# CENEX PIPELINE LLC — Warning Letter

- **operation:** document
- **citation:** CPF 520125008W
- **title:** CENEX PIPELINE LLC — Warning Letter
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2012-04-20
- **effective on:** Not available
- **summary:** CLOSED warning letter citing 195.204, 195.206, 195.214(a), 195.226(b), 195.402(a), 195.410(a)(1), 195.420(a), 195.420(c), 195.452(b)(5), 195.561(a), 195.571.
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- **app url:** https://regulus.evalyn.ai/document/phmsa-enforcement-520125008w
- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/520125008W
**body:**

Warning Letter involving CENEX PIPELINE LLC. PHMSA's enforcement data identifies the cited regulations as 195.204,  195.206,  195.214(a),  195.226(b),  195.402(a),  195.410(a)(1),  195.420(a),  195.420(c),  195.452(b)(5),  195.561(a),  195.571. The case was opened on 2012-04-20 and is reported as closed as of 2012-04-20. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

520125008W_warning letter_04202012.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520125008W/520125008W_warning%20letter_04202012.pdf

520125008W_warning letter_04202012_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520125008W/520125008W_warning%20letter_04202012_text.pdf

520125008W_warning letter_04202012_text.pdf

WARNING LETTER
CERTIFIED MAIL - RETURN RECEIPT REQUESTED
April 20, 2012
Mr. John Traeger
President
Cenex Pipeline Company
803 Highway 212 South
P.O. Box 909
Laurel, MT 59044-0909
CPF 5-2012-5008W
Dear Mr. Traeger:
Between August 16 and October 29, 2010, representatives of the Pipeline and Hazardous
Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code,
inspected Cenex Pipeline Company (Cenex) construction, operation and maintenance records in
Laurel, Montana. The inspectors also conducted field inspections of various Cenex pipeline
facilities in Montana and North Dakota.
As a result of the inspection, it appears that you have committed probable violations of the
Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the
probable violations are:
1. §195.204 Inspection – General
Inspection must be provided to ensure the installation of pipe or pipeline systems in
accordance with the requirements of this subpart. No person may be used to
perform inspections unless that person has been trained and is qualified in the phase
of construction to be inspected.



Cenex failed to ensure that four (4) construction inspectors who inspected the 2010 Hysham to
Forsyth Pipe Replacement Project were trained and qualified in the phase of construction that
they inspected. Furthermore, construction records available at the time of inspection lacked
sufficient detail to show whether the four inspectors were trained and qualified to perform
inspections in all phases of construction. Interviews with Cenex personnel revealed that
inspectors used to inspect the 2010 Replacement Project had not received any formal, specific
training in the aspects of the construction that they inspected. Instead, Cenex relied on the use of
retired Cenex personnel with prior construction experience and one (1) contract employee from
an inspection service company. Cenex assumed these personnel would be qualified in the phase
of construction to be inspected, but did not have the documentation that they actually were. An
operator is required to ensure that any person may be used to perform pipeline construction
inspections is trained and qualified in the phase of construction to be inspected.
2. §195.206 Material inspection
No pipe or other component may be installed in a pipeline system unless it has been
visually inspected at the site of installation to ensure that it is not damaged in a
manner that could impair its strength or reduce its serviceability.
Cenex failed to verify that pipe and other components installed during the 2010 Hysham to
Forsyth Pipe Replacement Project had been visually inspected to ensure they had not been
damaged. Cenex did not have inspection guidance for their inspectors to ensure pipe or other
components were not damaged in a manner that could impair strength or reduce serviceability
during installation. They also did not have inspection records of pipe and fittings conditions prior
to installation. As an alternative, Cenex relied on the use of retired Cenex personnel with
construction experience and one (1) contract employee from an inspection service company, and
Cenex assumed these personnel would inspect pipe and fittings to ensure they had not been
damaged. An operator is required to visually inspect all pipe and other components during
installation to ensure they are not damaged in a manner that could impair its strength or
serviceability.
3. §195.214 Welding procedures
(a) Welding must be performed by a qualified welder in accordance with welding
procedures qualified under Section 5 of API 1104 or Section IX of the ASME Boiler
and Pressure Vessel Code (ibr, see § 195.3) . The quality of the test welds used to
qualify the welding procedure shall be determined by destructive testing.
Cenex failed to ensure that welding procedures used for the 2010 Hysham to Forsyth Pipe
Replacement Project had been qualified to either the 19th or 20th edition of API 1104. The 2010
Hysham to Forsyth Pipe Replacement Project specification’s Section 6.0 General Welding
Procedure did not specify which edition of API 1104 will be used for welding qualifications
during this project. An operator is required to ensure its welding procedures being used have
been qualified either under the edition(s) of API 1104 or Section IX of the ASME Boiler and
Pressure Vessel Code which is incorporated by reference in Part 195.



