GOLDEN VALLEY ELECTRIC ASSOCIATION, INC — Notice of Probable Violation

party submissionOfficial PDF520075034_Petition for Reconsideration_09112009.pdf#

520075034_Decision on the Petition for Reconsideration_05052010.pdf, page 1Official PDFU.S. Department of Transportation 1200 New Jersey Ave, S.E. Safety Administration Pipeline and Hazardous Materials Washington, D.C. 20590 MAY 5 2010 Mr. Brian Newton President and Chief Executive Officer Golden Valley Electric Association PO Box 71249 Fairbanks, AK 99707-1249 Re: CPF No. 5-2007-5034 Dear Mr. Newton: Enclosed please find the Decision on Reconsideration issued in the above-referenced case. It denies your Petition for Reconsideration and affirms the Final Order without modification. Service of the Decision 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, Maut Mann lor Jeffrey D.! Associate Administrator for Pipeline Safety Enclosure Mr. Chris Hoidal, Director, Western Region, PHMSA CERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0043 9344]#

520075034_Decision on the Petition for Reconsideration_05052010.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 Golden Valley Electric CPF No. 5-2007-5034 Association, Petitioner. DECISION ON RECONSIDERATION In a September 1, 2009 Final Order, I found that Golden Valley Electric Association (GVEA or Petitioner) had failed to submit a timely written response to a September 12, 2007 Notice of Probable Violation and Proposed Civil Penalty (Notice). On that basis, I further found that the company had waived its right to contest the allegations in the Notice, that it had committed both of the probable violations, and that it should be assessed a $20,000 civil penalty. On September 11, 2009, GVEA submitted a Petition for Reconsideration (Petition). In its Petition, the company states that its failure to initially respond to the Notice was the result of a clerical error, and that it was not made fully aware of this proceeding until April 21, 2008, the date of another Office of Pipeline Safety (OPS) inspection. Petitioner also states that the civil penalty assessed in the Final Order should be reduced for several reasons. Having fully considered the record in this matter, I find that GVEA has not presented any persuasive factual or legal basis in support of reconsideration. I am, therefore, denying this Petition and affirming the September 1, 2009 Final Order without modification. I. Discussion The Pipeline Safety Regulations permit the filing of a petition for reconsideration of a final order. However, this is not a right of appeal or to seek a de novo review of the record.' Rather, reconsideration is an opportunity to present the agency with previously unavailable information and, if appropriate, to request that any errors in the final order be corrected. That is why the ' 49 C.F.R. § 190.215(a)-(e).#

520075034_Decision on the Petition for Reconsideration_05052010.pdf, page 32 Associate Administrator does not consider repetitious information or arguments on reconsideration. It is also why a petitioner must provide a valid reason for consideration of facts or arguments that were not raised on its behalf in a timely manner. Petitioner states that its failure to submit a written response within 30 days of receiving the Notice was the result of a clerical error. I am willing to assume, for purposes of this proceeding, that such an error might constitute good cause for failing to comply with that requirement. However, GVEA also neglected to submit a response after receiving actual notice of this proceeding during the April 2008 OPS inspection, and I am not willing to assume that a failure to comply with our procedural requirements should be excused under such circumstances. The Pipeline Safety Regulations state that a"[flailure of the respondent to respond" to a Notice in a timely manner "constitutes a waiver of the right to contest the allegations in the notice of probable violation and authorizes the Associate Administrator, OPS, without further notice to the respondent, to find facts to be as alleged in the notice of probable violation and to issue a final order under $190.213."2 In this case, GVEA did not submit a timely response and has not shown that its failure should be excused for good cause. Accordingly, I find that there is no basis for reconsideration of the $20,000 civil penalty assessed in the Final Order. RELIEF DENIED Based on the information provided in the Petition, a review of the relevant portions of the record, and for the reasons stated above, I am denying this Petition and affirming the Final Order without modification. This Decision is the final administrative action in this proceeding. MAY 5 2010 Lor- Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety = 49 C.F.R. § 190.209(c).#

