{"operation":"document","citation":"CPF 52022003NOPV","title":"THUNDER CREEK NGL PIPELINE, LLC — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2022-02-01","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.408(b)(2), 195.410(a)(2)(ii), 195.420(b), 195.428(a).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-52022003nopv.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-52022003nopv.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-52022003nopv","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/52022003NOPV","body":"Notice of Probable Violation involving THUNDER CREEK NGL PIPELINE, LLC. PHMSA's enforcement data identifies the cited regulations as 195.408(b)(2),  195.410(a)(2)(ii),  195.420(b),  195.428(a). The case was opened on 2022-02-01 and is reported as closed as of 2022-09-14. Proposed civil penalty: $45,600. Assessed civil penalty: $45,600. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n52022003NOPV_Final Order_09122022_(21-199942).pdf: https://primis.phmsa.dot.gov/enforcement-documents/52022003NOPV/52022003NOPV_Final%20Order_09122022_(21-199942).pdf\n\n52022003NOPV_Final Order_09122022_(21-199942)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/52022003NOPV/52022003NOPV_Final%20Order_09122022_(21-199942)_text.pdf\n\n52022003NOPV_PCP_02012022_(21-199942).pdf: https://primis.phmsa.dot.gov/enforcement-documents/52022003NOPV/52022003NOPV_PCP_02012022_(21-199942).pdf\n\n52022003NOPV_PCP_02012022_(21-199942)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/52022003NOPV/52022003NOPV_PCP_02012022_(21-199942)_text.pdf\n\n52022003NOPV_Final Order_09122022_(21-199942)_text.pdf\n\nSeptember 12, 2022\nVIA ELECTRONIC MAIL TO: nthomas@meritagemidstream.com\nMr. Nicholas O. Thomas\nChairman and Chief Executive Officer\nMeritage Midstream Services II, LLC\n1114 Energy Street\nGillette, Wyoming 82716\nRe: CPF No. 5-2022-003-NOPV\nDear Mr. Thomas:\nEnclosed please find the Final Order issued in the above-referenced case to Thunder Creek NGL\nPipeline, LLC, a subsidiary of Meritage Midstream Services II, LLC. It makes findings of\nviolation and assesses a civil penalty of $45,600. The penalty payment terms are set forth in the\nFinal Order. This enforcement action closes automatically upon receipt of payment. Service of\nthe Final Order by e-mail is effective upon the date of transmission and acknowledgement of\nreceipt as provided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure (Final Order)\ncc: Mr. Dustin Hubbard, Director, Western Region, Office of Pipeline Safety, PHMSA\nMr. Terrance Herauf, Vice President of Operations, Meritage Midstream Services II,\nLLC, therauf@meritagemidstream.com\nMr. Hayden Truscott, EHS Manager, Meritage Midstream Services II, LLC,\nhtruscott@meritagemidstream.com\nMr. Robert D. Ayers, Outside Counsel for Meritage Midstream Services II, LLC, Holland\n& Hart LLP, rdayers@hollandhart.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____________________________________\n)\nIn the Matter of )\n)\nThunder Creek NGL Pipeline, LLC, ) CPF No. 5-2022-003-NOPV\na subsidiary of Meritage Midstream )\nServices II, LLC, )\n)\nRespondent. )\n____________________________________)\nFINAL ORDER\nFrom August 17 through 19, 2021, pursuant to 49 U.S.C. § 60117, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of Thunder Creek NGL Pipeline, LLC’s\n(Thunder Creek or Respondent) pipeline system in Wright, Wyoming. Thunder Creek is a\nwholly-owned subsidiary of Meritage Midstream Services II, LLC. Thunder Creek operates a\n115.5-mile Y-Grade gas pipeline.1 The system receives high-pressure natural gas liquids from\nthe Thunder Creek 50 Buttes Gas Processing Plant in Campbell County, Wyoming and the\nThunder Creek Steamboat I Gas Processing Plant in Converse County, Wyoming.2\nAs a result of the inspection, the Director, Western Region, OPS (Director), issued to\nRespondent, by letter dated February 1, 2022, a Notice of Probable Violation and Proposed Civil\nPenalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that\nThunder Creek had violated the pipeline safety regulations in 49 C.F.R. Part 195\nand proposed assessing a civil penalty of $45,600 for the alleged violations. The Notice also\nincluded an additional two warning items pursuant to 49 C.F.R. § 190.205, which required no\nfurther action, but warned the operator to correct the probable violations or face possible future\nenforcement action.\nOn February 16, 2022, Meritage Midstream Services II, LLC, on behalf of Thunder Creek,\nresponded to the Notice (Response). Thunder Creek did not contest the allegations of violation\nand did not request a hearing. In its Response, the company provided additional information,\nand requested that the proposed civil penalties for Items 1 and 2 be reduced or withdrawn.\n1 Pipeline Safety Violation Report (Violation Report), (February 1, 2022) (on file with PHMSA), at 1.\n2 Id.\n\n\n\nFINDINGS OF VIOLATION\nIn its Response, Thunder Creek did not contest the allegations in the Notice that it violated 49\nC.