BUCKEYE PARTNERS, LP — Notice of Probable Violation

party submissionOfficial PDF120135007_Operator Response_05222013.pdf#

120135007_NOPV PCP PCO_05132013_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 OVERNIGHT EXPRESS MAIL May 13, 2013 T. Scott Collier VP, Performance Assurance & Asset Integrity Buckeye Partners, L.P. Five Tek Park 9999 Hamilton Boulevard Breinigsville, PA 18031 CPF 1-2013-5007 Dear Mr. Collier: During June 11-15, 2012, 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 inspected Buckeye Partners, L.P.’s (Buckeye) facilities in Boothwyn, Pennsylvania. As a result of the inspection, it appears that you have committed a probable violation of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The item inspected and the probable violation is: 1. §195.573 What must I do to monitor external corrosion control? (a) . . . (e) Corrective action. You must correct any identified deficiency in corrosion control as required by Sec. 195.401(b). However, if the deficiency involves a pipeline in an integrity management program under Sec. 195.452, you must correct the deficiency as required by Sec. 195.452(h).#

120135007_NOPV PCP PCO_05132013_text.pdf, page 2CPF 1-2013-5007 Buckeye failed to correct any identified deficiency in corrosion control as required by Sec. 195.401(b). Buckeye’s Cathodic Protection Survey Reports for 2010 and 2011for Breakout Tanks 1 through 19 at Booth Station were reviewed by the PHMSA inspector. For the eleven tanks noted below, the report shows two consecutive cathodic protection (CP) readings that were below Buckeye’s stated criteria of -0.850 millivolt (mV) cathodic potential, including voltage drop. There was no documentation to indicate that the low readings had been remediated. According to Buckeye’s Corrosion Manual Procedure A-02 issued 12/2011, and with prior versions of the same procedure (Buckeye’s Maintenance Manual Procedure J-02 issued 9-2009 and 9-2010), any abnormality or equipment deficiency should be corrected within one inspection cycle. The inspection is performed on an annual basis. During the dates of 8/3/2010 through 8/10/2010 and 6/3/2011 through 6/21/2011, electrical structure to soil and potential difference readings were taken: 1. Out of the eight locations around the perimeter of Tanks 1, 2, 3, 4, 5, 6, 8, 12, 13 and 14, each of those tanks had at least one location where CP readings were below criteria for two consecutive inspection cycles. 2. Out of the four locations around the perimeter of Tank 18, there was one location where CP readings were below criteria for two consecutive inspection cycles. 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 4, 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 violation and has recommended that you be preliminarily assessed a civil penalty of $60,000 as follows: Item number PENALTY 1 $60,000 Proposed Compliance Order With respect to item 1 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Buckeye Partners, L.P. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. 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 120135007_NOPV_PCP_PCO_05132013 Page 2 of 4#

120135007_NOPV PCP PCO_05132013_text.pdf, page 3CPF 1-2013-5007 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- 5007 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, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 120135007_NOPV_PCP_PCO_05132013 Page 3 of 4#

120135007_NOPV PCP PCO_05132013_text.pdf, page 4CPF 1-2013-5007 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. 2. 3. With respect to Item Number 1 of the Notice, pertaining to failing to correct any identified deficiency in corrosion control, Buckeye must evaluate and correct the deficiencies in corrosion control that were identified in the 2010 and 2011 cathodic protection survey for Tank #s 1, 2, 3, 4, 5, 6, 8, 12, 13, 14 and 18. Buckeye must submit any and all documentation that demonstrate completion with the above item within ninety (90) days after receipt of the Final Order to Byron Coy, Director, Eastern Region, Pipeline and Hazardous Materials Safety Administration. It is requested (not mandated) that Buckeye Partners, LP 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. 120135007_NOPV_PCP_PCO_05132013 Page 4 of 4#

120135007_Final Order_12112013_text.pdf, page 1Official PDFDECEMBER 11, 2013 Mr. Clark Smith President & Chief Executive Officer Buckeye Partners, LP One Greenway Plaza Suite 600 Houston, TX 77046 Re: CPF No. 1-2013-5007 Dear Mr. Smith: Enclosed please find the Final Order issued in the above-referenced case. It withdraws the alleged violation and associated civil penalty of $60,000, as well as the proposed compliance order. Therefore, this enforcement action is now 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. T. Scott Collier, Vice President, Performance Assurance & Asset Integrity Buckeye Partners, L.P., Five Tek Park, 9999 Hamilton Boulevard, Breinigsville, PA 18031 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

