# KEY PIPELINE LIMITED — Notice of Probable Violation

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

Official case documents:

520055016_decision on petition for reconsideration_01102008.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_decision%20on%20petition%20for%20reconsideration_01102008.pdf

520055016_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

520055016_Final Order_12112006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_Final%20Order_12112006.pdf

520055016_final order_12112006_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_final%20order_12112006_text.pdf

520055016_Petition for Reconsideration_12212006.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/520055016_Petition%20for%20Reconsideration_12212006.pdf

CPF_NO_5-2005-5016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055016/CPF_NO_5-2005-5016.pdf

520055016_final order_12112006_text.pdf

U 5 Department
of Transportation
Pipeline and Hazardous
Materials Safety Administration
400 Seventh Street, S W
Washington, D C 20590
Li'='" l l
RECEIVED
DEC t5 Ms
Ms. Anna Black
President
Key Pipelines LTD
355 Ashland Loop Road
Ashland, Oregon 97520
Re: CPF No. 5-2005-5016
Dear Ms. Black:
Enclosed is the Final Order issued by the Acting Associate Administrator for Pipeline Safety
in the above-referenced case. It makes findings of violation and assesses a civil penalty of
$7, 500. The Final Order also specifies actions to be taken to comply with the pipeline safety
regulations and revision of certain operating and maintenance procedures/plans. The penalty
payment terms are set forth in the Final Order. When the civil penalty is paid and the terms of
the Compliance Order and Amendment of Procedures are completed, as determined by the
Director, Western Region, this enforcement action will be closed. Your receipt of the Final
Order constitutes service under 49 C. F. R. g 190. 5.
Sincerely,
James Reynolds
Pipeline Compliance Registry
PHMSA-Office of Pipeline Safety
Enclosure
cc: Mr. Chris Hoidal, P. E.
, Director, Western Region, PHMSA
CERTIFIED MAIL — RETUElY RECEIPT RE UES TED



DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
In the Matter of
Key Pipelines LTD,
Respondent
CPF No. 5-2005-5016
FINAL ORDER
Between November 22 and 23, 2004, pursuant to 49 U. S. C. $ 60117, a representative of the
Pipeline and Hazardous Materials Safety Administration's (PHMSA's)' OAice of Pipeline Safety
conducted an on-site pipeline safety inspection of Respondent's Integrity Management Program
(IMP) at your offices in Wheatland, Wyoming. As a result of the inspection, the Director,
Western Region, PHMSA, issued to Respondent, by letter dated March 9, 2005, a Notice of
Probable Violation, Proposed Civil Penalty, Proposed Compliance Order, and Notice of
Amendment (Notice). In accordance with 49 C. F, R. $ 190. 207, the Notice proposed finding that
Respondent committed violations of 49 C. F. R. Part 195, proposed assessing a civil penalty of
$10, 000 for the alleged violations, and proposed ordering Respondent to take certain measures to
correct the alleged violations, The Notice also proposed, in accordance with 49 C. F. R.
$ 190. 237, that Respondent amend its procedureslpians.
After requesting and receiving an extension of time to respond, Respondent responded to the
Notice by letter dated May 11, 2005 (Response). Respondent responded to many of the
allegations but did not contest some of the Notice Items. Respondent did not request a hearing,
and therefore has waived its right to one.
FINDINGS OF VIOLATION
Item 1(a) in the Notice alleged Respondent violated 49 C. F. R. $ 195. 452(b)(1) by failing to
develop a written IMP by February 18, 2003 as the regulation requires of an operator of a
' Effective February 20, 2005, the Pipeline and Hazardous Matenals Safety Administration (PHMSA) succeeded
Research and Special Programs Adm&mstrat&on as the agency respons&ble for regulatmg safety in pipeline
transportat&on and hazardous materials transportation See, section 108 of the Norman Y. M&neta Research and
Spec&al Programs Improvement Act (Pubhc Law 108-426, 118 Stat. 2423-2429 (November 30, 2004)) See also, 70
Fed Reg. 8299 (February 18„2005) redelegatmg the p&pehne safety authonties and functions to the PHMSA
Admmistrator



