{"operation":"document","citation":"CPF 520045016","title":"AERA ENERGY LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2004-04-28","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.452(b)(3), 195.452(e)(1), 195.452(f)(1), 195.452(f)(8).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520045016.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520045016.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520045016","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520045016","body":"Notice of Probable Violation involving AERA ENERGY LLC. PHMSA's enforcement data identifies the cited regulations as 195,  195.452(b)(3),  195.452(e)(1),  195.452(f)(1),  195.452(f)(8). The case was opened on 2004-04-28 and is reported as closed as of 2009-03-25. Proposed civil penalty: $40,000. Assessed civil penalty: $15,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520045016_Final Order_03062009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045016/520045016_Final%20Order_03062009.pdf\n\n520045016_Final Order_03062009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520045016/520045016_Final%20Order_03062009_text.pdf\n\n520045016_Final Order_03062009_text.pdf\n\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED\nMr. Al Mueller\nVice President\nAera Energy, LLC\n10000 Ming Avenue\nPO Box 11164\nBakersfield, CA 93389-1164\nRe: CPF No. 5-2004-5016\nDear Mr. Mueller:\nEnclosed is the Final Order issued in the above-referenced case. It withdraws one of the\nallegations of violation, makes findings of violation and assesses a civil penalty of $15,000. The\nFinal Order also finds that you have completed the actions specified in the Notice required to\ncomply with the pipeline safety regulations, and that you have addressed the inadequacies in\nyour procedures that were cited in the Notice of Amendment. The penalty payment terms are set\nforth in the Final Order. This enforcement action closes automatically upon payment. Your\nreceipt of the Final Order constitutes service of that document 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: Ron A. Symm, Esq.Assistant General Counsel\nAera Energy LLC 10000 Ming Avenue PO Box 11164\nBakersfield, CA 93389-1164\nCynthia L. Quarterman, Esq.Steptoe & Johnson LLP\n1330 Connecticut Avenue, NW Washington, DC 20036\nKevin C. Mayer, Esq.Liner Yankelevitz Sunshine & Regenstreif LLP\n1100 Glendon Ave, 14th Floor Los Angeles, California 90024\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)\nAera Energy, LLC, ) CPF No. 5-2004-5016\n)\nRespondent. )\n______________________________)\nFINAL ORDER\nOn February 26, 2004, pursuant to 49 U.S.C. § 60117, representatives of the Research and\nSpecial Programs Administration’s Office of Pipeline Safety (OPS) and the California State Fire\nMarshal conducted an on-site pipeline safety inspection of the integrity management program of\nAera Energy, LLC (Aera or Respondent) in Bakersfield, California.\n1\nAt the time of the\ninspection, Aera operated an offshore crude oil pipeline, several onshore delivery lines, a\nbreakout tank, and a highly volatile liquid pipeline. As a result of the inspection, the Director,\nWestern Region, OPS (Director) issued to Respondent, by letter dated April 28, 2004, a Notice\nof Probable Violation, Proposed Civil Penalty, Proposed Compliance Order, and Notice of\nAmendment (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that\nRespondent had committed violations of the pipeline integrity management regulations, 49\nC.F.R. Part 195, proposed assessing a civil penalty of $40,000, and proposed ordering\nRespondent to take certain measures to correct the alleged violations. The Notice further\nproposed, in accordance with 49 C.F.R. § 190.237, that Respondent amend its integrity\nmanagement program procedures. Finally, in accordance with 49 C.F.R. § 190.205, the Notice\nproposed finding that Respondent had committed another probable violation of 49 C.F.R. Part\n195 and warned Respondent to take appropriate corrective action to address that item or be\nsubject to future enforcement action.\nAera responded to the Notice by letters dated November 10 and November 11, 2004\n(collectively, Response). Respondent indicated that although the Notice was dated April 28,\n2004 company did not receive the document until October 12, 2004. In its Response, Aera\ncontested the allegations and requested a hearing. The company renewed its request for a\nhearing by letter dated April 5, 2005 and submitted a Pre-hearing Brief dated June 10, 2005. In\naccordance with 49 C.F.R. § 190.211, a hearing was held on June 15, 2005 in Ontario,\n1 OPS is now part of the Pipeline and Hazardous Materials Safety Administration (PHMSA). The Norman Y.\nMineta Research and Special Programs Improvement Act, Pub. L. No. 108-426, 118 Stat. 2423 (2004), created\nPHMSA and transferred the authority of the Research and Special Programs Administration exercised under chapter\n601 of title 49, United States Code, to the Administrator of PHMSA. See also 70 Fed. Reg. 8299, 8301-8302 (2005)\n(delegating authority to the Administrator of PHMSA).