{"operation":"document","citation":"CPF 520192001","title":"HILCORP ALASKA, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2019-01-24","effective_on":null,"summary":"CLOSED notice of probable violation citing 191.17(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-520192001.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-520192001.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-520192001","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/520192001","body":"Notice of Probable Violation involving HILCORP ALASKA, LLC. PHMSA's enforcement data identifies the cited regulation as 191.17(a). The case was opened on 2019-01-24 and is reported as closed as of 2025-06-02. Proposed civil penalty: $198,700. Assessed civil penalty: $0. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n520192001_Closure Letter_06022025_(16-152926S).pdf: https://primis.phmsa.dot.gov/enforcement-documents/520192001/520192001_Closure%20Letter_06022025_(16-152926S).pdf\n\n520192001_Closure Letter_06022025_(16-152926S)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520192001/520192001_Closure%20Letter_06022025_(16-152926S)_text.pdf\n\n520192001_Consent Agreement and Order_05182020.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520192001/520192001_Consent%20Agreement%20and%20Order_05182020.pdf\n\n520192001_Consent Agreement and Order_05182020_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520192001/520192001_Consent%20Agreement%20and%20Order_05182020_text.pdf\n\n520192001_NOPV PCP PCO_01242019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520192001/520192001_NOPV%20PCP%20PCO_01242019.pdf\n\n520192001_NOPV PCP PCO_01242019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520192001/520192001_NOPV%20PCP%20PCO_01242019_text.pdf\n\n520192001_Operator Response to Notice and Request for Hearing and Preliminary Statement of Issues_02222019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/520192001/520192001_Operator%20Response%20to%20Notice%20and%20Request%20for%20Hearing%20and%20Preliminary%20Statement%20of%20Issues_02222019.pdf\n\n520192001_Closure Letter_06022025_(16-152926S)_text.pdf\n\nVIA ELECTRONIC MAIL TO: lsaugier@hilcorp.com\nJune 2, 2025\nMr. Luke Saugier\nSenior Vice President\nHilcorp Alaska, LLC\n3800 Centerpoint Drive\nSuite 1400\nAnchorage, Alaska 99503\nCPF 5-2019-2001; 5-2019-2002W\nClosure Letter\nDear Mr. Saugier:\nOn May 18, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued\na Consent Order incorporating the terms of a Consent Agreement between PHMSA and Hilcorp\nAlaska LLC (Hilcorp) related to the jurisdictional status and regulatory classification of certain\nnatural gas and hazardous liquid pipelines in Upper Cook Inlet of Alaska (Covered Pipelines).\nThe Consent Order and Consent Agreement (Agreement) required Hilcorp to bring the Covered\nPipelines into Hilcorp’s regulatory compliance programs through the Compliance Plan agreed to\nby PHMSA and Hilcorp.\nIn a February 18, 2025 letter to PHMSA, Hilcorp stated that it had met the terms of the\nCompliance Plan and requested termination of the Agreement consistent with Section XI\nTermination of the Agreement.\nPHMSA has reviewed compliance documents provided by Hilcorp and records from inspections\nthat PHMSA has conducted during the pendency of the Consent Order and Consent Agreement.\nBased on the results of that review, this case is now closed, and no further action is contemplated\nwith respect to the matters involved in this case. PHMSA notes that under Section XII Survival\nof the Agreement, notwithstanding closure of this case, Hilcorp will maintain the regulatory\nclassifications of the Covered Pipelines and parts of the Compliance Plan absent a change in law,\nregulation, or operational status.\n\n\n\nThank you for your cooperation in this matter.\nSincerely,\nDustin Hubbard\nDirector, Western Region\nPipeline and Hazardous Materials Safety Administration\ncc: PHP-60 Compliance Registry\nPHP-500 J. Gano (#16-152926S)\n\n520192001_Consent Agreement and Order_05182020_text.pdf\n\nMay 18, 2020\nVIA ELECTRONIC MAIL TO: dwilkins@hilcorp.com\nMr. David S. Wilkins\nSenior Vice President\nHilcorp Alaska, LLC\n3800 Centerpoint Drive, Suite 1400\nAnchorage, Alaska 99503\nCPF Nos. CPF 5-2019-2001; 5-2019-2002W\nDear Mr. Wilkins:\nEnclosed please find a Consent Order incorporating the terms of the Consent Agreement between\nthe Pipeline and Hazardous Materials Safety Administration (PHMSA) and Hilcorp Alaska, LLC,\nwhich was executed on May 18, 2020. Service of the Consent Order and Consent Agreement by\nelectronic mail is deemed effective upon the date of transmission as provided under 49 C.F.R.