{"operation":"document","citation":"CPF 520135008","title":"ALYESKA PIPELINE SERVICE CO — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2013-08-01","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.579(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520135008.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520135008.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520135008","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520135008","body":"Notice of Probable Violation involving ALYESKA PIPELINE SERVICE CO. PHMSA's enforcement data identifies the cited regulation as 195.579(a). The case was opened on 2013-08-01 and is reported as closed as of 2017-07-13. Proposed civil penalty: $145,000. Assessed civil penalty: $145,000. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520135008_Closure Letter_07132017.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520135008/520135008_Closure%20Letter_07132017.pdf\n\n520135008_Closure Letter_07132017_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520135008/520135008_Closure%20Letter_07132017_text.pdf\n\n520135008_Final Order_10082015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520135008/520135008_Final%20Order_10082015.pdf\n\n520135008_Final Order_10082015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520135008/520135008_Final%20Order_10082015_text.pdf\n\n520135008_NOPV PCO PCP_08012013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520135008/520135008_NOPV%20PCO%20PCP_08012013.pdf\n\n520135008_NOPV PCO PCP_08012013_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520135008/520135008_NOPV%20PCO%20PCP_08012013_text.pdf\n\n520135008_Operator Response_11042013.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520135008/520135008_Operator%20Response_11042013.pdf\n\n520135008_Closure Letter_07132017_text.pdf\n\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nJuly 13, 2017\nMr. Rod Hanson\nSenior Vice President, Operations and Maintenance\nAlyeska Pipeline Service Company\n3700 Centerpoint Drive\nAnchorage, Alaska 99503\nCPF 5-2013-5008\nClosure Letter\nDear Mr. Hanson:\nOn October 8, 2015, the Pipeline and Hazardous Materials Safety Administration (PHMSA)\nissued to the Alyeska Pipeline Service Company a Final Order in the above-referenced case.\nThis Order included a Compliance Order and Civil Penalty assessment. Based on our review\nof the documentation you provided and confirmation of payment of the civil penalty, it has\nbeen determined that you have complied with the terms of this Order.\nAccordingly, this case is now closed and no further action is contemplated with respect to the\nmatters involved in this case. Thank you for your cooperation in this matter.\nSincerely,\nDustin B. Hubbard\nActing Director, Western Region\nPipeline and Hazardous Materials Safety Administration\ncc: PHP-60 Compliance Registry\nPHP-500 H. Marlowe (#132739)\n\n520135008_Final Order_10082015_text.pdf\n\nOctober 8, 2015\nMr. Tom Barrett, President\nAlyeska Pipeline Service Company\n3700 Centerpoint Drive\nP.O. Box 196660\nAnchorage, AK 99503\nRe: CPF No. 5-2013-5008\nDear Mr. Barrett:\nEnclosed please find the Final Order issued in the above-referenced case. It makes one finding\nof violation, assesses a civil penalty of $145,000, and specifies actions that need to be taken by\nAlyeska Pipeline Service Company to comply with the pipeline safety regulations. The penalty\npayment terms are set forth in the Final Order. When the civil penalty has been paid and the\nterms of the compliance order completed, as determined by the Director, Western Region, this\nenforcement action will be closed. Service of the Final Order by certified mail is deemed\neffective upon 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, OPS\nMr. Michael W. Joynor, Senior Vice President, Operations, Alyeska Pipeline Service\nCompany\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\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)\nAlyeska Pipeline Service Company, ) CPF No. 5-2013-5008\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nOn January 8, 2011, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\nresponded to and began an investigation of a crude-oil release at Pump Station 1 (PS-01) of the\nTrans-Alaska Pipeline System (TAPS) operated by Alyeska Pipeline Service Company\n(Alyeska). TAPS transports crude oil from Alaska’s North Slope across 800 miles of varied\nAlaskan terrain to Valdez, Alaska, North America’s northernmost ice-free port.1\nOn that same date, Alyeska had discovered crude oil flowing into the PS-01 booster pump\nbasement under insulation at the 4th Unit Booster Pump discharge line basement wall penetration\n(2011 Failure). As a result of PHMSA’s subsequent investigation, the Director, Western Region,\nOPS (Director), issued to Respondent, by letter dated August 1, 2013, a Notice of Probable\nViolation, Proposed Compliance Order, and Proposed Civil Penalty (Notice or NOPV). In\naccordance with 49 C.F.R. § 190.207, the Notice proposed finding that Alyeska had violated\n49 C.F.R. § 195.579 and proposed assessing a civil penalty of $145,000 for the alleged violation.