{"operation":"document","citation":"CPF 520071008","title":"TALLGRASS INTERSTATE GAS TRANSMISSION, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2007-06-11","effective_on":null,"summary":"CLOSED notice of probable violation citing 192.903(2)(ii), 192.917(e)(5), 192.937(b).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520071008.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520071008.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520071008","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520071008","body":"Notice of Probable Violation involving TALLGRASS INTERSTATE GAS TRANSMISSION, LLC. PHMSA's enforcement data identifies the cited regulations as 192.903(2)(ii),  192.917(e)(5),  192.937(b). The case was opened on 2007-06-11 and is reported as closed as of 2010-04-30. Proposed civil penalty: $78,000. Assessed civil penalty: $39,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520071008_Decision on the  Petition for Reconsideration_04022010.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_Decision%20on%20the%20%20Petition%20for%20Reconsideration_04022010.pdf\n\n520071008_Decision on the  Petition for Reconsideration_04022010_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_Decision%20on%20the%20%20Petition%20for%20Reconsideration_04022010_text.pdf\n\n520071008_FinalOrder_09012009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_FinalOrder_09012009.pdf\n\n520071008_FinalOrder_09012009_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_FinalOrder_09012009_text.pdf\n\n520071008_NOPV letter_06112007.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_NOPV%20letter_06112007.pdf\n\n520071008_nopv letter_06112007_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_nopv%20letter_06112007_text.pdf\n\n520071008_operator request for hearing_07122007.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_operator%20request%20for%20hearing_07122007.pdf\n\n520071008_operator_response_02152008.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_operator_response_02152008.pdf\n\n520071008_Petition for Reconsideration_10052009.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520071008/520071008_Petition%20for%20Reconsideration_10052009.pdf\n\n520071008_Decision on the  Petition for Reconsideration_04022010_text.pdf\n\nAPR 2 2010\nMr. M. Dwayne Burton\nVice President\nGas Pipeline Operations & Engineering\nKinder Morgan Inc.\nOne Allen Center\n500 Dallas Street, Suite 1000\nHouston, TX 77002\nRe: CPF No. 5-2007-1008\nDear Mr. Burton:\nEnclosed is this agency’s decision denying your company’s Petition for Reconsideration in this\ncase. The penalty payment terms are set forth in the Final Order. This enforcement action closes\nautomatically upon payment. Service of the Final Order by certified mail is deemed effective\nupon the date of mailing, or as otherwise provided under 49 C.F.R. § 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\nRobert Hogfoss, Counsel\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 2377]\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)\nKinder Morgan, Inc., ) CPF No. 5-2007-1008\n)\nRespondent. )\n______________________________)\nDECISION ON PETITION FOR RECONSIDERATION\nOn September 1, 2009, I found that Kinder Morgan, Inc. (Kinder Morgan or Petitioner) had\nviolated 49 C.F.R. § 192.905(a), the regulation that requires an operator to identify all of the high\nconsequence areas (HCA) that could be affected by the operation of a natural gas pipeline\nsystem. I assessed Kinder Morgan a civil penalty of $39,000 for committing that violation and\nwithdrew a separate allegation of probable violation for evidentiary insufficiency.\n1\nOn October 5, 2009, after receiving an extension of the 20-day filing deadline, Kinder Morgan\nfiled a Petition for Reconsideration (Petition) of the September 1, 2009 Final Order. In that\nPetition, Kinder Morgan requested that certain “inaccurate language” be stricken from the\nAssessment of Penalty section of that Final Order and argued that the assessed civil penalty had\nto be reduced to properly reflect the facts of the case.\n2 Petitioner also introduced a chart with a\ncomparison of its HCA mileage on December 31, 2005, and October 27, 2007, to support these\nassertions.\nfollow the company’s written procedures for identifying HCAs.