\n§ 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure: Order, Consent Agreement, and Compliance Plan\ncc: Mr. Dustin Hubbard, Director, Eastern Region, Office of Pipeline Safety, PHMSA\nMs. Linda Daugherty, Deputy Associate Administrator for Field Operations, PHMSA\nMr. David Hassell, Operations Supervisor, Western Region – Alaska, PHMSA\nMs. Denali Kemppel, General Counsel, Hilcorp Alaska, LLC, dkemppel@hilcorp.com\nMr. Justin Furnace, Vice President, Government and Public Affairs, Hilcorp Energy\nCompany, jfurnace@hilcorp.com\nMr. James Curry, Outside Counsel, Babst Calland, jcurry@babstcalland.com\nCONFIRMATION OF 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____________________________________\nIn the Matter of )\n)\n)\nHilcorp Alaska, LLC, ) CPF Nos. 5-2019-2001;\n) 5-2019-2002W\nRespondent. )\n____________________________________)\nCONSENT ORDER\nBy letter dated January 24, 2019, the Pipeline and Hazardous Materials Safety Administration\n(PHMSA), Office of Pipeline Safety, issued a Notice of Probable Violation (Notice) to Hilcorp\nAlaska, LLC (Hilcorp or Respondent). By letter dated January 25, 2019, PHMSA issued a\nWarning Letter to Respondent.1\nIn accordance with 49 C.F.R. § 190.239, the Notice alleged that Hilcorp reported the Middle\nGround Shoal (MGS) gas pipeline system located in the waters of the Upper Cook Inlet as\nonshore, rather than offshore transmission mileage, in its 2015 Annual Report. The Director\nproposed a civil penalty of $198,700 for this alleged violation and proposed that the Respondent\ntake certain corrective measures to remedy the alleged violation. Also, on January 25, 2019, the\nDirector issued a Warning Letter (Warning) to Hilcorp alleging nine probable violations of the\npipeline safety regulations with regard to the MGS system.\nIn response to the Notice and Warning Letter, Respondent timely requested a hearing and an\ninformal discussion concerning potential settlement of the dispute. The parties subsequently\nengaged in good-faith settlement discussions that have resulted in the Consent Agreement and\nCompliance Plan attached to this Consent Order that settles all of the allegations in the Notice\nand Warning Letter.\nAccordingly, the Consent Agreement and Compliance Plan is hereby approved and incorporated\nby reference into this Consent Order. The Respondent is hereby ordered to comply with the\nterms of the Consent Agreement, effective immediately.\nPursuant to 49 U.S.C. 60101, et seq., failure to comply with this Consent Order may result in the\nassessment of civil penalties of up to $200,000, as adjusted for inflation (see 49 C.F.R.\n§ 190.223), for each violation for each day the violation continues or in referral to the Attorney\nGeneral for appropriate relief in a district court of the United States.\n1 Pursuant to 49 C.F.R. § 190.205, Warning Letters are not adjudicated. However, in this case, resolution of the\nWarning Letter is specifically referenced in the Consent Agreement and is therefore referenced in this Order as well.\n\n\n\nThe terms and conditions of this Consent Order are effective upon service in accordance with\n49 C.F.R. § 190.5.\n_____________________________ ________________________\nAlan K. Mayberry Date\nAssociate Administrator\nFor Pipeline Safety\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\nIn the Matter of )\n) CPF Nos. 5-2019-2001;\nHilcorp Alaska, LLC, ) 5-2019-2002W\nRespondent. )\n)\n)\n)\nSETTLEMENT AGREEMENT\nStarting in 2015, Hilcorp Alaska, LLC (Hilcorp or Respondent) and the Pipeline and Hazardous\nMaterials Safety Administration (PHMSA) (collectively, the Parties) began discussing the\njurisdictional status and regulatory classification of Hilcorp’s pipelines in and around the Upper\nCook Inlet. Hilcorp raised this issue with PHMSA and sought clarity on the status of these assets\nafter acquiring them from a number of other operators. Hilcorp maintained that certain assets\nlocated within the waters of the Upper Cook Inlet were exempt from the regulatory requirements\nof 49 C.F.R. Parts 192 and 195. PHMSA informed Hilcorp that it disagreed with that position and\nmaintained that the assets were subject to PHMSA’s regulatory oversight.\nOn October 31, 2018, PHMSA issued a report titled “Inventory of Upper Cook Inlet Pipeline\nFacilities and Identification of Regulators” (Inventory). The Inventory identified federal and state\nagencies with regulatory authority over pipelines located in the waters of the Upper Cook Inlet,\nlisted current pipeline operators and assets in those waters, and made statements regarding\nPHMSA’s views concerning the jurisdictional status of the assets.\nOn January 24, 2019, the Director, Western Region, PHMSA Office of Pipeline Safety, (Director)\nissued a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order\n(Notice) to Hilcorp. The Notice alleged that Hilcorp reported the Middle Ground Shoal (MGS)\ngas pipeline system located in the waters of the Upper Cook Inlet as onshore, rather than offshore\ntransmission mileage, in its 2015 Annual Report. The Director proposed a civil penalty of\n$198,700 for this alleged violation and proposed that the Respondent take certain corrective\nmeasures to remedy the alleged violation. Also, on January 25, 2019, the Director issued a\nWarning Letter (Warning) to Hilcorp alleging nine probable violations of the pipeline safety\nregulations with regard to the MGS system.