# BELLE FOURCHE PIPELINE CO — Notice of Probable Violation

- **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:** Not available
- **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).
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**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.

Official case documents:

520045010_closure letter_12012010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_closure%20letter_12012010.pdf

520045010_closure letter_12012010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_closure%20letter_12012010_text.pdf

520045010_Decision On Petition For Reconsideration_07152009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_Decision%20On%20Petition%20For%20Reconsideration_07152009.pdf

520045010_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

520045010_final order_12112006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_final%20order_12112006.pdf

520045010_final order_12112006_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_final%20order_12112006_text.pdf

520045010_petition for reconsideration_02152007.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/520045010_petition%20for%20reconsideration_02152007.pdf

CPF_5-2004_5010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045010/CPF_5-2004_5010.pdf

520045010_Decision On Petition For Reconsideration_07152009_text.pdf

VIA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 0390 0005 6162 5579]
Mr. Hank A. True III
President
Belle Fourche Pipeline Company
455 North Poplar Street
P. O. Box 2360
Casper, WY 82602
RE: CPF No. 5-2004-5010
Dear Mr. True:
Enclosed is this agency’s decision on the Petition for Reconsideration filed by Belle Fourche
Pipeline Company in the above-referenced case. For the reasons stated in the decision, the
Petition is granted in part and denied in part. When the terms of the Compliance Order have
been completed, as determined by the Director, Western Region, this enforcement action will be
closed. Your receipt of this decision constitutes service under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Jeffrey D. Wiese
Associate Administrator
for Pipeline Safety
Enclosure:
cc: Mr. Manuel A. Lojo, Esq., Belle Fourche Pipeline Company
Mr. Chris Hoidal, Director, Western Region, PHMSA



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
______________________________
)
In the Matter of )
)
Belle Fourche Pipeline Company, ) CPF No. 5-2004-5010
)
Petitioner. )
______________________________)
DECISION ON PETITION FOR RECONSIDERATION
On December 11, 2006, pursuant to 49 C.F.R. § 190.213, the Acting Associate Administrator for
Pipeline Safety, Pipeline and Hazardous Materials Safety Administration (PHMSA), issued a
Final Order finding that Belle Fourche Pipeline Company (Belle Fourche or Petitioner) had
for four of the violations, and ordering the company to take certain actions to comply with the
pertinent regulations.
violated various pipeline safety regulations,1 assessing Petitioner a total civil penalty of $61,500
On December 18 and 22, 2006, Belle Fourche received personal service of the Final Order,2
and
on December 29, 2006, the company paid the entire penalty. Six weeks later, on February 16,
2007, Belle Fourche filed this Petition for Reconsideration (Petition) pursuant to 49 C.F.R.
§ 190.215. By letter dated February 17, 2009, PHMSA granted Petitioner an additional 60 days
to supplement the record, and Belle Fourche did so by letter dated April 15, 2009.
Petitioner seeks reconsideration of only two of the seven Findings of Violation in the Final
Order. First, Belle Fourche contests the finding in Item 3 that Belle Fourche incorrectly applied
49 C.F.R. § 195.303, the regulation providing a risk-based alternative to the pressure-testing
requirements of 49 C.F.R. § 195.302, as applied to three of Belle Fourche’s pipeline segments
constructed with pre-1970 electric resistance-welded and lapwelded (ERW) pipe. Second,
Petitioner contests the finding in Item 10 that Belle Fourche incorrectly applied 49 C.F.R.
1 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),
195.432(b), and 195.436.
2 On December 18, 2006, Mr. Greg Vineyard signed a U.S. Postal Service Domestic Return Receipt, PS Form 3811,
at Petitioner’s official corporate mailing address, acknowledging receipt of the Final Order on behalf of Mr. Manual
A. Lojo, counsel for Belle Fourche.
https://wyobiz.wy.gov/Ecommerce/Common/FilingDetail.aspx?FilingNum=1980-000073155 (corporate information
on Belle Fourche obtained on January 21, 2009, from official website of the Wyoming Secretary of State). On
December 22, 2006, Mr. Vineyard signed another PS Form 3811, at Petitioner’s Casper, Wyoming office,
acknowledging receipt of the Final Order on behalf of Mr. Hank A. True III, president of Belle Fourche.