\n3 Kinder Morgan did not, however, dispute the finding that its employees failed to\nHaving fully considered the record in this matter, I find that Kinder Morgan has not presented\nany persuasive factual or legal basis in support of reconsideration. I will, therefore, deny this\nPetition and affirm the September 1, 2009 Final Order without modification.\n1 In the Matter of Kinder Morgan, Inc., Final Order, C.P.F. No. 1-2009-1001 (Aug. 9, 2009) (available at\nwww.phmsa.dot.gov/pipeline/enforcement).\n2 Petition at 1-2.\n3 Petition at Appendix A.\n\n\n\n2\nI. Discussion\nThe Pipeline Safety Regulations permit the filing of a petition for reconsideration of a final\nreconsideration is an opportunity to present the agency with previously unavailable information\nand, if appropriate, to request that any errors in the final order be corrected. That is why the\nAssociate Administrator does not consider repetitious information or arguments on\nreconsideration. It is also why a petitioner must provide a valid reason for consideration of facts\norder. However, this is not a right of appeal or to seek a de novo review of the record.4 Rather,\nor arguments that were not raised in a timely manner.\nWith that in mind, I will now consider the merits of this Petition. Kinder Morgan\nrequests that certain language be stricken from the Assessment of Penalty section of the\nFinal Order. The language in question reads:\nRespondent failed without justification to follow its own written procedure and\nthat failure led to a significant under-reporting of the HCAs that could be affected\nby the operation of the company’s pipeline system. If left uncorrected, such an\nerror would diminish the effectiveness of the other risk-based requirements\nimposed by the IMP regulations and create a potential threat to public safety.\nKinder Morgan takes exception to the use of the term “significant” and the phrase “create\na potential threat to public safety” in this part of the Final Order. That language,\nPetitioner believes, does not comport with the record in this case, including “the reality…\nthat 86% of the time . . . the procedure was followed correctly” and the fact that any\nerrors would have been quickly identified by the company during its annual HCA-\nmileage review.\nI do not find these arguments persuasive.\nFirst, an operator’s obligation to follow the Pipeline Safety Regulations does not vary on\na percentage basis, and Petitioner does not dispute that a violation of 49 C.F.R.\n§ 192.905(a) occurred in this case. Moreover, any agency charged with protecting public\nsafety would consider a 14% rate of regulatory noncompliance to be significant.\nTherefore, I reject Kinder Morgan’s request on reconsideration to strike that language\nfrom the Final Order.\nSecond, the fact that an operator may discover a violation at some future point does not\nmean that its conduct never “create[d] a potential threat to public safety.” To the\ncontrary, the Pipeline Safety Regulations are the minimum standards that an operator\nmust meet to ensure public safety and the protection of the environment, and any\nviolation of those standards creates a potential threat to those interests. Accordingly, I\nreject Petitioner’s request to strike this language from the Final Order as well.\n4 49 C.F.R. § 190.215(a)-(e).\n\n\n\nII. Conclusion\nFor the reasons stated in Part I of this Decision, I am denying this Petition and affirming\nthe September 1, 2009 Final Order without modification. This is the final administrative\naction in this proceeding.\n_____________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety\n3\n\n520071008_FinalOrder_09012009_text.pdf\n\nSep 01 2009\nMr. Richard D. Kinder\nChairman & Chief Executive Officer\nKinder Morgan, Inc.\n500 Dallas Street, Suite 1000\nHouston, TX 77002\nRE: Kinder Morgan, Inc., CPF No. 5-2007-1008\nDear Mr. Kinder:\nEnclosed is the Final Order issued in the above-referenced case. It makes findings of violation,\nassesses a civil penalty of $39,000, specifies actions that need to be taken by Kinder Morgan to\ncomply with the pipeline safety regulations, and withdraws an allegation of violation and a\nwarning item. The penalty payment terms are set forth in the Final Order.