{"operation":"document","citation":"CPF 520055023","title":"ALYESKA PIPELINE SERVICE CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2005-07-19","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.306(a), 195.308, 195.310(b)(9), 195.404(a)(1)(vii), 195.406(b), 195.412(a), 195.430, 195.55, 195.555, 195.573(a)(1), 195.573(c), 195.575(e), 195.579(a), 195.589(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520055023.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520055023.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520055023","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520055023","body":"Notice of Probable Violation involving ALYESKA PIPELINE SERVICE CO. PHMSA's enforcement data identifies the cited regulations as 195.306(a),  195.308,  195.310(b)(9),  195.404(a)(1)(vii),  195.406(b),  195.412(a),  195.430,  195.55,  195.555,  195.573(a)(1),  195.573(c),  195.575(e),  195.579(a),  195.589(c). The case was opened on 2005-07-19 and is reported as closed as of 2010-01-14. Proposed civil penalty: $84,000. Assessed civil penalty: $27,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520055023_Decision on the Petition for Reconsideration_12162009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055023/520055023_Decision%20on%20the%20Petition%20for%20Reconsideration_12162009.pdf\n\n520055023_Decision on the Petition for Reconsideration_12162009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055023/520055023_Decision%20on%20the%20Petition%20for%20Reconsideration_12162009_text.pdf\n\n520055023_FinalOrder_07282009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055023/520055023_FinalOrder_07282009.pdf\n\n520055023_FinalOrder_07282009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055023/520055023_FinalOrder_07282009_text.pdf\n\n520055023_Operator Petition for Reconsideration_08242009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520055023/520055023_Operator%20Petition%20for%20Reconsideration_08242009.pdf\n\n520055023_FinalOrder_07282009_text.pdf\n\nJUL 28 2009\nMr. Mike Joyner\nSenior Vice President\nPipeline and Oil Movements\nAlyeska Pipeline Service Company\n900 E. Benson Blvd.\nP.O. Box 196660\nAnchorage, AK 99519-6660\nRe: CPF No. 5-2005-5023\nDear Mr. Joyner:\nEnclosed is the Final Order issued in the above-referenced case. It makes findings of violation\nand assesses a civil penalty of $84,000. The Final Order also specifies actions to be taken by\nAlyeska to comply with the pipeline safety regulations and the revision of certain operating and\nmaintenance procedures. The penalty payment terms are set forth in the Final Order. When the\ncivil penalty has been paid and the terms of the compliance order and amendment of procedures\ncompleted, as determined by the Director, Western Region, this enforcement action will be\nclosed. Your receipt of the Final Order constitutes service of that document under 49 C.F.R.\n§ 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. Chris Hoidal, Director, Western Region, PHMSA\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 0390 0005 6162 5630]\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)\nAlyeska Pipeline Service Company, ) CPF No. 5-2005-5023\n)\nRespondent. )\n_______________________________)\nFINAL ORDER\nOn September 13-16 and 27-30, 2004, pursuant to 49 U.S.C. § 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of Respondent’s facilities, manuals and\nrecords in Alaska. Alyeska Pipeline Service Company (Alyeska or Respondent) operates the\nTrans Alaska Pipeline System (TAPS), an 800-mile pipeline that transports crude oil from the\nNorth Slope of Alaska to the Valdez Marine Terminal. As a result of the inspection, the\nDirector, Western Region, OPS (Director), issued to Respondent, by letter dated July 19, 2005, a\nNotice of Probable Violation, Proposed Civil Penalty, Proposed Compliance Order, and Notice\nof Amendment (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding\nthat Respondent had committed certain violations of 49 C.F.R. Part 195, proposed assessing civil\npenalties of $84,000 for the alleged violations, and proposed ordering Respondent to take certain\nmeasures to correct the alleged violations. The Notice also proposed, in accordance with 49\nC.F.R. § 190.237, that Respondent amend its written procedures for Operations, Maintenance\nand Emergencies.\nRespondent requested an extension of the deadline to respond to the Notice by letter dated\nAugust 12, 2005. The Director granted the request and extended the deadline to October 24,\n2005. Respondent requested a second extension by email dated October 4, 2005. The Director\nalso granted this request and extended the deadline to December 2, 2005. Respondent explained\nthat both of its extension requests were based on a need to gather additional information and\ndevelop amended procedures to respond to the Notice.