{"operation":"document","citation":"CPF 520055016","title":"KEY PIPELINE LIMITED — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2005-03-09","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.452(b)(2), 195.452(c)(1)(iii), 195.452(c)(2), 195.452(e), 195.452(f)(1), 195.452(f)(3), 195.452(f)(4), 195.452(f)(5), 195.452(f)(6), 195.452(f)(8), 195.452(j)(4)(ii), 195.452(j)(5)(iii), 195.452(l)(2)(viii).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520055016.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520055016.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520055016","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520055016","body":"Notice of Probable Violation involving KEY PIPELINE LIMITED. PHMSA's enforcement data identifies the cited regulations as 195,  195.452(b)(2),  195.452(c)(1)(iii),  195.452(c)(2),  195.452(e),  195.452(f)(1),  195.452(f)(3),  195.452(f)(4),  195.452(f)(5),  195.452(f)(6),  195.452(f)(8),  195.452(j)(4)(ii),  195.452(j)(5)(iii),  195.452(l)(2)(viii). The case was opened on 2005-03-09 and is reported as closed as of 2009-08-05. Proposed civil penalty: $10,000. Assessed civil penalty: $2,500. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520055016_decision on petition for reconsideration_01102008.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_decision%20on%20petition%20for%20reconsideration_01102008.pdf\n\n520055016_decision on petition for reconsideration_01102008_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_decision%20on%20petition%20for%20reconsideration_01102008_text.pdf\n\n520055016_Final Order_12112006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_Final%20Order_12112006.pdf\n\n520055016_final order_12112006_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_final%20order_12112006_text.pdf\n\n520055016_Petition for Reconsideration_12212006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_Petition%20for%20Reconsideration_12212006.pdf\n\nCPF_NO_5-2005-5016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/CPF_NO_5-2005-5016.pdf\n\n520055016_final order_12112006_text.pdf\n\nU 5 Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety Administration\n400 Seventh Street, S W\nWashington, D C 20590\nLi'='\" l l\nRECEIVED\nDEC t5 Ms\nMs. Anna Black\nPresident\nKey Pipelines LTD\n355 Ashland Loop Road\nAshland, Oregon 97520\nRe: CPF No. 5-2005-5016\nDear Ms. Black:\nEnclosed is the Final Order issued by the Acting Associate Administrator for Pipeline Safety\nin the above-referenced case. It makes findings of violation and assesses a civil penalty of\n$7, 500. The Final Order also specifies actions to be taken to comply with the pipeline safety\nregulations and revision of certain operating and maintenance procedures/plans. The penalty\npayment terms are set forth in the Final Order. When the civil penalty is paid and the terms of\nthe Compliance Order and Amendment of Procedures are completed, as determined by the\nDirector, Western Region, this enforcement action will be closed. Your receipt of the Final\nOrder constitutes service under 49 C. F. R. g 190. 5.\nSincerely,\nJames Reynolds\nPipeline Compliance Registry\nPHMSA-Office of Pipeline Safety\nEnclosure\ncc: Mr. Chris Hoidal, P. E.\n, Director, Western Region, PHMSA\nCERTIFIED MAIL — RETUElY RECEIPT RE UES TED\n\n\n\nDEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, DC 20590\nIn the Matter of\nKey Pipelines LTD,\nRespondent\nCPF No. 5-2005-5016\nFINAL ORDER\nBetween November 22 and 23, 2004, pursuant to 49 U. S. C. $ 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration's (PHMSA's)' OAice of Pipeline Safety\nconducted an on-site pipeline safety inspection of Respondent's Integrity Management Program\n(IMP) at your offices in Wheatland, Wyoming. As a result of the inspection, the Director,\nWestern Region, PHMSA, issued to Respondent, by letter dated March 9, 2005, a Notice of\nProbable 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 committed violations of 49 C. F. R. Part 195, proposed assessing a civil penalty of\n$10, 000 for the alleged violations, and proposed ordering Respondent to take certain measures to\ncorrect the alleged violations, The Notice also proposed, in accordance with 49 C. F. R.\n$ 190. 237, that Respondent amend its procedureslpians.