\nOn January 25, 2019, Hilcorp filed a Petition for Review in the United States Court of Appeals for\nthe D.C. Circuit, No. 19-1016, challenging PHMSA’s statements of jurisdiction and regulatory\noversight in the Inventory (Petition).\nHilcorp timely responded to the Notice and Warning, contested that the pipeline in question was\nproperly classified as “offshore”, and requested a hearing and an informal discussion concerning\nPage 1 of 12\n\n\n\npotential settlement of the dispute. The Parties have reached an agreement that settlement of these\nproceedings will avoid further administrative proceedings or litigation, that entry into this\nSettlement Agreement (Agreement) is the most appropriate means of resolving the issues raised in\nthe Notice, and addressing any findings from PHMSA inspections of the Covered Pipelines\n(defined below) that occurred before the Effective Date of this Agreement, and that the Agreement\nis in the public interest. Therefore, pursuant to 49 C.F.R. Part 190, without adjudication of any\nissue of fact or law, and upon consent and agreement of Hilcorp and PHMSA, the Parties agree as\nfollows:\nI. General Provisions\nAcknowledgements. Hilcorp acknowledges that as of the Effective Date of this\nAgreement Hilcorp, as the operator of certain pipeline facilities that transport hazardous liquids\nand natural gas in the Upper Cook Inlet, is subject to the jurisdiction of the Federal Pipeline Safety\nLaws, 49 U.S.C. § 60101, et seq., and the regulations and administrative orders issued thereunder.\nSpecifically, Respondent acknowledges the following:\na. The Submerged Gathering Pipelines, Out-of-Service Pipelines, and the Kenai\nKatchemak Pipeline as defined in Table 1 of this Agreement, are subject to the\njurisdiction of the Federal Pipeline Safety Laws, 49 U.S.C. § 60101, et seq., and\nthe regulations and administrative orders issued thereunder.\nb. The Onshore Gathering Pipeline as defined in Table 1 of this Agreement as the\nWest Cook Inlet Gas Gathering System, is subject to the jurisdiction of the Federal\nPipeline Safety Laws, 49 U.S.C. § 60101, et seq., and the regulations and\nadministrative orders issued thereunder, but only with regard to the portions of that\npipeline that qualify as a regulated gathering line under PHMSA’s gas gathering\nregulations.\nc. For purposes of this Agreement, Hilcorp acknowledges that it received proper\nnotice of PHMSA’s actions in these proceedings.\nScope of this Agreement. This Agreement applies to Respondents’ Submerged\nGathering Pipelines, Kenai Katchemak Pipeline and the regulated portions of the Onshore\nGathering Pipeline (“Covered Pipelines”) as defined in Table 1 of this Agreement. This\nAgreement also creates separate requirements applicable to the Out-of-Service Pipelines, as\ndefined in Table 1 of this Agreement, which are set out in Section II of the Compliance Plan –\nPlan for Out of Service Pipeline Facilities. This Agreement does not apply to Respondent’s\nunregulated Production Pipelines, the unregulated portions of the Onshore Gathering Pipeline\nas defined in Table 1 of this Agreement, or the unregulated Dolly Varden C pipeline, as the Parties\nagree that these pipelines are not subject to PHMSA’s jurisdiction. The Agreement does not apply\nto any other assets not specifically identified in this Agreement.\nPage 2 of 12\n\n\n\nTable 1\nSubmerged Gathering Pipelines\nPipeline Name\nPipeline Description\nPipeline Regulatory\nClassification\nMonopod A\n8-inch oil pipeline from\nRegulated Offshore\nMonopod Platform to Trading\nGathering\nBay Production Facility\n(TBPF)\nDolly Varden A\n8-inch oil pipeline from Dolly\nRegulated Offshore\nVarden Platform to TBPF\nGathering\nAnna A\n8-inch oil pipeline from Anna Regulated Offshore\nPlatform to Bruce Platform\nGathering\nBruce GP-1\n6-inch oil pipeline from\nRegulated Offshore\nBruce Platform to Granite\nGathering\nPoint Tank Farm (GPTF)\nGranite Point B\n8-inch oil pipeline from\nRegulated Offshore\nGranite Point Platform (GPP)\nto GPTF\nGathering\nSteelhead B\n10-inch gas pipeline from\nRegulated Offshore\nSteelhead Platform to TBPF\nGathering\nMonopod B\n8-inch gas pipeline from\nRegulated Offshore\nTBPF to Monopod Platform\nGathering\nDolly Varden B\n8-inch gas pipeline from\nRegulated Offshore\nTBPF to Dolly Varden\nGathering\nPlatform\nGrayling B\n10-inch gas pipeline from\nRegulated Offshore\nTBPF to Grayling Platform\nGathering\nKing Salmon B\n8-inch gas pipeline from\nRegulated Offshore\nTBPF to King Salmon\nGathering\nPlatform\nAnna B\n8-inch gas pipeline from\nRegulated Offshore\nBruce Platform to Anna\nGathering\nPlatform\nBruce GP-2\n6-inch gas pipeline from\nRegulated Offshore\nGPTF to Bruce Platform\nGathering\nGranite Point A\n8-inch gas pipeline from\nRegulated Offshore\nGPTF to GPP\nGathering\n2 As used in this Agreement, Submerged Gathering Pipelines refers only to the submerged portions of the pipelines\nlisted in Table 1. The Parties recognize that there are relatively short, onshore portions of the Submerged Gathering\nunregulated gas gathering lines under 49 C.F.R. § 192.8. The onshore portions of the liquid Submerged Gathering\nPipelines listed in Table 1. The onshore portions of the gas Submerged Gathering Pipelines are currently Class 1\n§ 195.11.