Category 2 pipeline that could affect a high consequence area (HCA). During the IMP
inspection, records indicated that the written IMP was initially completed in April 2004, which
exceeds the mandated Category 2 pipeline deadline of February 18, 2003 by approximately
thirteen months.
In its Response, Respondent contends that although its IMP was not formalized until April 2004,
the plan was being implemented prior to its formalization. However, Respondent did not provide
any evidence to support its claim that its IMP plan was developed prior to its formalization.
Accordingly, I find that Respondent violated 49 C. F, R. ) 195. 452(b)(1) in the Notice.
Item l(b) in the Notice alleged Respondent violated 49 C. F. R. $ 195. 452(b)(2) by failing to
identify pipeline segments that could affect an HCA by November 18, 2002 as the regulation
requires of an operator of a Category 2 pipeline. At the time of the IMP inspection, Respondent
was unable to present any documentation showing that it had completed segment identification
before the November 18, 2002 due date for a Category 2 pipeline, exceeding the mandated
deadline by approximately 17 months.
In its Response, Respondent stated that when the plan was formalized in April 2004, it
determined that it would not be necessary to distinguish segments on its single pipeline and
integrity testing would be conducted for compliance on that one line.
The rule requires that segments that could affect an HCA be identified as part of the IMP
regardless of the size of the system or the extent of the integrity testing (assessment). These
areas require a higher level of testing and remediation.
Accordingly, I find that Respondent violated 49 C. F. R. ) 195. 452(b)(2) in the Notice.
Item 4 in the Notice Amendment alleged Respondent violated 49 C. F. R. ) 195. 452(e) by failing
to complete a risk analysis of its pipeline segments that could affect an HCA to determine
baseline and continual integrity assessment schedules as the regulation requires of a pipeline
operator. At the time of the IMP inspection, Respondent had not yet completed a risk analysis
for this pipeline.
In its Response, Respondent stated that it will do a comprehensive risk analysis in conjunction
with the baseline assessment for its pipeline.
A baseline assessment plan (BAP) is a required part of a complete IMP that should have been in
place February 18, 2003. A required part of a BAP under 195. 452(c) is an evaluation of risk
factors to establish an assessment schedule. Respondent did not provide supporting
documentation that it has completed such an evaluation.
Accordingly, I find that Respondent violated 49 C. F. R. ) 195. 452(e) in the Notice.
Item 5(b) in the Notice alleged Respondent violated 49 C. F. R. ) 195. 452(f)(1)by failing to have
a process in its IMP plan to identify segments that could affect HCAs.



In its Response, Respondent stated that it had determined that pipeline segments were not
necessary.
49 C. F. R. $ 195. 452 does not allow an operator to decide whether or not pipeline segments need
to be determined for its pipeline. Segments were required to have been delineated by November
18, 2002.
Accordingly, I find that Respondent violated 49 C. F. R. $ 195. 452(f)(1) in the Notice.
Item 11 in the Notice alleged Respondent violated 49 C. F. R. $ 195. 452(i)(2) by failing to
evaluate the consequences associated with a pipeline release that could affect an HCA in
determining preventive and mitigative future actions. It appeared that Respondent had
incorrectly estimated the volume that could drain from its pipeline should a leak occur at the end
of its pipeline in Guernsey, Wyoming. Respondent assumed that the pipeline would only drain
from the first high point upstream from Guernsey, Wyoming, which is only about 2000 lineal
feet of pipe. However, in reviewing the topography of this pipeline, it appears that where it
crosses a divide approximately five miles from the Dwyer station, the pipeline generally drops
about 550 vertical feet in eleven miles. Therefore, it appears that the drain down volume for this
pipeline would exceed the volume contained in the 2000 lineal feet of pipe that is indicated in the
IMP.
Respondent did not contest this item and stated that a detailed analysis of the potential drainage
volume from the "worst case" release will be incorporated into the IMP.
Accordingly, I find that Respondent violated 49 C. F. R. ) 195. 452(i)(2) in the Notice.
These findings of violation will be considered prior offenses in any subsequent enforcement
action taken against Respondent.
ASSESSMKNT OF PENALTY
Under 49 U. S. C. ( 60122, Respondent is subject to a civil penalty not to exceed $100, 000 per
violation for each day of the violation up to a maximum of $1, 000, 000 for any related series of
violations.
49 U. S. C. $ 60122 and 49 C. F. R. ( 190. 225 require that, in determining the amount of the civil
penalty, I consider the following criteria: nature, circumstances, and gravity of the violation,
degree of Respondent's culpability, history of Respondent's prior offenses, Respondent's ability
to pay the penalty, good faith by Respondent 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 $10, 000 for the violations.
Item 1(a) of the Notice proposed a civil penalty of $5, 000 for violation of 49 C. F. R.
$ 195. 452(b)(1), as more fully described in the Notice and as discussed above, in that
Respondent failed to develop a written IMP by February 18, 2003 as the regulation requires of an



