BUCKEYE PARTNERS, LP — Notice of Probable Violation

party submissionOfficial PDF120125002_Operator Response to Notice_03082012.pdf#

120125002_ NOPV-PCP-PCO_02072012_text.pdf, page 1Official PDFU.S. Department 820 Bear Tavern Road, Suite 103 Of Transportation West Trenton, NJ 08628 Pipeline and 609.989.2171 Hazardous Materials Safety Administration NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER OVERNIGHT EXPRESS MAIL February 07, 2012 Jerry Ashcroft Vice President of Field Operations Buckeye Partners, L.P. Five TEK Park 9999 Hamilton Boulevard Breinigsville, PA 18031 CPF 1-2012-5002 Dear Mr. Ashcroft: From June 15 to 19, 2009, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Buckeye Partners, L.P.’s (Buckeye) pipeline and facilities in New Haven, Connecticut. As a result of the inspection, it appears 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: 1. §195.589 What corrosion control information do I have to maintain? (c) You must maintain a record of each analysis, check, demonstration, examination, inspection, investigation, review, survey, and test required by this subpart in sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures does not exist. You must retain these records for at least 5 years, except that records related to Secs. 195.569, 195.573(a) and (b), and 195.579(b)(3) and (c) must be retained for as long as the pipeline remains in service. Buckeye failed to maintain records of each atmospheric corrosion inspection, as required by §195.583(a), for at least 5 years.#

120125002_ NOPV-PCP-PCO_02072012_text.pdf, page 2120125002 During the inspection, a PHMSA representative requested Buckeye personnel to provide records of atmospheric corrosion inspections for the New Haven facility. However, Buckeye personnel could not provide any records of atmospheric corrosion inspections at the time of the inspection. 2. §195.404 Maps and Records. (c) Each operator shall maintain the following records for the periods specified; (3) A record of each inspection and test required by this subpart shall be maintained for at least 2 years or until the next inspection or test is performed, whichever is longer. Buckeye failed to maintain records of each overpressure safety device inspection and test as required by §195.428(a), for at least 2 years from 2007 through the PHMSA inspection performed in 2009. During the field inspection at Ludlow Tank Farm, a PHMSA representative observed that there were three (3) breakout tanks. Each of these breakout tanks has a thermal relief valve at an inlet and at the outlet, totaling six (6) thermal relief valves. The PHMSA representative requested Buckeye personnel to provide records of the overpressure safety device inspection and test pursuant to §195.428(a). However, Buckeye personnel could not produce any records or documentation at the time of the inspection. 3. §195.430 Firefighting equipment. Each operator shall maintain adequate firefighting equipment at each pump station and breakout tank area. The equipment must be- (a) In proper operating condition at all times; Buckeye failed to maintain firefighting equipment in proper operating condition at all times at the Ludlow Tank Farm. During the field inspection at Ludlow Tank Farm, a PHMSA representative observed that the lever on the nozzle of a foam hose was in a peculiar position. The lever was used to start and stop flow from the nozzle. The PHMSA representative requested a Buckeye representative to demonstrate how to operate the firefighting equipment for the purpose of fighting fires. The Buckeye representative could not move the lever because it was jammed, which made the firefighting equipment inoperable. 4. §195.589 What corrosion control information do I have to maintain? (c) You must maintain a record of each analysis, check, demonstration, examination, inspection, investigation, review, survey, and test required by this subpart in sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures does not exist. You must retain these records for at least 5 years, except that records related to Secs. 195.569, 195.573(a) and (b), and 195.579(b)(3) and (c) must be retained for as long as the pipeline remains in service. Buckeye failed to maintain a record of an internal inspection, required by §195.579(c), or a record control measures or that corrosion requiring control measures does not exist. 120125002_NOPV-PCP-PCO_02072012 Page 2 of 5#

