BUCKEYE PARTNERS, LP — Notice of Probable Violation

party submissionOfficial PDF120135006_Operator Response_06052013.pdf#

120135006_NOPV PCP PCO_05062013_text.pdf, page 1Official PDFU.S. Department Of Transportation Pipeline and 609.989.2171 Hazardous Materials Safety Administration 820 Bear Tavern Road, Suite 103 West Trenton, NJ 08628 NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER UPS OVERNIGHT DELIVERY May 6, 2013 Thomas Scott Collier Vice President, Performance Assurance & Asset Integrity Buckeye Partners, L.P. Five TEK Park 9999 Hamilton Boulevard Breinigsville, PA 18031 CPF 1-2013-5006 Dear Mr. Collier: On May 21, 2010, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code, initiated an investigation of an accident that occurred on Buckeye Partners, L.P.’s (Buckeye) pipe, designated Line LZ601XX, in Linden, New Jersey, on May 20, 2010. The accident involved a release of refined petroleum and resulted in property damage. Line LZ601XX is a part of Buckeye’s “Linden to NY State Line” pipeline system that consists of two 12 inch diameter, 0.25 inch wall thickness pipelines both 32 miles long, that delivers refined petroleum products such as diesel, fuel oil, kerosene and jet fuel to JFK Airport, LaGuardia Airport and other shippers in the Long Island, New York area. The maximum operating pressure of Line LZ601XX is 1,200 pounds per square inch gauge (psig). The pipe is coated with an external coal tar coating and has an impressed current cathodic protection system. On May 20, 2010, Colonial Pipeline Company (Colonial) received a call from a member of the public about a puddle of oil near Grasseli Road and South Wood Avenue in Linden, New Jersey. Colonial contacted Buckeye since both operators had pipelines in that area. International-Matex Tank Terminal, Inc. (IMTT) was contacted also, for the same reason. Buckeye notified the National Response Center (NRC)1 that it, along with Colonial and IMTT, were investigating a pipeline leak in the vicinity of that area. 1 NRC Report # 941049.#

120135006_NOPV PCP PCO_05062013_text.pdf, page 2CPF 1-2013-5006 Buckeye dispatched its personnel to that area to determine whether their pipe was leaking. When Buckeye personnel arrived on-site, they determined that their pipe, Line LZ601XX, had a pinhole leak. Line LZ601XX had been shut down, with product in it, for maintenance prior to the accident. The estimated pressure at the point and time of the accident was 282 psig. An estimated one (1) barrel of refined petroleum product was released from the pipe, approximately 1,100 feet east of the New Jersey Turnpike. The spill contaminated the soil and the surface water in Piles Creek. Buckeye took emergency containment measures. This accident occurred in an area surrounded by industrial facilities. This accident also occurred in an area that is identified as a high population area2 and unusually sensitive area.3 On June 17, 2010, Buckeye filed an accident report on DOT Form 7000-1(Accident Report)4 with PHMSA. As a result of the investigation, 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. §195.581 Which pipelines must I protect against atmospheric corrosion and what coating material may I use? (a) You must clean and coat each pipeline or portion of pipeline that is exposed to the atmosphere, except pipelines under paragraph (c) of this section. (b) Coating material must be suitable for the prevention of atmospheric corrosion. (c) Except portions of pipelines in offshore splash zones or soil-to-air interfaces, you need not protect against atmospheric corrosion any pipeline for which you demonstrate by test, investigation, or experience appropriate to the environment of the pipeline that corrosion will- (1) Only be a light surface oxide; or (2) Not affect the safe operation of the pipeline before the next scheduled inspection. Buckeye failed to protect the soil-to-air interface of its Line LZ601XX against atmospheric corrosion. As a result, external corrosion occurred at the soil-air-interface of Line LZ601XX and the pipe ultimately raptured. Prior to the accident, on August 19, 2008, Buckeye performed a visual inspection at the soil-to-air interface of Line LZ601XX, which was documented in Visual Inspection of Normally Exposed Pipe. This inspection record, in the “CONDITION OF COATING: Remarks” section, noted that the “[soil-to-air] interface on both sides of both lines needs to . . . be repaired” and that “[s]evere coating disbondment [was present].” Despite the fact that this inspection found deteriorated coating conditions and indicated that repair to the soil-to-air interface was needed, at the time of PHMSA’s accident investigation, Buckeye could not provide any records indicating Buckeye performed any repairs as a result of this inspection. 2 §195.450 Definitions. The following definitions apply to this section and §195.452: . . . (2) A high population area, which means an urbanized area, as defined and delineated by the Census Bureau, that contains 50,000 or more people and has a population density of at least 1,000 people per square mile; 3 §195.450 Definitions. The following definitions apply to this section and §195.452: . . . (4) An unusually sensitive area, as defined in §195.6. 4 This Notice refers to Buckeye’s Final Accident Report DOT Form 7000-1, last revision date: August 5, 2011. 120135006_NOPV_PCP_PCO_05062013 Page 2 of 6#