\nWhen the civil penalty has been paid and the terms of the compliance order completed, as\ndetermined by the Director, Western Region, this enforcement action will be closed. Your\nreceipt of the Final Order 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 Administrator\nfor Pipeline Safety\nEnclosure\ncc: Chris Hoidal, Director, Western Region, PHMSA\nRobert Hogfoss, Hunton & Williams, LLP\nBank of America Plaza, Suite 4100\n600 Peachtree Street, NE, Atlanta, GA 30308-2216\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 0390 0005 6162 5777]\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)\nKinder Morgan, Inc., ) CPF No. 5-2007-1008\n)\nRespondent. )\n______________________________)\nFINAL ORDER\nFrom August 14 to 18 and August 28 to September 1, 2006, pursuant to 49 U.S.C. § 60117, a\nrepresentative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office\nof Pipeline Safety (OPS), inspected the Integrity Management Program (IMP) of Kinder Morgan,\nInc. (Kinder Morgan or Respondent), then the operator of 10 natural gas pipeline systems in 13\ndifferent states, at its offices in Lakewood, Colorado.\nAs a result of that inspection, the Director, Western Region, OPS (Director), issued to Kinder\nMorgan, by letter dated June 11, 2007, a Notice of Probable Violation, Proposed Civil Penalty,\nand Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice\nalleged that Kinder Morgan had committed certain violations of Subpart O (Gas Transmission\nPipeline Integrity Management), Part 192, Title 49, Code of Federal Regulations. The Notice\nproposed assessing Kinder Morgan a civil penalty of $78,000 for the alleged violations and\nordering the company to take certain corrective actions.\nKinder Morgan responded to the Notice by letter dated July 12, 2007, contesting the allegations\nof violation and requesting a hearing (Response). The company later supplemented its Response\nby letter dated February 15, 2008, providing additional information and legal argument\n(Supplemental Response). On February 26, 2008, PHMSA convened an informal hearing, with\nan attorney from the Office of Chief Counsel presiding. Finally, on March 26, 2008, Kinder\nMorgan submitted a timely post-hearing brief (Brief) for the record.\nFINDING OF VIOLATION\nItem 1 of the Notice alleged that Kinder Morgan violated 49 C.F.R. § 192.905(a), which\nstates, in relevant part:\n§ 192.905 How does an operator identify a high consequence area?\na) General. To determine which segments of an operator's\n\n\n\n2\ntransmission pipeline system are covered by this subpart, an operator\nmust identify the high consequence areas. An operator must use method\n(1) or (2) from the definition in § 192.903 to identify a high consequence\narea. An operator may apply one method to its entire pipeline system, or\nan operator may apply one method to individual portions of the pipeline\nsystem. An operator must describe in its integrity management program\nwhich method it is applying to each portion of the operator's pipeline\nsystem. The description must include the potential impact radius when\nutilized to establish a high consequence area. (See appendix E.I. for\nguidance on identifying high consequence areas.) . . .\nThe Notice alleged that Kinder Morgan violated 49 C.F.R. § 192.905(a) by failing to properly\nidentify all of the High Consequence Areas (HCAs)1\nthat could be affected by the operation of\nits\npipeline system. In particular, the Notice alleged that Kinder Morgan failed to follow its own\n1 An HCA is defined in § 192.903 as:\n. . . an area established by one of the methods described in paragraphs (1) or (2) as\nfollows:\n(1) An area defined as--\n(i) A Class 3 location under § 192.5; or\n(ii) A Class 4 location under § 192.5; or\n(iii) Any area in a Class 1 or Class 2 location where the potential impact radius is\ngreater than 660 feet (200 meters), and the area within a potential impact circle contains 20\nor more buildings intended for human occupancy; or\n(iv) Any area in a Class 1 or Class 2 location where the potential impact circle\ncontains an identified site.\n(2) The area within a potential impact circle containing--\n(i) 20 or more buildings intended for human occupancy, unless the exception in\nparagraph (4) applies; or\n(ii) An identified site.\n(3) Where a potential impact circle is calculated under either method (1) or (2) to\nestablish a high consequence area, the length of the high consequence area extends axially\nalong the length of the pipeline from the outermost edge of the first potential impact circle\nthat contains either an identified site or 20 or more buildings intended for human occupancy\nto the outermost edge of the last contiguous potential impact circle that contains either an\nidentified site or 20 or more buildings intended for human occupancy. (See Figure E.I.A. in\nappendix E.)