operator of a Category 2 pipeline that could affect an HCA. In its Response, Respondent
contends that although its IMP was not formalized until April 2004, the plan was being
implemented prior to its formalization. However, Respondent did not provide any evidence to
support its claim that its IMP plan was developed prior to its formalization. Accordingly, having
reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of
$5, 000 for the violation.
Item 1(b) of the Notice proposed a civil penalty of $5, 000 for violation of 49 C. F. R.
f 195. 452(b)(2), as more fully described in the Notice and as discussed above, in that
Respondent failed to identify pipeline segments that could affect an HCA by November 18, 2002
as the regulation requires of an operator of a Category 2 pipeline. In its Response, Respondent
stated that when the plan was formalized in April 2004, it determined that it would not be
necessary to distinguish segments on its single pipeline and integrity testing would be conducted
for compliance on that one line. The rule requires that segments that could Meet an HCA be
identified as part of the IMP regardless of the size of the system or the extent of the integrity
testing (assessment). These areas require a higher level of testing and remediation. Accordingly,
having reviewed the record and considered the assessment criteria under 49 U. S. C. $ 60122 and
49 C. F. R. ) 190. 225, I assess Respondent a civil penalty of $2, 500 for the violation.
Accordingly, having reviewed the record and considered the assessment criteria, I assess
Respondent a total civil penalty of $7, 500. Respondent has the ability to pay this penalty without
adversely affecting its ability to continue in business.
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
Administration, Mike Monroney Aeronautical Center, Financial Operations Division
{AMZ-300), P. O. Box 25082, Oklahoma City, OK 73125.
Federal regulations {49 C. F. R. $ 89, 21{b)(3)) require this payment 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-
300), Federal Aviation Administration, Mike Monroney Aeronautical Center, P. O. Box
25082, Oklahoma City, OK 73125; (405) 954-8893,
Failure to pay the $7, 500 civil penalty will result in accrual of interest at the current annual rate
in accordance with 31 U. S. C. g 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'/o) 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 Items 4, Sb, and 11 in the Notice.