120135007_Final Order_12112013_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. 1-2013-5007 ) ) ) Respondent. ) ____________________________________) FINAL ORDER Between June 11-15, 2012, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), inspected Buckeye Partners, LP’s facilities in Boothwyn, Pennsylvania. Buckeye Partners, LP (Buckeye or Respondent), owns and operates approximately 6,000 miles of hazardous liquid pipelines in the Northeast and Upper Midwest regions.1 As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated May 13, 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. § 195.573(e) and proposed assessing a civil penalty of $60,000 for the alleged violation. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violation. Buckeye responded to the Notice by letter dated May 22, 2013 (Response). The company contested the allegations of violation and offered additional information in response to the Notice. Respondent did not request a hearing and therefore has waived its right to one. WITHDRAWAL 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. § 195.573(e), which states: 1 See http://www.buckeye.com/BusinessOperations/tabid/56/Default.aspx (last accessed on September 6, 2013).#

120135007_Final Order_12112013_text.pdf, page 32 § 195.573 What must I do to monitor external corrosion control? (a) . . . (e) Corrective action. You must correct any identified deficiency in corrosion control as required by § 195.401(b). However, if the deficiency involves a pipeline in an integrity management program under § 195.452, you must correct the deficiency as required by § 195.452(h). The Notice alleged that Respondent violated 49 C.F.R. § 195.573(e) by failing to correct an identified corrosion control deficiency within the time frames set by § 195.401(b).2 During the inspection, OPS reviewed Buckeye’s 2010 and 2011 cathodic protection survey reports for breakout tanks 1 through 19. The Notice alleged that OPS had discovered at least one location at 11 separate tanks that were below Buckeye’s own stated -0.85 millivolt (mV) threshold criteria for two consecutive inspection cycles. Specifically, between August 3-10, 2010 and June 3-21, 2011, the Notice alleged that Buckeye personnel had recorded at least one location around the perimeter of Tanks 1, 2, 3, 4, 5, 6, 8, 12, 13, and 14 that was below the -.85 mV criteria for consecutive inspection cycles. In addition, there was also a location around the perimeter at Tank 18 that was below the -.85 mV criteria for two consecutive inspection cycles. There was no evidence that these readings had been remediated. Therefore, OPS alleged that Buckeye had failed to correct these deficiencies as required by § 195.401(b). In its Response, Buckeye argued that there were no deficiencies to correct. In support, the company pointed to Section 2.1 of its Maintenance Manual Procedure J-02, which listed three different methods that the company used to determine effective cathodic protection. In the case of the Boothwyn breakout tanks, Buckeye argued it had used the 100 mV test, not the -0.85 mV threshold. Section 2.1.3 of Buckeye’s procedures stated that the 100 mV test required a minimum of 100 mV between the structure surface and a stable reference electrode in contact with the electrolyte. In its Response, Buckeye confirmed that by using this 100 mV test, none of the tanks at Boothwyn had insufficient cathodic protection. Therefore, Buckeye requested that PHMSA withdraw the Notice, civil penalty, and compliance order. I have reviewed the evidence in the case file and find that there is insufficient evidence to support a finding of violation of § 195.573(e). Buckeye clearly had three different methods outlined in its procedures that company personnel could use to determine effective cathodic protection. That fact is undisputed. Moreover, it is unclear whether the 100 mV test was the correct option to use, considering that Buckeye personnel stated during the OPS inspection that 2 Section 195.401(b) states, in relevant part: “(b) An operator must make repairs on its pipeline system according to the following requirements: (1) Non integrity management repairs: Whenever an operator discovers any condition that could adversely affect the safe operation of its pipeline system, it must correct the condition within a reasonable time. However, if the condition is of such a nature that it presents an immediate hazard to persons or property, the operator may not operate the affected part of the system until it has corrected the unsafe condition. . . .”#

120135007_Final Order_12112013_text.pdf, page 43 they did not have effective static P/S data to support the 100 mV test.3 However, OPS has not alleged that Buckeye failed to use the proper criteria to determine the adequacy of cathodic protection (§ 195.571), that it failed to identify a corrosion control deficiency, or that it failed to follow its own procedures under 49 C.F.R. § 195.402(a). Instead, OPS alleged that Buckeye failed to correct an identified corrosion control deficiency. Since it is not clear from the evidence that there was an identified deficiency to correct, I cannot find a violation of § 195.573(e). Accordingly, based upon a review of all of the evidence, I am withdrawing this item and the associated civil penalty. 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 $60,000 for the violation cited above. Item 1: The Notice proposed a civil penalty of $ 60,000 for Respondent’s violation of 49 C.F.R. § 195.573(e), for failing to correct an identified corrosion control deficiency. As stated above, I am withdrawing the alleged violation and the associated civil penalty amount. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 1 in the Notice for violation of 49 C.F.R. § 195.573(e). 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. As stated above, since I am withdrawing the alleged violation, I am also withdrawing the proposed Compliance Order. 3 See Pipeline Safety Violation Report (Violation Report), (June 5, 2013) (on file with PHMSA), at 3.#

120135007_Final Order_12112013_text.pdf, page 54 The terms and conditions of this Final Order [CPF No. 1-2013-5007] are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#