4. §195.226 Welding: Arc burns.
(b) An arc burn may be repaired by completely removing the notch by grinding, if
the grinding does not reduce the remaining wall thickness to less than the minimum
thickness required by the tolerances in the specification to which the pipe is
manufactured. If a notch is not repairable by grinding, a cylinder of the pipe
containing the entire notch must be removed.
Cenex failed to ensure or verify that all arc burn notches had been adequately removed by
grinding on the 2010 Hysham to Forsyth Pipe Replacement Project. The Project specification’s
Section 6.19 required arc burns to be removed but this procedure had no method for determining
if the notch of an arc burn had been completely removed. The use of ammonium persulfate is
often used to determine if arc burn notches have been completely removed by grinding. An
operator must have a process for completely removing arc burn notches to include a method for
determining that an arc burn notch has been completely removed. This process must be a part of
the pipeline specifications as required by 49 C.F.R Part §195.202.
5. §195.402 Procedural manual for operations, maintenance, and emergencies.
(a) General. Each operator shall prepare and follow for each pipeline system a
manual of written procedures for conducting normal operations and maintenance
activities and handling abnormal operations and emergencies. This manual shall be
reviewed at intervals not exceeding 15 months, but at least once each calendar year,
and appropriate changes made as necessary to insure that the manual is effective.
This manual shall be prepared before initial operations of a pipeline system
commence, and appropriate parts shall be kept at locations where operations and
maintenance activities are conducted.
(e) Emergencies. The manual required by paragraph (a) of this section must
include procedures for the following to provide safety when an emergency condition
occurs;
(9) Providing for a post accident review of employee activities to determine whether
the procedures were effective in each emergency and taking corrective action where
deficiencies are found.
Cenex failed to perform post accident reviews for three (3) releases which were reported on DOT
Form 7000-1 since 2007. Interviews with Cenex personnel revealed that Cenex had never
reviewed responses to these accidents to determine if emergency response procedures were
effective. Cenex’s Emergency Response Procedures Section F Post-Accident Review and
Actions procedure explicitly stated to the contrary with a particular procedure, "Any leak or
accident which is reported on DOT Form 7000-1 shall have a post-accident review." An
operator is required to complete a post accident review of employee activities to determine
whether the emergency response procedures were effective in each emergency and taking
corrective action where deficiencies are found as required by 49 C.F.R Part §195.402(e)(9).



6. §195.402 Procedural manual for operations, maintenance, and emergencies.
(a) General. Each operator shall prepare and follow for each pipeline system a
manual of written procedures for conducting normal operations and maintenance
activities and handling abnormal operations and emergencies. This manual shall be
reviewed at intervals not exceeding 15 months, but at least once each calendar year,
and appropriate changes made as necessary to insure that the manual is effective.
This manual shall be prepared before initial operations of a pipeline system
commence, and appropriate parts shall be kept at locations where operations and
maintenance activities are conducted.
Cenex failed to review its Minot Terminal Facility Emergency Response Plan at intervals not
exceeding 15 months, but at least once each calendar year. During the review of records for the
Minot Terminal Facility, the last review of Emergency Response Plan was performed in
December 2007. No evidence of a review in 2008 or 2009 could be provided. An operator is
required to review it written procedures for handling emergencies at intervals not exceeding 15
months, but at least once each calendar year as required by 49 C.F.R Part §195.402(a).
7. §195.402 Procedural manual for operations, maintenance, and emergencies
(a) General. Each operator shall prepare and follow for each pipeline system a
manual of written procedures for conducting normal operations and maintenance
activities and handling abnormal operations and emergencies. This manual shall be
reviewed at intervals not exceeding 15 months, but at least once each calendar year,
and appropriate changes made as necessary to insure that the manual is effective.
This manual shall be prepared before initial operations of a pipeline system
commence, and appropriate parts shall be kept at locations where operations and
maintenance activities are conducted.
(c) Maintenance and normal operations. The manual required by paragraph (a) of
this section must include procedures for the following to provide safety during
maintenance and normal operations:
(13) Periodically reviewing the work done by operator to determine the
effectiveness of the procedures used in normal operation and maintenance and
taking corrective action where deficiencies are found.
Cenex failed to perform adequate periodic reviews of the work done by its employees to
determine the effectiveness of the procedures used in normal operation and maintenance. During
the review of records, it appears that Cenex had not completed sufficient periodic reviews of
work done to ensure the effectiveness of procedures. Cenex’s review of procedures section
states, “The Maintenance Supervisor, Instrumentation and Electrical Supervisor, Manager of Oil
Movements, and Manager, Pipelines and Terminals shall perform an annual review of the work
done on five normal operations, abnormal operations, and/or maintenance procedures to
determine the applicability and use of the procedures in this manual." An operator is required to
periodically review the work done by operator to determine the effectiveness of the procedures
used in normal operation and maintenance and the operator must take corrective action when
deficiencies are found, i.e. this includes employees or contractors.