Under 49 U. S. C. $ 60118(a), each person who engages in the transportation of hazardous liquids
or who owns or operates a pipeline facility is required to comply with the applicable safety
standards established under Chapter 601. Pursuant to the authority of 49 U. S. C. $ 60118(b) and
49 C, F. R. $ 190. 217, Respondent is ordered to take the following actions to ensure compliance
with the pipeline safety regulations applicable to its operations. Respondent must-
With respect to Item 4 of the Notice, complete a risk analysis of its pipeline and
associated facilities. An evaluation of Respondent's risk analysis risk factors must be
used-
3. a. To help explain Respondent's choice of its baseline assessment method, and
b. In the establishment of its assessment schedule;
With respect to Item 5(b) of the Notice, Respondent must include a segment
identification process in its IMP. Respondent's segment identification process must-
a. Include sources to be used for making HCA determinations such as National
Pipeline Mapping System (NPMS), etc.
,
b. Include guidance for the periodic reviews of HCA sources to ensure that
segments reflect any HCA changes or additions,
c. Ensure Respondent's each segment that either directly intersects an HCA or
that affects an HCA is identified by beginning and ending points, and
d. Include an overland spread analysis and water transport analysis. These
analyses must be used to determine the beginning and ending points of the
segments that could affect the Guernsey, Wyoming Other Populated Area
HCA and possibly any HCAs downstream of Guernsey,
e. Include an air dispersion analysis. Results from this analysis shall be used for
determining if there are any additional segments that could affect HCAs, and
f, Include an objective analysis of its Dwyer Pump Station facilities, including
the breakout tank, to determine whether this facility will affect an HCA or not;
With respect to Item 11 of the Notice, Respondent must conduct a rigorous drain
down volume analysis for its pipeline at the North Platte River crossing and at
Guernsey, Wyoming. Respondent must incorporate this rigorous drain down volume
analysis for its pipeline into its IMP;
Maintain documentation of the safety improvement costs associated with fulfilling
this Compliance Order and submit the total to Director, Western Region, PHMSA.
Costs shall be reported in two categories: 1) total cost associated with
preparation/revision of plans, procedures, studies and analyses, and 2) total cost



associated with replacements, additions and other changes to pipeline infrastructure;
and
Within 60 days of receipt of the Final Order, submit documentation of procedures,
costs and evidence of actions taken to the Director, Western Region, Pipeline and
Hazardous Materials Safety Administration, 12300 West Dakota Avenue, Suite 110,
Lakewood, Colorado 80228. Please refer to CPF No. 5-2005-5016 on any
correspondence or communication in these matters.
The Director, Western Region, may grant an extension of time to comply with any of the
required items upon a written request timely submitted by Respondent demonstrating good cause
for an extension.
Failure to comply with this Order may result in the administrative assessment of civil penalties
not to exceed $100, 000 for each violation for each day the violation continues or in referral to the
Attorney General for appropriate relief in a district court of the United States.
AMENDMENT OF PROCEDURES
Items 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
Respondent's procedures/plans and proposed to require amendment of Respondent's procedures
to comply with the requirements of 49 C. F. R. $ 195. 452.
With respect to Notice Item 6, Respondent provided information, which Director, Western
Region, PHMSA, reviewed, that its IMP states that the risk analysis team will be made up of
qualified people. Accordingly, based on the results of this review and in light that Notice Item 6
was generated from protocol 5. 07, which is no longer a protocol question, I find no need exists to
issue an Order Directing Amendment with respect to Item 6.
Respondent did not contest the Items 9(a-c), 12 (a-b), and 13 in the Notice of Amendment. With
respect to Notice Items 2(a-b), 3, 5(a), 7(a-c), 8, and 10, although Respondent provided
information and/or explanation to the Director, Western Region, PHMSA, the
information/explanation(s) provided does(do) not address all of the inadequacies described in the
Notice. Accordingly, I find that Respondent's procedures as described in the Notice are
inadequate to ensure safe operation of its pipeline system. Pursuant to 49 U. S. C. g 60108(a) and
49 C. F. R. )190. 237, Respondent is ordered to make the following revisions to its procedures:
1. Amend its BAP to include an explanation of the processes used in determining its
use of Subpart E pressure test as the baseline assessment method (Notice Item 2(a));
2. Amend its IMP to include an evaluation of risk factors for establishing an
assessment schedule (Notice Item 2(b));
3. Amend its IMP to ensure that supporting justifications for revisions to its IMP are
documented (Notice Item 3);
Respondent did not provide any amended maps as evidence.