\n(4) If in identifying a high consequence area under paragraph (1)(iii) of this\ndefinition or paragraph (2)(i) of this definition, the radius of the potential impact circle is\ngreater than 660 feet (200 meters), the operator may identify a high consequence area based\non a prorated number of buildings intended for human occupancy with a distance of 660\nfeet (200 meters) from the centerline of the pipeline until December 17, 2006. If an operator\nchooses this approach, the operator must prorate the number of buildings intended for\nhuman occupancy based on the ratio of an area with a radius of 660 feet (200 meters) to the\narea of the potential impact circle (i.e., the prorated number of buildings intended for\nhuman occupancy is equal to 20 x (660 feet) [or 200 meters]/potential impact radius in feet\n[or meters]2).\n\n\n\n3\nwritten procedure2 for using the “potential impact circle” method3 to identify HCAs.\nIn support of that allegation, the Notice stated that when determining whether large areas (such\nfor the gathering of GPS data points at the outside corner boundaries or areas nearest to its\npipeline. However, according to the Notice, Kinder Morgan failed to follow such procedure and,\nas schools, parks or areas of public assembly)4 qualify as HCAs, Respondent’s procedure called\nas a consequence, underestimated the size of the HCAs.\nKinder Morgan does not dispute the allegation that it failed to follow its own HCA-identification\nprocedure, but instead raises a number of other arguments, only three of which warrant further\nconsideration here. Those arguments concern the validity of the company’s interpretation of the\nIMP regulations in identifying HCAs, the significance of its actions in exceeding the minimum\nregulatory standards, and the alleged mootness of the underlying allegation. For the following\nreasons, I find none of these arguments persuasive.\nFirst, Kinder Morgan argues that PHMSA’s initial IMP regulations relating to “identified sites”\nlacked clarity.5 For example, Respondent states that PHMSA had to clarify that § 192.905\n“allowed operators to use existing data on the density of buildings intended for human\noccupancy near pipelines, pro-rating any potential impact circles larger than 660 feet in diameter,\nuntil December 17, 2006.\napplied to the determination of whether a potential impact circle (PIC) of a certain radius\ncontained “20 or more buildings intended for human occupancy,” not whether such a PIC\n”6 However, the pro-rating provision cited by Kinder Morgan only\n2 Kinder Morgan Operations and Maintenance Manual Procedure 220, Section 3.7, Revised (Apr. 1, 2005) (Section\n3.7 Procedure).\n3 As defined in 49 C.F.R. § 192.903, a ”[p]otential impact circle is a circle of radius equal to the potential impact\nradius (PIR).” That same regulation states that “[p]otential impact radius (PIR) means the radius of a circle within\nwhich the potential failure of a pipeline could have significant impact on people or property. PIR is determined by\nthe formula r = 0.69* (square root of (p*d 2)), where ‘r’ is the radius of a circular area in feet surrounding the\npoint of failure, ‘p’ is the maximum allowable operating pressure (MAOP) in the pipeline segment in pounds per\nsquare inch and ‘d’ is the nominal diameter of the pipeline in inches. . .” Id.\n4 There are three different types of “identified sites” in the IMP regulations. The first is “[a]n outside area or open\nstructure that is occupied by twenty (20) or more persons on at least 50 days in any twelve (12)-month period,” and\nthat “include[s] but [is] not limited to, beaches, playgrounds, recreational facilities, camping grounds, outdoor\ntheaters, stadiums, recreational areas near a body of water, or areas outside a rural building such as a religious\nfacility.” 49 C.F.R. § 192.903. The second is “[a] building that is occupied by twenty (20) or more persons on at\nleast five (5) days a week for ten (10) weeks in any twelve (12)-month period,” and that “include[s], but [is] not\nlimited to, religious facilities, office buildings, community centers, general stores, 4-H facilities, or roller skating\nrinks.” Id. The third is “[a] facility occupied by persons who are confined, are of impaired mobility, or would be\ndifficult to evacuate,” and that “include[s] but [is] not limited to[,] hospitals, prisons, schools, day-care facilities,\nretirement facilities or assisted-living facilities.” Id.\n5 Supplemental Response at 2; Brief at 2.\n6 Brief at 2.