BRIDGEMARK CORP — Notice of Probable Violation

party submissionOfficial PDF520050018_Petition for Reconsideration_04182008.pdf#

520050018_finalorder_03312008_text.pdf, page 1Official PDFU S Department of Transportation Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Ave, S E Washington DC 20590 Mr. Kevin Mugavero Vice President of Operations Bridgemark Corporation 17671 Irvme Blvd Suite 217 Tustin, CA 92780-3129 Re: CPF No. 5-2005-001S Dear Mr. Mugavero: Enclosed is the Final Order issued in the above-referenced case. It makes findings of violation and assesses a civil penalty of $5, 000. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment Your receipt of the Final Order constitutes service of that document under 49 C. F. R. ) 190, 5, Thank you for your cooperation in this matter. Sincerely, tr, ~~ &5z~- Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc. Chris Hoidal, P. E. , Director Western Region, PHMSA CERTIFIED MAIL — RETURN RECEIPT RE UESTED#

520050018_finalorder_03312008_text.pdf, page 2U. S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D. C. 20590 In the Matter of Bridgemark Corporation, Respondent CPF No. 5-2005-0018 FINAL ORDER On May 11, 2004, 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 inspection of Respondent's Operator Qualification of Pipeline Personnel (OQ) Program in Placentia, CA. As a result of the mspection, the Director, Western Region, PHMSA, issued to Respondent, by letter dated October 17, 2005, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C. F. R. $ 190. 207, the Notice proposed finding that Respondent had violated 49 C. F. R. ) 192, 809(a) and proposed assessing a civil penalty of $5, 000 for the alleged violation. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violation. Respondent responded to the Notice by letter dated November 1, 2005 (Response). Respondent did not contest the allegations of violation but stated that it was no longer operating a Department of Transportation-regulated gas pipeline. It stated that it began using 100% of the natural gas generated from its own field on June 1, 2005 and, as a result, requested that the proposed civil penalty be eliminated. Respondent did not request a hearing and therefore has waived its right to one. FINDING OF VIOLATION In its Response, Respondent did not contest the allegation in the Notice that it violated 49 C. F. R. Part 192, as follows: ' Effective February 20, 2005, the Pipehne and Hazardous Matenals Safety Admmistration (PHMSA) succeeded Research and Special Programs Admimstration as the agency responsible for regulatmg safety in pipeline transportation and hazardous materials transportation See, section 108 of the Norman Y Mmeta 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 pipeline safety authonties and functions to the PHMSA Admimstrator#

520050018_finalorder_03312008_text.pdf, page 3Item 1. Subpart N — Qualification of Pipeline Personnel 49 C. F. R. g 192. 809 General. (a) Operators must have a written qualification program by April 27, 2001. The program must be available for review by the Administrator or by a state agency participating under 49 U, S. C. Chapter 601 if the program is under the authority of that state agency. The Notice alleged that Respondent did not have a written program for qualifying its pipeline personnel as of the date of the PHMSA inspection on May 11, 2004. Accordingly, I find that Respondent violated 49 C. F. R. $ 192. 809(a) by failing to have a written OQ program by April 27, 2001. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U. S. C. $ 60122, Respondent is subject to an administrative 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 in attempting to achieve compliance; the effect on Respondent's ability to continue in business; and such other matters as justice may require. The Notice proposed a total civil penalty of $5, 000 for violation of 49 C. F. R. )192. 809(a). The Notice proposed that Respondent be assessed a civil penalty of $5, 000 for violating 49 C. F. R. $ 192. 809(a) by failing to have a written OQ program available for inspection on May 11, 2004. In its Response, Respondent stated that it was no longer operating the pipeline at issue, that it was a small business, and requested that the penalty be waived. Respondent, however, presented no other information that would justify why it should not be held liable for the alleged violation, that it was unable to pay the proposed penalty, or that would otherwise warrant a reduction in the penalty amount. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $5, 000. Payment of the civil penalty must be made within 20 days of service. Payment may be made by sending a certified check or money order (containing the CPF Number for this case) payable to "U. S. Department of Transportation" to the Federal Aviation Admmistration, Mike Monroney#