\nAfter requesting and receiving an extension of time to respond, Respondent responded to the\nNotice by letter dated May 11, 2005 (Response). Respondent responded to many of the\nallegations but did not contest some of the Notice Items. Respondent did not request a hearing,\nand therefore has waived its right to one.\nFINDINGS OF VIOLATION\nItem 1(a) in the Notice alleged Respondent violated 49 C. F. R. $ 195. 452(b)(1) by failing to\ndevelop a written IMP by February 18, 2003 as the regulation requires of an operator of a\n' Effective February 20, 2005, the Pipeline and Hazardous Matenals Safety Administration (PHMSA) succeeded\nResearch and Special Programs Adm&mstrat&on as the agency respons&ble for regulatmg safety in pipeline\ntransportat&on and hazardous materials transportation See, section 108 of the Norman Y. M&neta Research and\nSpec&al Programs Improvement Act (Pubhc Law 108-426, 118 Stat. 2423-2429 (November 30, 2004)) See also, 70\nFed Reg. 8299 (February 18„2005) redelegatmg the p&pehne safety authonties and functions to the PHMSA\nAdmmistrator\n\n\n\nCategory 2 pipeline that could affect a high consequence area (HCA). During the IMP\ninspection, records indicated that the written IMP was initially completed in April 2004, which\nexceeds the mandated Category 2 pipeline deadline of February 18, 2003 by approximately\nthirteen months.\nIn its Response, Respondent contends that although its IMP was not formalized until April 2004,\nthe plan was being implemented prior to its formalization. However, Respondent did not provide\nany evidence to support its claim that its IMP plan was developed prior to its formalization.\nAccordingly, I find that Respondent violated 49 C. F, R. ) 195. 452(b)(1) in the Notice.\nItem l(b) in the Notice alleged Respondent violated 49 C. F. R. $ 195. 452(b)(2) by failing to\nidentify pipeline segments that could affect an HCA by November 18, 2002 as the regulation\nrequires of an operator of a Category 2 pipeline. At the time of the IMP inspection, Respondent\nwas unable to present any documentation showing that it had completed segment identification\nbefore the November 18, 2002 due date for a Category 2 pipeline, exceeding the mandated\ndeadline by approximately 17 months.\nIn its Response, Respondent stated that when the plan was formalized in April 2004, it\ndetermined that it would not be necessary to distinguish segments on its single pipeline and\nintegrity testing would be conducted for compliance on that one line.\nThe rule requires that segments that could affect an HCA be identified as part of the IMP\nregardless of the size of the system or the extent of the integrity testing (assessment). These\nareas require a higher level of testing and remediation.\nAccordingly, I find that Respondent violated 49 C. F. R. ) 195. 452(b)(2) in the Notice.\nItem 4 in the Notice Amendment alleged Respondent violated 49 C. F. R. ) 195. 452(e) by failing\nto complete a risk analysis of its pipeline segments that could affect an HCA to determine\nbaseline and continual integrity assessment schedules as the regulation requires of a pipeline\noperator. At the time of the IMP inspection, Respondent had not yet completed a risk analysis\nfor this pipeline.\nIn its Response, Respondent stated that it will do a comprehensive risk analysis in conjunction\nwith the baseline assessment for its pipeline.\nA baseline assessment plan (BAP) is a required part of a complete IMP that should have been in\nplace February 18, 2003. A required part of a BAP under 195. 452(c) is an evaluation of risk\nfactors to establish an assessment schedule. Respondent did not provide supporting\ndocumentation that it has completed such an evaluation.\nAccordingly, I find that Respondent violated 49 C. F. R. ) 195. 452(e) in the Notice.\nItem 5(b) in the Notice alleged Respondent violated 49 C. F. R. ) 195. 452(f)(1)by failing to have\na process in its IMP plan to identify segments that could affect HCAs.\n\n\n\nIn its Response, Respondent stated that it had determined that pipeline segments were not\nnecessary.\n49 C. F. R. $ 195. 452 does not allow an operator to decide whether or not pipeline segments need\nto be determined for its pipeline. Segments were required to have been delineated by November\n18, 2002.\nAccordingly, I find that Respondent violated 49 C. F. R. $ 195. 452(f)(1) in the Notice.