\nprovided a cathodic protection monitoring procedure that requires test leads to be spaced from\nbetween one to two miles. The exception to this is only allowed if one of the following has been\nmet: 1) close interval survey has been performed, 2) operating history demonstrates no leaks nor\nevidence of external corrosion, or 3) pipeline inspection logs, assume for ILI, demonstrate no\nwall loss. If one of these exceptions is met, then Respondent's procedures assume that sufficient\ncathodic protection exists. It its Response, Respondent's submission of this procedure appears to\nhave met the intent of 49 C. F. R. $ 195. 567. Based on this information demonstrating\ncompliance with the regulation, I am withdrawing this allegation of violation.\nASSESSMENT OF PENALTY\nUnder 49 U. S. C. $ 60122, Respondent is subject to a civil penalty not to exceed $100, 000 per\nviolation for each day of the violation up to a maximum of $1, 000, 000 for any related series of\nviolations.\n49 U. S. C. ) 60122 and 49 C. F. R. $ 190. 225 require that, in determining the amount of the civil\npenalty, I consider the following criteria: nature, circumstances, and gravity of the violation,\ndegree of Respondent's culpability, history of Respondent's prior offenses, Respondent's ability\nto pay the penalty, good faith by Respondent m attempting to achieve compliance, the effect on\nRespondent's ability to continue in business, and such othe","truncated":true,"body_characters":55443}