520050018_finalorder_03312008_text.pdf, page 4Aeronautical Center, Financial Operations Division (AMZ-341), P. O Box 25082, Oklahoma City, OK 73125. Federal regulations (49 C. F. R. $ 89. 21(b)(3)) also permit this payment to be made by wire transfer, through the Federal Reserve Communications System (Fedwire), to the account of the U. S. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire transfers should be directed to; Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P. O. Box 25082, Oklahoma City, OK 73125; (405) 954-8893. Failure to pay the $5, 000 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U. S. C. ) 3717, 31 C. F, R. ( 901. 9 and 49 C. F. R. $ 89. 23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service, Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a United States District Court. COMPLIANCE ORDER The Notice proposed a Compliance Order with respect to item 1 in the Notice for the violation of 49 C. F. R. $ 192. 809(a). Under 49 U. S. C. ( 60118(a), each person who engages in the transportation of gas or hazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. The Director, Western Region, PHMSA has indicated that Respondent is no longer operating a DOT-regulated facility as of April 11, 2006, and that the pipeline at issue has been disconnected and put in inactive mode, Accordingly, since compliance is no longer required with respect to this item, the compliance terms are not included in this Order. Under 49 C. F. R. ) 190. 215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be received within 20 days of Respondent's receipt of this Final Order and must contain a brief statement of the issues. The filing of the petition automatically stays the payment of any civil penalty assessed. However if Respondent submits payment for the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The terms and conditions of this Final Order shall be effective upon receipt. MAR 3 1 200S Jeffrey D. Wiese Associate Administrator for Pipeline Safety Date Issued#

520050018_Decision onPetitionforReconsideration_07282009_text.pdf, page 1Official PDFJUL 28 2009 Mr. Kevin Mugavero Vice President of Operations Bridgemark Corporation 17671 Irvine Boulevard Suite 217 Tustin, CA 92780-3129 Re: CPF No. 5-2005-0018 Dear Mr. Mugavero: Enclosed is the decision on the Petition for Reconsideration filed by Bridgemark Corporation on April 18, 2008, in the above-referenced enforcement case. For the reasons discussed in the decision, I have denied your petition. Payment of the $5,000 civil penalty shall be made in accordance with the terms of the Final Order. Your receipt of the 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: Chris Hoidal, Director, Western Region, PHMSA John J. Harris, Esq., Meyers, Nave, Riback, Silver & Wilson, PLC 333 South Grand Avenue, Suite 1670, Los Angeles, California 90071 CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 0390 0005 6162 5029]#

520050018_Decision onPetitionforReconsideration_07282009_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 ____________________________________ ) In the Matter of ) ) Bridgemark Corporation, ) CPF No. 5-2005-0018 ) Petitioner. ) ____________________________________) DECISION ON PETITION FOR RECONSIDERATION Background On March 31, 2008, pursuant to chapter 601, title 49 United States Code, the Associate Administrator for Pipeline Safety (Associate Administrator) issued a Final Order in this case against Bridgemark Corporation (Bridgemark or Petitioner), finding that Petitioner had committed one violation of the Gas Pipeline Safety Regulations, codified at 49 C.F.R. Part 192, and assessing a civil penalty of $5,000. Bridgemark is a crude oil production company based in Tustin, California. Specifically, PHMSA found that Petitioner violated 49 C.F.R. § 192.809(a) by failing to have a written Operator Qualification (OQ) program in place by the regulatory deadline of April 27, 2001. Generally, pipeline operators must have OQ programs in place to ensure that individuals performing covered tasks on their pipeline facilities are qualified.1 On April 18, 2008, Petitioner filed a Petition for Reconsideration (Petition) of the Final Order. Bridgemark sought withdrawal of the finding of violation in the Final Order and elimination or reduction of the associated civil penalty. Bridgemark made several arguments in support of its Petition. First, it argued that its pipeline is a gathering line not subject to PHMSA jurisdiction or regulation under Part 192. Second, it contended that the Final Order is time-barred under the general statute of limitations and PHMSA regulations. Third, it argued that no violation occurred because Petitioner was not operating the gathering line at the time the Notice of Probable Violation (Notice) was issued. In the alternative, it argued that the finding of violation should not be considered a prior offense in any subsequent enforcement action and that the civil penalty be reduced or the Final Order withdrawn. 1 49 C.F.R. Part 192, Subpart N – Qualification of Pipeline Personnel.#