\nRespondent responded to the Notice by letter dated December 2, 2005 (Response). The\ncompany contested all of the allegations of violation and many of the allegations that its\nprocedures were inadequate, and requested a hearing. A hearing was held on March 28, 2006, in\nLakewood, Colorado, with an attorney from the Office of Chief Counsel, PHMSA, presiding.\nRespondent was represented by counsel at the hearing. After the hearing, Respondent provided a\nclosing response (Closing) by letter dated May 26, 2006.\n\n\n\n2\nFINDINGS OF VIOLATION\nItems 5(b) and 5(c):\nItems 5(b) and 5(c) of the Notice alleged that Respondent violated 49 C.F.R. § 195.404(a), which\nstates:\n§ 195.404 Maps and records.\n(a) Each operator shall maintain current maps and records of its pipeline\nsystems that include at least the following information:\n(1) Location and identification of the following pipeline facilities:\n(i) Breakout tanks;\n(ii) Pump stations;\n(iii) Scraper and sphere facilities;\n(iv) Pipeline valves;\n(v) Facilities to which § 195.402(c)(9) applies;\n(vi) Rights-of-way; and\n(vii) Safety devices to which § 195.428 applies\nItems 5(b) and 5(c) alleged similar violations and are therefore discussed together. Item 5(b)\nalleged that Respondent’s “G-100” alignment drawings did not accurately reflect the current\nlocation and identification of certain facilities at the TAPS Pump Station 8 (PS8) and the North\nPole Metering Facility. Specifically, Item 5(b) alleged that Alyeska’s drawings did not reflect\nthat the PS8 piping was blinded off at the TAPS mainline in 1996, and did not reflect that 6-inch\nand 8-inch supply and return lines from TAPS to the North Pole Metering Facility had been\nreplaced with two 16-inch lines. In its Response and at the hearing, Respondent argued that the\nG-100 drawings were in fact accurate because the connections to the mainline still existed, even\nthough Respondent admitted they were blinded off in 1996. This argument is unpersuasive.\nPump Station 8 is no longer in service. The G-100 drawings reviewed by the OPS inspector\nincorrectly indicated that the PS8 pumps remained connected to the mainline and did not reflect\nthe out-of-service status of PS8.\nItem 5(c) also alleged that Respondent’s G-100 drawings did not accurately reflect that the pig\nlauncher and receiver, reducing flanges, and associated pipeline components had been removed\nfrom Pump Station 10 (PS10) in 1997. In its Response and at the hearing, Respondent indicated\nthat it had other sets of records that correctly reflected the piping configuration at PS8, PS10, and\nthe North Pole Metering Facility. Respondent argued that the G-100 drawings for these facilities\nare for reference purposes only and are not maintained as “as-built” records. Respondent\nindicated it would mark the drawings to indicate that they are “intended for general pipeline and\nfacility location purposes only,” and are not the most current detailed information on the pipeline\nsystem. In each instance, Respondent argued that it had different records, available to its\nemployees, that were more current than the G-100 drawings and that therefore it was in\ncompliance with § 195.404(a).\n\n\n\n3\nRegarding both Items, Respondent provided OPS with one set of drawings at the inspection but\nlater indicated that other drawings were the current records required by § 195.404. When\nRespondent maintains inconsistent maps and records, Respondent’s employees, emergency\nresponders, regulators and others viewing the drawings could be left with an incorrect\nunderstanding of the configuration of the pipeline. One purpose of maintaining current maps and\nrecords is to ensure that Respondent’s employees and others have accurate and consistent\ndocuments upon which they can rely when conducting normal operations and maintenance,\nresponding to emergencies, and in other circumstances. Inconsistent records therefore pose a\nthreat to pipeline safety.\nAfter considering all of the evidence and issues presented, I find that Respondent violated §\n195.404(a) as alleged in Items 5(b) and 5(c) when it failed to keep its G-100 drawings updated to\naccurately reflect the current configuration of TAPS at PS8, PS10 and the North Pole Metering\nFacility.\nItem 6(c):\nItem 6(c) of the Notice alleged that Respondent violated 49 C.F.R. § 195.406(b), which states:\n§ 195.406 Maximum operating pressure.\n(a) ….\n(b) No operator may permit the pressure in a pipeline during surges or\nother variations from normal operations to exceed 110 percent of the\noperating pressure limit established under paragraph (a) of this section.\nEach operator must provide adequate controls and protective equipment to\ncontrol the pressure within this limit.