2
§ 195.406(a)(1) in establishing the maximum operating pressure (MOP) of two other pipeline
segments because the company lacked adequate documentation of the design specifications or
materials testing of the pipe in those segments. The Final Order assessed Belle Fourche a civil
penalty of $20,000 for Item 10 and directed it to take certain actions to correct the violations
found in both Items 3 and 10. No penalty was assessed for Item 3.
As provided in 49 C.F.R. § 190.215(a)-(e), the pipeline safety regulations afford a respondent the
opportunity to file a petition with the Associate Administrator for reconsideration of a final
order. The purpose of this procedure is not to provide a right of appeal or de novo review, but to
allow for the presentation of previously unknown or unavailable information or arguments and to
permit the agency to reconsider and correct any errors in the final order. Consistent with these
principles, the regulations provide that the Associate Administrator is not obliged to consider
repetitious information, arguments, or petitions, and that a petitioner must provide valid reasons
why any additional facts or arguments were not presented in a timely manner.
It is clear from the record in this case that the Petition could be summarily dismissed as untimely
filed. Under the controlling regulation, a petition must be “received no later than 20 days after
service of the final order upon the respondent.
until approximately seven weeks after the president of Belle Fourche and its counsel received
personal service of the Final Order. Furthermore, Petitioner has not offered any valid reason
why the additional evidence and arguments raised in this Petition were not submitted prior to
issuance of the Final Order. Despite these deficiencies, I have reviewed the entire record of
these proceedings as a matter of administrative discretion and concluded that the case presents a
significant legal question that should be addressed. Based upon such review and for the reasons
cited below, I am granting the Petition in part and denying it in part.
”3 PHMSA did not receive the Petition in this case
I. Discussion
A. Item 3 - Belle Fourche’s Violation of 49 C.F.R. § 195.303
Item 3 of the Final Order found that Belle Fourche failed to comply with 49 C.F.R.
§ 195.303, as applied to three pipeline segments constructed with pre-1970 ERW pipe.
Before discussing the specific circumstances of Petitioner’s request for reconsideration, I
will provide some useful background information on 49 C.F.R. § 195.302, the regulation
that imposes a pressure-testing requirement on all hazardous liquid pipelines, and 49
C.F.R. § 195.303, the regulation that establishes an elective, risk-based alternative to such
testing.
3 49 C.F.R. § 190.215(a).



3
Section 195.302 prohibits the operation of a hazardous liquid pipeline that has not been
subjected to a valid pressure test.4 However, that regulation includes certain exemptions,
two of which are relevant to this proceeding. First, an interstate hazardous liquid pipeline
constructed before January 8, 1971, may be operated without a pressure test, so long as
the operator of that line established its MOP under 49 C.F.R. § 195.406(a)(5) on or
before December 7, 1998.5 This exemption ensures that an adequate margin of safety
exists in the absence of a pressure test6 by limiting the MOP of such a line to no more
than “80 percent of the test pressure or highest operating pressure to which the pipeline
was subjected for 4 or more continuous hours that can be demonstrated by recording
charts or logs made at the time the test or operations were conducted.”7
Second, older hazardous liquid pipelines, including those constructed with pre-1970
ERW pipe, may be operated without a pressure test if the operator elects to use the risk-
based alternative provided in 49 C.F.R. § 195.303 and a pressure test is not otherwise
required under the criteria specified in that regulation.
8 Those criteria require that each
pipeline segment be classified on the basis of several risk indicators, such as location,
product, volume, and probability of failure,
9 and that a pressure test be performed on any
segment constructed with pre-1970 ERW pipe unless a supplementary engineering
analysis shows that the line is not susceptible to longitudinal seam failure.10
In this case, the Final Order found that Petitioner elected to use the 49 C.F.R. § 195.303
risk-based alternative to pressure testing for three pipeline segments constructed with pre-
1970 ERW pipe.
11
It also found that while Belle Fourche had performed a metallurgical
seam evaluation on samples from one of those lines (i.e., the Donkey Creek to Guernsey
line), Petitioner was not able to adequately document that the pipe used throughout that
line was qualitatively similar to the samples tested. The Final Order further found that
Petitioner had not completed an adequate seam analysis of the Alzada to Belle Creek or
the Belle Creek to Highway 14-16 pipeline segments. Therefore, the Final Order
4 Specifically, that regulation provides that “no operator may operate a pipeline unless it has been pressure tested
under this [Subpart E] without leakage.” 49 C.F.R. § 195.302(a). The specific terms and conditions that must be
followed in conducting such tests, including test-pressure and time requirements, are prescribed in 49 C.F.R. §§
195.304-310.
5 49 C.F.R. § 195.302(b)(1)(i), (c)(1)(ii).
6 Department of Transportation, Research and Special Programs Administration, Pressure Testing Older Hazardous
Liquid and Carbon Dioxide Pipelines, 59 Fed. Reg. 29379 (Jun. 7, 1994) (providing reasons or bases for the
adoption of 49 C.F.R. § 195.302).
7 49 C.F.R. § 195.406(a)(5).
8 49 C.F.R. § 195.302(b)(4).
9 49 C.F.R. § 195.303(a)-(b).
10 49 C.F.R. § 195.303(c)-(d).
11 Those pipeline segments were the 8-inch Alzada to Belle Creek line, the 10-inch Belle Creek to Highway 14-16
line, and the 12-inch Donkey Creek to Guernsey line.