520050018_Decision onPetitionforReconsideration_07282009_text.pdf, page 32 In addition to these defenses, the company claimed that it did not waive its right to contest the allegation in the Notice and its right to a hearing and that its Petition met the procedural requirements of 49 C.F.R. § 190.215. OPS first became aware that Bridgemark operated a gas pipeline during a February 26, 2002 inspection of a nearby gas gathering system operated by another company.2 To determine whether Bridgemark’s pipeline was subject to Part 192, OPS sent Bridgemark a Request for Specific Information on May 27, 2003, seeking a written description of the company’s gas pipeline operations. Bridgemark responded by letter on July 15, 2003. Bridgemark’s letter included a written description of its pipeline facility, a diagram, a map, and certain pipe specifications. On the basis of Bridgemark’s response, OPS inspected the company’s facility on May 11, 2004. It is undisputed that at the time of the inspection, Bridgemark was operating a gas gathering pipeline in Placentia, California.3 Discussion A. Procedure Under 49 C.F.R. § 190.215, a respondent may file a petition for reconsideration of a final order issued pursuant to § 190.213, requesting that PHMSA reconsider its decision. Although PHMSA does not consider repetitious information, arguments or petitions, a respondent may request consideration of additional facts or arguments, provided that there is a valid reason why they allow a petitioner to present information or arguments that were unavailable or unknown prior to but not to provide the operator with an appeal or a de novo review. were not presented prior to issuance of the final order.4 The purpose of reconsideration is to issuance of the final order, as well as to allow the agency to correct any error in the final order, Bridgemark’s Petition presents many facts and arguments for the first time. Petitioner argues that it did not present these facts and arguments earlier because “it reasonably believed that [OPS] was not going to assert jurisdiction over Bridgemark’s facility.”5 Petitioner explains that it contacted OPS after receiving the Notice and was informed it should “simply write a letter explaining that the line was out of service.”6 The record contains no documentation of this exchange, nor is there any indication that OPS indicated to Bridgemark that the company would not be responsible for past violations simply because it had taken its facility out of service. 2 PHMSA Request for Specific Information at 1 (May 27, 2003). 3 Petition at 12. 4 49 C.F.R. § 190.215(b) & (c). 5 Petition at 5. 6 Id. at 9.#

520050018_Decision onPetitionforReconsideration_07282009_text.pdf, page 43 In its cursory response to the Notice, Bridgemark stated that it no longer operated a jurisdictional line as of June 2005 and requested waiver of the proposed penalty. Bridgemark did not request a hearing or address the allegation that it failed to have an OQ program in place at the time of the 2004 inspection. In its Petition, Bridgemark fails to present any valid reason why the facts and legal arguments presented in the Petition could not have been presented prior to issuance of the Final Order. Accordingly, based upon Petitioner’s failure to comply with the procedural requirements of 49 C.F.R. § 190.215(b) and (c), I hereby deny the Petition for Reconsideration. Notwithstanding the foregoing, I have reviewed the record in this case, including the Request for Specific Information and Bridgemark’s response, in order to ensure that no error has occurred. Based upon such review, I also deny the Petition for the reasons discussed below. B. Jurisdiction Petitioner asserts that from 2001 until mid-2005, it operated a 1,250-foot gathering line in Placentia, California.7 Petitioner argues that PHMSA never had jurisdiction over this line because it is a gathering line that PHMSA lacks the authority to regulate.8 Petitioner is incorrect. PHMSA has clear statutory jurisdiction over gas pipeline facilities and the transportation of gas.9 The term “transporting gas” means “the gathering, transmission, or distribution of gas by pipeline, or the storage of gas, in interstate or foreign commerce,” except for certain rural gas gathering lines.10 The regulations in place during the time period relevant to this case (i.e., from the adoption of the regulation imposing the April 27, 2001 OQ deadline through the May 11, 2004 inspection of Bridgemark’s facility) describe the types of rural gathering lines that are exempt from Part 192.11 Petitioner’s gathering line is not located in one of these areas. 7 Id. at 12. 8 Id. at 6. 9 49 U.S.C. § 60102(a) and 49 C.F.R. § 192.1(a). 10 49 U.S.C. § 60101(a)(21)(A). 11 49 C.F.R. § 192.1(b)(4) (2004). The regulation provided that Part 192 did not apply to “(4) Onshore gathering of gas outside of the following areas: (i) An area within the limits of any incorporated or unincorporated city, town or village. (ii) Any designated residential or commercial area such as a subdivision, business or shopping center, or community development.” In its Petition, Bridgemark cited the gathering line exemption in place at the time of the Petition, not the earlier version of the regulation that was in place during the relevant time period.#