\n\n\n\n2\nCalifornia, with an attorney from the Office of Chief Counsel, PHMSA, presiding. After the\nhearing, Respondent submitted additional information for the record on July 14, 2005. Due to a\nprocedural irregularity after the hearing, Aera was offered an opportunity for a second hearing\nand a chance to submit additional information for the record. At Aera’s request, a second\nhearing was held on February 28, 2007, with a different attorney from the Office of Chief\nCounsel, PHMSA, presiding. Aera then provided a Post-hearing Brief by letter dated April 2,\n2007.\nFINDINGS OF VIOLATION\nThe Notice alleged Respondent violated 49 C.F.R. Part 195, as follows:\nItem 1(b) in the Notice alleged that Respondent violated 49 C.F.R. § 195.452(f)(1), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) Which pipelines are covered by this section? This section applies to\neach hazardous liquid pipeline and carbon dioxide pipeline that could affect a\nhigh consequence area . . . . Covered pipelines are categorized as follows . . .\n(3) Category 3 includes pipelines constructed or converted after May\n29, 2001.\n(b) What program and practices must operators use to manage pipeline\nintegrity? Each operator of a pipeline covered by this section must:\n(1) Develop a written integrity management program that addresses\nthe risks on each segment of pipeline . . .\n(2) Include in the program an identification of each pipeline or\npipeline segment in the first column of the following table not later than\nthe date in the second column:\nPipeline . . . Date . . .\nCategory 3 Date the pipeline begins operation\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\ndrawn from results of the integrity assessments, and other maintenance and\nsurveillance data, and evaluation of consequences of a failure on the high\nconsequence area. An operator must include, at minimum, each of the\nfollowing elements in its written integrity management program:\n(1) A process for identifying which pipeline segments could affect a\nhigh consequence area . . . .\nThe Notice alleged that Respondent failed to have and follow a process for determining that a\npipeline segment could affect a high consequence area (HCA). Specifically, the Notice alleged\nAera operated a Category 3 highly volatile liquid (HVL) pipeline that could affect an HCA, but\nthe operator had not performed the required HCA segment identification pursuant to a process\nestablished under § 195.452(f)(1).\n\n\n\n3\nIn its written submissions and at the rehearing, Respondent acknowledged it operated the HVL\npipeline that could affect an HCA. Aera also explained the company used to operate five\nseparate HVL pipelines, but after “evaluat[ing] the environmental and safety risks associated\nwith its then-existing five HVL pipelines (as well as a proposed replacement line),” Aera decided\nto replace the five pipelines with a single new HVL pipeline.2 According to Respondent, the\ncompany determined “as early as June 2001” that the new HVL pipeline was a “single segment\nthat could affect all HCAs.\n”3 Respondent also maintained that “all the HCA elements (high\npopulation area, other populated area, unusually sensitive area, and commercially navigable\nwater way) were covered in Aera’s analysis.”4 Accordingly, Respondent reasoned, “[t]here is no\nbasis for concluding that Aera did not consider all those elements in its segment identification.”5\nRespondent submitted various risk analyses and other documentation to support its position that\nby Respondent consisted of: a June 2001 risk assessment; 6 a subsequent risk analysis;7 a series of\nit had identified the pipeline under its integrity management program. The evidence submitted\nenvironmental analyses;8 records from a startup hydrotest;9 and several studies that were\nperformed after March 6, 2002.10\nEach of these analyses is addressed in turn.\nThe primary document Respondent relied upon was a document titled “Ventura Gas Plant 6 and\nLPG Pipeline Risk Assessment,\n” dated June 2001.\n11 The study evaluated the likelihood of a\nhazardous release from the HVL pipeline and the possible consequences of such a release. After\nevaluating the document, I find it lacked key elements necessary for compliance with\n§ 195.452(f)(1). First, the document did not include a process for identifying HCAs or the\ncriteria Respondent would use to determine whether pipelines could affect HCAs. The study\nalso failed to identify any actual HCAs. Although one section of the study estimated the distance\nfrom the pipeline to several areas termed “nearest populations,\n” there was no determination\nwhether any of those areas were an HCA, or whether HCAs other than populated areas were near\nthe pipeline.