\nThe Notice also proposed ordering Respondent to take certain measures to correct the alleged\nviolation.\nAlyeska responded to the Notice by letter dated November 4, 2013 (Response). The company\ncontested the allegation for Item 1, offered additional information in response to the Notice, and\nrequested that the proposed civil penalty be reduced and the Proposed Compliance Order be\nwithdrawn. It also submitted supplemental information in a subsequent letter dated August 26,\n2014 (Supplemental Response). Respondent did not request a hearing and therefore has waived\nits right to one.\n1 http://www.alyeska-pipe.com/TAPS/PipelineOperations (last accessed on June 4, 2015).\n\n\n\nCPF No. 5-2013-5008\nPage 2\nFINDING OF VIOLATION\nThe Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.579(a), which states:\n§ 195.579 What must I do to mitigate internal corrosion?\n(a) General. If you transport any hazardous liquid or carbon dioxide\nthat would corrode the pipeline, you must investigate the corrosive effect\nof the hazardous liquid or carbon dioxide on the pipeline and take\nadequate steps to mitigate internal corrosion.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.579(a) by failing to take adequate\nsteps to mitigate internal corrosion in “deadlegs” (i.e., process piping sections that have been\nisolated and no longer maintain a flow of liquid or gas) and areas of low flow on TAPS, which\ntransports a hazardous liquid that would corrode the pipeline. Specifically, the Notice alleged\nthat Alyeska had been aware since at least 2008 that TAPS faced the risk of internal corrosion\nbut failed to take adequate steps to control it. It alleged that the 2011 Failure was directly\ncaused by internal corrosion.\nAccording to PHMSA, Alyeska hired a contractor, Det Norske Veritas (DNV), in 2011 to\nconduct a root cause analysis of the 2011 Failure. DNV’s final report determined that the direct\ncause of the leak was microbiologically influenced corrosion (MIC) and noted five causal\nfactors, all related to inhibit internal corrosion.2 Finally, PHMSA alleged that Alyeska had\ninstalled a sleeve on piping at Pump Station 9 in 2013 to remediate internal corrosion that had\nbeen causing significant (approximately 40%) pipe wall loss and that such repair showed that the\ncompany’s internal corrosion program continued to be inadequate.\nAlyeska responded to the Notice in writing on November 4, 2013 (Response). Alyeska disputed\nPHMSA’s allegation that the company had been aware of internal corrosion problems on TAPS\nas early as 2008 but failed to take adequate steps to mitigate it.3 The company stated that “the\n[Notice] does not fully acknowledge the work that Alyeska has performed to improve its\nIntegrity Management program beginning in 2008 until the present”4 and outlined five principal\nmeasures it had taken to address the problem.\nFirst, Alyeska contended that since 2008, it had optimized its procedures for microbiological\nmonitoring, that it had used and assessed the effectiveness of appropriate biocide and corrosion\n2 The Notice alleged that DNV specifically found five causal factors for the 2011 Failure: “a. [Pump Station 1]\nBooster #4 not added, b. No bio testing/ biocide injection, c. Non-biocide inhibitor began in mid-90s, d. Risk\nmitigation less than adequate on urgency to replace piping, and e. Lack of accessibility to inspect below ground\ndeadleg/low flow pipe segments.”\n3 Alyeska also challenged the Proposed Compliance Order and proposed civil penalty amount. I will address those\narguments in the appropriate sections below.\n4 Response, Attachment, at 2.\n\n\n\nCPF No. 5-2013-5008\nPage 3\ninhibitors, and that it had assessed chloride sources. The company further asserted that in 2008,\nit had contracted with Baker Petrolite, a nationally-recognized expert in the field, to perform a\ncorrosivity study for the crude oil flowing into TAPS. Alyeska claimed that it had used the\nresults of that study “to optimize the corrosion inhibition and biocide treatment programs and\ntested recommended inhibitors and biocides using actual TAPS crude-oil and water samples.”5\nAlyeska further stated that it had subsequently hired Baker Hughes to assess the company’s\ninternal corrosion inhibitor program and to assist Alyeska in improving its effectiveness.