120125002_ NOPV-PCP-PCO_02072012_text.pdf, page 3120125002 A pipeline replacement project was conducted on September 18, 2008, at Waterfront Street. Under §195.579(c), whenever you remove pipe from a pipeline, you must inspect the internal surface of the pipe for evidence of corrosion. Buckeye did not have written documentation that an inspection had been performed. Buckeye indicated that an internal inspection was performed and that the existing pipe was in good condition, but provided no records. 5. §195.404 Maps and Records. (c) Each operator shall maintain the following records for the periods specified; (3) A record of each inspection and test required by this subpart shall be maintained for at least 2 years or until the next inspection or test is performed, whichever is longer. Buckeye failed to maintain records of Right-of-Way (ROW) inspections, required by §195.412(a), for at least 2 years. Buckeye’s procedures for ROW inspections, D-02-Pipeline Right of Way, established several methods (primarily walking and flying) to inspect the ROW. Additionally, D-02-Pipeline Right of Way refers to ROW inspections shall be inspected within the time frequency listed on the Comprehensive Scheduling Chart in Section D-01. The chart recites the requirement prescribed in §195.412(a). A PHMSA representative requested a Buckeye representative to provide records of ROW inspections for the entire pipeline from New Haven, Connecticut, to Ludlow Station in Massachusetts, in accordance to its procedure, D-02-Pipeline Right of Way. The Buckeye representative produced an incomplete work order list from 2/18/2009 to 5/21/2009 for walking the line that had no information regarding the surface conditions on or adjacent to each pipeline ROW. Furthermore, the aforementioned list showed a segregated section of the facility rather than the entire facility. PHMSA found this list to be inadequate for ROW inspection records; therefore, Buckeye did not comply with §195.404(c)(3). Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violations and has recommended that you be preliminarily assessed a civil penalty of $67,900 as follows: Item number PENALTY 1 $11,800 2 $18,800 4 $11,800 5 $25,500 120125002_NOPV-PCP-PCO_02072012 Page 3 of 5#

120125002_ NOPV-PCP-PCO_02072012_text.pdf, page 4120125002 Proposed Compliance Order With respect to items 2 and 5 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Buckeye. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Warning Item With respect to item 3, 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 this item. Be advised that failure to do so may result in Buckeye being subject to additional enforcement action. 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. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. Please address your correspondence to Byron Coy, PE, Director, PHMSA Eastern, 820 Bear Tavern Rd, Suite 103, Bear Tavern Rd, W. Trenton, NJ 08628. Please refer to CPF 1-2012-5002 and for each document you submit, please provide a (signed) copy in electronic format whenever possible. Smaller files may be emailed to Byron.Coy@dot.gov. Larger files should be sent on a CD accompanied by the original paper copy to the Eastern Region Office Sincerely, Byron Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 120125002_NOPV-PCP-PCO_02072012 Page 4 of 5#

120125002_ NOPV-PCP-PCO_02072012_text.pdf, page 5120125002 PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Buckeye Partners L.P. (Buckeye) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Buckeye with the pipeline safety regulations: 1. Regarding Item Number 2 of the Notice pertaining to §195.404(c)(3), all thermal relief valves at Ludlow Tank Farm must be inspected and tested, as prescribed in §195.428(a), within 60 days after receipt of the Final Order. 2. Regarding Item Number 5 of the Notice pertaining to §195. 404(c)(3), Buckeye must inspect the surface condition on or adjacent to each pipeline right-of-way, for the entire pipeline from New Haven, Connecticut, to Ludlow Station in Massachusetts, as prescribed in §195.412(a), within 90 days after receipt of the Final Order. 3. Buckeye must record all inspections and tests set forth in the items of the compliance order. This must be done in accordance to the regulation and Buckeye’s Operation and Maintenance Manual, if applicable. 4. Buckeye must make all records and/ documentation available for review by the Director upon request. 5. Buckeye must provide a summary report to demonstrate compliance with all the above items to the Director, Eastern Region, Pipeline and Hazardous Materials Safety Administration, 820 Bear Tavern Rd, Suite 103, West Trenton, NJ 08628 within 120 days after receipt of the Final Order. 6. It is requested (not mandated) that Buckeye maintains documentation of the safety improvement costs associated with fulfilling this Compliance Order and submits the total to Director. 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. 120125002_NOPV-PCP-PCO_02072012 Page 5 of 5#

120125002_Final Order_12182012_text.pdf, page 1Official PDFDECEMBER 18, 2012 Mr. Clark Smith President & Chief Executive Officer Buckeye Partners, LP One Greenway Plaza Suite 600 Houston, TX 77046 Re: CPF No. 1-2012-5002 Dear Mr. Smith: Enclosed please find the Final Order issued in the above-referenced case. It withdraws three of the allegations of violation, makes one finding of violation, assesses a civil penalty of $11,800, and issues a warning to Buckeye Partners, LP, with respect to one other alleged probable violation. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon receipt of payment. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Thomas (Scott) Collier, Director, Performance Assurance, Buckeye Partners, LP, Five TEK Park, 9999 Hamilton Boulevard, Breinigsville, PA 18031 Mr. Byron Coy, Eastern Region Director, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