\nBackground\nItem 6(c) alleged that Respondent did not provide adequate controls and protective equipment to\ncontrol the pressure on the discharge side of the TAPS Pump Station 9 (PS9) of TAPS within the\nlimits prescribed in §195.406(a). Specifically, the Notice alleged that from November 30, 2002,\nto October 21, 2003, both of the pressure safety valves (PSVs) on the discharge side of PS9 (i.e.,\n39-PICV-905A and 39-PICV-905B) were out of service and therefore could not provide pressure\ncontrol for the pump station.\nPSVs (also called discharge relief valves) are important safety devices that are used to prevent\nthe overpressure of TAPS. The purpose of a PSV is to relieve pressure inside the pipeline before\nthe pressure reaches an unsafe level. When pipeline pressure reaches a predetermined set point,\nthe PSV is designed to open and allow oil to flow into a relief system so that the pipeline\npressure can be reduced to a safe level.\nAn OPS inspector observed that records provided during the inspection for PSV 39-PICV-905A\n(Valve A) indicated that Valve A was blocked in and taken out of service on January 18, 2002,\nand returned to service on April 25, 2004. Respondent does not dispute that Valve A was out of\nservice during this period. The OPS inspector also observed that the records for PSV 39-PICV-\n\n\n\n4\n905B (Valve B) indicated that Valve B was out of service on November 30, 2002, through\nOctober 21, 2003.\nIn its Response, at the hearing, and in its Closing, Respondent presented evidence and arguments\nin defense of OPS’ allegation of violation regarding Valve B. Respondent requested withdrawal\nof the allegation of violation in Item 6(c), and the associated proposed penalty and compliance\norder.\nDiscussion\nIn its Response, Alyeska argued that Valve B was in service during the time in question. The\ncompany explained that the records it provided to OPS during the inspection erroneously\nindicated that Valve B was out of service.1 Alyeska further explained that the technician who\nperformed maintenance on Valve A, which Respondent acknowledged was out of service,\nincorrectly associated his Valve A field notes with those for Valve B. Respondent stated that\nthese “maintenance record keeping errors in the field […] could lead to the conclusion that both\ndischarge relief valves were simultaneously out of service for the referenced time period.”2\nIn its Response, the company provided documents from its electronic work order system and\ndocuments indicates, however, that they only refer to maintenance activities; the documents do\nnot indicate whether Valve B was actually in service. Therefore, I find that these documents do\nnot constitute sufficient evidence to prove that Valve B was actually in service.\nargued that they showed Valve B was actually in service in 2002 and 2003.3 A review of the\nDuring the hearing, Alyeska stated that it would supply additional records and explanation on\nthis issue in its Closing. In support of its position, Respondent provided an explanation of its\nelectronic work order system for inspection and maintenance tasks. Respondent explained that\nthis system automatically generates work orders for inspection and maintenance tasks for each\nPSV and that each order contains instructions, called Safe Maintenance Procedures (SMPs), for\nperforming that specific task. Respondent explained that when its electronic system creates a\nwork order, an instrument technician takes the SMP form into the field to conduct the PSV test,\ninitialing each step on the form as the test is performed. Respondent provided the initialed and\nsigned SMP documents for 2002 and 2003 as evidence that Valve B was actually in service.4\nUpon review of these 2002-2003 documents, I find that they do not support Respondent’s\ncontention that Valve B was actually in service during this time period. Alyeska’s 2002 SMP\ncontains 62 steps that an instrument technician must perform to complete the PSV function test\n1 Response, Finding No. 6c at 2 (Dec. 2, 2005).\n2 Id.\n3 Id., Ex. 17 and 18. These exhibits include “Work Orders” and “Task Completion Processing” documents for\nValve B for 2002 and 2003.\n4 Closing at 4 (May 26, 2006). See Ex. 67, SMP-I19-043, signed and dated 11/30/02, and Ex. 68, SMP-I19-043\nsigned and dated 10/21/03.\n\n\n\n5\nand other related tests.5 Steps 1 through 34 involve testing of the PSV and include procedures\nfor testing preparation, pre-test, function testing and returning the valve to service. Steps 33 and\n34 cover returning the PSV to service after testing.6 For the 2002 function test, nearly all steps,\nbut not steps 33 and 34, were initialed as having been completed.7 Therefore, the 2002 SMP\ndocumentation shows that Valve B was apparently not placed into service after the function test\nwas performed. If anything, Alyeska’s own documentation supports the allegation that Valve B\nwas out of service in 2002.8\nDuring the hearing, Alyeska invited the OPS inspector to PS9 to meet with company staff for\nanother review of Valve B-related documents. Although there may be situations in which it is\nnecessary for OPS personnel to make site visits to clarify issues regarding an alleged violation,\nthis is not one of them. The evidence relevant to this allegation is contained in Respondent’s\nrecords, which it had ample opportunity to provide to OPS at the inspection and before, during\nand after the hearing.