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.420(b), which states:\n§ 195.420 Valve maintenance.\n(a) ….\n(b) Each operator shall, at intervals not exceeding 7 ½ months, but at\nleast twice each calendar year, inspect each mainline valve to determine that\nit is functioning properly.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.420(b) by failing to inspect each\nmainline valve at intervals not exceeding 7 ½ months, but at least twice each calendar year, to\ndetermine that it is functioning properly. Specifically, the Notice alleged that Thunder Creek\nfailed to produce records demonstrating that it inspected each mainline valve at the requisite\nintervals for calendar year 2020.\nRespondent did not contest this allegation of violation. Accordingly, based on a review of the\nevidence, I find that Respondent violated 49 C.F.R. § 195.420(b) by failing to inspect each\nmainline valve at intervals not exceeding 7 ½ months, but at least twice each calendar year, to\ndetermine that it is functioning properly.\nItem 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a), which states:\n§ 195.428 Overpressure safety devices and overfill protection systems.\n(a) Except as provided in paragraph (b) of this section, each operator\nshall, at intervals not exceeding 15 months, but at least once each calendar\nyear, or in the case of pipelines used to carry highly volatile liquids, at\nintervals not to exceed 7 ½ months, but at least twice each calendar year,\ninspect and test each pressure limiting device, relief valve, pressure\nregulator, or other item of pressure control equipment to determine that it is\nfunctioning properly, is in good mechanical condition, and is adequate from\nthe standpoint of capacity and reliability of operation for the service in\nwhich it is used.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and test\neach relief device on its pipeline used to carry highly volatile liquids, at intervals not exceeding 7\n½ months, but at least twice each calendar year, to determine that it is functioning properly, is in\ngood mechanical condition, and is adequate from the standpoint of capacity and reliability of\noperation for the service in which it is used. Specifically, the Notice alleged that Thunder Creek\nfailed to produce records demonstrating that it inspected each relief valve at the requisite\nintervals for calendar years 2019 and 2020.\n\n\n\nRespondent did not contest this allegation of violation. Accordingly, based on a review of the\nevidence, I find that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and test\neach relief device on its pipeline used to carry highly volatile liquids, at intervals not exceeding 7\n½ months, but at least twice each calendar year, to determine that it is functioning properly, is in\ngood mechanical condition, and is adequate from the standpoint of capacity and reliability of\noperation for the service in which it is used.\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any\nrelated series of violations.3\nIn determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I\nmust consider the following criteria: the nature, circumstances, and gravity of the violation,\nincluding adverse impact on the environment; the degree of Respondent’s culpability; the history\nof Respondent’s prior offenses; any effect that the penalty may have on its ability to continue\ndoing business; the good faith of Respondent in attempting to comply with the pipeline safety\nregulations; and self-disclosure or actions to correct a violation prior to discovery by PHMSA.\nIn addition, I may consider the economic benefit gained from the violation without any reduction\nbecause of subsequent damages, and such other matters as justice may require. The Notice\nproposed a total civil penalty of $45,600 for the violations cited above.\nItem 1: The Notice proposed a civil penalty of $22,800 for Respondent’s violation of 49 C.F.R.\n§ 195.420(b), for failing to inspect each mainline valve at intervals not exceeding 7 ½ months,\nbut at least twice each calendar year, to determine that it is functioning properly. Thunder Creek\nargued the civil penalty should be reduced or withdrawn for several reasons.\nWith respect to culpability, Thunder Creek asserted it corrected the non-compliance before\nPHMSA learned of the violation. Specifically, Thunder Creek explained that when it discovered\nit missed its first inspection deadline (April 10, 2020) for calendar year 2020, it immediately\nconducted an inspection on July 23, 2020.4 However, even though Thunder Creek realized it\nwas out of compliance with § 195.420(b) by July 2020, it did not conduct a second calendar year\n2020 inspection as required by the regulation. Rather, Thunder Creek conducted the next\ninspection on February 23, 2021.5 Thunder Creek’s inspections in 2021 complied with the\nregulations in 2021, but it did not act to correct the non-compliance in 2020. Accordingly,\nThunder Creek is not entitled to a reduction in the penalty because the company did not correct\n3 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.