{"operation":"document","citation":"CPF 520065027","title":"CALUMET MONTANA REFINING, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2006-06-15","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.509(b).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520065027.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520065027.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520065027","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520065027","body":"Notice of Probable Violation involving CALUMET MONTANA REFINING, LLC. PHMSA's enforcement data identifies the cited regulation as 195.509(b). The case was opened on 2006-06-15 and is reported as closed as of 2009-01-23. Proposed civil penalty: $10,000. Assessed civil penalty: $10,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520065027_FinalOrder_11212008.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520065027/520065027_FinalOrder_11212008.pdf\n\n520065027_finalorder_11212008_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520065027/520065027_finalorder_11212008_text.pdf\n\n520065027_finalorder_11212008_text.pdf\n\nO\nU S Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety\nAdministration\n1200 New Jersey Ave S E\nWashington DC 20590\nNo'tt' 2 1 iY(i8\nMr. Peter Sametz\nExecutive Vice President and Chief Operating Officer\nMontana Refining Company, Inc.\nSuite 2600, Watermark Tower\n530 8'\" Avenue, S. W.\nCalgary, Alberta T2P3S8\nCanada\nRe: CPF No. 5-2006-5027\nDear Mr. Sametz:\nEnclosed is the Final Order issued in the above-referenced case. It makes a finding of violation\nand assesses a civil penalty of $10, 000. The penalty payment terms are set forth in the Final\nOrder. This enforcement action closes automatically upon payment Your receipt of the Final\nOrder constitutes service of that document under 49 C. F. R. ( 190. 5.\nThank you for your cooperation in this matter.\nSincerely,\nJeffrey D. Wiese\nAssociate Admmistrator\nfor Pipeline Safety\nEnclosure\ncc: Mr, Chris Hoidal, Director, Western Region, OPS\nCERTIFIED MAIL — RETURN RECEIPT RE UESTED\n\n\n\nU. S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, DC 20590\nIn the Matter of\nMontana Refining Company, Inc.\n,\nRespondent.\nCPF No. 5-2006-5027\nFINAL ORDER\nFrom November 28, 2005, to December 2, 2005, pursuant to 49 U. S. C. ( 60117, a\nrepresentative of the Pipeline and Hazardous Materials Safety Administration (PHMSA),\nOffice of Pipeline Safety (OPS), inspected the operator qualification (OQ) program of\nMontana Refining Company, Inc. (Montana Refining or Respondent), the operator of a\nthree-mile-long crude oil pipeline and refinery in Great Falls, Montana. ' Following that\ninspection, the Director, Western Region, OPS (Director), issued to Montana Refining,\nby letter dated June 15, 2006, a Notice of Probable Violation and Proposed Civil Penalty\n(Notice). In accordance with 49 C. F. R. ( 190. 207, the Notice alleged that Respondent\nhad violated 49 C. F. R. $ 195. 509(b) and proposed assessing a civil penalty of $10, 000.\nMontana Refining responded to the Notice by letters dated December 13, 2006, and\nJanuary 11, 2008 (collectively, Response) Therein, Respondent denied the allegation of\nviolation and objected to the assessment of a civil penalty. Montana Refining also\ninitially requested a hearing, but later withdrew that request through counsel. By its\nwithdrawal, Respondent waived its right to a hearing and authorized entry of this Final\nOrder.\nFINDING OF VIOLATION\nItem 1 of the Notice alleged that Montana Refining had violated 49 C. F. R. $ 195. 509(b),\nwhich states:\ng 195. 509 General.\n(a) Operators must have a written qualification program by April 27, 2001.\nThe program must be available for review by the Administrator or by\n' In March 2006, Connacher Oil and Gas Limited, a Canadian energy company, purchased and currently\nowns Montana Refining\n\n\n\na state agency participating under 49 U. S. C. Chapter 601 if the program\nis under the authority of that state agency.\n(b) Operators must complete the qualification of individuals performing\ncovered tasks by October 28, 2002.\nAccording to the Notice, Montana Refining violated $ 195. 509(b) by not qualifying any\nof the individuals who performed covered tasks on its pipeline from October 28, 2002,\nuntil the date of the 2005 OPS inspection. While not refuting that allegation, Respondent\nnevertheless argues that the OQ requirements prescribed in ) 195. 509 \"are relatively new,\nand are not written in a manner that a one person pipeline operation can readily comply. \"\nI find this argument unpersuasive. Simply stated, each operator of a hazardous liquid\npipeline must comply with ( 195. 509. See 49 U S. C. $ 60102(a)(3) (\" The operator of a\npipeline facility shall ensure that employees who operate and maintain the facility are\nqualified to operate and maintain the pipeline facilities. \"); 49 C. F. R. $ 195. 2 (generally\ndefining operator, person, pipeline system, and pipeline facility); 49 C. F. R. $ 195. 501\n(prescribing the scope of OQ requirements), 49 C F. R. ( 195 505 (\" Each operator shall\nhave and follow a written qualification program. \"); 49 C F R, $ 195 507 (\" Each operator\nshall maintain records that demonstrate compliance with this subpart. \") (italics added).\nIndeed, the text of $ 195 509 does not include an exception for any particular class of\noperators, and the regulatory history confirms that ( 195. 509 is intended to apply to all\n2\noperators, regardless of size. Thus, an operator of a three-mile-long crude oil pipeline,\neven if managed by a single employee, is bound by the requirements of $ 195. 509 to the\nsame extent as an operator of a multistate crude oil pipeline operated by hundreds of\nemployees. For that reason, Montana Refining's argument that a \"one person pipeline\noperation\" cannot \"readily comply\" with the OQ requirements of $ 195, 509 must be\nrejected. Accordingly, I find that Respondent violated 49 C. F. R. $ 195. 509(b) by failing\nto qualify all of the individuals who were performing covered tasks on its pipeline no\nlater than October 28, 2002.