# CENEX PIPELINE LLC — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 520155013
- **title:** CENEX PIPELINE LLC — Notice of Probable Violation
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2015-06-30
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 195.446(h).
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- **app url:** https://regulus.evalyn.ai/document/phmsa-enforcement-520155013
- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/520155013
**body:**

Notice of Probable Violation involving CENEX PIPELINE LLC. PHMSA's enforcement data identifies the cited regulation as 195.446(h). The case was opened on 2015-06-30 and is reported as closed as of 2016-12-05. Proposed civil penalty: $43,200. Assessed civil penalty: $43,200. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

520155013_Closure Letter_12052016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520155013/520155013_Closure%20Letter_12052016.pdf

520155013_Closure Letter_12052016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520155013/520155013_Closure%20Letter_12052016_text.pdf

520155013_Final Order_ 02042016.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520155013/520155013_Final%20Order_%2002042016.pdf

520155013_Final Order_ 02042016_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520155013/520155013_Final%20Order_%2002042016_text.pdf

520155013_NOPV PCP PCO_06302015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520155013/520155013_NOPV%20PCP%20PCO_06302015.pdf

520155013_NOPV PCP PCO_06302015_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520155013/520155013_NOPV%20PCP%20PCO_06302015_text.pdf

520155013_Operator Response to Notice Letter_07202015.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520155013/520155013_Operator%20Response%20to%20Notice%20Letter_07202015.pdf

520155013_NOPV PCP PCO_06302015_text.pdf

NOTICE OF PROBABLE VIOLATION
PROPOSED CIVIL PENALTY
and
PROPOSED COMPLIANCE ORDER
CERTIFIED MAIL - RETURN RECEIPT REQUESTED
June 30, 2015
Mr. John Traeger
President
Cenex Pipeline LLC
803 HWY 212 S
P.O. Box 909
Laurel, MT 59044
CPF 5-2015-5013
Dear Mr. Traeger:
Between December 17, 2013 and June 26, 2014, a representative of the Pipeline and Hazardous
Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to
Chapter 601 of 49 United States Code, inspected Cenex Pipeline LLC’s (Cenex) Control
Room Management (CRM) Procedures in Laurel, Montana.
As a result of the inspection, it appears that you have committed a probable violation of the
Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and
the probable violation is:



1. §195.446 Control room management.
(h) Training. Each operator must establish a controller training program and
review the training program content to identify potential improvements at least
once each calendar year, but at intervals not to exceed 15 months. An operator's
program must provide for training each controller to carry out the roles and
responsibilities defined by the operator. In addition, the training program must
include the following elements:
(1) Responding to abnormal operating conditions likely to occur simultaneously
or in sequence;
(2) Use of a computerized simulator or non-computerized (tabletop) method for
training controllers to recognize abnormal operating conditions;
(3) Training controllers on their responsibilities for communication under the
operator's emergency response procedures;
(4) Training that will provide a controller a working knowledge of the pipeline
system, especially during the development of abnormal operating conditions; and
(5) For pipeline operating setups that are periodically, but infrequently used,
providing an opportunity for controllers to review relevant procedures in
advance of their application.
Cenex failed to establish a controller training program in accordance with Section 195.446(h).
Section 195.446(a) required the controller training program to be implemented by August 1,
2012. Cenex’s controller training program did not clearly define controller roles and
responsibilities and did not include training for responding to abnormal operating conditions
likely to occur simultaneously or in sequence. The training program did not identify setups
that are periodically, but infrequently used, and did not indicate how the controllers were
trained on the procedures used for such setups.
Proposed Civil Penalty
Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed
$200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a
related series of violations. For violations occurring prior to January 4, 2012, the maximum
penalty may not exceed $100,000 per violation per day, with a maximum penalty not to
exceed $1,000,000 for a related series of violations. The Compliance Officer has reviewed
the circumstances and supporting documentation involved in the above probable violation(s)
and has recommended that you be preliminarily assessed a civil penalty of $43,200.00 as
follows:
Item number PENALTY
1 $43,200.00
2