4
concluded that Belle Fourche violated § 195.303 as applied to each of these three
segments.
While not entirely clear, Petitioner appears to seek reconsideration of these findings on
the basis of 49 C.F.R. §§ 195.302(b)(1)(i) and (c)(1)(ii). In particular, Petitioner
contends that the three segments in question were all constructed prior to January 8,
1971, thereby qualifying for the § 195.302(b)(1)(i) exception to mandatory pressure
testing. On April 15, 2009, Belle Fourche also submitted a pressure chart from October
14, 2000, showing that “the Donkey Creek line” was continuously operated on that date
at 1440 psi for more than four hours. Petitioner therefore argues that the “lawful” MOP
of that line under §§ 195.302(b)(1)(i), (c)(1)(ii) and 195.406(a)(5) is 1150 psi (or 80% of
1440 psi), and that Item 3 of the Final Order should be withdrawn.
Petitioner’s argument, however, is not persuasive. First, Belle Fourche elected not to
seek an exemption from the mandatory pressure-testing requirement under
§§ 195.302(b)(1)(i) and (c)(1)(ii) for the three segments at issue.
Petitioner’s compliance with those regulations is not relevant to whether it violated the
requirements of § 195.303, the regulation that Belle Fourche chose to apply to these three
pipeline segments.
12 Therefore,
Second, even if §§ 195.302(b)(1)(i) and (c)(1)(ii) were somehow relevant to Petitioner’s
violation of § 195.303, Belle Fourche has not shown that it established the MOP of the
Donkey Creek line under § 195.406(a)(5) on or before December 7, 1998. On the
contrary, Petitioner’s pressure chart for that line is dated October 14, 2000, nearly two
years after the deadline for establishing MOP on the basis of the highest continuous
4-hour operating pressure. Accordingly, Belle Fourche has not shown that it complied
with §§ 195.302(b)(1)(i) and (c)(1)(ii), even if those regulations were applicable.
In sum, an operator is not required to use the risk-based alternative provided in
§ 195.303. However, if an operator elects to use that alternative and the segment in
question is constructed with pre-1970 ERW pipe, then a valid engineering analysis must
be performed to rebut the presumption that the line is susceptible to longitudinal seam
failure and therefore requires pressure testing.
13 There is no factual dispute here that the
three segments at issue were all constructed, at least in part, with pre-1970 ERW pipe,14
and that Petitioner elected to use the § 195.303 risk-based alternative to pressure testing
for those lines. Since the record does not reflect any valid engineering analysis to rebut
the presumption of longitudinal seam failure for any of the three lines, I must deny
12 Belle Fourche’s written procedures at the time of the inspection, attached as Exhibit 4 to the OPS inspector’s
original violation report, state that the company had “elected to follow the risk-based alternative to pressure testing
per 195.303” for these three lines.
13 49 C.F.R. § 195.303(c)-(d).
14 The record indicates that the Alzada to Belle Creek line was constructed in 1966 with ERW pipe, that the Belle
Creek to Highway 14-16 line was constructed in 1966 with ERW pipe, and that the Donkey Creek to Guernsey line
was constructed in 1968 with ERW pipe.