\nPipelines are all rural gathering lines that do not meet the definition of regulated rural gathering line in 49 C.F.R.\nPage 3 of 12\n\n\n\nSpark B\n6-inch gas pipeline from\nRegulated Offshore\nGranite Point Production\nGathering\nFacility (GPPF) to Spark\nPlatform\nSpark Spurr Intertie\n6-inch gas pipeline from\nRegulated Offshore\nSpark Platform to Spurr\nGathering\nPlatform\nOut-of-Service Pipelines\nPipeline Name\nPipeline Description\nPipeline Regulatory\nClassification\nDillon B\n8-inch oil pipeline from\nOut of Service\nPlatform C to Dillon Platform\nDillon D\n8-inch gas pipeline from\nOut of Service\nDillon to East Foreland\nFacility\nBaker A\n8-inch gas pipeline from\nOut of Service\nBaker Platform to Platform\nA.\nSpurr Gas\n6-inch gas pipeline from\nOut of Service\nSpurr Platform to GPPF\nSpurr Oil\n6-inch oil pipeline from Spur Out of Service\nPlatform to GPPF\nSteelhead A\n10-inch gas pipeline from\nOut of Service\nSteelhead Platform to TBPF\nKenai Katchemak Pipeline (KKPL)\nPipeline Name\nPipeline Description\nPipeline Regulatory\nClassification\nKenai Katchemak Pipeline\n12-inch gas pipeline that\nGas transmission\noriginates at the KKPL Tie-ln\nPad and terminates at the\nKenai Gas Field 33-30 Pad.\nOnshore Gathering Pipeline\nPipeline Name\nPipeline Description\nPipeline Regulatory\nClassification\nWest-Cook Inlet Gas\n16-inch gas pipeline from the | Onshore Gathering (Class 1\nGathering System (W-\nTBPF to the terminus at a tie- unregulated)\nCIGGS)\nPage 4 of 12\n\n\n\nin with the Beluga gas\ntransmission pipeline\nProduction Pipelines\nPipeline Name\nPipeline Description\nPipeline Regulatory\nClassification\nGrayling A\n10-inch oil pipeline from\nProduction\nGrayling Platform to TBPF\nKing Salmon A\n8-inch oil pipeline from King\nProduction\nSalmon Platform to TBPF\nSteelhead C\n8-inch oil pipeline from\nProduction\nSteelhead Platform to TBPF\nPlatform A - B1\n8-inch oil pipeline from\nProduction\nPlatform A to East Foreland\nFacility\nPlatform C - B2\n8-inch oil pipeline from\nProduction\nPlatform C to Platform A\nHappy Valley\n6-inch gas pipeline from\nProduction\nHappy Valley Pad B to\nHappy Valley Pad A and then\nto KKPL Tie-In Pad\nPaxton\n8-inch gas pipeline from\nProduction\nPaxton Pad to KKPL\nSusan Dionne\n8-inch gas pipeline from\nProduction\nSusan Dionne to KKPL\nNinilchik State\n8-inch gas pipeline from\nProduction\nNinilchik State Pad to KKPL\nGeorge Oskoloff (GO)\n8-inch gas pipeline from GO\nProduction\nPad to KKPL\nBartolowits\n6-inch gas pipeline from\nProduction\nBartolowits Pad to KKPL\nFalls Creek\n8-inch gas pipeline from Falls\nProduction\nCreek Pad to KKPL\nKasilof Extension\n6-inch gas pipeline from\nProduction\nBartolowits Pad to KKPL\nRespondent agrees to complete the actions specified in Attachment A to this\nAgreement (Compliance Plan) and to abide by the terms of this Agreement. The Compliance\nPlan is incorporated by reference into this Agreement. This Agreement does not constitute a\nfinding of violation of any law or regulation and may not be used in any civil, criminal, or\nadministrative proceeding of any kind as evidence or proof of any fact, fault or liability, or as\nevidence of the violation of any law, rule, regulation or requirement, except in a proceeding to\nenforce the provisions of this Agreement.\nPage 5 of 12\n\n\n\nAfter Respondent returns this signed Agreement to PHMSA, the Agency’s\nrepresentative will present it to the Associate Administrator for Pipeline Safety, recommending\nthat the Associate Administrator adopt the terms of this Agreement by issuing a Consent Order\npursuant 49 C.F.R. § 190.219 incorporating the terms of this Agreement. The terms of this\nAgreement constitute an offer of settlement until accepted by the Associate Administrator. If the\nAssociate Administrator accepts, the Associate Administrator will issue a Consent Order\nincorporating the terms of this Agreement.\nRespondent consents to the issuance of the Consent Order, and hereby waives any\nfurther procedural requirements with respect to its issuance. Respondent waives all rights to\ncontest the adequacy of the Notice, or the validity of the Consent Order or this Agreement,\nincluding all rights to administrative or judicial hearings or appeals, except as set forth herein.\nThis Agreement shall apply to and be binding upon PHMSA, and upon Hilcorp, its\nofficers, directors, and employees, and its successors, assigns, or other entities or persons\notherwise bound by law. Hilcorp agrees to provide a copy of this Agreement and any incorporated\nwork plans and schedules to all of Hilcorp’s officers, employees, and agents whose duties might\nreasonably include compliance with this Agreement.