\n\n\n\n4\ncontained other types of identified sites, including large outside areas or open structures.\n7\nTherefore, that formula neither relates to nor justifies Respondent’s undisputed failure to follow\nits own procedure for determining whether “large areas” qualified as HCAs.\nMoreover, Kinder Morgan wrote the procedure in question more than a year after PHMSA\ncompleted the extensive rulemaking that led to the initial IMP regulations, after this agency had\nreleased nearly three dozen guidance documents to assist operators in completing the HCA-\nregulations somehow impaired Kinder Morgan’s ability to develop and follow a compliant HCA-\nidentification process.8 Thus, I must reject the general argument that a lack of clarity in the IMP\nidentification procedure.\nSecond, Kinder Morgan argues that the company’s actual HCA identification process, even if\ncontrary to its own procedure, exceeded the minimum regulatory requirement that operators\nassess at least 50% of its pipeline segments that could affect HCAs by a certain date.\n9 The\nfundamental flaw in this argument is that it disregards an operator’s equally applicable obligation\nto “develop and follow” its own written IMP. Indeed, that duty is critical to the success of\nPHMSA’s performance-based regime for ensuring pipeline integrity under Subpart O.\n10\nTherefore, regardless of whether Respondent met or exceeded its other regulatory obligations,\nKinder Morgan still violated § 192.905(a) by failing to follow its own procedure for identifying\nHCAs.\nThird, Kinder Morgan argues that the company revised its procedure11 and performed a new\nHCA assessment after the inspection but before the issuance of this Notice, thereby rendering the\nallegation in Item 1 moot.\n12\nHowever, the actions taken by an operator to address a prior\nviolation or to ensure prospective compliance do not automatically render an enforcement\nproceeding moot. Further, PHMSA’s interest in collecting the civil penalty proposed in Item 1\n7 Compare 49 C.F.R. § 192.903 (“If in identifying a high consequence area under . . . [the potential impact circle\nmethod], the radius of the potential impact circle is greater than 660 feet (200 meters), the operator may identify a\nhigh consequence area based on a prorated number of buildings intended for human occupancy with a distance of\n660 feet (200 meters) from the centerline of the pipeline until December 17, 2006.”) with 49 C.F.R. § 192.903\n(defining “identified site” as “[a]n outside area or open structure that is occupied by twenty (20) or more persons on\nat least 50 days in any twelve (12)-month period . . . or [a] building that is occupied by twenty (20) or more persons\non at least five (5) days a week for ten (10) weeks in any twelve (12)-month period. ”) (emphasis added).\n8 http://primis.phmsa.dot.gov/gasimp/FaqList.gim?c=1#top5 (last accessed April 2, 2009).\n9 Response at 2; Brief at 3.\n10 49 C.F.R. § 192.907(a).\n11 For example, Kinder Morgan notes that after the OPS inspection, but before December 17, 2006, the company\nrevised its HCA-identification procedure “to add an additional 40 foot buffer to each [potential impact radius], to\naccount for GIS inaccuracies.” Brief at 3 (citing Kinder Morgan Operations and Maintenance Manual Procedure\n220, Section 3.5, Revised (Jan. 1, 2008)).\n12 Supplemental Response at 2; Brief at 3.\n\n\n\n5\nclearly provides the “concrete interest” needed to defeat any claim of mootness in this case.\n13\nThus, this argument also lacks merit.\nFor these reasons, I find that Kinder Morgan violated 49 C.F.R. § 192.905(a) by failing to\nproperly identify all of the HCAs that could be affected by the operation of its pipeline system.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\nWITHDRAWAL OF ALLEGATION\nItem 2 of the Notice alleged that Kinder Morgan violated 49 C.F.R. § 192.917(e)(5). That\nregulation provides, in relevant part:\n§ 192.917 How does an operator identify potential threats to pipeline\nintegrity and use the threat identification in its integrity\nprogram?\n(a) Threat identification. An operator must identify and evaluate all\npotential threats to each covered pipeline segment. Potential threats that an\noperator must consider include, but are not limited to, the threats listed in\nASME/ANSI B31.8S (incorporated by reference, see § 192.7), section 2,\nwhich are grouped under the following four categories:\n(1) Time dependent threats such as internal corrosion, external\ncorrosion, and stress corrosion cracking; . . .