Amend its IMP to show the drinking water HCA east of Guernsey, Wyoming that is
shown on the NPMS (Notice Item 5(a));
Amend its IMP to either refer to, or provide guidance for, determining when
anomalous conditions exist through information analysis of close interval surveys,
potential third party strikes, etc. (Notice Item 7(a));
Amend its IMP to provide guidance for corrective actions to be taken when
anomalous conditions are discovered through information analysis (Notice Item
7(b));
Amend its IMP to include the repair criteria listed in 49 C. F. R. $ 195. 452(h)(4)
(Notice Item 7(c));
Amend its IMP to include specific guidance to periodically review and recommend
future assessment methods (Notice Item 8);
Amend its IMP to include a process for identifying additional preventive and
mitigative actions to protect HCAs in its IMP. Respondent's preventive and
mitigative action identification process must include consideration of risk and must
cover a broad spectrum of alternatives. Risk factors must play a role in determining
additional preventive and mitigative actions. Respondent's preventive and
mitigative action identification process must include preventive and mitigative
actions taken to date (Notice Item 9(a));
10. Amend its IMP to include a process to evaluate Respondent's leak detection
capabilities. The process must, at least, consider the following factors: length and
size of the pipeline, type of product carried, the pipeline's proximity to an HCA, the
swiftness of leak detection, location of nearest response personnel, leak history, and
risk analysis results (Notice Item 9(b));
11. Amend its IMP to include a process to determine if emergency flow restriction
devices could protect an HCA in the event of a hazardous liquid pipeline release.
This determination must at least consider the following factors: the swiftness of leak
detection and pipeline shutdown capabilities, the type of commodity carried, the rate
of potential leakage, the volume that can be released, the pipeline profile, the
potential for ignition, proximity to power sources, location of nearest response
personnel, topography between the pipeline segment and the HCA, and benefits
expected by reducing the spill size (Notice Item 9(c));
12. Amend its BAP to include qualifications, roles, and responsibilities of those who
will be reviewing the results of its baseline assessment as well as any future
assessments (Notice Item 10);



13. Amend its IMP to state that if it is going to use an engineering justification to exceed
an assessment interval, it must notify PHMSA 270 days before the end of the five-
year (or less) interval of the justification for a longer interval, and additionally it will
propose an alternative interval (Notice Item 12(a));
14. Amend its IMP to state that if it plans to have a longer assessment interval because
of the unavailability of technology it must notify PHMSA 180 days before the end of
the five-year (or less) interval that it may require a longer assessment interval, and in
addition it will provide an estimate of when the assessment can be completed
(Notice Item 12(b));
15. Amend its IMP to state that if technology other than pressure testing or in-line
inspection is planned, notification to PHMSA is required at least 90 days before
conducting the assessment (Notice Item 13); and
16. Within 30 days following receipt of this Order, submit the amended procedures to
the Director, Western Region, PHMSA.
The Regional Director may grant an extension of time to comply with any of the required items
upon a written request timely submitted by Respondent demonstrating good cause for an
extension.
Failure to comply with this Order Directing Amendment may result in the administrative
assessment of civil penalties not to exceed $100, 000 for each violation for each day the violation
continues or in the referral the Attorney General for appropriate relief in a district court of the
United States.
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 issue(s). The filing of the petition
automatically stays the payment of any civil penalty assessed. All other terms of the Order,
including any required corrective action and amendment of procedures, remain in full effect
unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this
Final Order are effective on receipt.
T 0
Acti
ore L. Willke
Associate Administrator
for Pipeline Safety
Date Issued