5
Petitioner’s request for reconsideration of Item 3 of the Final Order and affirm the finding
that Belle Fourche violated 49 C.F.R. § 195.303.
B. Item 10 - Belle Fourche’s Violation of 49 C.F.R. § 195.406
Item 10 of the Final Order found that Petitioner failed to comply with 49 C.F.R.
§ 195.406 in calculating the MOP of two lines constructed with pre-1970 ERW pipe.
Specifically, it found that Belle Fourche lacked adequate documentation of the specified
minimum yield strength (SMYS) and other material specifications of the pipe in the Twentymile
to Guernsey line and the Highway 450 Station to 12-inch Junction line. The Final Order also
found that as a result of such inadequate documentation, Petitioner had to use certain default
values in establishing the MOP for those two lines under § 195.406(a)(1), the regulation that
limits MOP on the basis of the internal design pressure of the pipe. Because the company had
exceeded the MOP that PHMSA concluded should have been calculated on the basis of these
default values, the Final Order concluded that Belle Fourche violated 49 C.F.R. § 195.406.
Having carefully reviewed the entire record, I conclude that the Finding of Violation in Item 10
cannot be sustained, yet not for the reasons cited by Petitioner.
15 Section 195.406(a)(1) limits
the MOP of hazardous liquid pipelines on the basis of their internal design pressure, a value that
is determined by using a formula set forth in 49 C.F.R. § 195.106.
previously determined that pipelines designed, constructed, and installed prior to April 1, 1970,
are not subject to the requirements of § 195.406(a)(1).
16 However, PHMSA has
Specifically, in response to a request from the American Petroleum Institute on the relationship
between 49 C.F.R. §§ 195.106 and 195.406(a)(1) and the potential retroactive application of
those regulations to existing pipelines, PHMSA’s predecessor agency, the Materials
Transportation Bureau, issued a formal letter of interpretation.
17 Dated October 15, 1976, the
letter states that “§ 195.406(a)(1) only applies to pipelines to which § 195.106 applies (i.e.,
pipelines which are constructed, relocated, or otherwise changed on or after April 1, 1970, the
effective date of [section] 195.106).”18
It also states that “[w]here § 195.406(a)(1) is
inapplicable, one of the other standards in [section] 195.406(a) would govern the maximum
15 In its Petition, Belle Fourche asserts arguments previously considered and rejected in the Final Order. First,
Petitioner argues that it has shown through credible evidence that the SMYS of the pipe used in one of the disputed
lines is 60,000 psi, and that the SMYS of the pipe used in the other line is 42,000 psi. Petitioner also introduces, as
Exhibit 2 to its Petition, an affidavit from the company’s long-time superintendent of operations, Mr. Lyle Sessions,
to corroborate the evidence previously submitted with its Response, including a construction map that allegedly
shows the SMYS and other specifications of the pipe used in the two segments in question. Given the ultimate
disposition of the Finding of Violation in Item 10, further consideration of this evidence is unnecessary.
16 Under 49 C.F.R. § 195.106, the internal design pressure of a pipe is calculated by inputting certain specific criteria
into a predetermined formula.
17 Operating Pressure for Platform Piping; Interpretation, Department of Transportation, Materials Transportation
Bureau, Docket No. OPSO-35 (Oct. 15, 1976).
18 Id.



6
allowable operating pressure.” This 1976 letter of interpretation remains valid today and is
consistent with the long-standing statutory prohibition, currently codified at 49 U.S.C.
§ 60104(b), on the retroactive application of design, construction, and initial testing standards to
pipelines in existence when such standards are adopted.19
It is undisputed that the Twentymile to Guernsey line and Highway 450 Station to 12-inch
Junction line were both designed, constructed, and installed in 1968, several years before the
effective dates of 49 C.F.R. §§ 195.406(a)(1) and 195.106.20
Therefore, in accordance with the
1976 letter of interpretation and the statutory prohibition on retroactive application of design and
construction standards, I find that Belle Fourche had no obligation to consider § 195.406(a)(1) in
establishing the MOP of these two pipeline segments. Accordingly, I grant the Petition as to
Item 10 of the Final Order and withdraw the Finding of Violation with respect to 49 C.F.R.
§ 195.406.
Relief Granted
Based on the information provided in the Petition, a review of the relevant portions of the record,
and for the reasons stated above, I find that Belle Fourche did not violate 49 C.F.R. § 195.406 in
calculating the MOP for the Twentymile to Guernsey and Highway 450 Station to 12-inch
Junction lines. Therefore, I withdraw Item 10 of the Final Order, the $20,000 civil penalty
associated with that Finding of Violation, and the compliance actions related to that finding and
outlined in paragraph 3 of the Compliance Order. The Final Order is otherwise affirmed.
A copy of this Final Order shall be forwarded to the Federal Aviation Administration for the
proper disposition and refund of the $20,000 penalty that was assessed and collected for Item 10
of the Final Order.
This decision on reconsideration is the final administrative action in this proceeding.
_____________________________ __________________________
Jeffrey D. Wiese Date Issued
Associate Administrator
for Pipeline Safety
19 49 U.S.C. § 60104(b) (“Nonapplication.—A design, installation, construction, initial inspection, or initial testing
standard does not apply to a pipeline facility existing when the standard is adopted.”); see also, Bowen v.
Georgetown University Hosp., 488 U.S. 204, 208-09 (1988) (holding that regulations are presumed not to apply
retroactively).
20 The Final Order did not consider whether any of the lines in question had been replaced, relocated, or otherwise
changed on or after the date that the applicable standards were adopted. If so, Belle Fourche would be required to
comply with 49 C.F.R. §§ 195.106 and 195.406(a)(1) in establishing the MOP of those lines.