520075034_FinalOrder_09012009_text.pdf, page 1Official PDFSEP 01 2009 Mr. Brian Newton President and CEO Golden Valley Electric Association 758 Illinois Street Fairbanks, AK 99707-1249 Re: CPF No. 5-2007-5034 Dear Mr. Newton: Enclosed is the Final Order issued in the above-referenced case. It makes findings of violation and assesses a civil penalty of $20,000. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment. Your receipt of the Final Order constitutes service of that document 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: Chris Hoidal, Director, Western Region, PHMSA Dennis Hinnah, Deputy Director, Western Region, PHMSA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 0390 0005 6162 5838]#

520075034_FinalOrder_09012009_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 ) ) Golden Valley Electric Association, ) CPF No. 5-2007-5034 ) Respondent. ) ______________________________ ) FINAL ORDER Between January 9 - 11, 2006, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety (OPS) conducted an on-site pipeline safety inspection of the facilities and records of Golden Valley Electric Association (GVEA or Respondent) in Fairbanks, Alaska. GVEA operates crude oil supply and return pipelines between the Trans Alaska Pipeline System (TAPS) North Pole metering facility and another metering facility that supplies crude oil to two refineries and the GVEA power plant. Total pipeline mileage is 4.6 miles. As a result of the inspection, the Director, Western Region, OPS (Director), issued to Respondent, by letter dated September 12, 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. §§ 195.452(f)(5), (j)(3) and (j)(4)(i) and proposed assessing a civil penalty of $20,000 for the alleged violations. GVEA failed to respond within 30 days after it had received the Notice. Respondent’s failure to respond constitutes a waiver of their right to contest the allegations in the Notice and authorizes the entry of this Final Order. FINDINGS OF VIOLATION Respondent did not contest the allegations in the Notice that it violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(3), which states: § 195.452 Pipeline Integrity management in high consequence areas. (a) … (j) What is a continual process of evaluation and assessment to maintain a pipeline's integrity?#

520075034_FinalOrder_09012009_text.pdf, page 32 (1) General. After completing the baseline integrity assessment, an operator must continue to assess the line pipe at specified intervals and periodically evaluate the integrity of each pipeline segment that could affect a high consequence area. (2) . . . (3) Assessment intervals. An operator must establish five-year intervals, not to exceed 68 months, for continually assessing the line pipe's integrity. An operator must base the assessment intervals on the risk the line pipe poses to the high consequence area to determine the priority for assessing the pipeline segments. An operator must establish the assessment intervals based on the factors specified in paragraph (e) of this section, the analysis of the results from the last integrity assessment, and the information analysis required by paragraph (g) of this section. The Notice alleged that GVEA violated § 195.452(j)(3) by failing to reassess its 14-inch crude oil pipeline within 68 months of the previous assessment. As evidence of that violation, the Notice stated that GVEA performed a baseline hydrostatic test on the line on August 12, 1998, but still had not reassessed the line as of January 11, 2006, the last day of the OPS inspection. to the Integrity Management requirements of Subpart F. Accordingly, I find that Respondent violated 49 C.F.R. § 195.452(j)(3) by failing to reassess its 14-inch crude oil pipeline within 68 months of the previous assessment. GVEA’s pipeline system, which could affect one or more High Consequence Areas,1 is subject Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(j)(4)(i), which states: § 195.452 Pipeline Integrity management in high consequence areas. (a) …. (j) What is a continual process of evaluation and assessment to maintain a pipeline's integrity? (1) General. After completing the baseline integrity assessment, an operator must continue to assess the line pipe at specified intervals and periodically evaluate the integrity of each pipeline segment that could affect a high consequence area. (2) …. (4) Variance from the 5-year intervals in limited situations- (i) Engineering basis. An operator may be able to justify an engineering basis for a longer assessment interval on a segment of line pipe. The justification must be supported by a reliable engineering evaluation combined with the use of other technology, such as external monitoring technology, that provides an understanding of the condition of the line pipe equivalent to that which can be obtained from the assessment methods allowed in paragraph (j)(5) of this section. An operator must notify OPS 270 days before the end 1 An HCA is defined as: (1) A commercially navigable waterway, which means a waterway where a substantial likelihood of commercial navigation exists; (2) A high population area, which means an urbanized area, as defined and delineated by the Census Bureau, that contains 50,000 or more people and has a population density of at least 1,000 people per square mile; (3) An other populated area, which means a place, as defined and delineated by the Census Bureau, that contains a concentrated population, such as an incorporated or unincorporated city, town, village, or other designated residential or commercial area; (4) An unusually sensitive area. See 49 C.F.R. § 195.450.#