\nIn its Response, Alyeska also argued that even if both PSVs were out of service, the company\nstill had adequate controls and protective equipment to prevent overpressure at PS 9.9\nRespondent explained that it had an Operations Control Center procedure that, if triggered,\nwould require adjustment of pressure control equipment set points all along TAPS if that relief\nequipment at any given pump station were out of service.10\nI reject Respondent’s argument. Section 195.406(b) requires that Respondent have adequate\ncontrols and protective equipment to control the pressure on the discharge side of PS 9 within the\nlimits established under § 195.406(a). While Respondent argued that it had procedures to keep\nthe pipeline safe even with both discharge PSVs out of service, it provided no evidence that such\nprocedures would have served as adequate controls. Furthermore, even if Respondent had\nprovided such evidence, the company still failed to have the necessary protective equipment\nwhen both valves were out of service.\nSummary Findings\nPHMSA provided Alyeska several opportunities to submit evidence to refute OPS’ allegation\nand evidence regarding this issue. However, none of the documents that Respondent provided\n5 Response, Ex. 67.\n6 Id. at 4.\n7 Id. All steps leading up to those involved in returning the valve to service were initialed, except for step 22.\nThough the Respondent did fill in blanks within step 22 with technical data.\n8 The 2003 SMP documentation shows that after the October 21, 2003 Valve B test was conducted, the technician\nput Valve B back into service. (Response, Ex. 68). This is consistent with the allegation in the Notice that Valve B\nwas out of service until October 21, 2003.\n9 Response, Finding No. 6(c) at 2.\n10 Id. and see Ex.19 “Department Operating Procedure Operations Control Center, OCC-3.01 Pressure Control Set\nPoints.”\n\n\n\n6\nconstitute adequate proof that Valve B was actually in service during the time in question.\nAccordingly, upon considering all of the evidence, I find that Valve A and Valve B were out of\nservice from November 30, 2002 to October 21, 2003 and that, as a result, Alyeska did not have\nadequate controls and protective equipment during that period to control the pressure on the\ndischarge side of PS9 within the limits established according to § 195.406(a). I also find that\nRespondent’s procedures and controls do not constitute an acceptable alternative or substitute for\nproviding adequate protective equipment.\nItem 8:\nItem 8 of the Notice alleged that Respondent violated 49 C.F.R. § 195.430, which states:\n§ 195.430 Firefighting equipment.\nEach operator shall maintain adequate firefighting equipment at each\npump station and breakout tank area. The equipment must be-\n(a) In proper operating condition at all times;\n(b) Plainly marked so that its identity as firefighting equipment is\nclear; and,\n(c) Located so that it is easily accessible during a fire.\nItem 8 alleged that Alyeska violated § 195.430 by failing to maintain adequate firefighting\nequipment at each pump station and breakout tank area. Specifically, the Notice alleged that the\ncompany had removed all incipient firefighting equipment from the PS8 manifold building. The\nNotice explained that the lack of such equipment would hinder Respondent’s ability to\nextinguish fires within the manifold building. It also explained that the manifold building\nhoused a portion of the TAPS 48-inch mainline pipe, two 48-inch ball valves, and 42-inch and\n36-inch blind flanges.\nIn its Response, Alyeska contested the allegation and argued that because the manifold building\nwas unheated, unoccupied, and did not contain combustible materials, fire extinguishers in the\nbuilding would be “superfluous.”11 exception for non-operational pump stations or unheated or unoccupied pump station buildings,\nnor does compliance with the regulation turn on the presence of combustible materials. Section\n195.430 requires Respondent to maintain adequate firefighting equipment at each pump station\nand breakout tank area.\nThis argument is unconvincing. Section 195.430 contains no\nAt the hearing, the company indicated that it would comply with the proposed compliance order\nassociated with Item 8 by installing fire extinguishers in the enclosed manifold building at PS8\nand in all other enclosed manifold buildings at non-operational pump stations. After the hearing,\nOPS confirmed that fire extinguishers had been installed at PS8.