8. §195.402 Procedural manual for operations, maintenance, and emergencies
(a) General. Each operator shall prepare and follow for each pipeline system a
manual of written procedures for conducting normal operations and maintenance
activities and handling abnormal operations and emergencies. This manual shall be
reviewed at intervals not exceeding 15 months, but at least once each calendar year,
and appropriate changes made as necessary to insure that the manual is effective.
This manual shall be prepared before initial operations of a pipeline system
commence, and appropriate parts shall be kept at locations where operations and
maintenance activities are conducted.
(d) Abnormal operation. The manual required by paragraph (a) of this section
must include procedures for the following to provide safety when operating design
limits have been exceeded;
(5) Periodically reviewing the response of operator personnel to determine the
effectiveness of the procedures controlling abnormal operation and taking
corrective action where deficiencies are found.
Cenex failed to review the response to an abnormal operation that occurred at the Glendive
Station on December 21, 2008 to determine the effectiveness of the procedures. Cenex’s records
of the abnormal operation event did not include the operator’s response to the abnormal
operation. As a result, it is not feasible to review the response of operator personnel in
responding to the abnormal operation event at your Glendive station. An operator is required to
periodically review the response of operator personnel to determine the effectiveness of
procedures for controlling abnormal operations. An operator must document operator
personnel’s response to those abnormal operations and the records should be made available for
review.
9. §195.410 Line markers.
(a) Except as provided in paragraph (b) of this section, each operator shall place
and maintain line markers over each buried pipeline in accordance with the
following:
(1) Markers must be located at each public road crossing, at each railroad crossing,
and in sufficient number along the remainder of each buried line so that its location
is accurately known.
Cenex did not install and maintain pipeline markers in sufficient numbers along some of its
pipeline right-of-way in North Dakota. During a field inspection of the Cenex pipeline, PHMSA
personnel identified insufficient numbers of pipeline markers along the east side of Lake
Ashtabula. An operator is required to have sufficient pipeline markers along its right-of-way so
that its location is accurately identified.
10. §195.420 Valve maintenance.
(a) Each operator shall maintain each valve that is necessary for the safe operation
of its pipeline systems in good working order at all times.



Cenex did not maintain two (2) valves necessary for the safe operation of its pipeline system.
The valves must be maintained in good working condition at all times. During the 2010 field
inspection, PHMSA discovered that the upstream launcher valve at the Billings pump station had
a broken valve position indicator and that the M.P. 191 downstream launcher valve was seeping
a small amount of product. An operator is required to maintain each of its valves necessary for
safe operation of its pipeline system in good working condition at all times as required by 49
C.F.R Part §195.420(a).
11. §195.420 Valve maintenance
(c) Each operator shall provide protection for each valve from unauthorized
operation and from vandalism.
Cenex did not provide protection for three (3) valves from unauthorized operation and from
vandalism. During field inspections in North Dakota, PHMSA identified two (2) small diameter
side valves attached to the mainline block valve at M.P. 250 (West Fargo) had blind flanges and
they had no locks to prevent the side valves themselves from being opened. During field
inspections in Montana, it was found that the Glendive Tank 7’s relief line valve was not locked
to protect from unauthorized operation and from vandalism. In addition, it is critical that this
valve should be remained open at all times to relieve pipeline surges safely. An operator must
provide protection for each valve from unauthorized operation and from vandalism as required
by 49 C.F.R Part §195.420(c).
12. §195.452 Pipeline integrity management in high consequence areas.
(b) What program and practices must operators use to manage pipeline integrity?
Each operator of a pipeline covered by this section must:
(5) Implement and follow the program.
Cenex did not implement and follow the CHS integrity management program used to comply
with Federal pipeline safety integrity management rules. Cenex's compilation of verification and
repair digs show that only three (3) anomalies were chosen to validate the accuracy of 2008 in-
line inspection (ILI) tool assessment between Glendive, MT and Minot, ND. Meanwhile, the
CHS Integrity Management Plan Appendix I Section 7.1.1 - Verification and Remediation
Procedure states, "CHS shall select six (6) anomalies to field verify. Two each shall be selected
from the Maximum, Minimum, and Mid Range. " In addition, Cenex selected three (3)
validation anomalies within seven (7) feet of each other. Therefore, Cenex failed to validate the
tool accuracy for the entire pipeline segment and for the range of potential anomalies. An
operator is required to implement and follow its written integrity management program in high
consequence areas.
13. §195.452 Pipeline integrity management in high consequence areas.
(b) What program and practices must operators use to manage pipeline integrity?
Each operator of a pipeline covered by this section must:
(5) Implement and follow the program.