520045010_final order_12112006_text.pdf

U 5 Department
of Transportation
Pipeline and Hazardous
Materials Safety Administration
400 Seventh Street, S W
Washington, D C 20590
DEC 1 1
RECEIVED
DEC )5 roos
Mr. Hank A. True III
President
Belle Fourche Pipeline Company
895 W. River Cross Road
Casper, WY 82602
Re: CPF No. 5-2004-5010
Dear Mr. True:
Enclosed is the Final Order issued by the Acting Associate Administrator for Pipeline Safety
in the above-referenced case. It withdraws one of the allegations of violation, makes findings of
violation and assesses a civil penalty of $61, 500. The Final Order also specifies actions to be
taken to comply with the pipeline safety regulations and revision of certain operating and
maintenance procedures. The penalty payment terms are set forth in the Final Order. When the
civil penalty is paid and the terms of the Compliance Order and Amendment of Procedures are
completed, as determined by the Director, Western Region, this enforcement action will be
closed. Your receipt of the Final Order constitutes service under 49 C. F. R. g 190. 5.
Sincerely,
James Reynolds
Pipeline Compliance Registry
PHMSA-Office of Pipeline Safety
Enclosure
cc: Mr, Chris Hoidal, P. E.
,
Mr. Manuel A. Lojo, Esq.
P. O. Drawer 2360
Casper, WY 82602
Director Western Region, PHMSA
CERTIFIED MAIL — RETUEIV RECEIPT RE UES TED



DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
In the Matter of
Belle Fourche Pipeline Company,
Respondent
CPF No. 5-2004-5010
FINAL ORDER
Between August 18 and 22, 2003, pursuant to 49 U. S. C. $ 60117, a representative of the Pipeline
and Hazardous Materials Safety Administration's (PHMSA's)' Office of Pipeline Safety
conducted an on-site pipeline safety inspection of Respondent's hazardous liquid pipeline
facilities in Montana and Wyoming and supporting Operation and Maintenance records in
Casper, Wyoming. As a result of the inspection, the Director, Western Region, PHMSA, issued
to Respondent, by letter dated May 19, 2004, a Notice of Probable Violation, Proposed Civil
Penalty, Proposed Compliance Order, and Notice of Amendment (Notice). In accordance with
49 C. F. R. $ 190. 207, the Notice proposed finding that Respondent committed violations of 49
C. F. R. Part 195, proposed assessing a civil penalty of $67, 500 for the alleged violations, and
proposed ordering Respondent to take certain measures to correct the alleged violations. The
Notice also proposed, in accordance with 49 C. F. R. $ 190. 237, that Respondent amend its
procedures/plans.
Respondent responded to the Notice in a letter dated June 24, 2004, later supplemented in a letter
dated November 2, 2004 per PHMSA's request for additional information (Response).
Subsequently, PHMSA issued an Amendment to the Notice on April 5, 2005. Respondent
responded to the amended Notice in a letter dated May 3, 2005 (May 3, 2005 correspondence
included in "Response" ). Respondent contested many of the allegations, offered information to
explain the allegations, and requested that the proposed civil penalty be reduced. Respondent did
not request a hearing, and therefore has waived its right to one.
' Effective February 20, 2005, the Pipeline and Hazardous Matenals Safety Administration (PHMSA) succeeded
Research and Special Programs Administration as the agency responsible for regulatmg safety in pipehne
transportation and hazardous matenals transportation See, section 108 of the Norman Y Mineta Research and
Special Programs Improvement Act (Public Law 108-426, 118 Stat 2423-2429 (November 30, 2004)) See also, 70
Fed Reg 8299 (February 18, 2005) redelegating the pipehne safety authorities and functions to the PHMSA
Administrator