120125002_Final Order_12182012_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 ) Buckeye Partners, LP, ) CPF No. 1-2012-5002 ) ) ) Respondent. ) ____________________________________) FINAL ORDER Between June 15 and 19, 2009, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of Buckeye Partners, LP (Buckeye or Respondent), in New Haven, Connecticut. Buckeye owns and operates approximately 6,000 miles of pipeline transporting refined petroleum products and highly volatile liquids.1 As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated February 7, 2012, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Buckeye had committed various violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $67,900 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. Buckeye responded to the Notice by letter dated March 8, 2012 (Response). The company contested three allegations, agreed with one, offered additional information in response to the Notice, and requested that several of the proposed penalties be eliminated. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.589(c), which states: 1 http://www.buckeye.com/BusinessOperations/tabid/56/Default.aspx and http://www.buckeye.com/AboutUs/tabid/54/Default.aspx (last accessed on June 22, 2012).#

120125002_Final Order_12182012_text.pdf, page 32 § 195.589 What corrosion control information do I have to maintain? (a)…. (c) You must maintain a record of each analysis, check, demonstration, examination, inspection, investigation, review, survey, and test required by this subpart in sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures does not exist. You must retain these records for at least 5 years, except that records related to §§ 195.569, 195.573(a) and (b), and 195.579(b)(3) and (c) must be retained for as long as the pipeline remains in service. The Notice alleged that Respondent violated 49 C.F.R. § 195.589(c) by failing to maintain records of each inspection required by Subpart H (Corrosion Control) for at least five years. Specifically, the Notice alleged that Buckeye was unable, at the time of the PHMSA inspection, to produce records of atmospheric corrosion inspections required by 49 C.F.R. § 195.583(a) for the company’s New Haven facility. Respondent contested this allegation of violation, asserting that it did provide records at the time of the inspection. In its Response, Buckeye attached copies of the requested records. The records showed that atmospheric corrosion inspections had been performed on the New Haven facility on October 27, 2003, and again on October 24, 2006. After considering all of the evidence, I find that the records submitted by Buckeye in its Response satisfy the record maintenance requirement for the atmospheric corrosion inspections at the New Haven facility. Based upon the foregoing, I hereby order that Item 1 be withdrawn. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.404(c)(3), which states: § 195.404 Maps and records. (a)…. (c) Each operator shall maintain the following records for the periods specified:… (3) A record of each inspection and test required by this subpart shall be maintained for at least 2 years or until the next inspection or test is performed, whichever is longer. The Notice alleged that Respondent violated 49 C.F.R. § 195.404(c)(3) by failing to maintain a record of each inspection and test required by Subpart F (Operation and Maintenance) for at least two years or until the next inspection or test is performed, whichever is longer. Specifically, it alleged that Buckeye failed to maintain records of each overpressure safety device inspection, as required by § 195.428(a), for at least two years from 2007 through the 2009. The Notice alleged that during the inspection, a PHSMA representative observed three breakout tanks at Respondent’s Ludlow Tank Farm, each of which had two thermal relief valves. One valve was for the inlet and one for the outlet line of each tank, for a total of six among the three tanks. Buckeye was unable to produce any records or documentation for the overpressure safety device inspections for these valves at the time of the inspection.#

120125002_Final Order_12182012_text.pdf, page 43 Under § 195.428, an overpressure safety device must be inspected and tested at intervals not exceeding 15 months, but at least once each calendar year, to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. Buckeye contested the allegation, asserting that there were only five active tank lines associated with the three tanks, not six. Tanks 1 and 2 each had an incoming and outgoing line, but Tank 3 only had one. The company further explained that Tanks 1 and 2 had no thermal relief valves on either the incoming or outgoing tank lines, but were joined together into one line, for which thermal relief protection was located in the pump house. As for Tank 3, Buckeye explained there was a thermal relief valve on the incoming/outbound line at the tank. Both thermal relief valves were inspected once per calendar year (not to exceed 15 months). I agree. Having reviewed the records and photograph, along with the company’s description of the valve configuration, it appears that the two thermal relief valves were inspected at the prescribed interval. Accordingly, I find that the records submitted by Buckeye in its Response satisfy the record maintenance requirement for the overpressure safety devices at Ludlow Tank Farm. Based upon the foregoing, I hereby order that Item 2 be withdrawn. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.589(c), as cited above, by failing to maintain a record of each inspection required by Subpart H (Corrosion Control) for at least five years. Such records must show sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures do not exist. Specifically, the Notice alleged that on September 18, 2008, Buckeye conducted a pipeline replacement project at Waterfront Street. Although Buckeye’s project engineer claimed that the company performed an internal pipe visual inspection, as required by 49 C.F.R. § 195.579(c), the company had no records to document that it had actually performed such an inspection. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.589(c) by failing to maintain a record of the internal inspection of the pipe in sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures do not exist. Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.404(c)(3), as quoted above, by failing to maintain a record of each inspection and test required by Subpart F (Operation and Maintenance) for at least two years or until the next inspection or test is performed, whichever is longer. Specifically, the Notice alleged that Buckeye failed to maintain records of Right-of-Way (ROW) inspections required by § 195.412(a) for at least two years. According to the Notice, Buckeye provided incomplete records of ROW inspections for the entire pipeline from New Haven, Connecticut, to Ludlow Station in Massachusetts between February 18, 2009, and May 21, 2009. The records produced only showed a segregated section of the facility rather than the entire facility and had no information regarding the surface conditions on or adjacent to each pipeline ROW. In its Response, Buckeye contested this allegation, contending that it used air patrols to perform#