\n12\nFinally, the HVL pipeline was not identified as a segment covered by\nRespondent’s integrity management program. All of these elements were necessary for Aera to\nmake an informed and documented determination that the pipeline was covered by its integrity\nmanagement program. Since these elements were missing from the June 2001 risk assessment, I\nfind this evidence does not support Respondent’s assertion that it complied with § 195.452(f)(1).\nThe second document Respondent cited was the “Pipeline Integrity Management Risk\nAssessment for Venture BP Mix Pipeline.”\n13\nThe date of this document is not entirely clear.\nWhile the title page of the document states the study was conducted on August 1, 2001, various\n2 Post-hearing Brief (Brief) at 5.\n3 Id. at 7.\n4 Id. at 8-9.\n5 Id. at 9.\n6 Id. at 5 and Ex. II § E.\n7 Brief at 5 and Ex. II § B:21.\n8 Brief at 5 and Exhibit III §§ 4-3(13)-(15), 4-4(16)-(22), and Respondent’s letter dated July 14, 2005 at 3-7.\n9 Brief at 5.\n10 Brief at 5-6.\n11 Brief Ex. II § E.\n12 Id. at 20.\n13 Brief Ex. II § B:21.\n\n\n\n4\npages of the study are dated February 25, 2004 and June 24, 2004. Respondent did not offer an\nexplanation for the discrepancy between the various dates of the study, but did claim the study\ndemonstrates compliance with the deadline of March 6, 2002.\nNotwithstanding the possibility the study was finalized after the deadline for compliance, I have\nreviewed the document. The purpose of the study was “to review the installation of one new\nHVL pipeline . . . to identify potential risks and to assure adequate safeguards are in place . . .\n.”14 The bulk of the document was a series of worksheets with tables listing possible\nconsequences of a failure, causes, safeguards, and recommendations. The only portion of the\ndocument I find could be relevant is a single-page appendix titled “Prioritized List of HCA\nPipeline Segments,\n” which listed a number of “hazard elements.\n”15 One of those elements was\n“Populated areas, unusually sensative [sic] environmental areas, Nat. Fish Hatcheries,\nCommercially navigable waters, areas where people congregate.”16 This group of area types, as\na whole, was assigned a single hazard element and a “Risk Ranking” by Aera.17\nWhile the appendix identified certain categories of areas, Aera failed to identify any actual areas\nin the vicinity of its pipeline. For example, the study did not identify any specific navigable\nwaters or fish hatcheries. The study could not evaluate the extent to which the HVL pipeline\ncould affect any HCAs because no specific HCAs were identified. Moreover, the study failed to\nset forth the criteria by which Respondent would determine whether the pipeline could affect an\nHCA. For these reasons, I find this evidence also does not support Respondent’s assertion that it\ncomplied with § 195.452(f)(1).\nWith regard to the other documentation submitted by Aera, I do not find any of it supports\nRespondent’s position. Included in the documentation are letters between Aera and an\nenvironmental agency of California regarding compliance with state regulations, documents\npertaining to Aera’s endangered species program, checklists and forms for permits and\nmanagement of change, and a risk analysis dated October 2003.\n18\nI find such documentation is\nnot relevant to the allegation that Respondent violated § 195.452(f)(1). Similarly, with regard to\nRespondent’s startup hydrotest, such testing is not relevant to compliance with § 195.452(f)(1).\nFinally, any studies Respondent performed after March 6, 2002, by virtue of their date, do not\ndemonstrate compliance.\nIt is evident from the documentation submitted by Respondent that the company did look at risks\nassociated with its HVL pipeline. However, the evidence also shows that Respondent did not\nperform certain steps required under the integrity management regulations, including the\nrequirement that it have and follow, no later than March 6, 2002, a process for determining that\nits HVL pipeline could affect an HCA. Accordingly, after considering all the evidence, I find\nRespondent violated 49 C.F.R. § 195.452(f)(1) as alleged in the Notice.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(b)(3), which states:\n14 Id. (pages not numbered).\n15 Id.\n16 Id.\n17 Id.\n18 Brief Ex. III.\n\n\n\n5\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . . .\n(b) What program and practices must operators use to manage pipeline\nintegrity? Each operator of a pipeline covered by this section must . . .\n(1) Develop a written integrity management program that addresses\nthe risks on each segment of pipeline in the first column of the following\ntable not later than the date in the second column:\nPipeline Date\nCategory 1 March 31, 2002.\nCategory 2 February 18, 2003.\nCategory 3 1 year after the date the pipeline begins operation.\n(3) Include in the program a plan to carry out baseline assessments of\nline pipe as required by paragraph (c) of this section.