\nAccordingly, upon consideration of all of the evidence, I find that Respondent violated § 195.430\nby failing to have fire extinguishers in the manifold building at PS8.\n11 Response, Finding No. 8 at 2.\n\n\n\n7\nItems 10(a) and 10(b):\nItems 10(a) and 10(b) of the Notice alleged that Respondent violated 49 C.F.R. § 195.573(a),\nwhich states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) Protected pipelines. You must do the following to determine whether\ncathodic protection required by this subpart complies with § 195.571:\n(1) Conduct tests on the protected pipeline at least once each calendar\nyear, but with intervals not exceeding 15 months. However, if tests at those\nintervals are impractical for separately protected short sections of bare or\nineffectively coated pipelines, testing may be done at least once every 3\ncalendar years, but with intervals not exceeding 39 months.\nBackground\nItems 10(a) and 10(b) concern similar allegations and are therefore discussed together. Item\n10(a) alleged that Respondent violated § 195.573(a)(1) by failing to conduct tests in 2003 of the\ncathodic protection system on TAPS at cased road crossings at Mile Posts 449.46, 449.53,\n455.33, 455.37, 460.24, 460.26, and 474.51. The Notice alleged that the last survey at these\nlocations was conducted on June 1, 2002, 29 months before the date of the inspection and\nbeyond the maximum 15-month testing interval set out in § 195.573(a)(1).\nItem 10(b) alleged that Respondent violated § 195.573(a)(1) by failing to conduct tests in 2003\nof the cathodic protection system on TAPS at cased road crossings at Mile Posts 573.81, 538.56,\n541.33, 545.79, 545.83, 552.25, 561.86, 570.63, 579.48 and 606.19. The Notice alleged that the\nlast survey at these locations was conducted on June 4, 2002, 27 months before the date of the\ninspection and beyond the maximum 15-month testing interval set out in § 195.573(a)(1).\nAs OPS and Respondent discussed at the hearing, both 10(a) and 10(b) alleged that Respondent\nfailed to conduct tests of road casings at the cited locations for electrical isolation from the TAPS\nmainline. The Notice alleged that the omission of such tests constituted a failure to comply with\n§ 195.573(a)(1). At the hearing, OPS took the position that § 195.573(a)(1) requires casing\nisolation testing on the same annual frequency as that of testing of the cathodic protection levels\non the mainline pipe. At the hearing, in its Response and Closing, Alyeska took the position that\ncasing isolation tests are covered solely by § 195.575 and that, therefore, the annual interval set\nout in § 195.573(a)(1) does not apply.\nCasings are buried metal pipes through which the TAPS mainline passes beneath roads and other\nobstacles. Alyeska installs casings so that they are electrically isolated from the TAPS mainline\npipe. There is good reason for this. The purpose of electrical isolation is to allow the cathodic\nprotection system on the mainline pipe to function effectively. If a casing is not electrically\nisolated from the mainline pipe (i.e., if it is “shorted”) the mainline cathodic protection system\nwill supply current to the casing, rather than the mainline pipe as intended.\n\n\n\n8\nInadequate cathodic protection is a threat to pipeline safety because it increases the likelihood of\nexternal corrosion. External corrosion threatens pipeline safety because, if it progresses\nunchecked, it may cause the failure of the mainline pipe and increase the risk of harm to life,\nproperty and the environment.\nThe allegations in the Notice and the discussions at the hearing raise the issue of what testing\ninterval applies, if any, to the testing of casings for electrical isolation.\nDiscussion\nThe Notice alleged that Respondent failed to comply with § 195.573(a)(1) when it failed to test\nannually whether its road casings were electrically isolated from the TAPS mainline.\nRespondent’s procedures in place at the time of the inspection required the company to test road\ncasings for isolation from the mainline pipe once each year but with intervals not to exceed\nfifteen (15) months.12 Respondent agreed that it did not conduct annual casing isolation tests as\nrequired by its own procedure.13 However Respondent argued that the one-year testing\nprocedure was based on Respondent’s “incorrect interpretation of the regulations.”14\nRespondent argued that § 195.575, not § 195.573(a)(1), applies to the testing of casings for\nisolation. Respondent argued that isolation testing is “separate and distinct from testing to assure\nadequate levels of CP required by § 195.573(a)(1).”15 Respondent then asserted that it could\nselect the testing interval of its choice because § 195.575 does not specify an interval for casing\nroad casings on a triennial rather than annual basis. In its Closing, Respondent also argued that\nno finding of violation is appropriate because it was not on notice of the annual isolation testing\nrequirement.