120135006_NOPV PCP PCO_05062013_text.pdf, page 3CPF 1-2013-5006 According to Buckeye’s atmospheric corrosion procedures that were in effect at the time, Maintenance Manual, J-4 – Visual Pipe Inspection, visual inspections of normally exposed pipes designed to span creeks were done once a year. 5 Consequently, following the August 19, 2008 inspection described above, Buckeye next inspected this location on August 1, 2009. However, despite the findings of the previous inspection and the fact that there was no evidence of repairs since the previous inspection, the record for the August 1, 2009 inspection noted no problems with the soil-to-air interface and there was no mention of severe coating disbondment. On May 20, 2010, Buckeye’s pipe, Line LZ601XX, leaked at this soil-to-air interface. The Accident Report confirmed that there was a pinhole leak at the soil-to-air interface of Line LZ601XX at mile post (MP) 90+13. The Accident Report also stated that the apparent cause of the accident was external corrosion.6 Buckeye sent the failed pipe segment to Det Norske Veritas (U.S.A.), Inc. (DNV) for a metallurgical analysis. DNV’s final report7 established that the leak occurred in an area of disbonded coating where the pipeline transitioned from above ground to buried service. The report concluded that “the pipe leaked at a 0.5-inch crack that formed in a region of deep external corrosion.” The report also stated that “the remaining wall thickness adjacent to the crack was approximately 0.02 inches”, or 8%. During the accident investigation, Buckeye’s compliance manager for the Linden facility stated that after the 2008 visual inspection, Buckeye developed a project that was supposed to address repair work to this soil-to-air interface. The project was scheduled to be completed in mid-2010. The PHMSA inspector requested that Buckeye provide documentation demonstrating that the soil-to-air interface at this location was remediated. Buckeye was unable to provide any records demonstrating that these repairs were made. Based on the foregoing evidence, Buckeye failed to protect the soil-to-air interface of its Line LZ601XX against atmospheric corrosion from the time it performed the visual inspection and noted severe coating disbondment on August 19, 2008. 2. §195.452 Pipeline integrity management in high consequence areas. (a) . . . (f) What are the elements of an integrity management program? An integrity management program begins with the initial framework. An operator must continually change the program to reflect operating experience, conclusions drawn from results of the integrity assessments, and other maintenance and surveillance data, and evaluation of consequences of a failure on the high consequence area. An operator must include, at minimum, each of the following elements in its written integrity management program: (1) . . . (3) An analysis that integrates all available information about the integrity of the entire pipeline and the consequences of a failure (see paragraph (g) of this section); Prior to August 27, 2010, Buckeye did not include the element of an analysis that integrates all available information about the integrity of the entire pipeline and the consequences of a failure in its written integrity management program, as required by §195.452(f)(3). Section 195.452(f)(3) refers to section 5 Maintenance Manual, J-4-Visual Pipe Inspection Issued: 4/08 and 6/09, references Comprehensive Scheduling Chart- Regulatory Inspections (Maintenance Manual Section D-01, Ex. A), Normally Exposed Spans (pipeline) . . . 1 Time/Yr. 6 Accident Report, at 6. 7 Det Norske Veritas, Final Report, Metallurgical Analysis of Leak on 12-Inch Diameter Pipeline (May 20, 2010), Buckeye Partners, L.P. 120135006_NOPV_PCP_PCO_05062013 Page 3 of 6#