120125002_Final Order_12182012_text.pdf, page 54 ROW inspections at intervals not exceeding three weeks, but at least 26 times per year. The record provided to PHMSA for the period between February 18, 2009, and May 21, 2009 was only a summary listing of the work orders for ROW walking patrols in addition to the 26 required during the calendar year. Upon review of the record, it appears that Buckeye submitted spreadsheets indicating that air patrols for eight line sections were performed every two weeks from January 3, 2006, to June 14, 2009. Buckeye also submitted six examples of pilot reports dated: January 3, 2007, June 18, 2007, January 21, 2008, June 17, 2008, January 12, 2009, and June 8, 2009. Accordingly, I find that the records submitted by Buckeye in its Response satisfy the record maintenance requirement for the ROW inspections for the entire pipeline. Based upon the foregoing, I hereby order that Item 5 be withdrawn. 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 $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related series of violations. 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; the Respondent’s ability to pay the penalty 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 $67,900 for the violations cited above. Item 1: The Notice proposed a civil penalty of $11,800 for Respondent’s violation of 49 C.F.R. § 195.589(c), for failing to maintain records of each atmospheric corrosion inspection for at least five years. As discussed above, Item 1 is withdrawn. Therefore, I also withdraw the proposed penalty for violation of 49 C.F.R. § 195.589. Item 2: The Notice proposed a civil penalty of $18,800 for Respondent’s violation of 49 C.F.R. § 195.404(c)(3), for failing to maintain records of each overpressure safety device inspection as required by § 195.428(a) for at least two years from 2007 through the 2009. As discussed above, Item 2 is withdrawn. Therefore, I also withdraw the proposed penalty for violation of 49 C.F.R. § 195.404. Item 4: The Notice proposed a civil penalty of $11,800 for Respondent’s violation of 49 C.F.R. § 195.589(c), for failing to maintain a record of the internal inspection of the pipe in sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures do not exist. Buckeye did not contest this allegation of violation or#

120125002_Final Order_12182012_text.pdf, page 65 offer any argument or evidence justifying a reduction in penalty. Internal corrosion can lead to a leak or rupture of the pipeline, thus posing a risk to life, property, and the environment. The proposed penalty taken into account the substantial period of time that elapsed between the time of the replacement project in 2008 and the date of the inspection. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $11,800 for violation of 49 C.F.R. § 195.589. Item 5: The Notice proposed a civil penalty of $25,500 for Respondent’s violation of 49 C.F.R. § 195.404, for failing to maintain records of ROW inspections for at least two years. As discussed above, Item 5 is withdrawn. Therefore, I withdraw the proposed penalty for violation of 49 C.F.R. § 195.404. In summary, having reviewed the record and considered the assessment criteria for Item 4 cited above, I assess Respondent a total civil penalty of $11,800. Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire transfers should be directed to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial Operations Division telephone number is (405) 954-8893. Failure to pay the $11,800 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a district court of the United States. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 2 and 5 in the Notice for violations of 49 C.F.R. § 195.404. However, I have withdrawn these items. Accordingly, the compliance terms proposed in the Notice are not included in this Order. WARNING ITEM With respect to Item 3, the Notice alleged a probable violation of Part 195 but did not propose a civil penalty or compliance order for this item. Therefore, this is considered to be a warning item. The warning was for: 49 C.F.R. § 195.430 (Item 3) ─ Respondent’s alleged failure to maintain adequate firefighting equipment at each pump station and breakout tank area in#

120125002_Final Order_12182012_text.pdf, page 76 good operating condition at all times. During the inspection, a Buckeye representative could not move the lever on the nozzle of a foam hose at Ludlow Tank Farm because it was jammed and therefore inoperable. Buckeye presented information in its Response showing that it had taken certain actions to address this item. Buckeye explained that it had inspected and lubricated the nozzle, which then functioned properly, and that it intended to lubricate the nozzle every month to ensure its operability. If OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject to future enforcement action. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#