\nisolation tests.16 On that basis, Respondent indicated that it had changed its procedures to test\nI reject Respondent’s legal argument regarding the regulatory requirements applicable to casings.\nSection 195.573(a)(1) requires Respondent to test its pipeline for compliance with the cathodic\nprotection criteria requirements set forth in § 195.571 on an annual basis, but not to exceed 15\nmonths. The main purpose of this annual testing requirement is to provide Respondent with\ninformation about the effectiveness of its cathodic protection system such that it can correct\ndeficiencies within a reasonable time and prevent pipeline safety risks associated with external\ncorrosion.\nIf Alyeska fails to test annually the road casings to determine if they are isolated from the\nmainline pipe, the company does not get an accurate picture of the effectiveness of its cathodic\nprotection system on the mainline pipe inside the casing. Annual cathodic protection testing on\nthe mainline may not reveal a shorted casing and could give the impression that the cathodic\n12 Id.\n13 Response, Finding No. 10(a) at 2.\n14 Id.\n15 Response, Finding No. 10(a) at 4.\n16 Response, Finding No. 10(a) at 2.\n\n\n\n9\nprotection on the mainline pipe meets the requirements of §195.571, when, in fact, protection\nmay not be adequate. For example, testing of the cathodic protection on the mainline pipe at\neither end of a cased crossing may show adequate protection, but a short may be present inside\nthe casing. If the casing itself is not tested for isolation, a short could persist, resulting in\ninadequate cathodic protection on the mainline pipe at the location of the short and increasing the\nlikelihood of external corrosion at that location. External corrosion could occur undetected,\nparticularly in years between Respondent’s periodic in-line inspection (ILI) runs.\nThe preamble to the 2001 amendments to the Part 195 corrosion control regulations explains\nwhy the casing requirements in § 195.575 do not include an inspection frequency.17 The\ndiscussion supports the position that the annual testing requirement in § 195.573(a)(1) was\nintended to apply also to casing isolation tests. In the Final Rule preamble to the electrical\nisolation regulations, PHMSA discussed a commenter’s suggestion that § 195.575 should include\na specified testing frequency for casing isolation.18 PHMSA explained that the purpose of the\ninspection required by § 195.575 was to ensure that electrical isolation is adequate when the\nisolation is first installed.19 PHMSA elaborated that “all post-installation inspections and tests of\ntest for casing isolation can undermine effectiveness of cathodic protection and the accuracy of\nmainline cathodic protection test results, the preamble supports the inclusion of casing isolation\ntesting in the annual testing requirement.\ncathodic protection facilities are covered by final § 195.573.”20 In light of the fact that failure to\nIn its Closing, Alyeska took the position that during the hearing OPS had agreed to convert Items\n10(a) and 10(b) to Notice of Amendment (“NOA”) Items. There was discussion at the hearing\nabout Respondent having changed its procedures since the inspection from annual to triennial\ntesting. OPS had encouraged Respondent to change its procedures back to testing once every\ncalendar year but not to exceed 15 months. As discussed above, this change must be made to\ncomply with the regulations. Furthermore, OPS did not concede that a finding of violation and\ncivil penalty was not warranted for exceeding the maximum 15-month interval for conducting\nisolation tests of the road casings as required by § 195.573(a)(1). However, based on\ndiscussions at the hearing, the proposed compliance order associated with Items 10(a) and 10(b)\nis hereby reduced to a Notice of Amendment and will be addressed in the Amendment of\nProcedures section of this Final Order. In its Closing, Respondent committed to amending its\nprocedures in accordance with the proposed compliance order.21\nAccordingly, based upon consideration of all of the evidence in the record and the legal issues\nraised, I find that Respondent failed to comply with § 195.573(a)(1) when it failed to test\n17 See Final Rule, Controlling Corrosion on Hazardous Liquid and Carbon Dioxide Pipelines, 66 FR 66994, Dec.\n27, 2001.\n18 Id. at 67000.\n19 Id.\n20 Id.\n21 Closing at 5.\n\n\n\n10\nannually its road casings for isolation at the cited locations. I also find that the annual testing\nrequirement set out in § 195.573(a)(1) includes annual electrical isolation testing of all casings.\nItem 10(c):\nItem 10(c) of the Notice alleged that Respondent violated 49 C.F.R. § 195.573(c), which states:\n§ 195.573 What must I do to monitor external corrosion control?