Mr. G.P. Bilinski
Vice President, Transmission
Re: CPF No. 4-2001-1003
Dear Mr. Bilinski:
Enclosed is the Final Order issued by the Associate Administrator for Pipeline Safety in the above-referenced case. It makes a finding of violation and assesses a civil penalty of $5,000. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon payment. Your receipt of the Final Order constitutes service of that document under 49 C.F.R. § 190.5.
Pipeline Compliance Registry
Office of Pipeline Safety
CERTIFIED MAIL – RETURN RECEIPT REQUESTED
DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
In the Matter of )
responded to the Notice by letter dated
FINDING OF VIOLATION
alleged that Respondent violated 49 C.F.R. § 191.5(a), which requires the
operator to notify the National Response Center (NRC) of each incident at the
earliest practicable moment following discovery. An incident is defined by § 191.3 to mean, inter alia, “an event that involves a
release of gas from a pipeline . . . and . . . estimated property damage,
including cost of gas lost, of $50,000 or more.” On
In its Response, at the hearing, and in its post-hearing Brief, Respondent contested the allegation that it committed a violation. Respondent argued that the release did not meet the definition of a reportable incident in § 191.3. Assuming the release was an incident, Respondent contended that the telephonic report was made at the earliest practicable moment following discovery in accordance with § 191.5(a).
I. Whether the release met the criteria of a reportable incident.
Section 191.3 defines an incident that must be reported as “an event that involves a release of gas from a pipeline . . . and . . . estimated property damage, including cost of gas lost, of $50,000 or more.” In its Brief, Respondent stated that during the event, approximately 29 million cubic feet (29 MMCF) of gas was lost. Respondent also stated that gas cost $4.14 per million British thermal units ($4.14/MMBTU) on the day of the event. Based on these numbers, the cost of the gas lost during the event was approximately $120,000, almost 2.5 times the threshold reporting amount. Accordingly, the Notice alleged that the event met the criteria for a reportable incident under § 191.3.
argued that the event did not meet the definition of an incident, despite the
amount of gas lost, because the reporting regulation implicitly excludes
“operational events” from being reported.
Respondent explained that this release was an “operational event,”
because it was caused by a properly-functioning relief valve and there was no
threat to safety. (Brief, p.4)
Respondent contended that § 191.5(a) applies only to “safety events,”
which are events that involve personal injury, death, or significant property
damage other than the loss of gas. (
this position, Respondent cited an Interpretation issued by OPS on
The Interpretation cited does not support the position proffered by Respondent for a number of reasons. First, the Interpretation has a limited scope. The Interpretation was issued for the specific purpose of notifying operators that they must report incidents when the cause of the release is not definitely known. The language cited by Respondent was background to the regulation and did not effectively limit the definition of a reportable event. Also, the Interpretation itself conflicts with Respondent’s position. The Interpretation states that “§ 191.5 applies to all leaks in pipeline systems regardless of their cause,” yet Respondent contended that § 191.5 does not apply to leaks caused by relief valves. I find nothing in the Interpretation or the preamble that supports Respondent’s position that “operational events” are excluded from the definition of reportable incidents.
Ultimately, Respondent’s position cannot be sustained. The reporting regulations establish specific criteria for determining when a release must be telephonically reported to the NRC. The established criterion for a release of gas with no personal injury or death is estimated property damage of $50,000 or more, including the cost of gas lost. Accordingly, an operator must report each event that involves solely the release of gas estimated to cost at least $50,000, regardless of the cause of the release or the operator’s opinion that no threat to safety is present.
Respondent admitted that the event in question involved the release of gas from a pipeline and the cost of gas lost was approximately $120,000. Therefore, I find the release was a reportable incident as the term is defined by § 191.3.
II. Whether the incident was reported at the earliest practicable moment following discovery.
191.5(a) requires each operator notify the National Response Center (NRC) of
each incident “at the earliest practicable moment following discovery.” OPS notified all pipeline operators by Alert
Notice ALN-91-01, dated
Even though the report was made twenty-seven hours after the incident occurred, Respondent explained that the report was made at the earliest practicable moment following discovery. “In order to make discovery, [Respondent] needed to calculate the volume of natural gas released and the cost of natural gas at the time of the event.” (Brief, p.2) Respondent stated that it took twenty-seven hours to gather all the relevant information necessary for it to determine that the release was reportable. As soon as Respondent determined that the incident was reportable, it promptly reported it to the NRC.
position is based on an interpretation that “discovery” is the point when an
operator discovers the release must be reported. OPS has consistently interpreted “discovery”
to mean discovery of the incident itself, not the determination that the
incident is reportable. See In
the Matter of Enstar Natural Gas Company, CPF No. 52016 (May 14,
1997). In Enstar, the order
explained that “[d]iscovery could either mean discovery of the cause of the
incident or discovery of the incident itself.” (Enstar, p.2.) The order set forth that “[i]f the regulation
were read to mean at the earliest practicable moment following discovery of the
cause of the incident, the operator would never be required to report an
incident until the cause of the incident was definitely determined.” (
In Transok, the pipeline operator reported an incident sixteen hours after the event occurred. The operator contended that it complied with § 191.5(a) because it took sixteen hours to determine that the amount of gas lost exceeded the threshold amount. The order found that enough information was available to the operator shortly after discovery of the incident to enable the operator to conclude the release would likely trigger the reporting requirements. The information available to the operator included data from pipeline monitors that indicated how long the leak had lasted, which was enough time for a significant amount of gas to be released.