520075034_FinalOrder_09012009_text.pdf, page 43 of the five-year (or less) interval of the justification for a longer interval, and propose an alternative interval. An operator must send the notice to the address specified in paragraph (m) of this section. The Notice alleged that GVEA violated § 195.452(j)(4)(i) by failing to properly notify OPS before the end of the maximum five-year reassessment interval of its justification for establishing a longer reassessment interval for a particular segment of line pipe. Specifically, the Notice alleged that Respondent scheduled its 14-inch crude oil pipeline for reassessment and evaluation in 2007, nearly a decade after the previous baseline assessment of August 12, 1998. The Notice further alleged that Respondent failed to provide OPS with notice 270 days before August 12, 2003, the end of the maximum five-year reassessment interval, of its justification for establishing that longer interval. The Notice also stated that GVEA had still not provided OPS with that notification as of January 11, 2006, the last day of the inspection. Accordingly, I find that Respondent violated 49 C.F.R. §195.452(j)(4)(i) by failing to notify OPS before the end of the maximum five-year reassessment interval of the justification for a longer interval. These findings of violation will be considered prior offenses 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. 49 U.S.C. § 60122 and 49 C.F.R. § 190.225 require that, in determining the amount of the civil penalty, I consider the following criteria: 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 $20,000 for the violations. Notice Item 1 proposed a civil penalty of $10,000 for violation of 49 C.F.R. § 195.452(j)(3), for Respondent’s failure to reassess its 14-inch crude oil pipeline within 68 months of the previous assessment. Inspecting pipeline at the mandated intervals is a key part of maintaining pipeline safety and protecting the environment. Pipeline operators are obligated to assess and evaluate their pipeline as frequently as required, but no less often than every 68 months. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $10,000 for violating 49 C.F.R. § 195.452(j)(3). Notice Item 2 proposed a civil penalty of $10,000 for violation of 49 C.F.R. § 195.452(j)(4)(i), for Respondent’s failure to notify OPS before the end of the maximum five-year reassessment interval of its justification for establishing a longer interval. When a pipeline operator#

520075034_FinalOrder_09012009_text.pdf, page 54 establishes a reassessment interval that exceeds the mandated interval of five-years (or less), OPS must receive a timely notification of that decision. Moreover, the notification must include an adequate justification for that decision, one supported by a reliable engineering evaluation and the use of such other technology as may be appropriate. Timely notification that an operator will exceed the mandated pipeline reassessment intervals would reflect an operator’s attempt to comply with pipeline safety regulations. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $10,000 for violating 49 C.F.R. § 195.452(j)(4)(i). GVEA has presented no information that would warrant a reduction in the civil penalty proposed in the Notice. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of $20,000. 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 $20,000 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 the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590. The petition must be received within 20 days of Respondent’s receipt of this Final Order and must contain a brief statement of the issue(s). The filing of the petition automatically stays the payment of any civil penalty assessed. However if Respondent submits payment for the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective upon receipt. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