\nAlyeska received an independent evaluation of the crude oil and water for corrosive elements\nfrom Baker Hughes, which provided recommendations for a more effective internal corrosion\ninhibitor program. Alyeska claimed that it had re-evaluated and revised its inhibitor-injection\nprogram based on this report, had revised its procedures for biocide and inhibitor treatments in\nFall 2010, and had begun biocide treatments at Pump Station Three and Pump Station Four in\nNovember 2010 and in pump station facility piping in February 2011. It also claimed that it had\ntreated PS-01 crude tanks with biocide in May 2011 and begun system biocide-treatment\nmonitoring of bacteria levels in April 2011, which showed locations where bacteria counts were\ndecreasing, an indicator of biocide effectiveness.6\nAlyeska also engaged DNV to perform a root cause analysis of the booster pump leak at PS-01,\nwhich was completed on December 7, 2011. Alyeska created a Management Action Plan to\naddress the identified causes of the leak. This included a 2012 Baker Hughes “assessment of\nchlorides and their potential impact on corrosion acceleration.”7\nSecond, Alyeska argued that it had taken steps to replace or modify certain pipeline\ninfrastructure that the company believed to be susceptible to internal corrosion. This included\nthe removal of deadlegs and bringing certain facility piping above ground as part of the crude-oil\npiping assessment and replacement required under a 2011 Consent Agreement with PHMSA.8\nThird, the company argued that it had been expanding its Pipeline Integrity Testing (PIT)\nprogram for internal inspections and assessments and researching new technologies that\npotentially allowed the inspection of previously-inaccessible piping. These included guided\nwave, electro-magnetic acoustic transducers, and robotic crawler “pigs.”9\nFourth, contrary to PHMSA’s allegation that the installation of a sleeve over corroded pipe at\nPump Station 9 in April 2013 demonstrated the inadequacy of the company’s internal corrosion\nprogram, Alyeska asserted that this repair “does not demonstrate that the internal corrosion\n5 Id, at 3.\n6 Id.\n7 Id. at 4.\n8 In the Matter of Alyeska Pipeline Service Company, CPF 5-2011-5001S (August 17, 2011). Available at:\nhttp://primis.phmsa.dot.gov/comm/reports/enforce/CONOEvent opid 0.html?nocache=3154# TP 1 tab 5.\n9 Response, at 4-5.\n\n\n\nCPF No. 5-2013-5008\nPage 4\ninhibitor program is inadequate. The purpose of the program is to provide monitoring,\nprevention, and repair to maintain pipeline integrity…Installing any sleeve enhances the\neffectiveness of the overall, system integrity management program and is not a measure of the\neffectiveness of the corrosion inhibitor.”10\nFifth, in its Supplemental Response, Alyeska provided further information regarding the\nadequacy of its internal-corrosion mitigation efforts. Alyeska stated that it was currently\nperforming flow studies, which indicated that “[l]aminar flow conditions are not reached until\nTAPS flow rates are in the 200,000 barrels per day (BPD) range.” This rate is not expected to be\nreached for several more years.11 Alyeska stated that although bacteria levels and corrosion rates\nwere shown to be increasing at some corrosion-coupon locations in its previously-submitted\nBacteria Testing Analysis PowerPoint presentation, TAPS was primarily experiencing corrosion\nrates under 0.1 mils per year or less, which are considered low by NACE criteria. Additionally,\nAlyeska described its process for ensuring the integrity of TAPS valve bypasses, including visual\ninspections for evidence of external corrosion as well as non-destructive testing for evidence of\ninternal corrosion.12\nAfter careful consideration of all these arguments and all of the evidence in the record, I am\nunpersuaded that Alyeska took adequate steps from 2008 to 2011 to mitigate internal corrosion\non TAPS deadlegs and in low-flow areas. While it is clear that the company did take a number\nof steps, particularly after the 2011 Failure, to deal with the company’s complex and\nlongstanding problems with MIC, the fact remains that the 2011 Failure itself constitutes strong\nevidence that the efforts Alyeska had been making prior to that time were inadequate to mitigate\ninternal corrosion in low-flow piping. As stated in the Notice, DNV’s root cause analysis of the\n2011 Failure concluded that the direct cause of the oil leak was MIC and five other generic\ncauses, including “[l]ess than adequate process for corrosion inhibitor selection.”\nAlyeska was aware of these inadequacies several years before the 2011 release. In 2008,\nAlyeska released a risk assessment report, titled “Removing Concrete from PS-01 Buried Piping\nfor Internal Corrosion Investigation.” Alyeska’s evaluation concluded that in order to deal with\nthe active corrosion problems affecting the PS01 below-ground piping, it was necessary to obtain\ncorrosion data for the welds on this buried piping. The report stated that if no data were\navailable,\n[A]lyeska assumes a high probability of significant, active corrosion\nassociated with the belowground welds. . . Due to the high risks of\ninterrupting crude oil supply, every scenario the team evaluated\nrecommends replacing the buried pipe (i.e., the booster pump suction\nline, over and short line, suction and discharge relief lines) and\n10 Id. at 5.