520050018_Decision onPetitionforReconsideration_07282009_text.pdf, page 54 With limited exceptions that are not relevant here, “each operator of a gathering line must has submitted no evidence that its gathering line is not subject to Part 192. I therefore find that during the relevant time period, Petitioner operated a gathering line that was subject to PHMSA jurisdiction over natural gas pipelines, and specifically to the operator qualification regulations at issue in the Final Order. comply with the requirements of this [Part 192] applicable to transmission lines.”12 Petitioner Accordingly, I find that Petitioner’s jurisdictional arguments do not warrant withdrawal of the finding of violation or the civil penalty assessed in the Final Order. C. Timeliness of the Final Order Petitioner argues that the Final Order is time-barred by both the federal statute of limitations set forth in 28 U.S.C. § 2462 and by PHMSA regulations.13 Petitioner first asserts that because this case has not been concluded within five years of accrual of the claim, PHMSA is now barred by the state of limitations from making a finding of violation. Petitioner is incorrect. Section 2462 provides, in relevant part, that “an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued...” [Emphasis added]14 The plain language of the statute requires only that enforcement actions be commenced, not concluded, within five years. OPS commenced this action by issuing the Notice on October 17, 2005, four and a half years from the earliest possible date the cause of action could have accrued, on April 28, 2001.15 Petitioner also argues that the Final Order is time barred because it was not issued within a unpersuasive. The regulation does not impose a legal requirement that final orders be issued basis per se for withdrawing either. reasonable period of time as provided in 49 C.F.R. 190.213(e).16 within a certain timeframe. Rather, the regulation describes PHMSA’s general policy of issuing final orders as expeditiously as possible. Although the agency strives to issue orders promptly, a delay between the date a notice is issued and the date a final order is entered does not constitute a Petitioner’s argument is 12 49 C.F.R. § 192.9. 13 49 C.F.R. § 190. 213(e). 14 28 U.S.C. § 2462. 15 The regulations set out a continuing obligation to establish and follow an OQ program. Although the Final Order found that Bridgemark violated § 192.809(a) by failing to have a program in place by April 27, 2001, a cause of action could have accrued at any time between the regulatory deadline and the 2004 inspection. 16 Petition at 8. Section 190.213(e) provides: “(e) It is the policy of the Associate administrator, OPS to issue a final order under this section expeditiously. In cases where a substantial delay is expected, notice of that fact and the date by which it is expected that action will be taken is provided to the respondent upon request and whenever practicable.”#

520050018_Decision onPetitionforReconsideration_07282009_text.pdf, page 65 Petitioner has incurred no hardship during the pendency of this case due to delay. Bridgemark was fully aware of the allegations and the proposed remedies and was not compelled to pay the penalty or take any other action until the Final Order was issued. Accordingly, I find that Petitioner’s timeliness arguments do not warrant withdrawal of the finding of violation or the civil penalty assessed in the Final Order. D. Bridgemark’s Operating Status at the Time of the Notice. Petitioner also argues that a finding of violation is not appropriate in this case because Bridgemark was not actually operating the gathering line at the time the Notice was issued.17 Petitioner argues that because the Bridgemark line was taken out of service in June 2005, “there was no reason at that point for an OQ program, nor a factual basis for finding it in violation” of the OQ regulations.18 I find this argument unpersuasive. The finding of violation and penalty in the Final Order concerned Petitioner’s conduct at the time when it was operating the gathering line, not at the time of issuance of the Notice. PHMSA may begin an enforcement proceeding against any “person” who has committed a probable violation of the Pipeline Safety Laws or any regulation or order issued thereunder.19 It is irrelevant whether such person is still operating the pipeline facility at the time a notice of probable violation is issued. Accordingly, I find that Petitioner’s operating status argument does not warrant withdrawal of the finding of violation or the civil penalty assessed in the Final Order. E. Prior Offense & Reduction of the Penalty. Petitioner argues, in the alternative, that because any violation was not ongoing, then “any technical violation should not be considered a ‘prior offense,’” and requests that the Final Order be modified to delete that finding.20 Bridgemark also argues that its Petition contains “sufficient rejected Petitioner’s other arguments, I find no evidence or legal reason to warrant modification of the Final Order or reduction of the penalty. factual and legal basis for reducing the penalty substantially.”21 Having reviewed the record and 17 Petition at 8-9. 18 Id. at 9. 19 49 C.F.R. § 190.207(a). 20 Petition at 10. 21 Id.#

520050018_Decision onPetitionforReconsideration_07282009_text.pdf, page 76 Relief Denied I have fully considered Petitioner’s request for reconsideration and its arguments, as discussed above. On the basis of the foregoing, the Petition for Reconsideration is denied. This decision is the final administrative action in this proceeding. _______________________________ ________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#