120135006_NOPV PCP PCO_05062013_text.pdf, page 4CPF 1-2013-5006 195.452(g) which itemizes the information that an operator must analyze.8 Buckeye’s written integrity management program did not provide an analysis process to correlate in-line inspection (ILI) indications with other sources of data. During the accident investigation, a PHMSA inspector requested a copy of Buckeye’s written integrity management program that defined how it would assess anomalies that have been identified in an ILI report. Buckeye provided the procedure, Data Integration Procedure, Buckeye Partners, L.P. (August 27, 2010). This procedure is inadequate because it fails to specify that data collected from inspections, tests, surveillance and patrols is used to make a decision on the integrity of its pipeline (e.g. atmospheric corrosion inspection results).9 The PHMSA inspector then requested the version prior to August 27, 2010. Buckeye was unable to provide a previous version of the procedure. Buckeye’s compliance manager for the Linden facility, stated that the “Data Integration procedure developed over time up to the August 27, 2010 official document.” Therefore, Buckeye did not have procedures that addressed §195.452(f)(3) prior to August 27, 2010. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed$200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a related series of violations. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a related series of violations. For violations occurring prior to January 3, 2012, the maximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a 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 $418,700 as follows: Item number PENALTY 1 $290,000 2 $128,700 Proposed Compliance Order With respect to items 1 and 2 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. 8 195.452(g) What is an information analysis? In periodically evaluating the integrity of each pipeline segment (paragraph (j) of this section), an operator must analyze all available information about the integrity of the entire pipeline and the consequences of a failure. This information includes: (1) Information critical to determining the potential for, and preventing, damage due to excavation, including current and planned damage prevention activities, and development or planned development along the pipeline segment; (2) Data gathered through the integrity assessment required under this section; (3) Data gathered in conjunction with other inspections, tests, surveillance and patrols required by this Part, including, corrosion control monitoring and cathodic protection surveys; and (4) Information about how a failure would affect the high consequence area, such as location of the water intake. 9 The information in such an analysis must include data gathered in conjunction with other inspections, tests, surveillance and patrols required by Part 195, including, corrosion control monitoring and cathodic protection surveys, as required by §195.452(g)(3). 120135006_NOPV_PCP_PCO_05062013 Page 4 of 6#

120135006_NOPV PCP PCO_05062013_text.pdf, page 5CPF 1-2013-5006 Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. All material you submit in response to this enforcement action may be made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond 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 submit all correspondence in this matter to Byron Coy, PE, Director, PHMSA Eastern Region, 820 Bear Tavern Road, Suite 103, W. Trenton, NJ 08628. Please refer to CPF 1-2013-5006 on each document you submit, and please whenever possible, provide a signed PDF copy in electronic format. 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 Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 120135006_NOPV_PCP_PCO_05062013 Page 5 of 6#

120135006_NOPV PCP PCO_05062013_text.pdf, page 6CPF 1-2013-5006 PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Buckeye Partners, LP (Buckeye) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Buckeye with the pipeline safety regulations: 1. With respect to Item 1 of the Notice, Buckeye must amend its corrosion control procedures to give detailed instructions for inspections of pipeline or portion of pipeline that is exposed to the atmosphere, particularly at soil-to air interfaces, under thermal insulation, under disbonded coatings, at pipe supports, in splash zones, at deck penetrations and in spans over water, in accordance with §195.583(b). Buckeye must submit the amended procedure within sixty (60) days of receipt of the Final Order. 2. With respect to Item 2 of the Notice, Buckeye must amend its written integrity management program for its facility in Linden, New Jersey to include a process to analyze all available information about the integrity of the entire pipeline and the consequences of a failure, as prescribed in §195.452(f)(3). Buckeye must submit the amended procedures within sixty (60) days of receipt of the Final Order. 3. All submissions must be sent to Byron Coy, PE, Director, PHMSA Eastern Region, 820 Bear Tavern Road, Suite 103, West Trenton, NJ 08628. Please refer to CPF 1-2013-5006 on each document you submit. 4. It is requested (not mandated) that Buckeye maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Byron Coy, Director, Eastern Region, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. 120135006_NOPV_PCP_PCO_05062013 Page 6 of 6#