\nItem 11 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 452(i)(2) by failing to\nevaluate the consequences associated with a pipeline release that could affect an HCA in\ndetermining preventive and mitigative future actions. It appeared that Respondent had\nincorrectly estimated the volume that could drain from its pipeline should a leak occur at the end\nof its pipeline in Guernsey, Wyoming. Respondent assumed that the pipeline would only drain\nfrom the first high point upstream from Guernsey, Wyoming, which is only about 2000 lineal\nfeet of pipe. However, in reviewing the topography of this pipeline, it appears that where it\ncrosses a divide approximately five miles from the Dwyer station, the pipeline generally drops\nabout 550 vertical feet in eleven miles. Therefore, it appears that the drain down volume for this\npipeline would exceed the volume contained in the 2000 lineal feet of pipe that is indicated in the\nIMP.\nRespondent did not contest this item and stated that a detailed analysis of the potential drainage\nvolume from the \"worst case\" release will be incorporated into the IMP.\nAccordingly, I find that Respondent violated 49 C. F. R. ) 195. 452(i)(2) in the Notice.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\nASSESSMKNT OF PENALTY\nUnder 49 U. S. C. ( 60122, Respondent is subject to a civil penalty not to exceed $100, 000 per\nviolation for each day of the violation up to a maximum of $1, 000, 000 for any related series of\nviolations.\n49 U. S. C. $ 60122 and 49 C. F. R. ( 190. 225 require that, in determining the amount of the civil\npenalty, I consider the following criteria: nature, circumstances, and gravity of the violation,\ndegree of Respondent's culpability, history of Respondent's prior offenses, Respondent's ability\nto pay the penalty, good faith by Respondent in attempting to achieve compliance, the effect on\nRespondent's ability to continue in business, and such other matters as justice may require, The\nNotice proposed a total civil penalty of $10, 000 for the violations.\nItem 1(a) of the Notice proposed a civil penalty of $5, 000 for violation of 49 C. F. R.\n$ 195. 452(b)(1), as more fully described in the Notice and as discussed above, in that\nRespondent failed to develop a written IMP by February 18, 2003 as the regulation requires of an\n\n\n\noperator of a Category 2 pipeline that could affect an HCA. In its Response, Respondent\ncontends that although its IMP was not formalized until April 2004, the plan was being\nimplemented prior to its formalization. However, Respondent did not provide any evidence to\nsupport its claim that its IMP plan was developed prior to its formalization. Accordingly, having\nreviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of\n$5, 000 for the violation.\nItem 1(b) of the Notice proposed a civil penalty of $5, 000 for violation of 49 C. F. R.\nf 195. 452(b)(2), as more fully described in the Notice and as discussed above, in that\nRespondent failed to identify pipeline segments that could affect an HCA by November 18, 2002\nas the regulation requires of an operator of a Category 2 pipeline. In its Response, Respondent\nstated that when the plan was formalized in April 2004, it determined that it would not be\nnecessary to distinguish segments on its single pipeline and integrity testing would be conducted\nfor compliance on that one line. The rule requires that segments that could Meet an HCA be\nidentified as part of the IMP regardless of the size of the system or the extent of the integrity\ntesting (assessment). These areas require a higher level of testing and remediation. Accordingly,\nhaving reviewed the record and considered the assessment criteria under 49 U. S. C. $ 60122 and\n49 C. F. R. ) 190. 225, I assess Respondent a civil penalty of $2, 500 for the violation.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a total civil penalty of $7, 500. Respondent has the ability to pay this penalty without\nadversely affecting its ability to continue in business.\nPayment of the civil penalty must be made within 20 days of service. Payment may be\nmade by sending a certified check or money order (containing the CPF Number for this\ncase) payable to \"U. S, Department of Transportation\" to the Federal Aviation\nAdministration, Mike Monroney Aeronautical Center, Financial Operations Division\n{AMZ-300), P. O. Box 25082, Oklahoma City, OK 73125.