FINDINGS OF VIOLATION
Item I in the Notice alleged Respondent violated 49 C. F. R. ) 195. 1(a), (b)(1-4) and ) 195. 402(a)
in that Respondent did not include the 8-inch line segment that connects its 10-inch diameter
pipeline at the Elk Creek pump station to its 12-inch diameter pipeline at the Donkey Creek
pump station in its operations, maintenance, and emergency procedures manual as required by
49 C. F. R. $195. 402(a).
In its June 24, 2004 letter, Respondent indicated that the 8- and 10-inch pipelines at issue had
been purged and abandoned. PHMSA then requested that Respondent provide a map showing
the location of those abandoned pipelines. In its November 2, 2004 letter, Respondent provided
a map that depicts only a portion of the pipeline at issue as having been abandoned. The balance
that has not been abandoned is depicted on its map as being 8- and 10-inch gathering only. Since
a portion of this line is depicted as being 10-inch, it cannot be a gathering line as per the
definition in 49 C. F. R. $195. 2 that states "Gathering line means a pipeline 219. 1 mm (8 5/8 in)
or less nominal outside diameter that transports petroleum from a production facility. " With the
changes to this pipeline system, the Compliance Order below is amended to address
Respondent's operational changes.
Accordingly, I find that Respondent violated 49 C. F. R. $ 195. 1 (a), (b){1-4) and $ 195. 402(a) in
the Notice.
Item 2 of the Notice proposed a civil penalty of $25, 500 for violation of 49 C. F. R. $$ 195. 50(b)
and 195. 54(a) in that Respondent failed to report a 120-barrel spill that occurred at its Alzada
pump station pig launching facilities on June 10, 2003 within the required 30-day period. This
accident was not reported for 86 days, which was 56 days beyond the 30 days allowed by Federal
regulation.
In its June 24, 2004 letter, Respondent stated that it did not contest the violation but that jt
requested the penalty be substantially reduced. In support of the reduction, Respondent stated
that the spill was wholly contained within a containment dike and has been used as an
opportunity to underscore to employees the importance of timely reporting of all spills. Here,
the Respondent did not report the spill until a PHMSA inspector observed the spill, which was
86 days aAer the spill and 56 days aAer the latest that it should have been reported.
Accordingly, I find that Respondent violated 49 C. F. R. $$ 195. 50{b) and 195. 54(a) in the Notice.
Item 3 in the Notice alleged Respondent violated 49 C. F. R. ) 195. 303 in that Respondent
incorrectly applied the Risk-based alternative to pressure testing for the following pipelines:
1. 8-inch segment between Alzada and Belle Creek built in 1966;
2. 10-inch line from Belle Creek to Highway 14-16 built in 1966; and
3. 12-inch line from Donkey Creek to Guernsey built in 1968.



Respondent did a metallurgical seam evaluation on samples of the 12-inch line in May of 2000,
but it did not have sufficient construction documentation to verify that all of the 12-inch line was
of the same quality as the pipe samples tested. For the 8-inch segment between Alzada and Belle
Creek and the 10-inch line from Belle Creek to Highway 14-16, Respondent did not complete a
metallurgical seam evaluation nor did it hydro test these pipeline segments.
In its June 24, 2004 letter, Respondent stated that the Elk Creek line was removed from service
on March 1 and that the Donkey Creek Line has been operating recently at a MOP of less than
1152.
Although some of Respondent's pipe has been taken out of service, substantial sections of
pipeline manufactured from pre-70 electric resistance weld pipe still have not been
hydrostatically tested. Respondent's metallurgical analysis of these sections of pipeline is not
statistically sufficient nor does Respondent have sufficient construction records to substantiate
that the entire pipeline installed is similar to the pipe that received a metallurgical analysis.
Accordingly, I find that Respondent violated 49 C. F. R. ) 195. 303 in the Notice.
Item 10 in the Notice Amendment alleged Respondent violated 49 C. F. R. ) 195. 406 in that
Respondent has not been able to provide adequate records certifying the yield strength {SMYS)
of 60, 000 psi for the pipe used in construction of its 12. 75-inch, . 219 inch wall thickness pipeline
section between Twentymile Station and Guernsey. Respondent has determined the MOP of this
line section, using 49 C. F. R. )195. 106 with a SMYS of 60, 000 psi, to be 1440 psig. Without
adequate records or materials testing that certifies the actual material strength of the pipe,
Respondent cannot use a SMYS any greater than 24, 000 psi, which results in a MOP no greater
than 593. 6 psig. Additionally, Respondent's records show that the pressure shutdown switch at
the Twentymile station is set at 1440 psig, which is 243% of the design pressure lacking any
pipeline material certification. Respondent normally operates this segment between 900 psig and
1100 psig.
Respondent could not provide adequate records certifying the SMYS of 42, 000 psi for the pipe
used in construction of its 12. 75-inch, . 25 inch wall thickness pipeline section between Highway
450 Station and the 12-inch mainline Junction. Respondent has determined the MOP of this line
section, using 49 C. F. R. )195. 106 with a SMYS of 42, 000 psi, to be 1390 psig. Without
adequate records or materials testing that certifies the actual material strength of the pipe,
Respondent cannot use a SMYS any greater than 24, 000 psi, which results in a MOP no greater
than 677. 6 psig. Additionally, Respondent's records show that the pressure shutdown switch at
the South Hilight station is set at 1300 psig, which is 192 % of the design pressure lacking any
pipeline material certification. Respondent normally operates this segment between 300 psig to
800 psig.
In its November 2, 2004 letter to PHMSA, Respondent provided a township/section map
depicting the pipeline rights-of-way as a solid line with an arrow labeled "333, 055' 12 3/4
. 219X60 29. 31¹" pointing to that solid line. Respondent contends that this is a copy of an
original construction map and it shows that the pipeline section in dispute is made from X-60