\n11 Laminar, as opposed to turbulent, flow could allow a corrosive environment to accumulate near the walls of the\npipeline and possibly contribute to internal corrosion or enhance existing internal corrosion.\n12 Supplemental Response, at 3.\n\n\n\nCPF No. 5-2013-5008\nPage 5\npossible replacement or modification of the related facilities.\n13\nDespite such warnings from its own study, the company chose to continue using the existing\npiping without taking appropriate steps to mitigate the internal corrosion that eventually resulted\nin a release . In essence, Alyeska addressed the corrosion problem on the below-ground piping\nsymptomatically, contracting a corrosivity study with Baker Petrolite and an evaluation of the\ninternal corrosion inhibitor program with Baker Hughes but not taking action that would\nproperly correct the corrosion that led to the 2011 Failure.\nAccordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R.\n§ 195.579(a) by failing to take adequate steps to mitigate internal corrosion in deadlegs and areas\nof low flow in TAPS.\nThis finding of violation will be considered a prior offense in any subsequent enforcement action\ntaken against Respondent.\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any\nrelated series of violations. In determining the amount of a civil penalty under 49 U.S.C.\n§ 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,\ncircumstances, and gravity of the violation, including adverse impact on the environment; the\ndegree of Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s\nability to pay the penalty and any effect that the penalty may have on its ability to continue doing\nbusiness; and the good faith of Respondent in attempting to comply with the pipeline safety\nregulations. In addition, I may consider the economic benefit gained from the violation without\nany reduction because of subsequent damages, and such other matters as justice may require.\nThe Notice proposed a total civil penalty of $145,000 for the violation cited above.\nItem 1: The Notice proposed a civil penalty of $145,000 for Respondent’s violation of\n49 C.F.R. § 195.579(a), for failing to take adequate steps to mitigate internal corrosion in\ndeadlegs and areas of low flow in TAPS.\nAlyeska objected to the proposed civil penalty on several grounds. First, it argued that a\ncomparison with other NOPVs issued by PHMSA to other operators in 2013 “demonstrates that\nsimilar violations related to corrosion control, integrity assessment programs, cathodic protection\nprograms, and inline inspection requirements, all regulatory requirements under Pipeline\nIntegrity Management or Subpart H, Corrosion Control resulted in lower penalty amounts.”14\nSpecifically, it argued that Buckeye Partners received three NOPVs in 2013 alleging violations\nof corrosion-related regulations. Each had proposed penalties of less than $100,000; two of the\nASSESSMENT OF PENALTY\n13 Pipeline Safety Violation Report (August 1, 2013) (on file with PHMSA), at Exhibit 7, at 4.\n14 Response, at 5-6.\n\n\n\nCPF No. 5-2013-5008\nPage 6\nthree were multiple-violation notices. Similarly, Texas Eastern Transmission was issued an\nNOPV with three probable violations, only one of which was corrosion-related, with a proposed\npenalty of $33,700. Centerpoint Energy Gas Transmission had an NOPV with 10 alleged\nviolations, five of which were integrity- or corrosion-related. Although the total proposed\npenalty in that case was $137,200, the proposed penalties for the integrity-related\nalleged violations totaled only $87,900. PHMSA issued an NOPV to Jayhawk Pipeline\nfor four alleged violations of regulations involving high consequence areas (HCAs), yet the\nproposed penalty was only $82,400. BP Pipeline (North America) received an NOPV in 2013\nwith alleged violations of integrity management programs, including HCA regulations.\nAlthough there were six probable violations, the proposed penalty was $100,000. According to\nAlyeska, each of these cases had similar probable violations, yet all had proposed penalties that\nwere less, some significantly less, than the $145,000 proposed in this case.15\nAlyeska further argued that because 49 C.F.R. § 190.225 is “silent on the consideration of\npotential harm,….PHMSA should be considering only actual harm, such as personal injury or\nadverse impact on the environment when assessing the gravity of an alleged violation.” The\ncompany cited another 2013 case in which Kinder Morgan Liquids Terminals, LLC, received an\nNOPV in 2013 for an accident in which an employee had been injured and yet the proposed\npenalty was only $100,000. In contrast, Alyeska argued that in the current case, no harm\noccurred. Therefore, Alyeska argued, the proposed penalty is unsupported by the nature,\ncircumstances and gravity of the violation when compared to other cases involving personal\ninjury or damage to the environment.16\nSecond, the company argued, with regard to culpability, that it had acted diligently, not\nrecklessly or negligently, in taking remedial action to mitigate internal corrosion. Alyeska\ncontended that its internal corrosion inhibitor program was designed to create an awareness of,\nand to address, the consequences of moving hazardous liquid in TAPS.