\nFederal regulations {49 C. F. R. $ 89, 21{b)(3)) require this payment be made by wire\ntransfer, through the Federal Reserve Communications System (Fedwire), to the account\nof the U. S. Treasury, Detailed instructions are contained in the enclosure. Questions\nconcerning wire transfers should be directed to: Financial Operations Division (AMZ-\n300), Federal Aviation Administration, Mike Monroney Aeronautical Center, P. O. Box\n25082, Oklahoma City, OK 73125; (405) 954-8893,\nFailure to pay the $7, 500 civil penalty will result in accrual of interest at the current annual rate\nin accordance with 31 U. S. C. g 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'/o) 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.\nCOMPLIANCE ORDER\nThe Notice proposed a Compliance Order with respect to Items 4, Sb, and 11 in the Notice.\n\n\n\nUnder 49 U. S. C. $ 60118(a), each person who engages in the transportation of hazardous liquids\nor who owns or operates a pipeline facility is required to comply with the applicable safety\nstandards established under Chapter 601. Pursuant to the authority of 49 U. S. C. $ 60118(b) and\n49 C, F. R. $ 190. 217, Respondent is ordered to take the following actions to ensure compliance\nwith the pipeline safety regulations applicable to its operations. Respondent must-\nWith respect to Item 4 of the Notice, complete a risk analysis of its pipeline and\nassociated facilities. An evaluation of Respondent's risk analysis risk factors must be\nused-\n3. a. To help explain Respondent's choice of its baseline assessment method, and\nb. In the establishment of its assessment schedule;\nWith respect to Item 5(b) of the Notice, Respondent must include a segment\nidentification process in its IMP. Respondent's segment identification process must-\na. Include sources to be used for making HCA determinations such as National\nPipeline Mapping System (NPMS), etc.\n,\nb. Include guidance for the periodic reviews of HCA sources to ensure that\nsegments reflect any HCA changes or additions,\nc. Ensure Respondent's each segment that either directly intersects an HCA or\nthat affects an HCA is identified by beginning and ending points, and\nd. Include an overland spread analysis and water transport analysis. These\nanalyses must be used to determine the beginning and ending points of the\nsegments that could affect the Guernsey, Wyoming Other Populated Area\nHCA and possibly any HCAs downstream of Guernsey,\ne. Include an air dispersion analysis. Results from this analysis shall be used for\ndetermining if there are any additional segments that could affect HCAs, and\nf, Include an objective analysis of its Dwyer Pump Station facilities, including\nthe breakout tank, to determine whether this facility will affect an HCA or not;\nWith respect to Item 11 of the Notice, Respondent must conduct a rigorous drain\ndown volume analysis for its pipeline at the North Platte River crossing and at\nGuernsey, Wyoming. Respondent must incorporate this rigorous drain down volume\nanalysis for its pipeline into its IMP;\nMaintain documentation of the safety improvement costs associated with fulfilling\nthis Compliance Order and submit the total to Director, Western Region, PHMSA.\nCosts shall be reported in two categories: 1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses, and 2) total cost\n\n\n\nassociated with replacements, additions and other changes to pipeline infrastructure;\nand\nWithin 60 days of receipt of the Final Order, submit documentation of procedures,\ncosts and evidence of actions taken to the Director, Western Region, Pipeline and\nHazardous Materials Safety Administration, 12300 West Dakota Avenue, Suite 110,\nLakewood, Colorado 80228. Please refer to CPF No. 5-2005-5016 on any\ncorrespondence or communication in these matters.\nThe Director, Western Region, may grant an extension of time to comply with any of the\nrequired items upon a written request timely submitted by Respondent demonstrating good cause\nfor an extension.\nFailure to comply with this Order may result in the administrative assessment of civil penalties\nnot to exceed $100, 000 for each violation for each day the violation continues or in referral to the\nAttorney General for appropriate relief in a district court of the United States.