\n(c) What must be in the baseline assessment plan? (1) An operator must\ninclude each of the following elements in its written baseline assessment plan:\n(i) The methods selected to assess the integrity of the line pipe . . .\n(ii) A schedule for completing the integrity assessment;\n(iii) An explanation of the assessment methods selected and\nevaluation of risk factors considered in establishing the assessment\nschedule . . . .\nThe Notice alleged that Respondent’s integrity management program failed to include a baseline\nassessment plan by the required deadline in the regulation. Pursuant to § 195.452(b)(3), each\noperator of a pipeline that could affect an HCA must have an integrity management program that\nincludes a plan to carry out baseline assessments of line pipe. Pursuant to § 195.452(b)(2), the\nbaseline assessment plan must be developed for Category 2 pipelines by February 18, 2003 and\nfor Category 3 pipelines within 1 year after the date the pipeline begins operation. In accordance\nwith § 195.452(c), a baseline assessment plan must: identify the methods selected to assess pipe\nintegrity (such as internal inspection tools or pressure test); explain the technical basis for the\nassessment method(s) selected; include a schedule for completing integrity assessments; and\nevaluate the risk factors considered in establishing the assessment schedule.\nIn its written submissions and at the rehearing, Respondent explained that it operates several\ndifferent pipelines subject to the integrity management rule: a 17.3-mile pipeline from the outer\nContinental Shelf to the California shore (the San Pedro Bay pipeline); three 0.26-mile onshore\ndelivery lines; and the above-referenced 1.583-mile HVL pipeline. The San Pedro Bay pipeline\nand the delivery lines are Category 2 pipelines and the HVL pipeline is a Category 3 pipeline.19\nRespondent also explained that since the vast majority of its pipeline mileage is offshore,\nincluding pipelines not regulated by PHMSA, the company initially prepared a baseline\nassessment plan under U.S. Department of Interior’s Minerals Management Service (MMS)\n19 Pre-Hearing Brief 5-6\n\n\n\n6\noffshore pipeline regulations.20\nRespondent contended the assessment schedule it had under the\nMMS plan exceeded the requirements of OPS’s integrity management rule. Respondent also\nargued the company performed baseline assessments well in advance of the OPS integrity\nmanagement deadlines. For these reasons, Respondent contended that it had a baseline\nassessment plan that complied with § 195.452(b)(3).\nWith regard to the San Pedro Bay Pipeline, Respondent submitted a document titled “Elly to\nShore Pipeline Smart Pig Plan,” dated March 3, 2000, which “propos[ed] a three phased\napproach to accommodating the . . . 16-inch oil pipeline for smart pig internal inspections.”\n21\nAlso submitted were correspondence between Aera and MMS, which the company claimed\n“discuss[ed] various tools and selection criteria, and identif[ied] the location of the highest risk\nsegment.”22 Aera also submitted a “reformatted” baseline assessment plan, dated May 18, 2005,\nfor which Aera claimed the “basis for key threat and tool selection criteria were in existence at\nthe time of the February 26, 2004 [OPS inspection].”23\nAfter reviewing the documents submitted by Respondent for the San Pedro Bay Pipeline, I find\nthat Aera must comply with,” including the running of a smart pig. 24\nthe documents did not comply with § 195.452(b)(3) for several reasons. First, the documentation\nlacked an explanation of the technical basis for selecting smart pigging as the assessment\nmethod, as required under § 195.452(c). The evidence shows that Aera selected smart pigging\nbecause MMS had rescinded a waiver granted to the company and “set forth specific conditions\nSince the March 2000\ndocument did not “explain the technical basis for the assessment method(s) selected” as required\nby § 195.452(c), the plan did not comply with § 195.452(b)(3).\nAlthough Respondent was required to choose an assessment method and develop an assessment\nschedule based on consideration of the pipeline’s risk factors, it appears Respondent only\nevaluated potential risks caused by the chosen assessment method itself. For example,\nRespondent identified “the pipeline’s key threat to be the pipeline’s ability to withstand the\npressure required to clean it prior to running an in-line assessment tool.”\n25 There is no indication\nin the record that Respondent actually considered the risk factors of the pipeline and chose an\nappropriate assessment method based on those risks. In addition, despite Respondent’s claim\nthat it evaluated “various tools and selection criteria,”26\nI find no evidence in the record that the\ncompany considered other available integrity assessment methods. Furthermore, the schedule\nRespondent prepared for completing the pig run on the offshore pipeline did not prioritize\nbetween Respondent’s other pipelines based on risk, as required by § 195.452(c).