present case, Respondent arrived at the release site aware the valve had been
open for 1.25 hours. Having knowledge of
the operating pressure on the line at the valve site and the length of time the
valve was open, Respondent could have estimated the volume of gas that
released. Using a reasonable estimate of
the cost of gas, Respondent should have known within a relatively short period
of time that the amount of gas lost likely exceeded the threshold and a report
would likely be required. In its
Response, Respondent stated that extraordinarily high gas prices were the only
reason the incident met the threshold. (Response,
p.3) Given the considerable amount of gas
that was lost, I disagree. A release of
29 MMCF of natural gas has consistently exceeded the $50,000 threshold in
months and even years prior to
In its Brief, Respondent argued that “earliest practicable moment” is not a specific time frame and that use of the 1-2 hour time frame mentioned in Alert Notice ALN-91-01 violates Respondent’s right to “regulatory due process” because it is not incorporated into regulations. OPS issued ALN-91-01 to provide guidance to the industry about the reporting requirements of § 191.5(a). The Alert Notice itself does not form the legal basis for a violation, but advises operators of the conduct required by § 191.5(a) in most cases, which enables them to conform their conduct accordingly. “When OPS learns that an operator has not submitted a telephonic report within one to two hours, OPS makes a case-by-case determination whether the operator should have known that a report was likely to be required and, if so, whether the operator had adequate opportunity to collect the reportable information.” (Transok, p.4)
In the present case, we look to see if Respondent was capable of knowing that a report was likely to be required shortly after the incident, and, if so, whether Respondent was able to collect the reportable information. The evidence shows that Respondent was capable of estimating that the incident would likely need to be reported shortly after the incident. Respondent was able to estimate the amount of gas released during the 1.25 hours the valve was open and the cost of the gas. Respondent was able to collect the minimal amount of information required to be reported under § 191.5(b), which was: the location of the incident, time of the incident, number of injuries or fatalities if any, the name of person reporting, and any other significant facts known at the time the report is made. I find Respondent failed to report the incident to the NRC at the earliest practicable moment by delaying the report until twenty-seven hours after the incident occurred. Accordingly, I find Respondent violated § 191.5(a) as alleged in the Notice.
ASSESSMENT OF PENALTY
Under 49 U.S.C. § 60122, Respondent is subject to a civil penalty not to exceed $100,000 per violation for each day of the violation up to a maximum of $1,000,000 for any related series of violations. The Notice proposed a total civil penalty of $5,000 for the violation of § 191.5(a).
49 U.S.C. § 60122 and 49 C.F.R. § 190.225 require that, in determining the amount of the civil penalty, I consider the following criteria: nature, circumstances, and gravity of the violation, degree of Respondent’s culpability, history of Respondent’s prior offenses, Respondent’s ability to pay the penalty, good faith by Respondent in attempting to achieve compliance, the effect on Respondent’s ability to continue in business, and such other matters as justice may require.
The circumstances of this case strongly indicate that Respondent should have reported this incident many hours prior to the time it did so. In its Response and at the hearing, Respondent contended that the gravity of the violation was negligible, because the event occurred in a rural area with no potential adverse effects to safety. Prompt reporting of a pipeline incident is critical to OPS’s ability to investigate and resolve pipeline safety concerns. Failure to report an incident promptly, even when an incident is in a rural area, hinders OPS’s ability to decide whether immediate response to the incident is necessary, which can jeopardize public safety and any subsequent investigation conducted by OPS.
Respondent also contended that it made a good faith attempt to comply with the regulatory requirements by reporting the incident as soon as it determined the value of the gas released, which exceeded $50,000 only because of extraordinarily high gas prices. However, Respondent was capable of estimating the price of gas much earlier and should have known that the incident would need to be reported given the amount of gas that was released. The amount of gas released would have exceeded the $50,000 threshold in most circumstances. Furthermore, there is evidence to suggest that Respondent’s field personnel did not promptly report the incident because they incorrectly believed that abnormal operations did not need to be reported.
Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of $5,000.
Payment of the civil penalty must be made within 20 days of service. Payment may be made by sending a certified check or money order (containing the CPF Number for this case) payable to “U.S. Department of Transportation” to the Federal Aviation Administration, Mike Monroney Aeronautical Center, Financial Operations Division (AMZ-120), P.O. Box 25082, Oklahoma City, OK 73125.
regulations (49 C.F.R. § 89.21(b)(3)) also permit this 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 (AMZ-120), Federal Aviation Administration,
Failure to pay the $5,000 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 United States District Court.
Under 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be received within 20 days of Respondent’s receipt of this Final Order and must contain a brief statement of the issue(s). The filing of the petition automatically stays the payment of any civil penalty assessed. However, if Respondent submits payment for the civil penalty, the Final Order becomes the final administrative action and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective on receipt.
Stacey Gerard Date Issued
for Pipeline Safety
 Respondent and OPS disagreed as to whether the relief valve in question functioned properly. The evidence suggests that the valve malfunctioned, because it opened at a pressure below MAOP and remained open for 1.25 hours until Respondent manually closed the valve. However, since this question of fact is not material to the outcome in this case, I do not make a finding as to whether the valve malfunctioned.
 Gas prices are published by the Energy Information Administration, U.S. Department of Energy, http://www.eia.doe.gov.