\n(a) ….\n(c) Rectifiers and other devices. You must electrically check for proper\nperformance each device in the first column at the frequency stated in the\nsecond column.\nDevice Check Frequency\nRectifier At least six times each calendar year, but\nwith intervals not exceeding 2½ months.\nOther interference bond At least once each calendar year, but with\nintervals not exceeding 15 months.\nItem 10(c) alleged that Respondent violated § 195.573(c) by failing to electrically check for\nproper performance each rectifier on TAPS at least six times each calendar year, but with\nintervals not exceeding 2½ months. Specifically, the Notice alleged that Alyeska failed to timely\ninspect the 40-EEQ-86 cathodic protection rectifier for Tank 200 at PS10. In its Response and at\nthe hearing, Alyeska explained that because PS10, including Tank 200, was no longer\noperational and had been cleaned and disconnected from TAPS in 1996, the 40-EEQ-86 rectifier\nwas no longer in use.22 In its Response and at the hearing, the company explained that it had no\nintention of using Tank 200 in the future and that it would eventually be dismantled.\nBecause Tank 200 was cleaned, removed from service and disconnected from TAPS in 1996, I\nfind that, at the time of the inspection, the 40-EEQ-86 cathodic protection rectifier associated\nwith Tank 200 was not subject to the requirements of § 195.573(c). Accordingly, upon\nconsideration of all of the evidence, I order that the allegation of violation in Item 10(c) and the\nassociated proposed compliance order be withdrawn.\nRespondent is reminded that if it chooses to place Tank 200 back into service in the future, it\nmust verify the integrity of the tank and the associated cathodic protection system and comply\nwith all other applicable provisions of the Pipeline Safety Laws and regulations.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any\n22 Hearing Presentation, Item 10(c) at 5.\n\n\n\n11\nrelated series of violations.\n49 U.S.C. § 60122 and 49 C.F.R. § 190.225 require that, in determining the amount of a 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.\nThe Notice proposed a total civil penalty of $84,000 for violations of §§ 195.404(a), 195.406(b),\n195.430, and 195.573(a)(1).\nItems 5(b) and 5(c) proposed penalties of $1,000, respectively, for two violations of\n§195.404(a). Respondent requested that PHMSA eliminate the proposed civil penalties for these\nItems on the basis of its argument that it did not violate the regulation. As discussed in the\nfindings of violation, I found that Alyeska violated § 195.404(a) when it failed to keep and\nprovide accurate maps of PS8, PS10, and the North Pole Metering Facility. Respondent\nprovided no information that would warrant reduction of the proposed penalties. Having\nreviewed the record and considered the assessment criteria, I assess Respondent civil penalties of\n$1,000 for Item 5(b) and $1,000 for Item 5(c).\nItem 6(c) proposed a penalty of $55,000 for violation of § 195.406(b). Respondent requested\nthat PHMSA eliminate the proposed civil penalty for this Item on the basis of its argument that it\ndid not violate the regulation. The regulation requires Respondent to provide adequate controls\nand protective equipment to control pressure within the limits established under § 195.406(a).\nRespondent submitted numerous documents at the inspection and before, during and after the\nhearing to show that it had adequate controls and protective equipment in place at the time of the\ninspection. However, none of these documents were sufficient to prove Respondent’s argument.\nAs a result, I have found that Respondent failed to have adequate controls and protective\nequipment to control pressure in TAPS. Compliance with this regulation is a key means of\npreventing pipeline failures due to overpressure. Respondent has provided no information that\nwould warrant reduction or elimination of the penalty. Having reviewed the record and\nconsidered the assessment criteria, I assess Respondent a civil penalty of $55,000 for Item 6(c).\nItem 8 proposed a penalty of $1,000 for violation of § 195.430. Respondent requested that\nPHMSA eliminate the proposed civil penalty for this Item on the basis of its argument that it did\nnot violate the regulation. The regulation requires Respondent to maintain adequate firefighting\nequipment at each pump station and breakout tank area. Respondent did not have firefighting\nequipment in the PS8 manifold building. Respondent has provided no information that would\nwarrant reduction or elimination of the penalty. Having reviewed the record and considered the\nassessment criteria, I assess Respondent a civil penalty of $1,000 for Item 8.