\nWith respect to the “reformatted” baseline assessment plan dated May 18, 2005, the document\npostdates the compliance deadline of February 18, 2003 by more than two years; therefore it\ndoes not demonstrate compliance. I reject Respondent’s contention that the “basis” for this\n20 MMS regulates certain production pipelines on the outer Continental Shelf that are not regulated by OPS under\n§ 195.1\n21 Post-hearing Brief Ex. III § 2-1 at 1.\n22 Brief at 11.\n23 Id.\n24 Brief Ex. III § 2-1 (cover letter).\n25 Id.\n26 Brief at 11.\n\n\n\n7\ndocument was in existence prior to the deadline and so Respondent was in compliance. Section\n195.452(b) requires that Respondent have a fully developed baseline assessment plan for the\nCategory 2 San Pedro Bay Pipeline by February 18, 2003, not merely the “basis” for one.\nRespondent argued it also had a baseline assessment plan for the three delivery lines. For one of\nthe delivery lines, Respondent argued that a plan had been developed by a previous operator; but\nthe record demonstrates Aera did not have a copy of that document prior to the deadline for\ncompliance, and still did not have it at the time of the OPS inspection.27 For the other delivery\nlines, Respondent submitted an “Integrity Evaluation,\n”28 dated April 2005, and an “IMP for\nHazardous Liquid Pipelines, Appendix B, Baseline & Subsequent Assessment Schedule,\nCategory-2 Pipelines,\n”29\ndated May 2005. By virtue of the date of those documents, however,\nthey do not demonstrate Respondent had a baseline assessment plan for the Category 2 pipelines\nby the regulatory deadline of February 18, 2003.\nFinally, with respect to the Category 3 HVL pipeline, the deadline for Respondent to develop a\nbaseline assessment plan was March 6, 2003, one year after the date the pipeline began\noperation. Respondent claimed it conducted a hazard analysis that “identified key threats such as\nthird-party damage, earthquakes, and vandalism.”\n30 The actual document, which was titled\n“Pipe Hazard Analysis Checklist,\n” dated September 25, 2001, only consisted of two pages of\nanswers to yes and no questions prepared for the benefit of the state fire marshal.31\nThe\ndocument included discussion of the manner in which Respondent would respond to certain\ntypes of issues on its pipeline. Respondent claimed its baseline assessment plan consisted of this\ndocument plus its June 2001 risk assessment. Neither of those documents met the specifications\nin § 195.452(c), however, because they failed to identify the selection of methods to assess pipe\nintegrity and the technical basis for the methods selected. The documents also failed to include a\nschedule for completing integrity assessments and failed to evaluate the risk factors considered\nin establishing an assessment schedule.\nIn its written submissions and at the rehearing, Respondent claimed that it performed baseline\nassessments prior to the deadline in the integrity management regulations. The performance of\nbaseline assessments, however, does not necessarily demonstrate compliance with\n§ 195.452(b)(3), which is alleged to have been violated, because that regulation requires\nRespondent develop a baseline assessment plan that evaluates and justifies the method(s) of\nassessment chosen to assess line pipe and prioritizes the scheduling of all of its pipelines for\nassessment based on specified criteria.\nAccordingly, I find that Respondent violated 49 C.F.R. § 195.452(b)(3) by failing to include in\nits integrity management program a plan to carry out baseline assessments of line pipe as further\nspecified in § 195.452(c).\nThese findings of violation will be considered a prior offenses in any subsequent enforcement\naction taken against Respondent.\n27 Brief at 12.\n28 Brief Ex. II § D.\n29 Brief Ex. II § G.\n30 Brief at 11.\n31 Brief Ex. II § B:20.\n\n\n\n8\nWITHDRAWAL OF ALLEGATION\nItem 4(a): The Notice alleged that Respondent violated 49 C.F.R. § 195.452(e)(1), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . . .\n(e) What are the risk factors for establishing an assessment schedule (for\nboth the baseline and continual integrity assessments)? (1) An operator must\nestablish an integrity assessment schedule that prioritizes pipeline segments\nfor assessment (see paragraphs (d)(1) and (j)(3) of this section). An operator\nmust base the assessment schedule on all risk factors that reflect the risk\nconditions on the pipeline segment. The factors an operator must consider\ninclude, but are not limited to:\n(i) Results of the previous integrity assessment, defect type and\nsize that the assessment method can detect, and defect growth rate;\n(ii) Pipe size, material, manufacturing information, coating type\nand condition, and seam type;\n(iii) Leak history, repair history and cathodic protection history;\n(iv) Product transported;\n(v) Operating stress level;\n(vi) Existing or projected activities in the area;\n(vii) Local environmental factors that could affect the pipeline\n(e.g., corrosivity of soil, subsidence, climatic);\n(viii) geo-technical hazards; and\n(ix) Physical support of the segment such as by a cable suspension\nbridge.