\nFor all transfers of ownership or operating responsibility of the Covered Pipelines,\nHilcorp will provide a copy of this Agreement to the prospective transferee at least 30 days prior\nto such transfer. Hilcorp will provide written notice of a transfer of ownership or operating\nresponsibility to the Director within 30 days after such transfer. This provision shall not apply to\nany of those facilities that have been abandoned in accordance with 49 C.F.R. §§ 192.727 or 195.59\nat or before the time of the transfer.\nThis Agreement constitutes the final, complete, and exclusive agreement and\nunderstanding between the Parties with respect to the settlement embodied in this Agreement. The\nParties acknowledge that there are no representations, agreements or understandings relating to\nsettlement other than those expressly contained in this Agreement.\nNothing in this Agreement affects or relieves Respondent of its responsibility to\ncomply with all applicable requirements of the Federal Pipeline Safety Laws, 49 U.S.C. § 60101,\net seq., and the regulations and orders issued thereunder; and nothing in this Agreement alters\nPHMSA’s right of access, entry, inspection, and information gathering or PHMSA’s authority to\nbring enforcement actions against the Respondent pursuant to the Federal Pipeline Safety Laws,\nthe regulations and orders issued thereunder, or any other provision of Federal or State law; with\nthe following mutual understandings regarding timing:\na. The Parties agree that, to allow Hilcorp time to integrate the Covered Pipelines into\nits PHMSA compliance programs, PHMSA’s inspections of the Covered Pipelines\nduring the pendency of this Agreement will be limited to inspections to verify\ncompliance with this Agreement and to investigate and address existing or\nimminent safety conditions or concerns.\nPage 6 of 12\n\n\n\nb. The Parties agree that nothing in this Agreement prevents PHMSA from\ninvestigating a pipeline accident or incident on any Hilcorp pipeline facilities\nsubject to PHMSA’s jurisdiction, or employing its Corrective Action Order or\nSafety Order authorities under 49 U.S.C. §§ 60112 and 60117(l), respectively.\nc. The Parties agree that, in light of the challenges associated with the jurisdictional\nstatus and regulatory classification of the Covered Pipelines, and the Parties’ long-\nrunning discussions of the same, PHMSA will not bring enforcement actions for\nalleged violations of the Pipeline Safety Laws or PHMSA’s Pipeline Safety\nRegulations that may have occurred with respect to the Covered Pipelines prior to\nthe Effective Date.\nd. The Parties agree that during the pendency of this Agreement, PHMSA will not\nbring enforcement actions against Hilcorp regarding alleged violations of the\nPipeline Safety Laws or PHMSA’s Pipeline Safety Regulations that may occur with\nrespect to the Covered Pipelines, except that PHMSA may bring an enforcement\naction with regard to alleged violations for failing to comply with the terms of this\nAgreement.\ne. Notwithstanding subparagraph (d) of this paragraph, the Parties agree that PHMSA\nmay commence normal inspection and enforcement activities for the activities\ncovered in the Compliance Plan on expiration of the various compliance\ntimeframes as set forth in the Compliance Plan.\nThis Agreement does not waive or modify any Federal, State, or local laws or\nregulations that are applicable to Hilcorp’s pipeline systems. This Agreement is not a permit, or a\nmodification of any permit, under any Federal, State, or local laws or regulations. Respondent\nremains responsible for achieving and maintaining compliance with all applicable Federal, State,\nand local laws, regulations, and permits.\nThis Agreement does not create rights in, or grant any cause of action to, any third\nparty not party to this Agreement. The U.S. Department of Transportation is not liable for any\ninjuries or damages to persons or property arising from acts or omissions of Respondent or its\nofficers, employees, or agents carrying out the work required by this Agreement. Respondent\nagrees to hold harmless the U.S. Department of Transportation, its officers, employees, agents,\nand representatives from any and all causes of action arising from any acts or omissions of\nRespondent or its contractors in carrying out any work required by this Agreement.\nShould a change in law, regulation, or operational status of any of the pipelines\nidentified in Table 1 occur that may affect the jurisdictional status or regulatory classifications of\nthe pipeline facilities subject to this Agreement, either Party may notify the other of such potential\nchange, and the Parties agree to discuss any potential classification changes in good faith.\nThe Director may grant an extension of time for compliance with any of the terms\nof this Agreement, including the Compliance Plan, upon a written request timely submitted\ndemonstrating good cause for an extension. Absent unexpected delays, Hilcorp will submit any\nPage 7 of 12\n\n\n\nrequests for extension no less than 30 days before the applicable deadline. The Director shall\nrespond to any such requests within 14 business days of receipt.