Cenex did not implement and follow the CHS integrity management program which Cenex uses
to comply with Federal pipeline safety integrity management rules. CHS Integrity Management
Plan Article 7.9 described a process for performing evaluations/analyses that integrate all
available integrity information about a pipeline as required by 49 C.F.R Part 195.452(f) (3).
Cenex had no records to indicate that they had performed an evaluation/analysis of all available
pipeline integrity information, i.e. the integration of the results from the 2008 ILI assessment
with all other available information about the integrity of your pipeline such as annual CP
surveys, close-interval surveys, one-call tickets, and patrol reports. An operator is required to
implement and follow its written integrity management program in high consequence areas.
14. §195.561 When must I inspect pipe coating used for external corrosion control?
(a) You must inspect all external pipe coating required by Sec. 195.557 just prior to
lowering the pipe into the ditch or submerging the pipe.
(b) You must repair any coating damage discovered.
Cenex failed to inspect all pipe coating just prior to lowering the pipe into the ditch during the
2010 Hysham to Forsyth Pipeline Replacement project. Cenex’s construction records indicated
there had been minimal inspection of line pipe coating and of the coating at the weld areas for
the 2010 Hysham to Forsyth Pipeline Replacement project. As a result, Cenex’s construction
inspection records cannot be verified that the pipe and weld area coating were inspected prior to
lowering the pipe into the ditch. An operator is required to inspect all external pipe coating just
prior to lowering the pipe into the ditch and any coating damage found must be repaired.
15. §195.571 What criteria must I use to determine the adequacy of cathodic
protection? Cathodic protection required by this Subpart must comply with one or
more of the applicable criteria and other considerations for cathodic protection
contained in paragraphs 6.2 and 6.3 of NACE SP 0169 (incorporated by reference,
see § 195.3).
Cenex did not comply with paragraphs 6.2 and 6.3 of NACE SP 0169 for determining the
adequacy of their cathodic protection (CP) in 2009. During the 2009 CP surveys, Cenex found
approximately 70 test stations had polarized potentials more negative than negative1200 mV.
NACE SP 0169 paragraph 6.2.2.3.3 states,
“The use of excessive polarized potentials on
externally coated pipelines should be avoided to minimize cathodic disbondment of the coating.”
CP polarized potentials more negative than negative1200 mV may also indicate that stray current
is interfering with a pipeline’s CP system as specified in NACE SP0169 paragraph 6.3.4.
Furthermore, there is another possibility that all rectifiers supplying protective current to the
pipeline at the test station location have not been interrupted which means that the potentials
being read are not polarized potentials. Specifically, the locations of the polarized potentials that
were more negative than -1200 mV are Johnson Lane in Billings to M.P. 60, M.P. 90 to M.P.
111, M.P. 175 to M.P. 180, Minot to Fargo segment’s M.P. 138 to M.P. 140, and Minot to Fargo
segment’s M.P.154 to M.P.166. An operator must comply with applicable criteria and other
considerations within NACE SP 0169 paragraphs 6.2 and 6.3 to determine the adequacy of
cathodic protection.



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. We have reviewed the circumstances and supporting documents
involved in this case, and have decided not to conduct additional enforcement action or penalty
assessment proceedings at this time. We advise you to correct the item identified in this letter.
Failure to do so will result in Cenex Pipeline Company being subject to additional enforcement
action.
No reply to this letter is required. If you choose to reply, in your correspondence please refer to
CPF 5-2012-5008W. Be advised that all material you submit in response to this enforcement
action is subject to being made publicly available. If you believe that any portion of your
responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the
complete original document you must provide a second copy of the document with the portions
you believe qualify for confidential treatment redacted and an explanation of why you believe
the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b).
Sincerely,
Chris Hoidal
Director, Western Region
Pipeline and Hazardous Materials Safety Administration
cc: PHP-60 Compliance Registry
PHP-500 G. Davis (#129363, 129364, 129365)
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