\nThe Notice alleged Respondent failed to perform a risk analysis for the HVL pipeline, including\nan air dispersion analysis. The Notice further alleged the analysis must be performed for\nRespondent to properly rank its pipeline segments by highest to lowest risk as required by\n§ 195.452(e)(1).\nIn its written responses and at the rehearing, Respondent asserted that it did perform a risk\nassessment, including an air dispersion analysis, for the HVL pipeline in June 2001. In its Post-\nhearing Brief, Respondent stated that it also performed an analysis in August 2001.\nThe two studies Respondent cited are the “Ventura Gas Plant 6 and LPG Pipeline Risk\nAssessment”\n32 and the “Pipeline Integrity Management Risk Assessment for Ventura BP Mix\nPipeline.”33 The former was dated June 2001 and appeared to be just as the title indicated—a\nrisk assessment for the HVL pipeline. That study assessed pipeline risks by calculating the\nestimated “hazard distances” for different types of failure events.\n34\nThe calculation was based on\nequipment inventories, flow rates, detection, likely isolation of equipment, and representative\n32 Brief Ex. II § E.\n33 Brief Ex. II § B:21.\n34 Brief Ex. II § E at 16.\n\n\n\n9\nweather conditions. In particular, the study documented Aera’s use of a model to calculate\nflammable vapor dispersion.\nThe second study also appeared to evaluate various sources of harm, possible consequences,\nsafeguards, and recommendations to reduce risk. The timeliness of this document, however, is\nquestionable due to the fact that relevant pages in the document are dated 2004.\nWith respect to the allegation of violation in Item 4(a), based on a review of Respondent’s June\n2001 risk assessment, I find Aera performed a risk analysis for the HVL pipeline that included an\nair dispersion or “flammable vapor dispersion” analysis. Since that was the sole factual\nallegation upon which Item 4(a) rested, I order this Item be withdrawn.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122 and 49 C.F.R. §§ 190.221–190.227, Respondent is subject to a civil\npenalty not to exceed $100,000 per violation for each day of the violation up to a maximum of\n$1,000,000 for any related series of violations. The Notice proposed a civil penalty of $10,000\nfor the violation of § 195.452(f)(1) (Item 1(b)) and $25,000 for the violation of § 195.452(b)(3)\n(Item 2).\n35\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: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent’s culpability; the history\nof Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that\nthe penalty may have on its ability to continue doing business; and the good faith of Respondent\nin attempting to comply with the pipeline safety regulations. In addition, I may consider the\neconomic benefit gained from the violation without any reduction because of subsequent\ndamages, and such other matters as justice may require.\nIn its Post-hearing Brief, Aera argued the above-referenced criteria weigh against levying civil\npenalties in this case for several reasons. First, Respondent asserted that the company is a small\noperator; though Respondent did not offer any information to suggest that Aera is not able to pay\nthe penalties. Respondent also did not claim the penalties would affect its ability to continue in\nbusiness. I find the level of the proposed civil penalties appropriate for the size of Respondent’s\noperation and see no reason to reduce them solely because of Respondent’s size.\nSecond, Aera claimed it has “less experience with OPS matters”; but Respondent’s level of\nexperience is not an excuse for violating the applicable safety regulations.\n36\nPHMSA has\nprovided operators with ample guidance information concerning the integrity management\nregulations through public meetings, an extensive integrity management website\n(http://primis.phmsa.dot.gov/iim/index.htm), answers to frequently asked questions (FAQs), and\n35 Respondent argued the proposed civil penalty for Item 2 had been “reset” to $20,000 in accordance with the\nRegional Director’s post-hearing recommendation. Brief at 6. While I review the post-hearing recommendations of\nthe regional director and presiding official pursuant to § 190.213, I am not bound by the terms of those\nrecommendations when issuing a final order.\n36 Brief at 14.\n\n\n\n10\nthe very inspection protocols used by PHMSA in conducting compliance inspections.37\nRespondent’s lack of experience is no reason to reduce the civil penalty.