\nThird, Alyeska argued, with regard to its history of prior offenses, that it had four prior\nenforcement actions alleging violations of § 195.579, but three did not have any proposed\npenalties. The remaining NOPV had a proposed penalty of only $11,000 for each of the\napplicable probable violations.\nFourth, Alyeska argued, with respect to the lack of a penalty reduction for good faith, that it had\nindeed demonstrated good-faith efforts to achieve compliance with § 195.579, through the\nvarious measures discussed above. According to the company, these various efforts should serve\nas “a mitigating factor” that would support a reduction of the proposed civil penalty.17\nFifth, Alyeska argued that while the proposed penalty would not affect the company’s ability to\ncontinue in business, the proposed penalty could be more effectively spent on the company’s\ncontinuing program to mitigate internal corrosion.\n15 Id, at 5.\n16 Id, at 6.\n17 Id, at 7.\n\n\n\nCPF No. 5-2013-5008\nPage 7\nI have carefully reviewed the record, considered Alyeska’s five arguments for a penalty\nreduction, and evaluated the proposed penalty in this case relative to other recent enforcement\ncases cited by Respondent. I find the company’s arguments unpersuasive. Specifically, I find\nthe proposed penalty to be reasonable and consistent with PHMSA’s civil penalty assessment\ncriteria.\nAlyeska has put great store in comparing the proposed penalty in the present case with those\nproposed against other operators in 2013. While PHMSA strives for consistency in its analysis\nand calculation of proposed civil penalties, the wide range in penalty amounts among the cases\ncited by Respondent is directly attributable to material differences in the facts that serve as the\nunderlying basis for considering each penalty factor.\nThe greatest shortcoming in Respondent’s analysis is that none of the other 2013 NOPVs cited\nby Alyeska involved an accident.\n18 In the present case, there was an actual release of crude oil\nfrom TAPS that was a reportable incident causally related to the alleged violation. Additionally,\nAlyeska cited one of its own cases where it was cited $11,000 for the same violation. Again, that\nparticular case did not involve an accident.\nFurther, it is misleading to compare a penalty assessed against one operator with one assessed\nagainst another operator for the same regulatory violation, since PHMSA’s assessment criteria\ndo not depend upon the substantive content or subject matter of a regulation (e.g., internal\ncorrosion, welding, or valve inspections) to determine a proposed penalty, but, rather, rely upon\nthe nature, circumstances, gravity of the violation and other factors. These penalty factors and\nthe factual basis for each one are set forth in detail in PHMSA’s standardized Violation Report\nand serve as the actual framework for proposing penalties. These factors are applied consistently\nto all operators across all regions of the country. In summary, I find nothing in the assessment of\nthe proposed penalty in this case that is inconsistent or out of line with those assessed in the other\nrecent cases cited by Respondent.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess the\nRespondent a total civil penalty of $145,000 for violation of 49 C.F.R. § 195.579(a).\nPayment of the civil penalty must be made within 20 days of service. Federal regulations\n(49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal\nReserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed\ninstructions are contained in the enclosure. Questions concerning wire transfers should be\ndirected to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike\nMonroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The\nFinancial Operations Division telephone number is (405) 954-8845.\n18 As noted earlier, Alyeska cited a case involving Kinder Morgan Liquids Terminals, LLC [CPF 1-2013-5004], “in\nwhich an employee was injured and yet the proposed penalty was only $100,000.” This is incorrect. The Kinder\nMorgan case actually involved five probable violations arising out of an accident, but the total proposed (and\nuncontested) penalty in the case was $500,000, not $100,000, as stated by Alyeska. The Kinder Morgan case\nactually reinforces the large difference that exists between penalties for violations that constitute causal factors in\naccidents and those that do not.