\n4 Violation Report, at Ex. 4.\n5 Id., at Ex. 5.\n\n\n\nthe non-compliance for calendar year 2020 prior to PHMSA’s inspection.\nThunder Creek also argues the end date of the violation of July 23, 2020, in the Violation Report\nis evidence that the company is entitled to credit for correcting the violation before PHMSA\nconducted its inspection. I disagree. The Violation Report shows the operator inspected the\nmainline valves on August 26, 2019, and was required to inspect them again by April 10, 2020,\nin order to not exceed the 7 ½ month interval. The next time the valves were inspected was on\nJuly 23, 2020, over three months beyond the required interval. The end date of the violation in\nthe Violation Report reflects that next inspection date which occurred beyond the 7 ½ month\ninterval, but that date does not show that the operator corrected the compliance issue before\nPHMSA’s inspection because it remains undisputed that the company failed to conduct two\ninspections of the valves in the calendar year 2020 and it failed to conduct the first inspection\nwithin 7 ½ months of the previous inspection.\nWith respect to additional considerations, Thunder Creek alleged that a reduction of the civil\npenalty is warranted due to organizational restructuring efforts that resulted in a new position to\noversee PHMSA compliance, and the implementation of a new internal tracking system to more\naccurately track inspections, both of which occurred prior to PHMSA’s inspection.6 Although\nPHMSA commends Thunder Creek for making these organizational changes, the non-\ncompliance issue continued through the end of 2020. Further, PHMSA issued a warning letter to\nThunder Creek in 2017 for its alleged failure to inspect each mainline valve at the requisite\nintervals pursuant to § 195.420(b).7 Thus, Thunder Creek has been aware of this compliance\nissue for several years, but failed to address the issue sooner.\nAlso with respect to additional considerations, Thunder Creek stated that the COVID-19\npandemic caused significant operational and personnel challenges that “likely contributed” to the\nmissed inspections.”8 At the beginning of the COVID-19 pandemic, PHMSA issued a Notice of\nStay of Enforcement and Notice of Enforcement Discretion to Operators Affected by the\nCoronavirus (COVID-19) Outbreak.\n9 The Stay of Enforcement recognized that operators may\nface resource constraints due to the COVID-19 pandemic, and required operators to document\nissues that may impact compliance and promptly notify PHMSA. Thunder Creek, however, did\nnot notify PHMSA that it was experiencing any operational and personnel challenges during this\ntime. Further, Thunder Creek’s response did not articulate the specific circumstances it faced\nthat caused the company to be unable to conduct inspections. The operator, therefore, is not\nentitled to a reduced civil penalty for challenges it was experiencing during the pandemic.\n6 Id., at 3.\n7 CPF No. 5-2017-5019.\n8 Response, at 3.\n9 See PHMSA Stay of Enforcement, Mar. 20, 2020, available at\nhttps://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/2020-03/PHMSA%20Notice%20on%20Enforcement.pdf, (last\naccessed Aug. 15, 2022); see also PHMSA Termination of March 20, 2020 Stay of Enforcement, May 19, 2021,\navailable at https://www.phmsa.dot.gov/news/notice-pipeline-underground-storage-and-lng-facility-operators-\nregarding-termination-phmsas, (last accessed Aug. 15, 2022).\n\n\n\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $22,800 for violation of 49 C.F.R. § 195.420(b).\nItem 2: The Notice proposed a civil penalty of $22,800 for Respondent’s violation of 49 C.F.R.\n§ 195.428(a), for failing to inspect and test each relief device on its pipeline used to carry highly\nvolatile liquids, at intervals not exceeding 7 ½ months, but at least twice each calendar year, to\ndetermine that it is functioning properly, is in good mechanical condition, and is adequate from\nthe standpoint of capacity and reliability of operation for the service in which it is used. Thunder\nCreek argued the civil penalty should be reduced or withdrawn for several reasons.\nWith respect to culpability, Thunder Creek asserted it corrected the non-compliance before\nPHMSA learned of the violation and that it missed the deadline for the second 2019 inspection\nby only 10 days. The relief valves were inspected on December 12, 2019, and next inspected on\nAugust 13, 2020, and again on March 29-30, 2021. Thunder Creek argued that because it missed\nthe December 2019 inspection by only ten days, the civil penalty should be reduced for\nidentifying the issue and correcting the non-compliance. However, Thunder Creek did not\ncorrect the non-compliance. For calendar year 2019, Thunder Creek admitted it did not conduct\ninspections at intervals not to exceed 7 ½ months. In the calendar year 2020, Thunder Creek\ncompleted only one inspection despite implementing a compliance officer position in that same\nyear. Compliance with the regulation in 2021 did not act to correct the non-compliance that\noccurred in 2019 and 2020. Thunder Creek, therefore, did not correct the non-compliance that\noccurred in 2019 or 2020 prior to PHMSA’s inspection and, therefore, is not entitled to a\nreduction in the civil penalty.