\n(e) Actions to address particular threats. If an operator identifies any\nof the following threats, the operator must take the following actions to\naddress the threat.. . .\n(5) Corrosion. If an operator identifies corrosion on a covered\npipeline segment that could adversely affect the integrity of the line\n(conditions specified in § 192.933), the operator must evaluate and\nremediate, as necessary, all pipeline segments (both covered and non-\ncovered) with similar material coating and environmental characteristics. An\noperator must establish a schedule for evaluating and remediating, as\nnecessary, the similar segments that is consistent with the operator's\nestablished operating and maintenance procedures under part 192 for testing\nand repair.\nThe Notice alleged that Kinder Morgan violated 49 C.F.R. § 192.917 by failing to identify and\nevaluate all potential threats to each covered pipeline segment. In supporting this allegation, the\nNotice stated that Respondent “did not always perform an evaluation of similar pipeline segments\n(both covered and non-covered) when significant corrosion is found inside an HCA.\n” The Notice\n13 Ellis v. Brotherhood Ry., Airline et. al., 466 U.S. 435, 442 (1984) (citing Powell v. McCormack, 395 U.S. 486,\n496-498 (1969)); see also Friends of the Earth, Inc. v. Laidlaw, 528 U.S. 167, 180-194 (2000) (describing and\ndistinguishing the doctrines of standing and mootness).\n\n\n\n6\ncited as evidence a corrosion analysis record, dated September 20, 2005, which Kinder Morgan had\nprovided to the OPS inspector at the time of the inspection.\nKinder Morgan disputes this allegation on several grounds. First, Respondent argues that the term\n“evaluate” lacks clarity in § 192.917 and that PHMSA staff stated during the hearing that\nsubparagraph (e)(5) is usually applied in the context of direct assessments, a procedure that Kinder\nMorgan does not presently use on its transmission system.14 Second, the company argues that it had\na procedure for performing like-pipeline-segment corrosion evaluations at the time of the OPS\ninspection15 and that it followed such procedure when remediating immediate repair conditions, as\ndocumented by its alignment sheets, action plans, and closure reports.\nthat it recently revised its procedure to be consistent with guidance provided by PHMSA, and that\nthis violation was not among the 55 areas of concern mentioned in OPS’s 2006 post-inspection\nreport.\n16 Third, Kinder Morgan notes\nFinally, Kinder Morgan argues that, on August 14, 2006, it sold some of the pipeline segments in\nquestion; therefore, it may not be the real party in interest in this proceeding.17\nUpon consideration of all of the evidence, I find that the record does not contain a sufficient\nbasis for finding Kinder Morgan in violation of 49 C.F.R. § 192.917(e)(5). First, the evidence\nconfirms that Respondent in fact had a procedure in place for performing like-pipeline-segment\ncorrosion evaluations at the time of the OPS inspection and that it properly followed that\nprocedure in remediating an immediate repair on the Read Junction to Collbran line in\nSeptember 2005. The evidence also shows — both before and after the effective date of the IMP\nregulations — that Kinder Morgan repaired other pipeline segments with corrosion.\n14 Supplemental Response at 2; Brief at 4.\n15 Kinder has introduced the relevant portions of that procedure, revised as of June 1, 2006, the text of which states:\n3.12 High Consequence Area Remediation [192.917(e)(5), 192.933]\nIf corrosion that could adversely affect pipeline integrity is identified in an HCA segment, Risk\nEngineering will evaluate other non-covered pipeline segments with similar material, coating, and\nenvironmental characteristics. If the evaluation identifies the potential for corrosion that could\nadversely affect pipeline integrity on other pipeline segments, Risk Engineering will establish a\nschedule for evaluating and remediating these similar segments as necessary in conformance with\napplicable O&M Procedures.\nBrief at 4, Exhibit 11.\n16 Kinder Morgan has submitted an unlabeled and undated printout of what it describes as an “immediate repair\nlisting.” Brief at 4, Exhibit 8F. Six different entries are noted in that document, and those entries apparently relate\nto repairs performed on various pipeline segments in 2001, 2002, 2004, and 2005 following inline inspection (ILI)\ntool runs. In addition, Kinder Morgan has submitted another document describing its testing and repair of the Read\nJunction to Collbran line following a September 2005 ILI tool run. Brief at 4, Exhibit 12.