pipe and not X-52 pipe. Subsequently, it contends that this pipeline was correctly listed as
having a MOP of 1440 psig.
Since Respondent could not provide further evidence substantiating the material strength of the
pipe used in the construction of either pipeline section originally cited, PHMSA issued an
Amendment to the May 19, 2004 Notice, dated April 5, 2005. That Amendment changed the
violation from incorrectly calculating the MOP for the two pipeline sections to a violation of
using a SMYS of 60, 000 psi for calculating the MOP on one pipeline section and using a SMYS
of 42, 000 psi for the other pipeline section without having sufficient records or materials testing
or to verify the SMYS of the pipe used in construction of either pipeline.
Respondent responded to the Amended Notice in a letter dated May 3, 2005. In that response,
Respondent contends that it is permitted to operate at 80 percent of the highest operating
pressure to which the pipeline was subjected to for four or more continuous hours that can be
demonstrated by recording charts of logs made at the time the operations were conducted. It
maintains that the Twentymile to Guernsey pipeline has been operated at 1440 psig for four or
more continuous hours and it will be retrieving those documents to support this argument.
Respondent asserts this would allo~ them to establish a MOP of 1152 which is 80'/~ of 1440
psig. Additionally, Respondent contends that it has pressure tested its Highway 450 section to a
pressure of 1500 psig in 1994 and again in 2005.
49 C. F. R. $ 195. 106, using Hooke's law, governs how pressure is to be determined under the
code. Respondent may use 80 percent of the highest operating pressure recorded for four or
more continuous hours in lieu of a pressure test. However, an operator may not operate a
pipeline at a pressure that exceeds either 80 percent of the highest operating pressure or the test
pressure recorded for four or inore continuous hours, the design pressure of the pipe, or the
pressure rating of any component. Though it may have adequate records to allow them to use
80'/o of an operating pressure in lieu of pressure test, it may not exceed the design pressure of the
pipeline. Without adequate construction records or statistically viable metallurgical testing, it
cannot use a SMYS any higher than 24, 000 psi.
Accordingly, I find that Respondent violated 49 C. F. R. $ 195. 406 in the Notice.
Item 11 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 408(a) and (b)(1) in that
Respondent does not attend or monitor its Highway 14-16 pump station, which receives crude oil
from tankage.
In its June 24, 2004 Response, Respondent stated that the Highway 14-16 Station is a gathering
line and it has been since March 1, 2004.
It appears that the Highway 14-16 Station injects crude oil into what Respondent labeled on a
map transmitted to PHMSA as "8 inch and 10 inch segments in gathering service only as of
March 2004. " Since the line that the Highway 14-16 Station injects crude into has pipe that is
10-inch, this pipeline appears to be transmission and not gathering as per the definition in
49 C. F. R. $ 195. Therefore, because the Highway 14-16 Station appears to control the delivery