\nThunder Creek argues the end date of the violation in the Violation Report (August 12, 2020)\nprovides evidence that the company corrected the non-compliance prior to PHMSA’s inspection.\nAgain, Thunder Creek did not correct the violation before PHMSA conducted its inspection and\nit cannot claim, simply based on a date in the Violation Report, that it corrected its violation\nwhen it did not. The end date in the Violation Report reflects the date that Thunder Creek\ncompleted one inspection in 2020, but does not conclude or signify that the inspection due by\nJuly 27, 2020 was cured. Further, it is undisputed that Thunder Creek did not conduct two\ninspections in the calendar year 2020 so no credit is warranted for correcting the violation prior\nto PHMSA’s inspection.\nWith respect to additional considerations, Thunder Creek stated that due to its organizational\nrestructuring efforts and the unavoidable challenges caused by the COVID-19 pandemic, the\ncivil penalty should be reduced or withdrawn. For the same reasons identified in Item 1, I find\nthat a reduction in the civil penalty is not warranted on those bases.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $22,800 for violation of 49 C.F.R. § 195.428(a).\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a total civil penalty of $45,600.\nPayment of the civil penalty must be made within 20 days after receipt of this Final Order.\n\n\n\nFederal regulations (49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer\nthrough the Federal Reserve Communications System (Fedwire), to the account of the U.S.\nTreasury. Detailed instructions are contained in the enclosure. Questions concerning wire\ntransfers should be directed to: Financial Operations Division (AMK-325), Federal Aviation\nAdministration, Mike Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City,\nOklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845.\nFailure to pay the $45,600 civil penalty will result in accrual of interest at the current annual rate\nin accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to\nthose same authorities, a late penalty charge of six percent (6%) per annum will be charged if\npayment is not made within 110 days of service. Furthermore, failure to pay the civil penalty\nmay result in referral of the matter to the Attorney General for appropriate action in a district\ncourt of the United States.\nWARNING ITEMS\nWith respect to Items 3 and 4, the Notice alleged probable violations of Part 195, but identified\nthem as warning items pursuant to § 190.205. The warnings were for:\n49 C.F.R. § 195.408(b)(2) (Item 3) ─ Respondent’s alleged failure to have a\ncommunication system to provide for the transmission of information needed for\nthe safe operation of its pipeline system, including the ability to receive notices\nfrom operator personnel, the public, and public authorities of abnormal or\nemergency conditions and sending this information to appropriate personnel or\ngovernment agencies for corrective action; and\n49 C.F.R. § 195.210(a)(2)(ii) (Item 4) ─ Respondent’s alleged failure to place\nand maintain line markers over each buried pipeline that had the name of the\noperator and a telephone number (including area code) where the operator can be\nreached at all times on a background of sharply contrasting color.\nIf OPS finds a violation of any of these items in a subsequent inspection, Respondent may be\nsubject to future enforcement action.\nUnder 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final\nOrder to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey\nAvenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of\nChief Counsel, PHMSA, at the same address. The written petition must be received no later than\n20 days after receipt of the Final Order by Respondent. Any petition submitted must contain a\nbrief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.243. The filing\nof a petition automatically stays the payment of any civil penalty assessed. The other terms of\nthe order, including any corrective action, remain in effect unless the Associate Administrator,\nupon request, grants a stay. If Respondent submits payment of the civil penalty, the Final Order\nbecomes the final administrative decision and the right to petition for reconsideration is waived.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\n\n\n\nC.F.R. § 190.5.\nSeptember 12, 2022\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety","truncated":false,"body_characters":20533}