\nII. Monetary Penalties\nIn consideration of the good faith nature of this Agreement, PHMSA hereby\nwithdraws the allegation and proposed civil penalty of $198,700 in Item 1 of the Notice for CPF\nNo. 5-2019-2001.\nIf Hilcorp commits a Material Breach of this Agreement, as defined in Paragraph\n16, Hilcorp will be liable for stipulated penalties, unless a force majeure event has occurred in\naccordance with Section VI (Force Majeure), according to the following provisions:\na. For each Material Breach of this Agreement, Respondent will pay $750 per day for\neach instance of failure to comply for the first 15 days of noncompliance; $1000\nper day for the 16th through 30th days of noncompliance; and $1,250 per day for\neach day of noncompliance thereafter.\nb. Stipulated penalties under this Paragraph will begin to accrue on the day after\nperformance is due, and shall continue to accrue through the final day of completion\nof the activity.\nc. Respondent will pay any stipulated penalties not more than 30 days after receipt of\nwritten demand by PHMSA for such penalties. Federal regulations (49 C.F.R. §\n89.21(b)(3)) require payments in excess of $10,000 dollars to be made by wire\ntransfer through the Federal Reserve Communications System (Fedwire) to the\naccount of the “U.S. Treasury.”\nA Material Breach of this Agreement shall be the Respondent’s failure to complete\ncertain activities required in the Compliance Plan, as specified below, by the deadline established\nin the Compliance Plan combined with a failure to obtain a time extension for such activity from\nPHMSA. Should Hilcorp appeal a PHMSA decision regarding a time extension pursuant to\nParagraph 23, no Material Breach shall occur until the Associate Administrator issues a\ndetermination with respect to that appeal. A Material Breach shall only include a failure to attempt\nto perform an activity required by the Agreement or Compliance Plan, where non-performance of\nthat activity creates a substantial likelihood that the safety of the Covered Pipelines will be\nmaterially degraded. A Material Breach shall not include failure to comply with reporting or\nnotification requirements, and shall not include ministerial or inadvertent errors or omissions in\nfilings made or compliance documentation prepared under this Agreement.\nIII. Dismissal of Petition for Review\nWithin five business days after the Effective Date of this Agreement, Hilcorp shall\nfile with the U.S. Court of Appeals for the D.C. Circuit a Stipulation to Dismiss the Petition,\npursuant to Rule 42(b) of the Circuit Rules for the District of Columbia Circuit and Rule 42 of the\nPage 8 of 12\n\n\n\nFederal Rules of Appellate Procedure, specifying that the Parties shall bear their own costs and\nfees.\nIV. Disposition of Warning Letter\nThe Parties agree that the alleged probable violations in the Warning Letter at\nCPF No. 5-2019-2002W, many of which occurred before Hilcorp acquired the MGS system,\nhave been resolved.\nV. Review and Approval Process\nWith respect to any submission of any document or plan required by this Agreement\nthat requires the approval of the Director, the Director may: (a) approve, in whole or in part, the\nsubmission, (b) approve the submission on specified, reasonable conditions, (c) disapprove, in\nwhole or in part, the submission, or (d) any combination of the foregoing. The Director shall\nrespond within 60 days of a submission by Respondent. If the Director approves, approves in part,\nor approves with conditions, Respondent will take all action as approved by the Director, subject\nto Respondent's right to invoke the dispute resolution procedures in Section VII with respect to\nany conditions the Director identifies. If the Director disapproves all or any portion of the\nsubmission, the Director will provide Respondent with a written notice of the deficiencies and a\nreasonable period of time to correct them. Respondent will correct all deficiencies within the time\nspecified by the Director and resubmit for approval. If the Director does not act on a submission\nor any document or plan submitted under this paragraph within 60 days of submission, Respondent\nmay proceed as provided in the document or plan, as submitted.\nVI. Force Majeure\nRespondent agrees to perform all the terms of this Agreement within the timeframes\nestablished under the Compliance Plan, unless performance is delayed by a force majeure. For\npurposes of this Agreement, a force majeure is defined as an event arising from causes beyond the\ncontrol of the Respondent, or any entity controlled by Respondent or Respondent’s contractors,\nwhich delays or prevents performance of any obligation under the Agreement despite\nRespondent’s commercially reasonable efforts to fulfill the obligation.\nIf a force majeure event occurs or has occurred that may delay the performance of\nany term of this Agreement beyond the approved timeframe, Respondent shall notify the Director,\nin writing, within 5 business days of when Respondent knew that the event might cause a delay.