520075034_ Decision on the Petition for Reconsideration_05052010 _text.pdf, page 1Official PDFMAY 5 2010 Mr. Brian Newton President and Chief Executive Officer Golden Valley Electric Association PO Box 71249 Fairbanks, AK 99707-1249 Re: CPF No. 5-2007-5034 Dear Mr. Newton: Enclosed please find the Decision on Reconsideration issued in the above-referenced case. It denies your Petition for Reconsideration and affirms the Final Order without modification. Service of the Decision 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, PHMSA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 1160 0001 0043 9344]#

520075034_ Decision on the Petition for Reconsideration_05052010 _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 ) Golden Valley Electric ) CPF No. 5-2007-5034 Association, ) ) ) ) Petitioner. ) ______________________________) DECISION ON RECONSIDERATION In a September 1, 2009 Final Order, I found that Golden Valley Electric Association (GVEA or Petitioner) had failed to submit a timely written response to a September 12, 2007 Notice of Probable Violation and Proposed Civil Penalty (Notice). On that basis, I further found that the company had waived its right to contest the allegations in the Notice, that it had committed both of the probable violations, and that it should be assessed a $20,000 civil penalty. On September 11, 2009, GVEA submitted a Petition for Reconsideration (Petition). In its Petition, the company states that its failure to initially respond to the Notice was the result of a clerical error, and that it was not made fully aware of this proceeding until April 21, 2008, the date of another Office of Pipeline Safety (OPS) inspection. Petitioner also states that the civil penalty assessed in the Final Order should be reduced for several reasons. Having fully considered the record in this matter, I find that GVEA has not presented any persuasive factual or legal basis in support of reconsideration. I am, therefore, denying this Petition and affirming the September 1, 2009 Final Order without modification. I. Discussion The Pipeline Safety Regulations permit the filing of a petition for reconsideration of a final order. However, this is not a right of appeal or to seek a de novo review of the record.1 Rather, reconsideration is an opportunity to present the agency with previously unavailable information and, if appropriate, to request that any errors in the final order be corrected. That is why the 1 49 C.F.R. § 190.215(a)-(e).#

520075034_ Decision on the Petition for Reconsideration_05052010 _text.pdf, page 32 Associate Administrator does not consider repetitious information or arguments on reconsideration. It is also why a petitioner must provide a valid reason for consideration of facts or arguments that were not raised on its behalf in a timely manner. Petitioner states that its failure to submit a written response within 30 days of receiving the Notice was the result of a clerical error. I am willing to assume, for purposes of this proceeding, that such an error might constitute good cause for failing to comply with that requirement. However, GVEA also neglected to submit a response after receiving actual notice of this proceeding during the April 2008 OPS inspection, and I am not willing to assume that a failure to comply with our procedural requirements should be excused under such circumstances. The Pipeline Safety Regulations state that a“[f]ailure of the respondent to respond” to a Notice in a timely manner “constitutes a waiver of the right to contest the allegations in the notice of probable violation and authorizes the Associate Administrator, OPS, without further notice to the respondent, to find facts to be as alleged in the notice of probable violation and to issue a final that its failure should be excused for good cause. Accordingly, I find that there is no basis for reconsideration of the $20,000 civil penalty assessed in the Final Order. order under §190.213.”2 In this case, GVEA did not submit a timely response and has not shown RELIEF DENIED Based on the information provided in the Petition, a review of the relevant portions of the record, and for the reasons stated above, I am denying this Petition and affirming the Final Order without modification. This Decision is the final administrative action in this proceeding. _____________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety 2 49 C.F.R. § 190.209(c).#

520075034_closure letter_01052011_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED January 5, 2011 Mr. Brian Newton President and CEO Golden Valley Electric Association 758 Illinois Street Fairbanks, AK 99707-1249 CPF 5-2007-5034 Dear Mr. Newton: On September 1, 2009, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Golden Valley Electric Association (GVEA) a Final Order in the above- referenced case. This Order included a Civil Penalty assessment which would automatically close the enforcement action upon receipt of payment. On May 14, 2010, PHMSA received GVEA’s payment and accordingly, this case is now closed and no further action is needed with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, Dennis Hinnah Deputy Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 J. Strawn (#116644)#