\n17 Amended Statement of Issues at 2.\n\n\n\n7\nSecond, neither the Notice nor the Violation Report identified a specific instance where Kinder\nMorgan failed to conduct a like-pipeline-segment corrosion evaluation. On the contrary, the\nonly relevant evidence cited by OPS was a September 2005 corrosion analysis record, a\ndocument which (at least in that particular instance) establishes Kinder Morgan’s compliance\nwith the cited regulation.\nFor these reasons, I find that PHMSA has not met its burden of proving that Kinder Morgan\nfailed to perform like-pipeline-segment corrosion evaluations. Accordingly, I am withdrawing\nItem 2 of the Notice without prejudice and without addressing Kinder Morgan’s remaining\narguments.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, in determining the amount of a civil penalty,\nI must 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 $78,000. That included a $39,000 penalty for Item\n1, relating to the alleged violation of 49 C.F.R. § 192.905(a), and a $39,000 penalty for Item 2,\nrelating to the alleged violation of 49 C.F.R. § 192.917. Having already found that the evidence\nof record is insufficient to prove a violation § 192.917, I am hereby withdrawing the proposed\n$39,000 civil penalty for Item 2.\nWith regard to Item 1, Kinder Morgan has not presented any persuasive basis for reducing or\neliminating the proposed civil penalty. Respondent failed without justification to follow its own\nwritten procedure and that failure led to a significant under-reporting of the HCAs that could be\naffected by the operation of the company’s pipeline system. If left uncorrected, such an error\nwould diminish the effectiveness of the other risk-based requirements imposed by the IMP\nregulations and create a potential threat to public safety. Kinder Morgan also created the\nprocedure in question, a fact that undermines any purported ambiguity or difficulty in abiding by\nits terms. In addition, Respondent has the ability to pay the proposed civil penalty amount\nconsideration of all of the evidence and the assessment criteria, I assess a civil penalty of\nwithout suffering any detrimental business or operational effects.18 Accordingly, upon\n$39,000 for Respondent’s violation of 49 C.F.R. § 192.905(a).\n18 See http://www.kne.com/investor/ (last accessed March 18, 2009) (annual financial reports for Kinder Morgan and\nits related business entities)\n\n\n\n8\nPAYMENT OF PENALTY\nPayment of the $39,000 civil penalty must be made within 20 days of service. Federal\nregulations (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 should\nbe directed to: Financial Operations Division (AMZ-341), Federal Aviation Administration,\nMike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, OK 73125; (405) 954-\n8893.\nFailure to pay the $39,000 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 Item 1, for violations of 49 C.F.R.\n§ 192.905(a). Under 49 U.S.C. § 60118(a), each person who engages in the transportation of gas\nor who owns or operates a pipeline facility is required to comply with the applicable safety\nstandards established under chapter 601. Pursuant to the former authorities and 49 C.F.R.\n§ 190.217, Respondent is ordered to take the following actions to ensure compliance with the\npipeline safety regulations applicable to its operations. Specifically, Respondent must:\n1. With regard to Respondent’s violation of 49 C.F.R. § 192.905(a) (Item 1):\n(a) Re-examine all areas containing identified sites and properly\ndetermine the location of the outside boundaries of those identified sites in\naccordance with the requirements of Kinder Morgan’s O&M Procedure 220,\nSection 3.7;\n(b) Use that information to update Kinder Morgan’s HCA mileage and\ndetermine whether these HCAs have been properly assessed and/or repaired in\naccordance with all applicable regulatory requirements; and\n(c) Submit a report to the Director, identifying all changes made in the\ncompany’s HCA mileage, including those that resulted from the re-\nexamination of areas containing identified sites and the divestiture of\nparticular pipeline assets, describing all repairs made as a result of the new\nHCA mileage, and discussing what types of anomalies were repaired, if any.