\nThird, Respondent argued that it demonstrated a good faith attempt to achieve compliance and\nalso a lack of culpability by: performing baseline assessments prior to the deadline; installing a\nnew HVL pipeline; developing its integrity management program internally rather than hiring an\noutside consultant; performing risk assessments; and revising its BAP.\nMany of these actions do not warrant a reduction to the civil penalties because they were not\nactions taken by Respondent in an attempt to achieve compliance with PHMSA’s integrity\nmanagement regulations. With regard the baseline assessments, the record demonstrates\nRespondent performed those assessments to comply with new pipeline startup requirements and\nanother agency’s regulatory requirements. There is also no evidence to suggest that the new\nHVL pipeline was installed in an attempt to comply with any PHMSA integrity management\nregulations. Respondent’s internal development of an integrity management program does not\nnecessarily demonstrate a good faith effort any more than it would if Respondent had hired an\noutside consultant. Respondent’s risk assessments do not demonstrate good faith efforts to\nachieve compliance with the cited regulations--§§ 195.452(f)(1) and 195.452(b)(3)—because\nthose regulations require conduct other than the mere performance of risk assessments.\nRespondent’s baseline assessment plan revisions were performed after PHMSA’s inspection of\nRespondent’s integrity management program; and post-inspection remedial actions do not\ndemonstrate good faith efforts to achieve compliance when the violations had occurred.\nFurthermore, I find unpersuasive Respondent’s claim that these actions demonstrate a lack of\nculpability, because Aera is responsible for compliance with the pipeline safety regulations and\nis accountable for the company’s actions that do not comply with those regulations.\nFourth, Respondent maintained that it did not attain any economic benefit from the violations,\nbut instead experienced “significant additional costs.”\n38\nFurther details about the nature of those\nadditional costs were missing from Respondent’s Brief. Notwithstanding Respondent’s\nassertion, I did not consider economic benefit in the assessment of the civil penalties in this case.\nFifth, Respondent claimed the nature, circumstances and gravity of the violations were not\nsignificant and there was no adverse impact on the environment. The basis for Respondent’s\nposition was that Aera performed baseline assessments on all of its covered segments and has\ntaken remedial measures as a result of those assessments.\nWith regard to Item 1(b), I found Respondent violated § 195.452(f)(1) by failing to have and\nfollow a process to identify an HVL pipeline as being covered by the company’s integrity\nmanagement program. Failure to identify when a pipeline is subject to the integrity management\nprogram rules presents a risk to the safety of the public and environment in the most critical\nareas, because the operator may not adhere to the more stringent standards imposed by the\nintegrity management regulations for that pipeline. In this case, however, Respondent was\nclearly aware through various studies that its HVL pipeline was located in a sensitive area and\n37 These guidance materials do not constitute rules themselves but provide informal information to the regulated\ncommunity about how to implement their integrity management programs in accordance with the applicable\nrequirements of the pipeline safety regulations.\n38 Brief at 14.\n\n\n\n11\nthe company took certain measures to reduce risk by replacing several older pipelines with one\nnew pipeline, routing the new pipeline to reduce risks where possible, and performing integrity\nassessments and remedial measures. For this reason, I find the nature, circumstances and gravity\nof the violation in Item 1(b) warrant a reduction in the civil penalty.\nWith regard to Item 2, I found that Respondent did not have a baseline assessment plan to guide\nthe performance of assessments in violation of § 195.452(b)(3). I recognize, however, that Aera\ndid perform certain integrity assessments and took remedial measures that assured a greater level\nof safety than if the company had completely neglected to do so. Accordingly, I find the nature,\ncircumstances and gravity of the violation in Item 2 also warrant a reduction in the civil penalty.\nFinally, Aera contended the penalties proposed in this case are higher than penalties imposed in\nother cases. Respondent cited several cases in which PHMSA issued Notices of Amendment\n(NOAs) rather than civil penalties for deficiencies in an operator’s integrity management\nprogram.39\nPursuant to 49 C.F.R. Part 190, PHMSA has a broad range of enforcement tools\navailable for addressing deficiencies and matters of noncompliance. NOAs are generally issued\nunder § 190.237 when the agency considers an operator’s plans or procedures “inadequate.”