\nThe final rule promulgating $ 195 509 specifically noted that small operators would be covered, statmg, in\npart\nOne commenter was concerned with the effect of the proposed rule on small\noperators, and suggested that [the agency] provide guidance on compliance with the\nrule to assist small operators, and state pipelme safety mspection personnel, The\n[Negotiated Rulemaking/ Committee discussed the issue of the effects of the rule on\nsmall operators .\n,\nand agreed that special provisions would not be appropriate\nbecause the qualification of workers at both large and small pipeline operators can\nimpact safety Federal guidance documents such as the \"Guidance Manual for\nOperators of Small Gas Systems\" will be revised to help small operators achieve\ncompliance In addition, many trammg programs are currently under development\nby government orgamzations and members of the pipehne mdustry\n64 Fed. Reg 46853, 46856 (August 27, 1999) (itahcs added).\n\n\n\nThis finding of violation will be considered a prior offense in any subsequent\nenforcement action taken against Respondent.\nASSESSMENT OF PENALTY\n49 U. S. C. $ 60122 and 49 C. F. R. ) 190. 225 require that, in determining the amount of the\ncivil penalty, I consider the following criteria: the nature, circumstances, and gravity of\nthe violation, including adverse impact on the environment; the degree of Respondent's\nculpability; the history of Respondent's prior offenses; the Respondent's ability to pay\nthe penalty and any effect that the penalty may have on its ability to continue doing\nbusiness; and the good faith of Respondent in attempting to comply with the pipeline\nsafety regulations. In addition, I may consider the economic benefit gained from the\nviolation without any reduction because of subsequent damages, and such other matters\nas justice may require. The Notice proposed a total civil penalty of $10, 000 for\nRespondent's violation of 49 C. F. R. ) 195. 509(b).\nRespondent argues that a civil penalty should not be assessed for three reasons. First,\nMontana Refining has \"show[n] good faith in achieving compliance\" with 49 C. F. R. $\n195. 509, a \"relatively new\" regulation that is \"not written in a manner that a one person\npipeline operation can readily comply. \" Second, Montana Refining has no prior history\nof violating the OQ regulations. Third, the \"nature, circumstances and gravity\" of the\nalleged violation do not merit a $10, 000 penalty, particularly given the prompt action\ntaken by Montana Refining to correct the situation upon receipt of the Notice.\nI will address each of Respondent's arguments in turn. As for Respondent's good faith\narginnent, PHMSA does consider an operator's good faith efforts to achieve compliance\nwhen calculating a civil penalty amount. For example, if an operator has taken\nreasonable steps to comply with a particular regulation but those efforts are subsequently\ndeemed insufficient as the result of an inspection, PHMSA will consider such actions as a\nmitigating factor in calculating a civil penalty. Similarly, if an operator acts on the basis\nof an incorrect, but otherwise reasonable, interpretation of a regulation, the agency may\npropose a lower penalty than would otherwise be assessed.\nIn this case, however, Respondent did not make a good faith effort to achieve\ncompliance Indeed, nothing indicates that Montana Refining even considered qualifying\nthe individuals who performed covered tasks from October 28, 2002, until the date of the\n2005 inspection. Furthermore, $ 195. 509(b) is not a \"relatively new\" regulation It was\nissued in August 1999, six years before the OPS inspector discovered the pending\nviolation.\nAs for Respondent's second argument, it is true that Montana Refining has no prior\nhistory of violating the OQ regulations. However, this may simply be due to the fact that\nthe 2005 OQ inspection was the first and only one that Montana Refining has undergone\nsince the issuance of those regulations in 1999. More importantly, PHMSA did, in fact,\nconsider Respondent's lack of prior offenses in calculating the pending civil penalty;\notherwise, the proposed penalty amount would have been substantially larger,\n\n\n\nAs for Respondent's argument that the nature, circumstances, and gravity of the violation\ndo not justify the proposed civil penalty, the facts prove just the opposite. Montana\nRefining operated its crude oil pipeline for years without taking steps to ensure that its\nemployees and contractors were properly trained and qualified to perform all of their\ncovered tasks. The need for Montana Refining's personnel to receive proper training and\nevaluation is particularly acute in this case since a failure could affect a populated High\nConsequence Area or contaminate the Missouri River. Respondent's efforts to comply\nwith 49 C. F R. ) 195, 509(b) after the discovery of the violation cannot justify a penalty\nreduction.\nHaving reviewed the entire record and considered Respondent's arguments in light of the\nstatutory assessment criteria, I find that Respondent has failed to present any evidence or\nlegal grounds to justify a reduction in the proposed civil penalty. Accordingly, I assess\nRespondent a total civil penalty of $10, 000\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\nFederal Reserve Communications System (Fedwire), to the account of the U. S. Treasury.\nDetailed instructions are contained in the enclosure. Questions concerning wire transfers\nshould be directed to: Financial Operations Division (AMZ-341), Federal Aviation\nAdministration, Mike Monroney Aeronautical Center, P. O. Box 25082, Oklahoma City,\nOK 73125; (405) 954-8893.\nFailure to comply with this Order may result in administrative assessment of civil\npenalties not to exceed $100, 000 for each violation for each day the violation continues\nor in referral to the Attorney General for appropriate relief in a district court of the United\nStates.\nThe terms and conditions of this Final Order shall be effective upon receipt.\nNQY 2 1 2008\nDate Issued\nJeffrey D. Wiese\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":11907}