\nSuch notice shall identify the cause of the delay or anticipated delay and the anticipated duration\nof the delay; state the measures taken or to be taken to prevent or minimize the delay; and estimate\nthe timetable for implementation of those measures. Failure to comply with the notice provision\nof this paragraph and to undertake reasonable efforts to avoid and minimize the delay shall waive\nany claim of force majeure by Respondent.\nIf the Director determines, upon notification by Respondent, that a delay or\nanticipated delay in performance is or was attributable to a force majeure, then the Director will\nextend the time period for the performance of that term for a reasonable period. The Director will\nPage 9 of 12\n\n\n\nnotify Respondent, in writing, of the length of any extension of performance of such terms affected\nby the force majeure. Any such extensions shall not alter Respondent's obligation to perform or\ncomplete other terms of this Agreement which are not affected by the force majeure.\nVII. Dispute Resolution\nThe Director and Hilcorp will informally attempt to resolve any disputes arising\nunder this Agreement, including but not limited to any decision of the Director. If Hilcorp and the\nDirector are unable to informally resolve the dispute within 15 calendar days, Hilcorp may request\nin writing, within 10 calendar days of any failed attempt at informal resolution, a written\ndetermination resolving the dispute from the Associate Administrator for Pipeline Safety,\nPHMSA. Along with its request, Hilcorp will provide the Associate Administrator with all\ninformation Hilcorp believes is relevant to the dispute. If the request is submitted as provided\nherein, the Associate Administrator will issue a final determination in writing within 30 calendar\ndays. Decisions of the Associate Administrator under this paragraph will constitute final agency\naction subject to judicial review. The existence of a dispute and PHMSA’s consideration of\nmatters placed in dispute will not excuse, toll, or suspend any term or timeframe for completion\nof any work to be performed under this Agreement during the pendency of the dispute resolution\nprocess, except as agreed by the Director or the Associate Administrator in writing, or ordered by\na court of competent jurisdiction.\nVIII. Recordkeeping and Information Disclosure\nUnless otherwise required in this Agreement, Hilcorp agrees to maintain records\ndemonstrating compliance with all requirements of this Agreement for a period of at least five\nyears following completion of the Compliance Plan, or as otherwise required by law or regulation,\nwhichever period is longer.\nFor any reports, plans, or other deliverables required to be submitted to PHMSA\npursuant to this Agreement, Respondent may assert a claim of business confidentiality or other\nprotections applicable to the release of information by PHMSA, covering part or all of the\ninformation required to be submitted to PHMSA pursuant to this Agreement in accordance with\n49 C.F.R. Part 7 and 49 C.F.R. § 190.343. PHMSA determines release of any information\nsubmitted pursuant to this Agreement in accordance with 49 C.F.R. Part 7, the Freedom of\nInformation Act, 5 U.S.C. § 552, DOT and PHMSA policies, and other applicable regulations and\nExecutive Orders.\nIX. Effective Date\nThe term “Effective Date,” as used herein, is the date on which the Consent Order\nis issued by the Associate Administrator incorporating the terms of this Agreement. Unless\nspecified to the contrary, all deadlines for actions required by this Agreement run from the\nEffective Date of the Consent Order.\nPage 10 of 12\n\n\n\nX. Modification\nThe terms of this Agreement may be modified only by mutual agreement of the\nParties. Such modifications must be in writing and signed by both Parties. Either party may\nrequest modification by submitting a written request to the other party.\nXI. Termination\nThis Agreement terminates upon completion of all terms set forth in the\nCompliance Plan, except as provided in paragraph 29 of this Agreement. Upon termination of\nthis Agreement, all Covered Pipelines shall be subject to all requirements of 49 C.F.R. Parts 190-\n199, as applicable. Hilcorp may request written confirmation from PHMSA when this Agreement\nis terminated and the Director will provide such confirmation. Nothing in this Agreement prevents\nHilcorp from completing any of the obligations earlier than the deadlines provided for in the\nCompliance Plan.\nXII. Survival.\nAbsent a change in law, regulation, or operational status of any Covered\nPipeline that may occur and affect the jurisdictional status or regulatory classifications of the\npipeline facilities subject to this Agreement, the acknowledgements of jurisdiction as provided\nfor in Paragraph 1 of this Agreement, the regulatory classification of Hilcorp’s assets as set forth\nin Table 1 of this Agreement and the obligations set forth in sections I.2, I.4(g), I.4(h), and\nII.1(b)-(c) of the Compliance Plan shall, consistent with their terms, survive any termination or\nexpiration of this Agreement and shall bind the Parties and their successors and assigns.