\nWhen an NOA is issued, no allegations of violation are involved. By comparison, where the\nagency finds an actual violation of a regulatory requirement, PHMSA generally issues a Notice\nof Probable Violation. I find Respondent’s argument unpersuasive that the proposed penalty\nshould be reduced or eliminated merely because NOAs were more appropriate in other cases\n(and for certain items in this case). I have also reviewed the NOA cases cited by Respondent and\nfind none of them present the exact set of circumstances involved in this case.\nFor the reasons discussed above, having reviewed the record and considered the assessment\ncriteria, I assess Respondent a reduced civil penalty of $5,000 for Item 1 and a reduced civil\npenalty of $10,000 for Item 2.\nPayment of the $15,000 total civil penalty must be made within 20 days of service. Federal\nregulations (49 C.F.R. § 89.21(b)(3)) require this payment be made by wire transfer, through the\nFederal Reserve Communications System (Fedwire), to the account of the U.S. Treasury.\nDetailed instructions are contained in the enclosure. Questions concerning wire transfers should\nbe directed to: Financial Operations Division (AMZ-341), Federal Aviation Administration,\nMike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, OK 73125; (405) 954-\n8893.\nFailure to pay the $15,000 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 United\nStates District Court.\n39 Brief at 15-16.\n\n\n\n12\nThe Notice also proposed a civil penalty of $5,000 for the violation of § 195.452(e)(1) (Item\n4(a)). Since Item 4(a) is withdrawn, the corresponding proposed civil penalty will not be\nassessed.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Items 1(b) and 2 in the Notice for\nviolations of §§ 195.452(f)(1) and (b)(3), respectively. Under 49 U.S.C. § 60118(a), each person\nwho engages in the transportation of hazardous liquids by pipeline or who owns or operates a\nhazardous liquid pipeline facility is required to comply with the applicable safety standards\nestablished under chapter 601. Respondent has submitted documentation concerning its efforts\nto achieve compliance, which the Director has reviewed. Based on the results of that review, it\nappears Aera has satisfied the Proposed Compliance Order portion of the Notice. Accordingly,\nsince compliance has been achieved with respect to the violations of §§ 195.452(f)(1) and (b)(3),\nthe compliance terms are not included in this Order.\nThe Notice also proposed a compliance order for Item 4(a) in the Notice for violation of\n§ 195.452(e)(1). Since Item 4(a) is withdrawn, the terms of the proposed compliance order\nassociated with that allegation are not included in this order.\nAMENDMENT OF PROCEDURES\nItems 1(a) and 3 in the Notice alleged inadequacies in Respondent’s integrity management\nprogram procedures and proposed to require amendment of Respondent’s procedures to comply\nwith the requirements of 49 C.F.R. §§ 195.452(f)(1) and (f)(8), respectively. In response to the\nNotice, Respondent submitted copies of its amended procedures, which the Director has\nreviewed. Accordingly, based on the results of that review, I find Respondent’s original\nprocedures as described in the Notice were inadequate to ensure safe operation of its pipeline\nsystem, but that Respondent has corrected the identified inadequacies. No need exists to issue an\norder directing amendment.\nWARNING ITEM\nWith respect to Item 4(b), the Notice alleged a probable violation of Part 195 but did not\npropose a civil penalty or compliance order for this item. Therefore, this is considered to be a\nwarning item. The warning was for:\n49 C.F.R. § 195.452(e) (Notice Item 4(b)) – Respondent’s alleged failure to establish an\nintegrity assessment schedule that prioritizes pipeline segments for assessment based on,\namong other things, evaluation of the likelihood of a pipeline release occurring and how a\nrelease could affect the HCA.\nRespondent did not object to this allegation. Accordingly, pursuant to 49 C.F.R. § 190.205, I\nfind a probable violation of 49 C.F.R. § 195.452(e) (Notice Item 4(b)) has occurred and\n\n\n\n13\nRespondent is hereby advised to correct such condition. If PHMSA finds a violation for this\nitem in a subsequent inspection, Respondent may be subject to future enforcement action.\nUnder 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of\nthis Final Order. The petition must be received within 20 days of Respondent’s receipt of this\nFinal Order and must contain a brief statement of the issue(s). The filing of the petition\nautomatically stays the payment of any civil penalty assessed. However, if Respondent submits\npayment for the civil penalty, the Final Order becomes the final administrative decision and the\nright to petition for reconsideration is waived. The terms and conditions of this Final Order shall\nbe effective upon receipt.\n___________________________________ __________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":39837}