\n2. Complete the above actions within 60 days of its receipt of this Final Order.\n3. Maintain documentation of the safety improvement costs associated with\nfulfilling this Compliance Order and submit the total to the Director, Western\nRegion, PHMSA. Costs shall be reported in two categories: 1) total cost\nassociated with preparation/revision of plans, procedures, studies, and\n\n\n\n9\nanalyses, and 2) total cost associated with replacements, additions, and other\nchanges to pipeline infrastructure.\nWARNING ITEM\nThe warning concerned Respondent’s alleged violation of 49 C.F.R. § 192.937, for failing to\nselect the methods that would be used to perform the integrity reassessment of pipeline segments\nthat had already received a baseline integrity assessment. Kinder Morgan disputes this allegation\nand argues that its IMP described the pipeline threat assessment methods in use at the time of the\nIMP regulations do not establish a specific timeframe for selecting integrity reassessment\nmethods.\nOPS inspection, that those methods conformed to PHMSA’s guidance on the issue,19 and that the\nI find that Kinder Morgan’s arguments are reasonable and persuasive. Section 192.937 requires\nthat an operator select an appropriate time interval, not to exceed seven years, for conducting an\nintegrity reassessment and a proper method for conducting such reassessments. However, the\nregulation fails to explicitly require that an operator select a reassessment method within a\nparticular timeframe and PHMSA’s guidance on the issue suggests that the critical timeframe in\nterms of method selection is before the next integrity reassessment, not after the performance of\na baseline assessment.\n20 Given the text of the regulation, the agency’s guidance documents, and\n19 Kinder Morgan supports this argument by citing a PHMSA guidance document, FAQ 46, that states:\nQuestion: What are acceptable integrity assessment methods?\nAnswer: Internal inspection, pressure testing, and direct assessment are acceptable methods to\nassess pipeline integrity (192.921(a), 192.937(c)). However, the method(s) selected must be\nappropriate to address the identified threats to the line being assessed. (Thus, for example, direct\nassessment can only be used where the threats are external or internal corrosion or stress corrosion\ncracking). Confirmatory direct assessment can be used for assessments conducted on no longer\nthan seven-year intervals when re-assessments conducted using these specified methods are\nscheduled to occur at intervals longer than 7 years, and when the threats of concern are corrosion.\nOther technologies that an operator can demonstrate provide an equivalent understanding of pipe\ncondition may be acceptable methods. However, operators must inform OPS 180 days before\nconducting an assessment using other technologies.\nBrief at 6, Exhibit 14; see http://primis.phmsa.dot.gov/gasimp/FaqHome.gim?faq=46&c=1 (accessed\nMarch 17, 2009).\n20 As PHSMA stated in FAQ 217, Justifying Assessment Methods Prior to Use:\nAssessment methods must be identified, and demonstrated to be capable of addressing applicable\nthreats, before an assessment is conducted. At the same time, OPS recognizes that last-minute\nproblems arise and that plans must often change as a result. It is acceptable for operators to change\ntheir assessment plans due to unexpected situations, but the reasons for the change and the\nacceptability of a changed assessment method should be documented when the change is made,\nprior to implementing the assessment.\nhttp://primis.phmsa.dot.gov/gasimp/FaqHome.gim?faq=217&c=1 (accessed March 17, 2009).\n\n\n\n10\nthe absence of any additional supporting rationale, I cannot find that Kinder Morgan committed a\nprobable violation of 49 C.F.R. § 192.937. Accordingly, I am hereby withdrawing Item 3 of the\nNotice without prejudice.\nUnder 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of\nthis Final Order. The petition must be received within 20 days of Respondent’s receipt of this\nFinal Order and must contain a brief statement of the issue(s). The terms of the order, including\nany required corrective action and amendment of procedures, shall remain in full force and effect\nunless the Associate Administrator, upon request, grants a stay. The terms and conditions of this\nFinal Order shall be effective upon receipt.\n_____________________________ ________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":37218}