\nAMENDMENT OF PROCEDURES\nItems 2(a-b), 3, 5(a), 6, 7(a-c), 8, 9(a-c), 10, 12(a-b), and 13 of the Notice alleged inadequacies in\nRespondent's procedures/plans and proposed to require amendment of Respondent's procedures\nto comply with the requirements of 49 C. F. R. $ 195. 452.\nWith respect to Notice Item 6, Respondent provided information, which Director, Western\nRegion, PHMSA, reviewed, that its IMP states that the risk analysis team will be made up of\nqualified people. Accordingly, based on the results of this review and in light that Notice Item 6\nwas generated from protocol 5. 07, which is no longer a protocol question, I find no need exists to\nissue an Order Directing Amendment with respect to Item 6.\nRespondent did not contest the Items 9(a-c), 12 (a-b), and 13 in the Notice of Amendment. With\nrespect to Notice Items 2(a-b), 3, 5(a), 7(a-c), 8, and 10, although Respondent provided\ninformation and/or explanation to the Director, Western Region, PHMSA, the\ninformation/explanation(s) provided does(do) not address all of the inadequacies described in the\nNotice. Accordingly, I find that Respondent's procedures as described in the Notice are\ninadequate to ensure safe operation of its pipeline system. Pursuant to 49 U. S. C. g 60108(a) and\n49 C. F. R. )190. 237, Respondent is ordered to make the following revisions to its procedures:\n1. Amend its BAP to include an explanation of the processes used in determining its\nuse of Subpart E pressure test as the baseline assessment method (Notice Item 2(a));\n2. Amend its IMP to include an evaluation of risk factors for establishing an\nassessment schedule (Notice Item 2(b));\n3. Amend its IMP to ensure that supporting justifications for revisions to its IMP are\ndocumented (Notice Item 3);\nRespondent did not provide any amended maps as evidence.\n\n\n\nAmend its IMP to show the drinking water HCA east of Guernsey, Wyoming that is\nshown on the NPMS (Notice Item 5(a));\nAmend its IMP to either refer to, or provide guidance for, determining when\nanomalous conditions exist through information analysis of close interval surveys,\npotential third party strikes, etc. (Notice Item 7(a));\nAmend its IMP to provide guidance for corrective actions to be taken when\nanomalous conditions are discovered through information analysis (Notice Item\n7(b));\nAmend its IMP to include the repair criteria listed in 49 C. F. R. $ 195. 452(h)(4)\n(Notice Item 7(c));\nAmend its IMP to include specific guidance to periodically review and recommend\nfuture assessment methods (Notice Item 8);\nAmend its IMP to include a process for identifying additional preventive and\nmitigative actions to protect HCAs in its IMP. Respondent's preventive and\nmitigative action identification process must include consideration of risk and must\ncover a broad spectrum of alternatives. Risk factors must play a role in determining\nadditional preventive and mitigative actions. Respondent's preventive and\nmitigative action identification process must include preventive and mitigative\nactions taken to date (Notice Item 9(a));\n10. Amend its IMP to include a process to evaluate Respondent's leak detection\ncapabilities. The process must, at least, consider the following factors: length and\nsize of the pipeline, type of product carried, the pipeline's proximity to an HCA, the\nswiftness of leak detection, location of nearest response personnel, leak history, and\nrisk analysis results (Notice Item 9(b));\n11. Amend its IMP to include a process to determine if emergency flow restriction\ndevices could protect an HCA in the event of a hazardous liquid pipeline release.