120135006_Final Order_02042014_text.pdf, page 1Official PDFFEBRUARY 4, 2014 Mr. Clark C. Smith President and Chief Executive Officer Buckeye Partners, LP Five TEK Park 9999 Hamilton Boulevard Breinigsville, PA 18031 Re: CPF No. 1-2013-5006 Dear Mr. Smith: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a reduced civil penalty of $290,000, and specifies actions that need to be taken by Buckeye Partners, LP, to comply with the pipeline safety regulations. The penalty payment terms are set forth in the Final Order. When the civil penalty has been paid and the terms of the compliance order completed, as determined by the Director, Eastern Region, this enforcement action will be closed. 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. Byron Coy, Director Eastern Region, OPS Mr. Thomas Scott Collier, Vice President, Performance Assurance & Asset Integrity, Buckeye Partners, LP CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

120135006_Final Order_02042014_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. 1-2013-5006 ) Respondent. ) ____________________________________) FINAL ORDER On May 21, 2010, pursuant to Chapter 601 of 49 United States Code, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), initiated an investigation of an accident that occurred on May 20, 2010, along Buckeye Partners, LP’s (Buckeye or Respondent) pipeline, designated as Line LZ601XX (Line LZ601XX or Pipeline), in Linden, New Jersey. The accident involved a release of refined petroleum through a pinhole leak. A total of one barrel of petroleum leaked from the Pipeline and resulted in property damage to a High Consequence Area (HCA). 1 Buckeye owns and operates approximately 6,000 miles of hazardous liquid pipelines in the Northeast and Upper Midwest regions.2 The PHMSA investigation revealed that almost two years prior to the leak, on August 18, 2008, Buckeye had visually inspected the Pipeline. The inspector noted that the soil-to-air interface on Line LZ601XX needed to be repaired and that there was severe coating disbondment. There is no record that Buckeye repaired the Pipeline, as recommended. Instead, the Pipeline leaked at the same location previously noted by the Buckeye inspector, in an area of “deep external corrosion.”3 As a result of the OPS investigation, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated May 6, 2013, 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 violated 49 C.F.R. §§ 195.581(a) and 195.451(f) and 1 The term “High Consequence Area” is defined as a commercially navigable waterway, a high population area, an other populated area, or an unusually sensitive area (e.g., a drinking water or ecological resource area). See 49 C.F.R. § 195.450. 2 See http://www.buckeye.com/BusinessOperations/tabid/56/Default.aspx (last accessed on September 6, 2013). 3 See Pipeline Safety Violation Report (Violation Report), (May 6, 2013) (on file with PHMSA), at 3 (citing Det Norske Veritas, Final Report, Metallurgical Analysis of Leak on 12-inch Diameter Pipeline (May 20, 2010)).#