520055016_decision on petition for reconsideration_01102008_text.pdf

O
U S Department
of Transportatton
Pipeline and Hazardous
Materials Safety
Administration JAN l 0 2008
1200 New Jersey rtve S E
Washington OC 20590
Ms. Anna Black
Owner
Key Pipelines, Ltd.
355 Ashland Loop Road
Ashland, OR 97520
Re: CPF No. 5-2005-5016
Dear Ms. Black:
Enclosed is a decision on the petition for reconsideration filed in the above-referenced
case, The Associate Administrator for Pipeline Safety has conditionally granted the petition
and reduced the civil penalty to $2500 if the conditions set forth in the decision are met,
Payment of the remaining $2500 is due within 20 days following receipt of the decision. The
conditions include a requirement that you submit documentation within 30 days following
receipt of this decision that all required corrective action and amendment of procedures has
been completed, including documentation of the costs incurred in doing so, Failure to satisfy
the conditions nullifies this reduction and the civil penalty v ill immediately become due in
full. Your receipt of this decision constitutes ser vice under 49 C. F R. $ 190. 5.
Sincerely,
Jeffrey D. Wiese
Associate Administrator
for Pipeline Safety
Enclosure
CERTIFIED MAIL — RETURN RECEIPT RE UESTED



DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, DC 20590
In the Matter of
Key Pipelines, Ltd.
Petitioner
,
CPF No. 5-2005-5016
DECISION ON PETITION FOR RECONSIDERATION
Background
On December 11, 2006, pursuant to chapter 601, title 49 United States Code, the Associate
Administrator for Pipeline Safety issued a Final Order in this case finding that Petitioner had
committed violations of the hazardous liquid pipeline safety regulations and assessing a civil
penalty in the amount of $7, 500. The violations involved Petitioner's failure to comply with the
integrity management requirements at 49 C. F. R. $ 195. 452. ' The Final Order also ordered
Petitioner to take certain measures to correct the alleged violations and directed Petitioner to
amend its written integrity management program procedures,
On December 27, 2006, Petitioner filed a petition for reconsideration of the Final Order and a
request for an extension of time to complete the compliance order and amendment of procedures.
In its petition, Petitioner sought reconsideration of the civil penalty amount assessed in Final
Order on the grounds that payment of the $7500 penalty would constitute a financial hardship
given its current financial condition. Petitioner did not request reconsideration of the findings of
violation m the order and expressed its intent to complete the actions specified in the compliance
order and amendment of procedures.
Discussion
The transportation of hazardous liquids by pipeline involves inherent risks and persons electing
to engage in such transportation are well aware that it is subject to a set of comprehensive safety
regulations. Regulatory compliance costs are inherent to pipeline operations and pipeline
operators are expected to have sufficient financial health to satisfy all compliance costs. In short,
non-compliance is not an option for an operator of any size. Federal policy, however, does
The violations are more fully described in the Final Order.



provide a degree of discretion for the modification of penalties for small businesses under
certain conditions and ability to pay is a statutory consideration under 49 U. S. C. 60122(b). The
operator, however, has the burden of demonstrating financial hardship.
In this case, Petitioner is a small busmess and provided financial documentation in connection
with its petition including a certified financial statement to support its claim of financial
hardship. Petitioner also provided information concerning its good faith efforts to comply. In
addition, Petitioner informed PHMSA that for purposes of its integrity management program, it
would treat even the non-high consequence area (HCA) portions of its pipeline as if they were
located in a HCA
Relief Conditionall Granted
Having considered Petitioner's request for reconsideration, I find Petitioner is a small business
and has demonstrated that payment of the full $7500 penalty would constitute a financial
hardship given its current financial condition. I further find that the violations did not involve an
impending threat to public safety or any criminal wrongdoing. Accordingly, I have decided to
waive $5000 of the $7500 civil penalty if the following conditions are met:
(1) The amount waived must be used for safety and compliance activities such as
pipeline integrity management programs;
(2) Within 30 days following receipt of this decision, submit documentation
demonstrating that all required corrective action and amendment of procedures set forth
in the December 11, 2006 Final Order has been completed; and
(3) Submit documentation of the costs incurred for accomplishing the actions described
in Items 1 and 2 above along with the documentation demonstrating that the required
actions have been completed.
Failure to satisfy the above conditions nullifies this reduction and the civil penalty will
immediately become due in full,
Payment of the remaining $2500 civil penalty must be made within 20 da s 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 Administration,
Mike Monroney Aeronautical 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 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. 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.
Je ey . Wiese
Associate Administrator
for Pipeline Safety
Date Issued
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