\nItems 10(a) and 10(b) proposed penalties of $14,000 and $12,000, respectively, for violations of\n§ 195.573(a)(1). Respondent requested that PHMSA withdraw the proposed civil penalties for\n\n\n\n12\nthese Items. First, Respondent argued that it committed no violation of the regulation. As\ndiscussed in the Findings of Violation, 49 C.F.R. § 195.573(a)(1) requires Respondent to conduct\nannual tests of the adequacy of its cathodic protection system, including tests to determine\nwhether pipeline casings are electrically isolated from the mainline pipe. Electrically shorted\ncasings may interfere with cathodic protection and result in inadequate protection. An operator\ndoes not have a full and accurate picture of the adequacy of its cathodic protection unless it\nconducts annual casing isolation tests. Respondent’s failure to annually test casing isolation\ncould result in significant threats to pipeline safety.\nSecond, Respondent argued that the penalty for this Item should be withdrawn for procedural\nreasons. It argued that because OPS decided to treat these Items as more appropriate for\nresolution through an NOA rather than a compliance order, then no penalties should be imposed.\nRespondent indicated that the regulations “do not include proposed civil penalties in conjunction\nwith NOAs.”23 The Final Order makes findings that Respondent violated § 195.573(a)(1) for\nfailing to test annually the electrical isolation of road casings at the cited locations. Civil\npenalties may also be imposed on the basis of such findings of violation.24 The Final Order also\ntreats the proposed compliance order proposing to require Respondent to amend its procedures\nfor compliance with § 195.573(a)(1) as an NOA. The regulations permit the use of an NOA in\naddition to, and in conjunction with, the appropriate enforcement actions in 49 C.F.R. Part 190,\nSubpart B.25\nThird, Respondent argued that it should not be subject to a penalty because the “plain language\nof 49 C.F.R. § 195.575 does not require isolation testing on a one-year interval.”26 Respondent\nargued that it was not on notice that annual isolation testing was required. As discussed in the\nfindings of violation, Respondent was on notice of the annual casing isolation testing\nrequirement. Notice was provided in the 2001 amendments to the Part 195 corrosion control\nregulations, which explained the lack of a specific testing interval in § 195.575 and the\napplicability of the annual testing interval in § 195.573 to all “post-installation testing of\ncathodic protection facilities.”27\nFinally, Respondent argued that a civil penalty “arguably violates procedural due process”\npresumably because of a lack of notice that PHMSA interpreted § 195.575 as requiring annual\ntesting.28\nBeyond this statement, Respondent has stated no legal or factual basis for its\n23 Closing at 4.\n24 49 C.F.R. § 190.223(a).\n25 49 C.F.R. § 190.237(b) states: “The amendment of an operator’s plans or procedures prescribed in paragraph (a)\nof this section is in addition to, and may be used in conjunction with, the appropriate enforcement actions prescribed\nin this subpart.”\n26 Closing at 5.\n27 Supra note 19, at 67000.\n28 Closing at 5.\n\n\n\n13\n“arguable” procedural due process claim and none is apparent from a thorough review of the\nrecord.\nRespondent provided no information that would warrant reduction of the proposed penalty.\nHaving reviewed the record and considered the assessment criteria, I assess Respondent civil\npenalties of $14,000 for Item 10(a) and $12,000 for Item 10(b).\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a total civil penalty of $84,000.\nRespondent has provided no information that indicates payment of this penalty would adversely\naffect its ability to continue in business.\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require this payment be made by wire transfer, through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, P.O. Box 269039, Oklahoma City, OK 73125; (405) 954-8893.\nFailure to pay the $84,000 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.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Items 5(b), 5(c), 6(c), 8, 10(a), 10(b),\nallegation of violation was withdrawn. Therefore, the proposed compliance order for Item 10(c)\nis no longer necessary. With respect to Items 10(a) and 10(b), on the basis of discussions\nbetween OPS and Respondent at the hearing, the proposed compliance order related to these\nItems will be treated as a Notice of Amendment, addressed in the Amendment of Procedures\nand 10(c) in the Notice for violations of 49 C.F.R. Part 195.29 With respect to Item 10(c), the\nsection of this Final Order. The Director has indicated that Respondent has taken the actions\nspecified in the proposed compliance order to address Item 8. Accordingly, since compliance\nhas been achieved with respect to this violation, the compliance terms are not included in this\nOrde","truncated":true,"body_characters":79307}