\n\n\n\nCPF No. 5-2013-5008\nPage 8\nFailure to pay the $145,000 civil penalty will result in accrual of interest at the current annual\nrate in 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 district\ncourt of the United States.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Item1 in the Notice, for a violation of\n49 C.F.R. § 195.579(a). Under 49 U.S.C. § 60118(a), each person who engages in the\ntransportation of hazardous liquids or who owns or operates a pipeline facility is required to\ncomply with the applicable safety standards established under chapter 601. Alyeska stated that\nthe Proposed Compliance Order should be withdrawn because the work that was proposed has\nalready been completed.\nThe Director has reviewed the Response and acknowledges that Respondent has completed most\nof the Proposed Compliance Order items. However, Alyeska has not demonstrated that it has\ncompleted Item (1)(a) of the Proposed Compliance Order by optimizing its procedures for\nmicrobiological monitoring or biocide-dosing protocols for current and anticipated future flow\nrates.\nTherefore, pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217,\nRespondent is ordered to take the following action to ensure compliance with the pipeline safety\nregulations applicable to its operations:\n1. With respect to the violation of § 195.579(a) (Item 1), Respondent must optimize\nprocedures for microbiological monitoring, especially effectiveness in deadlegs and\nlow-flow areas, as well as biocide-dosing protocols to mitigate MIC for current and\nanticipated future flow rates. Such work must be completed no later than 180 days\nfollowing receipt of this Order.\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nFailure to comply with this Order may result in administrative assessment of civil penalties not\nto exceed $200,000 for each violation for each day the violation continues or in referral to the\nAttorney General for appropriate relief in a district court of the United States.\nUnder 49 C.F.R. § 190.243, Respondent has a right to submit a Petition for Reconsideration of\nthis Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline\nSafety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC\n20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA\nwill accept petitions received no later than 20 days after receipt of service of this Final Order by\n\n\n\nCPF No. 5-2013-5008\nPage 9\nthe Respondent, provided they contain a brief statement of the issue(s) and meet all other\nrequirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays the payment of\nany civil penalty assessed. Unless the Associate Administrator, upon request, grants a stay, all\nother terms and conditions of this Final Order are effective upon service in accordance with\n49 C.F.R. § 190.5.\n___________________________________ __________________________\nJeffrey D. Wiese Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n520135008_NOPV PCO PCP_08012013_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED COMPLIANCE ORDER\nand\nPROPOSED CIVIL PENALTY\nCERTIFIED MAIL – RETURN RECEIPT REQUESTED\nAugust 1, 2013\nMr. Tom Barrett\nPresident\nAlyeska Pipeline Service Company\n3700 Centerpoint Drive\nP.O. Box 196660\nAnchorage, AK 99503\nCPF 5-2013-5008\nDear Mr. Barrett:\nOn January 8, 2011, a representative of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA), pursuant to Chapter 601 of 49 United States Code, responded to and\nbegan an investigation of a crude oil release at Pump Station 1 (PS-01) of the Trans-Alaska\nPipeline System (TAPS) operated by Alyeska Pipeline Service Company (Alyeska).\nBackground\nTAPS is an 800 mile, 48-inch diameter pipeline. Alyeska has operated TAPS since 1977,\ntransporting crude oil from Prudhoe Bay to the Valdez Marine Terminal in Alaska. The unique\nenvironment and circumstances under which TAPS operates pose many challenges for the\npipeline. The challenges Alyeska faces include seismic instability, permafrost, cold\ntemperatures, the vast distance of land the pipeline travels, mountainous and rugged terrain,\nremote locations along the pipeline, and internal and external corrosion.\nIn 1988, Alyeska discovered internal corrosion in sections of pipe known as deadlegs which\nexperienced only occasional or low flow movement of oil. Alyeska reported that the cause of\nthis internal corrosion was water that was deposited by the crude oil and settled in the bottom of\nthe pipe.1\n1 GAO Report to the Chairman, Subcommittee on Water, Power, and Offshore Energy Resources, Committee on\nInterior and Insular Affairs, House of Representatives, RCED91-89, Trans-Alaska Pipeline, July 1991, page 24.