Proposed Compliance Order
With respect to Item One (1) pursuant to 49 United States Code § 60118, the Pipeline and
Hazardous Materials Safety Administration proposes to issue a Compliance Order to Cenex
Pipeline LLC. Please refer to the Proposed Compliance Order, which is enclosed and made a
part of this Notice.
Response to this Notice
Enclosed as part of this Notice is a document entitled Response Options for Pipeline
Operators in Compliance Proceedings. Please refer to this document and note the response
options. All material you submit in response to this enforcement action may be 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). If you do not respond
within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the
allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to
find facts as alleged in this Notice without further notice to you and to issue a Final Order.
In your correspondence on this matter, please refer to CPF 5-2015-5013 and for each
document you submit, please provide a copy in electronic format whenever possible.
Sincerely,
Chris Hoidal
Director, Western Region
Pipeline and Hazardous Materials Safety Administration
Enclosures: Proposed Compliance Order
Response Options for Pipeline Operators in Compliance Proceedings
cc: PHP-60 Compliance Registry
PHP-500 M. Petronis (#142794 and #148705)
3



PROPOSED COMPLIANCE ORDER
Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety
Administration (PHMSA) proposes to issue to Cenex Pipeline LLC (Cenex) a Compliance
Order incorporating the following remedial requirements to ensure the compliance of Cenex
with the pipeline safety regulations:
1. 2. 3. In regard to Item Number 1 of the Notice pertaining to the Controller Training
Program, Cenex must develop and implement a Controller Training Program that
meets each of the requirements of § 195.446(h).
Cenex must complete Compliance Item #1 within 60 days of receipt of the Final
Order.
It is requested (not mandated) that Cenex maintain documentation of the safety
improvement costs associated with fulfilling this Compliance Order and submit the
total to Chris Hoidal, Director, Western, Pipeline and Hazardous Materials Safety
Administration. It is requested that these costs be reported in two categories: 1)
total cost associated with preparation/revision of plans, procedures, studies and
analyses, and 2) total cost associated with replacements, additions and other
changes to pipeline infrastructure.
4

520155013_Final Order_ 02042016_text.pdf

February 4, 2016
Mr. John Traeger
President
Cenex Pipeline, LLC
803 HWY 212 S
P.O. Box 909
Laurel, MT 59044
Re: CPF No. 5-2015-5013
Dear Mr. Traeger:
Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of
violation, assesses a civil penalty of $43,200, and specifies actions that need to be taken by
Cenex Pipeline, LLC to comply with the pipeline safety regulations. The penalty payment terms
are set forth in the Final Order. When the civil penalty has been paid and the terms of the
compliance order completed, as determined by the Director, Western Region, this enforcement
action will be closed. Service of the Final Order by certified mail is deemed effective upon the
date of mailing, or as otherwise provided under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Jeffrey D. Wiese
Associate Administrator
for Pipeline Safety
Enclosure
cc: Director, Western Region, PHMSA OPS
Mr. Richard Petersen, V.P. Pipelines and Terminals, Cenex Pipeline, LLC
CERTIFIED MAIL - RETURN RECEIPT REQUESTED



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
____________________________________
)
In the Matter of )
)
Cenex Pipeline, LLC, ) CPF No. 5-2015-5013
)
Respondent. )
____________________________________)
FINAL ORDER
Between December 17, 2013, and June 26, 2014, pursuant to 49 U.S.C. § 60117, a representative
of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline
Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of
Cenex Pipeline, LLC (Cenex or Respondent) in Laurel, Montana. Cenex operates two hazardous
liquid pipeline systems from its control center in Laurel, Montana. 1 The Cenex Products
Pipeline, which transports gasoline and diesel fuel, consists of approximately 671 miles of
pipeline with 24 breakout tanks.2 The Front Range Pipeline transports crude oil through
approximately 295 miles of pipeline, including 10 breakout tanks.3
As a result of the inspection, the Director, Western Region, OPS (Director), issued to
Respondent, by letter dated June 30, 2015, a Notice of Probable Violation, Proposed Civil
Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the
Notice proposed finding that Cenex had violated 49 C.F.R. § 195.446, and proposed assessing a
civil penalty of $43,200 for the alleged violation. The Notice also proposed ordering Respondent
to take certain measures to correct the alleged violation.
Cenex responded to the Notice by letter dated July 20, 2015 (Response). The company did not
contest the allegations of violation but provided an explanation of its actions and requested that
the proposed civil penalty be reduced or eliminated. Respondent did not request a hearing and
therefore has waived its right to one.
1 Pipeline Safety Violation Report (Violation Report), (June 30, 2015) (on file with PHMSA), at 1.
2 Id.
3 Id.



CPF No. 5-2015-5013
Page 2
FINDING OF VIOLATION
In its Response, Cenex did not contest the allegation 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. § 195.446, which states in part:
§ 195.446 Control room management.
(a) . . . The training procedures required by paragraph (h) must be
implemented no later than August 1, 2012 . . .
(h) Training. Each operator must establish a controller training program and
review the training program content to identify potential improvements at
least once each calendar year, but at intervals not to exceed 15 months. An
operator’s program must provide for training each controller to carry out the
roles and responsibilities defined by the operator. In addition, the training
program must include the following elements:
(1) Responding to abnormal operating conditions likely to occur
simultaneously or in sequence;
(2) Use of a computerized simulator or non-computerized (tabletop) method
for training controllers to recognize abnormal operating conditions;
(3) Training controllers on their responsibilities for communication under the
operator’s emergency response procedures;
(4) Training that will provide a controller a working knowledge of the pipeline
system, especially during the development of abnormal operating conditions;
and
(5) For pipeline operating setups that are periodically, but infrequently used,
providing an opportunity for controllers to review relevant procedures in
advance of their application.
The Notice alleged that Respondent violated 49 C.F.R. § 195.446(h) by failing to establish a
controller training program in accordance with Section 195.446(h). Specifically, the Notice
alleged that Cenex’s controller training program did not clearly define controller roles and
responsibilities, and did not include training for responding to abnormal operating conditions
(AOC) likely to occur simultaneously or in sequence. The training program did not identify
setups that are periodically - but infrequently - used, and did not indicate how the controllers
were trained on the procedures used for such setups.
Respondent did not contest this allegation of violation. Accordingly, based upon a review of all
of the evidence, I find that Respondent violated 49 C.F.R. § 195.446(h) by failing to establish a
controller training program in accordance with Section 195.446(h).
This finding of violation will be considered a prior offense in any subsequent enforcement action
taken against Respondent.



CPF No. 5-2015-5013
Page 3
ASSESSMENT OF PENALTY
Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed
$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any
related series of violations.4 In determining the amount of a civil penalty under 49 U.S.C.
§ 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,
circumstances, and gravity of the violation, including adverse impact on the environment; the
degree of Respondent’s culpability; the history of Respondent’s prior offenses; 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 $43,200 for the violations cited above.
Item 1: The Notice proposed a civil penalty of $43,200 for Respondent’s violation of 49 C.F.R.
§ 195.446(h), for failing to establish a controller training program in accordance with Section
195.446(h). Respondent submitted a response letter which stated that Respondent has been
working with a vendor since late 2011 to develop a Supervisory Control and Data Acquisition
simulator that will be used to train pipeline controllers on operating procedures and AOC
response; and the simulator will be used to evaluate controller performance. Respondent further
stated that it has invested over $590,000 in development of the simulator and has scheduled a
Simulator Site Acceptance Test. Because it began improving the Controller Training Program
before the PHMSA inspection, and because it has invested significant resources in development
of the simulator, Respondent argues the proposed civil penalty should be mitigated or eliminated.
With respect to the nature, circumstances, and gravity of this violation, the failure to establish a
controller training program in accordance with Section 195.446(h) is a serious violation that
could threaten the proper operation of the pipeline. The pipeline contains high consequence area
segments, and the lack of a controller training program established in accordance with Section
195.446(h) could seriously affect pipeline safety and integrity.
I acknowledge Respondent’s attempt to develop a SCADA simulator in order to meet the
training requirements. However, during the several years of Respondent’s inability to procure
the simulator, Respondent relied on standard Operator Qualification modules that did not fully
meet the control room management training requirements of Section 195.446(h). Respondent
was fully aware of the training program requirements, but failed to institute an adequate
controller training program. Based on the gravity of the violation and Respondent’s culpability, I
do not see any basis for reducing or eliminating the penalty. Accordingly, having reviewed the
record and considered the assessment criteria, I assess Respondent a civil penalty of $43,200 for
violation of 49 C.F.R. § 195.446(h).
In summary, having reviewed the record and considered the assessment criteria for each of the
Items cited above, I assess Respondent a total civil penalty of $43,200.
4 The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, Pub. L. No. 112-90, § 2(a)(1), 125 Stat.
1904, January 3, 2012, increased the civil penalty liability for violating a pipeline safety standard to $200,000 per
violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.



CPF No. 5-2015-5013
Page 4
Payment of the civil penalty must be made within 20 days of service. Federal regulations
(49 C.F.R. § 89.21(b)(3)) require such payment to 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 (AMK-325), Federal Aviation Administration, Mike
Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The
Financial Operations Division telephone number is (405) 954-8845.
Failure to pay the $43,200 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 district
court of the United States.
COMPLIANCE ORDER
The Notice proposed a compliance order with respect to Item 1 in the Notice for violation of
49 C.F.R. § 195.446(h). Under 49 U.S.C. § 60118(a), each person who engages in the
transportation of hazardous liquids or who owns or operates a pipeline facility is required to
comply with the applicable safety standards established under chapter 601. Pursuant to the
authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the
following actions to ensure compliance with the pipeline safety regulations applicable to its
operations:
1. With respect to the violation of § 195.446(h) (Item 1), Respondent must:
A. Develop and implement a Controller Training Program that meets each of
the requirements of § 195.446(h) within 60 days of receipt of the Final
Order.
The Director may grant an extension of time to comply with any of the required items upon a
written request timely submitted by the Respondent and demonstrating good cause for an
extension.
In addition, pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217,
Respondent is requested (not mandated) to take the following action:
Cenex should maintain documentation of the safety improvement costs associated
with fulfilling this Compliance Order and submit the total to Director, Western
Region, Pipeline and Hazardous Materials Safety Administration, Office of Pipeline
Safety. It is requested that these costs be reported in two categories: 1) total cost
associated with preparation/revision of plans, procedures, studies and analyses; and 2)
total cost associated with replacements, additions and other changes to pipeline
infrastructure.



CPF No. 5-2015-5013
Page 5
Failure to comply with this Order may result in the administrative assessment of civil penalties
not to exceed $200,000 for each violation for each day the violation continues or in referral to the
Attorney General for appropriate relief in a district court of the United States.
Under 49 C.F.R. § 190.243, Respondent has a right to submit a Petition for Reconsideration of
this Final Order. The petition must be sent to: Associate Administrator, Office of Pipeline
Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC
20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA
will accept petitions received no later than 20 days after receipt of service of this Final Order by
the Respondent, provided they contain a brief statement of the issue(s) and meet all other
requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays the payment of
any civil penalty assessed. Unless the Associate Administrator, upon request, grants a stay, all
other terms and conditions of this Final Order are effective upon service in accordance with
49 C.F.R. § 190.5.
___________________________________ __________________________
Jeffrey D. Wiese Date Issued
Associate Administrator
for Pipeline Safety

520155013_Closure Letter_12052016_text.pdf

CERTIFIED MAIL - RETURN RECEIPT REQUESTED
December 5, 2016
Mr. Richard S. Petersen
President
Cenex Pipeline, LLC
PO Box 909
Laurel, MT 59044
CPF 5-2015-5013
Case Closure
Dear Mr. Petersen:
Between December 2013 and June 2014, a representative of the Pipeline and Hazardous Materials
Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49
United States Code inspected your Control Room Management Procedures in Laurel, Montana. As a
result of the inspection, Cenex Pipeline was issued a Final Order and Compliance Order on February
4, 2016, which identified deficiencies in your Control Room Management Controller Training
Program and required that an adequate Controller Training Program be developed and implemented to
meet each of the requirements of 49 CFR 195.446(h).
We reviewed information provided in your letters dated April 7, 2016 and June 20, 2016, and
considered information shared with PHMSA staff in meetings with you and your representatives on
September 28, November 8 and November 28, 2016. As a result of the review of the new Controller
Training Program, it appears that the deficiencies outlined in the Final Order have been corrected. This
letter is to inform you no further action is necessary and this case is now closed. Thank you for your
cooperation.
Sincerely,
Chris Hoidal
Director, Western Region
Pipeline and Hazardous Materials Safety Administration
cc: PHP-60 Compliance Registry
PHP-500 M. Petronis
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