PACIFIC OPERATORS OFFSHORE — Notice of Probable Violation

party submissionOfficial PDF520070003_Operator Response_03012007.pdf#

poo 5-2007-0003 nopv-pcp 2-16-07_text.pdf, page 1Official PDFO U. S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 12300 W Dakota Ave, Suite 110 Lakewood, CO 80228 SENT TO COMPLIANCE REGISTRY Hardcopy Elec tronical ¹ of Copiesd / Date i italo 1 NOTICE OF PROBABLE VIOLATION AND PROPOSED CIVIL PENALTY CERTIFIED MAIL - RETURN RECEIPT RE UESTED February 16, 2007 Mr. Bruce Johnston Operations Superintendent Pacific Operators Offshore, LLC P. O. Box 5565 Oxnard, CA 93031 CPF 5-2007-0003 Dear Mr, Johnston: On July 26-27, 2005, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code, conducted an on-site pipeline safety inspection of the Pacific Operators Offshore (POO) pipeline and facilities at your offices in Carpinteria, California. As a result of the inspection, it appears that you have committed a probable violation of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The item inspected and the probable violation is: 192. 745 Valve maintenance: Transmission lines. (a) Each transmission line valve that might be required during any emergency must be inspected and partially operated at intervals not exceeding 15-months, but at least once each calendar year. Pacific Operators Offshore did not inspect its mainline block valve, once a year, in the La Conchita plant for the last two years. Pacific Operators Offshore staff admitted that they failed to inspect this valve as required by Part 192. 745(a).#

poo 5-2007-0003 nopv-pcp 2-16-07_text.pdf, page 2Pro osed Civil Penalt Under 49 United States Code, $ 60122, you are subject to a civil penalty not to exceed $100, 000 for each violation for each day the violation persists up to a maximum of $1, 000, 000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation and has recommended that you be preliminarily assessed a civil penalty of $10, 000 as follows: Item number PENALTY $10, 000 Res onse to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings Please refer to this document and note the response options. If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 5-2007-0003 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Chris oidal Director, Western Region Pipeline and Hazardous Materials Safety Administration Enclosures: Response Options for Pipeline Operators in Compliance Proceedings cc: PHP-60 Compliance Registry PHP-500 H. Monfared (¹114345)#

520070003_Final Order_03172010_text.pdf, page 1Official PDFMAR 17 2010 Mr. Robert P. Carone President Pacific Operators Offshore, LLC 1145 Eugenia Place Carpinteria, CA 93013 Re: CPF No. 5-2007-0003 Dear Mr. Carone: Enclosed is the Final Order issued in the above-referenced case. It makes a finding of violation and assesses a civil penalty of $10,000. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Chris Hoidal, Director, Western Region CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 5170]#

520070003_Final Order_03172010_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 ______________________________ ) In the Matter of ) ) Pacific Operators Offshore, LLC, ) CPF No. 5-2007-0003 ) Respondent. ) ______________________________) FINAL ORDER On July 26-27, 2005, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of Pacific Operators Offshore, LLC (Respondent or Pacific Operators), in Carpinteria, California. Respondent’s pipeline consists of a 12-inch natural gas pipeline running approximately 5.8 miles from the Hogan offshore platform to the La Conchita Plant in La Conchita, California. As a result of the inspection, the Director, Western Region, PHMSA (Director), issued to Respondent, by letter dated February 16, 2007, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Respondent had violated 49 C.F.R. § 192.745(a) and proposed assessing a civil penalty of $10,000 for the alleged violation. Pacific Operators responded to the Notice by letter dated March 1, 2007 (Response), and requested a hearing. An informal hearing via telephone conference was held on August 8, 2007, with Larry White, Office of Chief Counsel, PHMSA, presiding. FINDING OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 192, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.745(a), which states: § 192.745 Valve maintenance: Transmission lines. (a) Each transmission line valve that might be required during any emergency must be inspected and partially operated at intervals not exceeding#

520070003_Final Order_03172010_text.pdf, page 32 15 months, but at least once each calendar year. The Notice alleged that Respondent violated 49 C.F.R. § 192.745(a) by failing to inspect and partially operate, at least once each calendar year, each transmission line valve on its pipeline that might be required during emergencies. Specifically, the Notice alleged that Pacific Operators failed to inspect its mainline block valve at the La Conchita Plant for years 2003 and 2004. In its Response and during the hearing, Pacific Operators acknowledged that it was unable to produce inspection forms or records demonstrating that the required annual valve inspection was performed for 2003 or 2004, but contended that periodic operation of the valve during the course of the year meant that it was operational and therefore met the inspection and partial operation requirement of § 192.745(a). OPS stated that it had obtained a copy of the relevant section of Respondent’s written Operations and Maintenance Manual, entitled “Procedure 7.01 Emergency Valve Maintenance.” This written procedure required specific actions to be taken during annual valve inspections, including greasing or lubricating the valve, introducing power to powered valves and fully or partially operating the valve, inspecting for atmospheric corrosion, inspecting the area around the valve to ensure it was accessible by personnel, checking for blow-down obstructions, and checking signage. In addition, Procedure 7.01 required that a record of such annual valve inspection be created by completion of Form 7.01. At the hearing, Respondent acknowledged that it had failed to follow its own written procedures for performing and documenting the valve inspection. Moreover, Respondent’s argument that the regular operation of a transmission line valve satisfies the annual inspection requirement is unpersuasive. This argument amounts to the proposition that OPS’s longstanding requirements for periodic maintenance inspections and recordkeeping for pipeline components such as mainline valves can be disregarded. Periodic valve inspection requirements, however, were included in the Federal pipeline safety regulations for good reason—to ensure the safe operation of pipeline facilities. If a pipeline valve needs service, waiting to find out until the operator is in the midst of using the valve, such as during an unintended shut-down, could compromise safety. Compliance with the annual valve inspection requirement is not optional. Accordingly, after considering all the evidence, I find that Respondent violated 49 C.F.R. § 192.745(a) by failing to perform documented annual inspections of its mainline block valve at the La Conchita Plant for years 2003 and 2004. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related series of violations.#

520070003_Final Order_03172010_text.pdf, page 43 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $10,000 for Respondent’s violation of 49 C.F.R. § 192.745(a), for failing to perform documented annual inspections of the company’s mainline block valve at the La Conchita Plant for years 2003 and 2004. In its Response and during the hearing, Pacific Operators stated that compliance was important and that it gave regular attention to its valves. Respondent reiterated its contention that it believed it had “met the spirit of the requirement” and characterized the non-compliance as a recordkeeping issue. As stated above, compliance with periodic valve inspection requirements is a key part of pipeline safety. Respondent’s own procedures required that a documented annual inspection be performed; the company acknowledged that it failed to follow these procedures. Maintaining complete and accurate records is itself important to safety because, in the absence of complete records, an operator’s managers cannot perform effective oversight of personnel who perform pipeline maintenance. Respondent has presented no information that would warrant a reduction in the civil penalty amount proposed in the Notice for this violation. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of $10,000 for violating 49 C.F.R. § 192.745(a). Payment of the civil penalty must be made within 20 days of service. 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-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, OK 73125; (405) 954-8893. Failure to pay the $10,000 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a United States District Court. 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 sent to: Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590. A copy of the petition should also be sent to: Assistant Chief Counsel for Pipeline#

520070003_Final Order_03172010_text.pdf, page 54 Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590. PHMSA is willing to accept petitions received no later than 20 days after receipt of service of this Final Order by the Respondent, provided such petitions contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. Unless the Associate Administrator, upon request, grants a stay, the terms and conditions of this Final Order are effective upon receipt of service. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#