\nThis determination must at least consider the following factors: the swiftness of leak\ndetection and pipeline shutdown capabilities, the type of commodity carried, the rate\nof potential leakage, the volume that can be released, the pipeline profile, the\npotential for ignition, proximity to power sources, location of nearest response\npersonnel, topography between the pipeline segment and the HCA, and benefits\nexpected by reducing the spill size (Notice Item 9(c));\n12. Amend its BAP to include qualifications, roles, and responsibilities of those who\nwill be reviewing the results of its baseline assessment as well as any future\nassessments (Notice Item 10);\n\n\n\n13. Amend its IMP to state that if it is going to use an engineering justification to exceed\nan assessment interval, it must notify PHMSA 270 days before the end of the five-\nyear (or less) interval of the justification for a longer interval, and additionally it will\npropose an alternative interval (Notice Item 12(a));\n14. Amend its IMP to state that if it plans to have a longer assessment interval because\nof the unavailability of technology it must notify PHMSA 180 days before the end of\nthe five-year (or less) interval that it may require a longer assessment interval, and in\naddition it will provide an estimate of when the assessment can be completed\n(Notice Item 12(b));\n15. Amend its IMP to state that if technology other than pressure testing or in-line\ninspection is planned, notification to PHMSA is required at least 90 days before\nconducting the assessment (Notice Item 13); and\n16. Within 30 days following receipt of this Order, submit the amended procedures to\nthe Director, Western Region, PHMSA.\nThe Regional Director may grant an extension of time to comply with any of the required items\nupon a written request timely submitted by Respondent demonstrating good cause for an\nextension.\nFailure to comply with this Order Directing Amendment may result in the administrative\nassessment of civil penalties not to exceed $100, 000 for each violation for each day the violation\ncontinues or in the referral the Attorney General for appropriate relief in a district court of the\nUnited States.\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. All other terms of the Order,\nincluding any required corrective action and amendment of procedures, remain in full effect\nunless the Associate Administrator, upon request, grants a stay. The terms and conditions of this\nFinal Order are effective on receipt.\nT 0\nActi\nore L. Willke\nAssociate Administrator\nfor Pipeline Safety\nDate Issued\n\n520055016_decision on petition for reconsideration_01102008_text.pdf\n\nO\nU S Department\nof Transportatton\nPipeline and Hazardous\nMaterials Safety\nAdministration JAN l 0 2008\n1200 New Jersey rtve S E\nWashington OC 20590\nMs. Anna Black\nOwner\nKey Pipelines, Ltd.\n355 Ashland Loop Road\nAshland, OR 97520\nRe: CPF No. 5-2005-5016\nDear Ms. Black:\nEnclosed is a decision on the petition for reconsideration filed in the above-referenced\ncase, The Associate Administrator for Pipeline Safety has conditionally granted the petition\nand reduced the civil penalty to $2500 if the conditions set forth in the decision are met,\nPayment of the remaining $2500 is due within 20 days following receipt of the decision. The\nconditions include a requirement that you submit documentation within 30 days following\nreceipt of this decision that all required corrective action and amendment of procedures has\nbeen completed, including documentation of the costs incurred in doing so, Failure to satisfy\nthe conditions nullifies this reduction and the civil penalty v ill immediately become due in\nfull. Your receipt of this decision constitutes ser vice under 49 C. F R. $ 190. 5.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\nCERTIFIED MAIL — RETURN RECEIPT RE UESTED\n\n\n\nDEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, DC 20590\nIn the Matter of\nKey Pipelines, Ltd.\nPetitioner\n,\nCPF No. 5-2005-5016\nDECISION ON PETITION FOR RECONSIDERATION\nBackground\nOn December 11, 2006, pursuant to chapter 601, title 49 United States Code, the Associate\nAdministrator for Pipeline Safety issued a Final Order in this case finding that Petitioner had\ncommitted violations of the hazardous liquid pipeline safety regulations and assessing a civil\npenalty in the amount of $7, 500. The violations involved Petitioner's failure to comply with the\nintegrity management requirements at 49 C. F. R. $ 195. 452. ' The Final Order also ordered\nPetitioner to take certain measures to correct the alleged violations and directed Petitioner to\namend its written integrity management program procedures,\nOn December 27, 2006, Petitioner filed a petition for reconsideration of the Final Order and a\nrequest for an extension of time to complete the compliance order and amendment of procedures.