of crude oil into jurisdictional pipeline, this station must meet the requirements of 49 C. F, R. $
195. 408.
Accordingly, I find that Respondent violated 49 C. F. R. ) 195. 408(a) and (b)(1) in the Notice.
Item 13 in the Notice alleged Respondent violated 49 C. F. R. ) 195. 428(a) in that Respondent's
pressure shutdown switches only receive a functional test which does not ensure that these
switches will operate at the correct pressure. Pressure transducers do not receive annual
calibration to insure it is transmitting correct pressures.
Respondent responded to this issue in its June 24, 2004 letter by stating that new procedures
would be written and implemented. It provided no documentation showing that all of its
pressure control equipment had been properly tested and inspected, including calibration if
necessary.
Accordingly, I find that Respondent violated 49 C F. R. $ 195. 428(a) in the Notice.
Item 14 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 432(b) in that Respondent is
required by API 653 Section 4. 3. 1. 2 to conduct a routine in-service inspection once each month.
Respondent only does a routine inspection of its Sussex breakout tank once each year. During
the inspection, Respondent's engineer informed the PHMSA inspector that it did not do monthly
inspections.
In its June 24, 2004 correspondence, Respondent submitted its Sussex Station reports in response
to this allegation. Respondent directs our attention to the far right column labeled "Signature" in
these reports where there are employee initials and a handwritten "VI. " Respondent contends
that the "VI" stands for "Visual Inspection" and asserts that this indicates compliance with the
requirements of section 4 of API Standard 653, claiming that the inspections took place on a
basis more frequently than once per month. Although Respondent may rely on the handwritten
"VI" markings as evidence that the tank had been visually inspected on a basis more frequently
than once a month, there was not a specific column in Respondent's Sussex Station reports to
indicate that the tank had been inspected.
The evidence does not support an argument that the tank was inspected in accordance with API
653 Section 4. Respondent must still include a monthly inspection that will incorporate and
document the condition of those items listed under of API 653 Section 4. 3. 1. 3 for the Sussex
breakout tank.
Accordingly, I find that Respondent violated 49 C. F. R. $ 195. 432(b) in the Notice.
Item 16 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 436 in that there is no
security fencing at the Elk Creek pump station and the Alzada pump station and pig launcher
facilities. The controls and facilities at these pump stations are unmanned and readily accessible
by the public via state highways that are adjacent to these two stations.



The June 24, 2004 response to this issue was that both Alzada station and Elk Creek station had
been abandoned. In its November 2, 2004 Response, Respondent provided evidence to support
that the pipeline from Alzada to Elk Creek had been abandoned.
It appears that because the Alzada station is associated with the upstream end of this pipeline
section it should be considered abandoned. However, the Elk Creek station may still be injecting
crude oil into Respondent's "8'inch and 10-inch segments in gathering service only as March
2004. " Since part of this line is 10-inch at least, that portion that is 10-inch is considered to be
transmission. It appears that the Elk Creek station injects into this pipeline system and therefore
it is considered to be a jurisdictional facility. Therefore, the Elk Creek station should have
increased security provided.
Accordingly, I find that Respondent violated 49 C. F. R. $ 195. 436 in the Notice.
These findings of violation will be considered prior offenses in any subsequent enforcement
action taken against Respondent.
%WITHDRAWAL OF ALLEGATIOIV
Item 17 in the Notice alleged that Respondent had violated 49 C. F. R. $ 195. 567 by failing to
install an adequate number of test stations or demonstrate that test stations are at sufficient
intervals to indicate the adequacy of the cathodic protection system. In its Response, Respondent
provided a cathodic protection monitoring procedure that requires test leads to be spaced from
between one to two miles. The exception to this is only allowed if one of the following has been
met: 1) close interval survey has been performed, 2) operating history demonstrates no leaks nor
evidence of external corrosion, or 3) pipeline inspection logs, assume for ILI, demonstrate no
wall loss. If one of these exceptions is met, then Respondent's procedures assume that sufficient
cathodic protection exists. It its Response, Respondent's submission of this procedure appears to
have met the intent of 49 C. F. R. $ 195. 567. Based on this information demonstrating
compliance with the regulation, I am withdrawing this allegation of violation.
ASSESSMENT OF PENALTY
Under 49 U. S. C. $ 60122, Respondent is subject to a civil penalty not to exceed $100, 000 per
violation for each day of the violation up to a maximum of $1, 000, 000 for any related series of
violations.
49 U. S. C. ) 60122 and 49 C. F. R. $ 190. 225 require that, in determining the amount of the civil
penalty, I consider the following criteria: nature, circumstances, and gravity of the violation,
degree of Respondent's culpability, history of Respondent's prior offenses, Respondent's ability
to pay the penalty, good faith by Respondent m attempting to achieve compliance, the effect on
Respondent's ability to continue in business, and such othe
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