120135006_Final Order_02042014_text.pdf, page 32 proposed assessing a civil penalty of $418,700 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 June 5, 2013 (Response). The company did not contest the allegations contained in Item 1 of the Notice, but requested that the proposed civil penalty be reduced. Buckeye did contest Item 2 of the Notice and requested that the proposed civil penalty be removed or reduced. 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 195.581, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.581(a), which states: § 195.581 Which pipelines must I protect against atmospheric corrosion and what coating material may I use? (a) You must clean and coat each pipeline or portion of pipeline that is exposed to the atmosphere, except pipelines under paragraph (c) of this section. (b) Coating material must be suitable for the prevention of atmospheric corrosion. (c) Except portions of pipelines in off-shore splash zones or soil-to-air interfaces, you need not protect against atmospheric corrosion any pipeline for which you demonstrate by test, investigation, or experience appropriate to the environment of the pipeline that corrosion will – (1) Only be a light surface oxide; or (2) Not affect the safe operation of the pipeline before the next scheduled inspection. The Notice alleged that Respondent violated 49 C.F.R. § 195.581(a) by failing to clean and coat each pipeline or portion of pipeline that is exposed to the atmosphere. Specifically, the Notice alleged that Buckeye failed to protect the soil-to-air interface of Line LZ601XX against atmospheric corrosion, from August 19, 2008, until May 20, 2010. It alleged that during a company inspection on August 19, 2008, the Buckeye inspector’s report noted that severe coating disbondment was present and that the Pipeline needed repair on both sides. The Notice alleged that Buckeye never repaired the noted defects, which eventually led to the accident on May 20, 2010. The leak occurred approximately 33 months after the 2008 inspection, in the same location that Buckeye was aware needed repair. Respondent did not contest this allegation of violation but contended that the proposed penalty was too high. Based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.581(a) by failing to protect its line from atmospheric corrosion, by cleaning and coating each pipeline or portion of pipeline that is exposed to the atmosphere. Buckeye’s arguments regarding the proposed penalty will be addressed below in the Assessment of Penalty#

120135006_Final Order_02042014_text.pdf, page 43 section. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f), which states, in relevant part: § 195.452 Pipeline integrity management in high consequence areas. (a) . . . (f) What are the elements of an integrity management program? An integrity management program begins with the initial framework. An operator must continually change the program to reflect operating experience, conclusions drawn from results of the integrity assessments, and other maintenance and surveillance data, and evaluation of consequences of a failure on the high consequence area. An operator must include, at minimum, each of the following elements in its written integrity management program: (1) . . . (3) An analysis that integrates all available information about the integrity of the entire pipeline and the consequences of a failure (see paragraph (g) of this section); . . . The Notice alleged that Respondent violated 49 C.F.R. § 195.452(f) by failing to have, prior to August 27, 2010, an integrity management program (IMP) that included a process for conducting an analysis that integrated all available information about the integrity of Buckeye’s entire pipeline, including Line LZ601XX, and the consequences of a failure, as detailed in paragraph (g) of § 195.452. Specifically, the Notice alleged that Buckeye’s IMP failed to include an analysis process that correlated in-line inspection (ILI) indications with other relevant data to make decisions regarding the integrity of the line. During the PHMSA inspection, Buckeye personnel had provided a copy of its procedure, Data Integration Procedure, dated August 27, 2010, but was unable to provide any written procedure in effect prior that date. In its Response, Buckeye contended that it did have an information analysis procedure in place as part of its January 2010 IMP Plan, specifically, Section 10 – Continual Evaluation, and provided a copy of that earlier version, that would have been in effect as of the date of the accident. Upon reviewing Section 10 – Continual Evaluation, of Buckeye’s January 2010 IMP Plan, I find that this earlier version does include an analysis process designed to correlate ILI indications with other relevant data to make decisions regarding the integrity of the line and that it was in effect prior to August 27, 2010. Therefore, I hereby order that Item 2, along with its related penalty and corrective action, be withdrawn.#