\nIn its petition, Petitioner sought reconsideration of the civil penalty amount assessed in Final\nOrder on the grounds that payment of the $7500 penalty would constitute a financial hardship\ngiven its current financial condition. Petitioner did not request reconsideration of the findings of\nviolation m the order and expressed its intent to complete the actions specified in the compliance\norder and amendment of procedures.\nDiscussion\nThe transportation of hazardous liquids by pipeline involves inherent risks and persons electing\nto engage in such transportation are well aware that it is subject to a set of comprehensive safety\nregulations. Regulatory compliance costs are inherent to pipeline operations and pipeline\noperators are expected to have sufficient financial health to satisfy all compliance costs. In short,\nnon-compliance is not an option for an operator of any size. Federal policy, however, does\nThe violations are more fully described in the Final Order.\n\n\n\nprovide a degree of discretion for the modification of penalties for small businesses under\ncertain conditions and ability to pay is a statutory consideration under 49 U. S. C. 60122(b). The\noperator, however, has the burden of demonstrating financial hardship.\nIn this case, Petitioner is a small busmess and provided financial documentation in connection\nwith its petition including a certified financial statement to support its claim of financial\nhardship. Petitioner also provided information concerning its good faith efforts to comply. In\naddition, Petitioner informed PHMSA that for purposes of its integrity management program, it\nwould treat even the non-high consequence area (HCA) portions of its pipeline as if they were\nlocated in a HCA\nRelief Conditionall Granted\nHaving considered Petitioner's request for reconsideration, I find Petitioner is a small business\nand has demonstrated that payment of the full $7500 penalty would constitute a financial\nhardship given its current financial condition. I further find that the violations did not involve an\nimpending threat to public safety or any criminal wrongdoing. Accordingly, I have decided to\nwaive $5000 of the $7500 civil penalty if the following conditions are met:\n(1) The amount waived must be used for safety and compliance activities such as\npipeline integrity management programs;\n(2) Within 30 days following receipt of this decision, submit documentation\ndemonstrating that all required corrective action and amendment of procedures set forth\nin the December 11, 2006 Final Order has been completed; and\n(3) Submit documentation of the costs incurred for accomplishing the actions described\nin Items 1 and 2 above along with the documentation demonstrating that the required\nactions have been completed.\nFailure to satisfy the above conditions nullifies this reduction and the civil penalty will\nimmediately become due in full,\nPayment of the remaining $2500 civil penalty must be made within 20 da s of service. Payment\nmay be made by sending a certified check or money order (containing the CPF Number for this\ncase) payable to \"U. S. Department of Transportation\" to the Federal Aviation Administration,\nMike Monroney Aeronautical Center, Financial Operations Division (AMZ-341), P. O. Box\n25082, Oklahoma City, OK 73125.\nFederal regulations (49 C. F. R. $ 89. 21(b)(3)) also permit this payment to be made by wire\ntransfer, through the Federal Reserve Communications System (Fedwire), to the account of the\nU. S. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire\ntransfers should be directed to: Financial Operations Division (AMZ-341), Federal Aviation\nAdministration, Mike Monroney Aeronautical Center, P. O. Box 25082, Oklahoma City, OK\n73125; (405) 954-8893.\n\n\n\nFailure to pay the civil penalty will result in accrual of interest at the current annual rate in\naccordance with 31 U. S. C. $ 3717, 31 C. F. R. $ 901. 9 and 49 C. F. R. $ 89. 23. Pursuant to those\nsame authorities, a late penalty charge of six percent (6%) per annum will be charged if payment\nis not made within 110 days of service. Failure to pay the civil penalty may result in referral of\nthe matter to the Attorney General for appropriate action in a United States District Court.\nJe ey . Wiese\nAssociate Administrator\nfor Pipeline Safety\nDate Issued","truncated":false,"body_characters":30538}