\nXIII. Ratification\nThe Parties’ undersigned representatives certify that they are fully authorized to\nenter into the terms and conditions of this Agreement and to execute and legally bind such party\nto this document.\nPage 11 of 12\n\n\n\nThe Parties hereby agree to all terms and conditions of this Agreement.\nFor PHMSA:\nMay 18, 2020\nAlan K. Mayberry Date\nAssociate Administrator for Pipeline Safety\nPipeline and Hazardous Materials Safety Administration\nFor Hilcorp Alaska, LLC:\nMay 14, 2020\nDavid S. Wilkins Date\nSenior Vice President\nHilcorp Alaska, LLC\nPage 12 of 12\n\n520192001_NOPV PCP PCO_01242019_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nJanuary 24, 2019\nMr. Greg Lalicker\nPresident\nHilcorp Alaska, LLC\n1111 Travis Street\nHouston, Texas 77002\nCPF 5-2019-2001\nDear Mr. Lalicker:\nOn July 11 through 15, 2016 and October 26, 2016, representatives of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\npursuant to Chapter 601 of 49 United States Code (U.S.C.), inspected your Middle Ground\nShoal natural gas transmission pipeline system near Nikiski, Alaska. We also reviewed your\noperation, maintenance and emergency response procedures and supporting records at your\nNikiski and Anchorage offices.\nAs a result of the inspection, it is alleged that you have committed a probable violation of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The item\ninspected and the probable violation is:\n\n\n\n1. § 191.17 Transmission systems; gathering systems; and liquefied natural gas\nfacilities: Annual report.\n(a) Transmission or Gathering. Each operator of a transmission or a gathering\npipeline system must submit an annual report for that system on DOT Form\nPHMSA 7100.2.1. This report must be submitted each year, not later than\nMarch 15, for the preceding calendar year, except that for the 2010 reporting\nyear the report must be submitted by June 15, 2011.\nHilcorp Alaska, LLC (Hilcorp) failed to properly report the Middle Ground Shoal (MGS)\nnatural gas transmission pipe located within the waters of the upper Cook Inlet as offshore\ntransmission mileage in its 2015 Annual Report. During the on-site records inspection at\nHilcorp's Nikiski office, Hilcorp produced an internal document that identified 16.6 miles of\n8-inch gas transmission lines associated with their MGS natural gas pipeline system as\noffshore; however, that same pipeline mileage recorded in the 2015 annual report as\nsubmitted by Hilcorp on March 15, 2016 was listed as an onshore pipeline, in direct\ncontradiction of their own internal analysis.\nPrior to September 1, 2015 the previous owner, XTO Energy Inc., had correctly reported and\ncategorized their 8-inch diameter transmission pipe as lying in offshore waters. Hilcorp\npurchased the XTO oil and gas facilities on September 1, 2015.\nThe mileage associated with the purchase of the XTO facilities is required to be reported on\nHilcorp's 2015 Annual Report. Hilcorp calculated that 16.6 miles of 8-inch diameter pipe was\nassociated with the natural gas transmission facilities located within the waters of the Upper\nCook Inlet. The waters of the upper Cook Inlet are \"offshore\" under 49 C.F.R. Part 192 and\n49 C.F.R. Part 195, and are required to be reported as such pursuant to § 191.17(a). Hilcorp's\n2015 Annual Report does not report any offshore mileage for 8-inch diameter transmission\npipe (Part H of the Annual Report). Hilcorp's 2015 Annual Report does report 16.6 miles of\n8-inch diameter pipe as onshore transmission pipe. Therefore, Hilcorp failed to properly\nreport the 16.6 miles of 8-inch diameter transmission pipe located within the waters of the\nupper Cook Inlet as offshore transmission mileage in its 2015 Annual Report. Hilcorp’s\nRegulatory Compliance Manager verified that Hilcorp had reported the mileage as \"onshore\".\nProposed Civil Penalty\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to\nexceed $209,002 per violation per day the violation persists, up to a maximum of $2,090,022\nfor a related series of violations. For violations occurring prior to November 2, 2015, the\nmaximum penalty may not exceed $200,000 per violation per day, with a maximum penalty\nnot to exceed $2,000,000 for a related series of violations. The Compliance Officer has\nreviewed the circumstances and supporting documentation involved in the above probable\nviolation and has recommended that you be preliminarily assessed a civil penalty of $198,700\nas follows:\n2\n\n\n\nItem number PENALTY\n1 $198,700\nProposed Compliance Order\nWith respect to item 1, pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials\nSafety Administration (PHMSA) proposes to issue a Compliance Order to Hilcorp Alaska,\nLLC. Please refer to the Proposed Compliance Order, which is enclosed and made a part of\nthis Notice.\nResponse to this Notice\nEnclosed as part of this Notice is a document entitled Response Options for Pipeline\nOperators in Compliance Proceedings. Please refer to thi","truncated":true,"body_characters":43547}