\n\n\n\nIn 2007, Alyeska discovered internal corrosion in the heat-affected zone of girth welds in\nsections of pipe that were being removed from PS-01. An Alyeska summary of the corrosion\nnoted that this section of the piping system at PS-01 has low oil flow compared to the mainline\npipe, that low flow rates can increase the potential for water and sediment to settle at the bottom\nof the pipe and provide a corrosive environment, and that the facility piping systems are not\npiggable by either cleaning pigs or in-line inspection pigs.2\nOn April 1, 2008, PHMSA issued a Notice of Probable Violation alleging that Alyeska had\nfailed to provide any records to demonstrate that it had investigated the corrosive effects of the\nhazardous liquids transported and that it had not taken adequate steps to mitigate internal\ncorrosion in the TAPS mainline.3 In Alyeska’s written response, the company stated “Alyeska\nhas not analyzed the crude oil transported in TAPS.”4 Alyeska asserted that it mitigated internal\ncorrosion through the use of an aggressive maintenance pigging program, chemical inhibitors,\nand corrosion coupons. Nonetheless, Alyeska agreed in a Compromise Agreement dated\nNovember 16, 2011, that the company had committed these violations. The Compromise\nAgreement also stated that the company had developed and implemented an internal corrosion\nmitigation program.\nIn September 2008, Alyeska discovered internal corrosion adjacent to girth welds in tank lines at\nPS-01 and filed a Safety-Related Condition Report with the Office of Pipeline Safety. The flow\nrate in these tank lines is significantly less than the flow rate on the mainline pipe. Alyeska\ninstalled five sleeves over areas with significant pipe wall loss, including two areas with over\n80% wall loss.5 In February 2010, PHMSA inspectors noted in the Safety-Related Condition\nReport that “Alyeska has completed a conceptual engineering study of the active below ground\nDOT covered piping. This study identified piping that was… difficult to inspect due to structural\ninterference. Alyeska is currently conducting a preliminary engineering study to determine\nproject details for the subset of this work at PS01.”\nAlyeska’s 2008 Annual Report for Pipeline and Valdez Marine Terminal Facilities Corrosion\nMonitoring was sent to the Joint Pipeline Office (JPO) on April 17, 2009. This report shows that\nthe company questioned the effectiveness of a corrosion inhibitor that it was using on TAPS:\n“The use of RU248, which is formulated for corrosion caused by dissolved acid gases, may no\nlonger be effective in APSC system due to changing crude oil characteristic. This is because\ncorrosion induced bacteria has been identified in several locations at the facilities…. IME\n[Alyeska’s Integrity Management Engineering department] recommends and will be conducting\nan evaluation of current corrosion inhibitor effectiveness by conducting a study on all segments\nof the facilities; a recommendation and implementation of the most effective chemical that\ninhibits corrosion will be completed.”6\nIn 2009, the JPO requested information on the internal corrosion at PS-01. Alyeska responded\n2 GL 17088, Exhibit 5, page 1.\n3 Notice of Probable Violation, CPF No. 5-2008-5008.\n4 See GL 16053, May 22, 2008, Finding 5, pages 2-3.\n5 PHMSA OPS Safety Related Condition Report 20080077.\n6 Trans Alaska Pipeline System 2008 Annual Report for Pipeline and Valdez Marine Terminal Facilities Corrosion\nMonitoring, page 20, Appendix A, Table 5.\n2\n\n\n\nthat they had performed a risk assessment on October 6, 2008, and decided not to excavate the\nconcrete boxes at PS-01 to inspect for corrosion on the below ground piping.7 In addition, Baker\nPetrolite, a contractor Alyeska selected to evaluate the corrosivity of TAPS crude oil, reported\n“significant levels of bacteria in the Alyeska system which have the potential to cause\ncorrosion.”8 Specifically, Baker Petrolite noted that “[b]ased on the current test results, it\nappears that facility piping which is not in turbulent flow and able to be pigged has the potential\nfor bacteria corrosion problems.”9\nIn December of 2009, Baker Petrolite reported to Alyeska the results of a bacteria enumeration\nsurvey that it conducted in fall of 2009 on the pipeline deadlegs. The report stated: “The basic\nconclusion from this survey is that Pipeline and the Valdez Marine Terminal have bacteria in\nnumbers that can and will degrade the integrity of the measured systems.”10\nOn June 24, 2010, Alyeska met with PHMSA and made a presentation regarding its internal\ncorrosion program. The materials Alyeska provided during that presentation indicated that it had\nbeen analyzing the corrosivity of the crude oil and water in TAPS since 2007, that the internal\ncorrosion inhibitor that it had been using was ineffective for the type of bacteria found in TAPS,\nand that the company planned to begin using a new corrosion inhibitor treatment program by\nSeptember 15, 2010.11 The company also planned to treat all deadlegs in the system according\nto the new inhibitor program in September and October of 2010.12\nOn January 8, 2011, crude oil was discovered flowing into the PS-01 booster pump basement\nunder the insulation at the 4th Unit Booster Pump discharge line basement wall penetration.