120135006_Final Order_02042014_text.pdf, page 54 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 $418,700 for the violations cited above. Item 1: The Notice proposed a civil penalty of $290,000 for Respondent’s violation of 49 C.F.R. § 195.581, for failing to protect Line LZ601XX from atmospheric corrosion, an omission that was a causal factor in the March 20, 2010 accident. As noted above, Buckeye did not contest this allegation of violation but sought a reduction in the penalty amount. Buckeye contends that the penalty should be limited to $100,000, the statutory limit for what the company asserts is, at most, a single-day violation. I disagree. As noted on page 5 of the Violation Report, the violation is for “[a]pproximately 635 days. From the date of non compliance to the date of the accident.” By not repairing the acknowledged defect from August 19, 2008, to May 20, 2010, Buckeye’s inaction created a multiple-day event. In fact, it is the very long-term nature of the violation that led to the accident and that warrants a more serious penalty. Moreover, the accident occurred in an HCA and resulted in a release of refined petroleum. Had the leak continued, the environmental harm could have been far greater. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $290,000 for violation of 49 C.F.R. § 195.581. Item 2: The Notice proposed a civil penalty of $128,700 for Respondent’s violation of 49 C.F.R. § 195.452(f)(3), for failing to include an element in its IMP plan that integrated all available information about the integrity of the entire pipeline and the consequences of a failure. As noted above, I found that Buckeye did have an IMP Plan in place prior to August 27, 2010 that included an analysis process to correlate ILI indications with other relevant data to make decisions regarding the integrity of the line. Based upon such finding, I hereby withdraw the proposed penalty for violation of 49 C.F.R. § 195.452(f)(3). In summary, having reviewed the record and considered the assessment criteria for each of the Items cited above, I assess Respondent a reduced total civil penalty of $290,000. 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#

120135006_Final Order_02042014_text.pdf, page 65 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 $290,000 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 district court of the United States. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1 and 2 in the Notice for violations of 49 C.F.R. §§ 195.581(a) and 195.452(f)(3), respectively. As discussed above, Item 2 has been withdrawn; therefore, the compliance terms relating to Item 2 are also withdrawn. As for the remaining Item 1, under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following action to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 195.581 (Item 1), Respondent must amend its corrosion control procedures to give detailed instructions for inspections of any pipeline or portion of pipeline that is exposed to the atmosphere, particularly at soil-to air interfaces, under thermal insulation, under disbanded coatings, at pipe supports, in splash zones, at deck penetrations and in spans over water, in accordance with §195.583(b). Buckeye must submit the amended procedure within sixty (60) days of receipt of the Final Order. 2. All submissions must be sent to Byron Coy, PE, Director, PHMSA Eastern Region, 820 Bear Tavern Road, Suite 103, West Trenton, NJ 08628. Please refer to CPF 1-2013-5006 on each document you submit. 3. It is requested (not mandated) that Buckeye maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Byron Coy, PE, Director, PHMSA Eastern Region. It is requested that these costs be reported in two categories: 1) total costs associated with preparation/revision of plans, procedures, studies and analyses; and 2) total cost associated with replacements, additions and other charges to pipeline infrastructure. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent and demonstrating good cause for an extension.#

120135006_Final Order_02042014_text.pdf, page 76 Failure to comply with this Order [CPF No. 1-2013-5006] may result in administrative assessment of civil penalties not to exceed $200,000 for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. 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 sent to: Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA will accept petitions received no later than 20 days after receipt of service of this Final Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of any civil penalty assessed. Unless the Associate Administrator, upon request, grants a stay, all other 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#

120135006_Closure Letter_04212014_text.pdf, page 1Official PDFU.S. Department Of Transportation Pipeline and 609.989.2171 Hazardous Materials Safety Administration 820 Bear Tavern Road, Suite 103 West Trenton, NJ 08628 OVERNIGHT EXPRESS MAIL April 21, 2014 Thomas Scott Collier VP, Performance Assurance & Asset Integrity Buckeye Partners, L.P. Five TEK Park 9999 Hamilton Boulevard Breinigsville, PA 18031 CPF 1-2013-5006 Dear Mr. Collier: On May 21, 2010, pursuant to Chapter 601 of 49 United States Code, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), initiated an investigation of an accident that occurred on May 20, 2010, along Buckeye Partners, LP’s pipeline, designated as Line LZ601XX (Line LZ601XX or Pipeline), in Linden, New Jersey. The accident involved a release of refined petroleum through a pinhole leak. As a result of the OPS investigation, the Associate Administrator for Pipeline Safety issued to Respondent, by letter dated February 4, 2014, a Final Order which included a Civil Penalty and Compliance Order. Based on our review of the documentation submitted by Buckeye on April 4, 2014 and confirmation of payment of the Civil Penalty, it has been determined that you have complied with the terms of this Order. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Byron Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration#