BOC GASES — Notice of Probable Violation

party submissionOfficial PDF520176016_Operator Response to Notice_06142017.pdf#

520176016_Final Order_02132018_text.pdf, page 1Official PDFFebruary 13, 2018 Mr. Jason Cooper President and CEO Linde North America, LLC 200 Somerset Corporate Boulevard Bridgewater, New Jersey 08807 Re: CPF No. 5-2017-6016 Dear Mr. Cooper: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation and assesses a civil penalty of $43,200. This is to acknowledge receipt of payment of the full penalty amount, by wire transfer dated August 21, 2017. The Final Order further finds that Linde North America, LLC, has completed the actions specified in the Notice to comply with the pipeline safety regulations. This enforcement action is now closed. Service of the Final Order is deemed effective as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Director, Western Region, Office of Pipeline Safety, PHMSA Mr. Ray Carr, Head of Regional Operations, Linde North America, LLC Mr. Andy Gutacker, Head of Onsite Bulk & U.S. Onsite Production, Linde North America, LLC CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

520176016_Final Order_02132018_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 ) ) Linde North America, LLC, ) CPF No. 5-2017-6016 a division of The Linde Group, ) ) ) Respondent. ) ____________________________________) FINAL ORDER From November 7 through 8, 2016, 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 of Linde North America, LLC (Linde or Respondent), near Green River, Wyoming. Respondent is a division of The Linde Group, an international company headquartered in Munich, Germany, that manufactures and supplies industrial, specialty and medical gases as well as related equipment.1 Linde operates a pipeline facility and 8.1-mile hazardous liquid pipeline that transports carbon dioxide in the vicinity of Green River, Wyoming.2 As a result of the inspection, the Director, Western Region, OPS (Director), issued to Respondent, by letter dated May 24, 2017, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice), which also included warnings pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Respondent had violated 49 C.F.R. §§ 195.452 and 191.22 and proposed assessing a civil penalty of $43,200 for one of the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. The warning items required no further action, but warned the operator to correct the probable violations or face possible future enforcement action. Linde responded to the Notice by email dated June 14, 2017 (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 eliminated or reduced. Respondent subsequently paid the civil 1 See, http://www.lindeus.com/en/about the linde group/linde north america/index html (last accessed October 30, 2017); 2 Pipeline Safety Violation Report (Violation Report), (May 23, 2017) (on file with PHMSA), at 1.#

520176016_Final Order_02132018_text.pdf, page 3CPF No. 5-2017-6016 Page 2 penalty of $43,200 by wire transfer dated August 31, 2017. Payment of the civil penalty authorizes PHMSA to make findings of violation and to issue this final order without further proceedings pursuant to § 190.208(a)(1). FINDINGS OF VIOLATION In its Response, Linde did not contest the allegations in the Notice that it violated 49 C.F.R. Parts 195 and 191, 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?— (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 Linde violated 49 C.F.R. § 195.452(j)(3), by failing to establish five-year intervals, not to exceed 68 months, for continually assessing each pipeline segment that could affect a high consequence area. Specifically, the Notice alleged that, during the PHMSA inspection, Respondent presented documentation showing that it had assessed the line pipe in 2006 with a pressure test but could not show that it had reassessed the pipeline’s integrity within the required five-year interval. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Linde violated 49 C.F.R. § 195.452(j)(3) by failing to continually assess each pipeline segment that could affect a high consequence area within five years, not to exceed 68 months. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 191.22(c)(2)(i), which states: § 191.22 National Registry of Pipeline and LNG operators. (a) . . . . (c) Changes. Each operator of a gas pipeline, gas pipeline facility,#

520176016_Final Order_02132018_text.pdf, page 4CPF No. 5-2017-6016 Page 3 underground natural gas storage facility, LNG plant, or LNG facility must notify PHMSA electronically through the National Registry of Pipeline, Underground Natural Gas Storage Facility, and LNG Operators at http://opsweb.phmsa.dot.gov of certain events. (1) . . . . (2) An operator must notify PHMSA of any of the following events not later than 60 days after the event occurs: (i) A change in the primary entity responsible (i.e., with an assigned OPID) for managing or administering a safety program required by this part covering pipeline facilities operated under multiple OPIDs. The Notice alleged that Respondent violated 49 C.F.R. § 191.22(c)(2)(i), by failing to notify PHMSA of a change in the primary entity responsible for managing or administering a safety program required by Part 191 covering pipeline facilities operated under multiple Operator Identification Numbers (OPIDs). Specifically, the Notice alleged that Linde acquired BOC Gases in 2006, resulting in a change in the primary entity responsible for managing or administering the safety program required by Part 191, but Linde did not notify PHMSA of the change in ownership within 60 days. Linde 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. § 191.22(c)(2)(i) by failing to notify PHMSA of a change in the primary entity responsible for managing or administering a safety program required by Part 191 covering pipeline facilities operated under multiple OPIDs. 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 $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.3 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 violation of § 195.452(j)(3) (Item 1). 3 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).#

520176016_Final Order_02132018_text.pdf, page 5CPF No. 5-2017-6016 Page 4 Item 1: The Notice proposed a civil penalty of $43,200 for Respondent’s violation of 49 C.F.R. § 195.452(j)(3), for failing to establish five-year intervals, not to exceed 68 months, for continually assessing each pipeline segment that could affect a high consequence area. In its Response, Linde did not contest the allegation of violation but requested the penalty be waived or substantially reduced on the grounds that: (1) while the company did not undertake a complete reassessment of the pipeline within the required five-year interval, it did timely complete Close Interval Surveys (CISes) in 2011 and 2016, and conduct other inspections; (2) this was the first civil penalty Linde had received from PHMSA; (3) there was no “detrimental impact to public safety from the probable violations;” and (4) Linda had taken prompt action to ensure that there would be no future violations. On August 3, 2017, in accordance with § 190.209(b)(7), the Regional Director submitted a written evaluation of the response material submitted by Respondent and recommended that the penalty be assessed in the amount proposed. Subsequently, on August 31, 2017, Respondent paid the proposed civil penalty in full. Under 49 C.F.R. § 190.208(a)(1), such payment waives Linde’s opportunity to contest the penalty amount. Notwithstanding, I have considered Linde’s arguments to reduce the penalty but find the proposed penalty amount to be appropriate. With regard to the nature and circumstances of the violation, I find that PHMSA discovered the violation and that Respondent failed to perform a required pipeline-safety activity. With regard to the gravity of the violation, OPS alleged that pipeline safety was compromised in a high consequence area. While Respondent argued the gravity of the violation was less severe because it performed CISes in 2011 and 2016, such surveys are intended only to measure cathodic protection therefore are not a substitute for a comprehensive pipeline integrity assessment, as is required under § 195.452. Although Respondent also contended there were no impacts to public safety, I find the company’s failure to comply with the integrity management regulations compromised safety, at a minimum, by delaying the performance of a pipeline integrity assessment beyond the maximum time permitted. With respect to the degree of Respondent’s culpability and good faith in attempting to comply with the pipeline safety regulations, Linde contended the penalty should be lowered because it took prompt action to ensure that no future violations would occur. While such actions are commendable, I do not find they warrant a penalty reduction, since they were taken subsequent to PHMSA identifying the violation. At that point, Respondent was already obligated to remediate the violation. Finally, with regard to Linde’s compliance history and argument that it had never previously received a penalty from PHMSA, I have reviewed the company’s enforcement history and can confirm this is correct. In fact, page two of the Pipeline Safety Violation Report in this case reflects no prior violations. This information was already considered in establishing the proposed penalty amount; therefore, I find no reason to reduce the penalty further. 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. § 195.452(j)(3). In summary, having reviewed the record and considered the assessment criteria for the Item cited#

520176016_Final Order_02132018_text.pdf, page 6CPF No. 5-2017-6016 Page 5 above, I assess Respondent a total civil penalty of $43,200, which amount has already been paid. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1 and 2 in the Notice, for violations of 49 C.F.R. §§ 195.452(j)(3) and 191.22(c)(2)(i), respectively. 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. The Director indicates that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to the violation of § 195.452(j)(3) (Item 1), on July 25, 2017, Respondent successfully completed an eight-hour test of the pipeline, witnessed by PHMSA. 2. With respect to the violation of § 191.22(c)(2)(i) (Item 2), Respondent filed the necessary paperwork to update its operator name and OPID. The operator is now “Linde North America, LLC” and its OPID is 31391. Accordingly, I find that compliance has been achieved with respect to these violations. Therefore, the compliance terms proposed in the Notice are not included in this Order. WARNING ITEMS With respect to Items 3, 4 and 5, the Notice alleged probable violations of Part 195, but did not propose a civil penalty or compliance order for these items. Therefore, these are considered to be warning items. The warnings were for: 49 C.F.R. § 195.403(c) (Item 3) ─ Respondent’s alleged failure to require and verify that its supervisors maintain a thorough knowledge of that portion of the emergency response procedures established under § 195.402 for which they are responsible to ensure compliance; 49 C.F.R. § 195.420(b) (Item 4) ─ Respondent’s alleged failure to inspect each mainline valve to determine that it is functioning properly, at intervals not exceeding 7½ months, but at least twice each calendar year; and 49 C.F.R. § 195.583(a) (Item 5) ─ Respondent’s alleged failure to inspect each onshore pipeline or portion of pipeline exposed to the atmosphere, for evidence of atmospheric corrosion at least once every three calendar years, but with intervals not exceeding 39 months.#

520176016_Final Order_02132018_text.pdf, page 7CPF No. 5-2017-6016 Page 6 Respondent stated in its Response that it had taken certain actions to address the cited items. If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. Under 49 C.F.R. § 190.243, Respondent may submit a petition for reconsideration of this Final Order to the Associate Administrator for Pipeline Safety, PHMSA, 1200 New Jersey Avenue SE, East Building, 2nd Floor, Washington, D.C. 20590, no later than 20 days after receipt of the Final Order by Respondent. Any petition submitted must contain a 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. The other terms of the order, including corrective action, remain in effect unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. February 13, 2018 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

520176016_NOPV PCP PCO_05242017_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED May 24, 2017 Mr. Ray Carr Head of Regional Operations Linde North America Inc. The Linde Group 200 Somerset Cooperate Blvd Bridgewater, NJ 08807 CPF 5-2017-6016 Dear Mr. Carr: On November 7 and 8, 2016, 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 The Linde Group’s CO2 pipeline facility in the vicinity of Green River, Wyoming. As a result of the inspection, it is alleged 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:#

520176016_NOPV PCP PCO_05242017_text.pdf, page 21. §195.452 Pipeline integrity management in high consequence areas. (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. (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 Linde Group violated 49 C.F.R. § 195.452(j)(3) by failing to continually assess the line pipe’s integrity at five-year intervals, not to exceed 68 months, to evaluate the integrity of each pipeline segment that could affect a high consequence area. The Linde Group used a pressure test to assess the integrity of the line pipe in accordance with 195.452 (j)(5)(ii). According to the Linde Group, the last pressure test was conducted in 2006. During the inspection, the Linde Group failed to present any evidence, including pressure test records, showing that they reassessed the pipeline’s integrity within a five-year interval, not to exceed 68 months. In fact, a Linde Group compliance officer disclosed to PHMSA during the inspection that no pressure tests to assess the line pipe’s integrity had been performed within the 5-year interval. Therefore, the Linde Group violated 49 C.F.R. § 195.452(j)(3). 2. §191.22 National Registry of Pipeline and LNG Operators (c) Changes. Each operator of a gas pipeline, gas pipeline facility, LNG plant or LNG facility must notify PHMSA electronically through the National Registry of Pipeline and LNG Operators at http://opsweb.phmsa.dot.gov of certain events. (2) An operator must notify PHMSA of any of the following events not later than 60 days after the event occurs: (i) A change in the primary entity responsible (i.e., with an assigned OPID) for managing or administering a safety program required by this part covering pipeline facilities operated under multiple OPIDs. (ii) A change in the name of the operator; The Linde Group violated 49 C.F.R. § 191.22(c)(2)(i) by failing to notify PHMSA of a change in the primary entity responsible for managing or administering a safety program required by this part covering pipeline facilities operated under multiple OPIDs not later than 60 days after the event occurred. In 2006, The Linde Group acquired BOC Gases, resulting in a change in the primary entity responsible for managing or administering a safety program required by this Part. However, The Linde Group did not notify PHMSA of this change in#

520176016_NOPV PCP PCO_05242017_text.pdf, page 3operatorship of the pipeline. Therefore, by failing to notify PHMSA of this change in the primary entity responsible for managing or administering a safety program required by Part 191 covering pipeline facilities operated under multiple OPIDs not later than 60 days after the change in ownership, The Linde Group violated 49 C.F.R. § 191.22(c)(2)(i). 3. §195.403 Emergency Response Training. (c) Each operator shall require and verify that its supervisors maintain a thorough knowledge of that portion of the emergency response procedures established under 195.402 for which they are responsible to ensure compliance. The Linde Group violated 49 C.F.R. § 195.403(c) by failing to require and verify that its supervisors maintain a thorough knowledge of that portion of the emergency response procedures established under 195.402 for which they are responsible to ensure compliance. During the inspection, The Linde Group failed to provide any evidence, including but not limited to training records, to show that its site manager Kevin Harris, responsible for implementing the facility response plan. maintained a thorough knowledge of these emergency response procedures for which he was responsible to ensure compliance for 2016. 4. §195.420 Valve maintenance. (b) Each operator shall, at intervals not exceeding 7 1/2 months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. The Linde Group violated 49 C.F.R. § 195.420(b) by failing to inspect each mainline valve to determine that it is functioning properly at intervals not exceeding 7 ½ months, but at least twice each calendar year. During the inspection, The Linde Group provided PHMSA only one valve maintenance inspection record for 2015, and offered no other evidence that it conducted an additional mainline valve inspection during that calendar year. Therefore, it failed to perform valve maintenance at intervals not to exceed 7 ½ months, but at least twice in 2015. It also failed to present any evidence that it inspected each mainline valve to determine that it was functioning properly from 2011-2014. Therefore, by failing to conduct valve maintenance inspections at intervals not exceeding 7 ½ months, but at least twice each calendar year for 2011-2015, The Linde Group violated 49 C.F.R. § 195.420(b). 5. §195.583 What must I do to monitor atmospheric corrosion control? (a) You must inspect each pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion, as follows: If the pipeline is located: Then the frequency of inspection is: Onshore At least once every 3 calendar years, but with intervals not exceeding 39 months The Linde Group violated 49 C.F.R. § 195.583(a) by failing to inspect each onshore pipeline or portion of pipeline exposed to the atmosphere for evidence of atmospheric corrosion at least once every 3 calendar years, but with intervals not exceeding 39 months. During the#

520176016_NOPV PCP PCO_05242017_text.pdf, page 4inspection, The Linde Group failed to provide PHMSA with any evidence that it inspected its onshore pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion, including but not limited to any inspection records. Therefore, by failing to demonstrate that it inspected its onshore pipeline, or portion of pipeline exposed to the atmosphere, for evidence of atmospheric corrosion at least once every 3 calendar years, but with intervals not exceeding 39 months, The Linde Group violated 49 C.F.R. § 195.583(a). Warning Items With respect to Items 3, 4 and 5, 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 promptly correct these items. Failure to do so may result in additional enforcement action. Proposed Civil Penalty Under 49 United States Code, §60122, you are subject to a civil penalty not to exceed $205,638 per violation per day the violation persists up to a maximum of $2,056,380 for a related series of violations. For violations occurring between January 4, 2012 to August 1, 2016, the maximum penalty may not exceed $200.000 per violation per day, with a maximum penalty not to exceed $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 related series of violations. Item number PENALTY Item 1 $43,200 Proposed Compliance Order With respect to Item 1 and 2 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to The Linde Group. 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#

520176016_NOPV PCP PCO_05242017_text.pdf, page 5within 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 5-2016-6016 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 G. Ogirima (#154571)#

520176016_NOPV PCP PCO_05242017_text.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to The Linde Group a Compliance Order incorporating the following remedial requirements to ensure the compliance of The Linde Group with the pipeline safety regulations: 1. 2. 3. In Regards to item Number 1 pertaining to continual process of evaluation and assessment to maintain a pipeline's integrity, The Linde Group must within 120 days assess the integrity of its pipeline in accordance with 195.452 (c) and provide a written record of compliance to PHMSA’s Western Region Office within 30 days of the integrity assessment. In regard to Item Number 2 of the Notice pertaining to notification of change of the primary entity responsible for administering a safety program, The Linde Group must notify PHMSA of a change in the primary entity responsible for administering a safety program within 30 days of receipt of this Notice. It is requested (not mandated) that The Linde Group maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Chris Hoidal, Director, Western Region, 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.#