\nAlyeska contracted with Det Norske Veritas (DNV) to perform the metallurgical analysis of the\nremoved pipe segment. DNV produced a report, “PS01 Booster Pump Manifold Failure\nInvestigation: Laboratory Analysis September 12, 2011,” which concluded: “High levels of\nbacteria were found in solids and swabs taken from the area of pitting associated with the leak\nlocation…. The presence of microorganisms on the pipe surfaces combined with the\nundercutting pit morphology observed in the metallographic cross-sections indicates that\nmicrobiologically influenced corrosion (MIC) is likely the primary corrosion mechanism.”13\nIn 2011, Alyeska contracted with DNV to perform a Root Cause Analysis of the PS-01 crude oil\nrelease. The final Root Cause Analysis report, dated December 7, 2011, concludes that the direct\ncause of the oil leak was Microbiologically Influenced Corrosion (MIC), and that five causal\nfactors were: “a. PS01 Booster #4 not added, b. No bio testing/ biocide injection, c. Non-biocide\ninhibitor began in mid-90s, d. Risk mitigation less than adequate on urgency to replace piping,\nand e. Lack of accessibility to inspect below ground deadleg/low flow pipe segments.” The\nreport states, “Some of the causal factors have a very long historical influence on the potential\n7 GL 18303, Exhibit 7, Removing Concrete from PS01 Buried Piping for Internal Corrosion Investigation, page 16.\n8 GL 18303, Exhibit 5, Baker Petrolite letter to Alyeska dated February 9, 2009, page 1.\n9 GL 18303, Exhibit 5, Baker Petrolite letter to Alyeska dated February 9, 2009, page 5\n10 Baker Petrolite Letter to Alyeska dated December 10, 2009, pages 1-2.\n11 Alyeska Internal Corrosion Program, Integrity Management Engineering, presentation dated June 24, 2010, slide\n14.\n12 Id. at slide 23\n13 DNV, PS01 Booster Pump Manifold Failure Investigation: Laboratory Analysis, September 12, 2011, page 19.\n3\n\n\n\nfor MIC to develop (e.g., a. and b. above).”14\nDNV’s Root Cause Analysis noted six generic causes of the accident, including “Less than\nadequate process for corrosion inhibitor selection.”15\nIn response to the January 2011 release at PS-01, PHMSA issued a Notice of Proposed Safety\nOrder (CPF 5-2011-5001S) on February 1, 2011, which proposed requiring Alyeska to\nimplement certain safety actions to address factors involved in the release of crude oil and\ndifficulties associated with safely restarting the pipeline. That proposed safety order resulted in a\nConsent Order on August 17, 2011. Once PHMSA believed the primary causal factors of the\nJanuary 2011 release had been addressed, PHMSA began to focus on whether any regulatory\nviolations had contributed to the release by reviewing the DNV metallurgical analysis and root\ncause analysis and the PHMSA Accident Investigation Report.\nIn 2013, Alyeska installed a sleeve over a pipe with approximately 40% wall loss caused by\ninternal corrosion in the 36” high-pressure (discharge) relief header at PS-9.16 This pipe has a\nlow flow rate compared to the mainline pipe, similar to the low flow conditions in the PS-01\ndeadleg prior to the January 2011 release.\nIt appears that you have committed a probable violation of the Pipeline Safety Regulations, Title\n49, Code of Federal Regulations. The probable violation is:\n1. §195.579 What must I do to mitigate internal corrosion?\n(a) General. If you transport any hazardous liquid or carbon dioxide that would\ncorrode the pipeline, you must investigate the corrosive effect of the hazardous\nliquid or carbon dioxide on the pipeline and take adequate steps to mitigate\ninternal corrosion.\nAlyeska did not take adequate steps to mitigate internal corrosion in deadlegs and areas of low\nflow in TAPS. Alyeska was aware of this problem by 2008, but failed to adequately mitigate\ninternal corrosion. PHMSA, the Joint Pipeline Office, and Alyeska’s contractors voiced\nnumerous concerns regarding Alyeska’s internal corrosion mitigation efforts, including those\nbeing taken at PS-01, between 2008 and 2010.\nThe leak that began at PS-01 on January 8, 2011, was caused by internal corrosion; DNV’s final\nRoot Cause Analysis report concluded that the direct cause of the oil leak was Microbiologically\nInfluenced Corrosion (MIC), and noted six generic causes of the accident, including “Less than\nadequate process for corrosion inhibitor selection.” In 2013, Alyeska installed a sleeve at PS-9\nto remediate internal corrosion that was causing significant pipe wall loss, which shows that the\ninternal corrosion program continued to be inadequate.\n14 DNV, Alyeska Root Cause Analysis – PS01 Booster Pump, December 7, 2011, pages 24-25.\n15 Id. at 25.\nPHMSA).\n16 Email from Joseph P. Robertson, Alyeska, to Bill Flanders, PHMSA ","truncated":true,"body_characters":44228}