DELAWARE STORAGE AND PIPELINE COMPANY — Warning Letter

120136001W_Warning Letter_07092012_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 WARNING LETTER OVERNIGHT EXPRESS MAIL July 09, 2013 Charles Denault, President Delaware Storage & Pipeline Company 400 Amherst Street, Suite 405 Nashua, NH 03063 CPF 1-2013-6001W Dear Mr. Denault: From December 6 to December 8, 2011, 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 Delaware Storage and Pipeline Company’s (DSPC) Public Awareness Program, Public Awareness Program for Delaware Storage & Pipeline Company, Revised November 10, 2009 (Public Awareness Program for DSPC) and materials in Little Creek, Delaware. 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. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4 Message Content. Specifically, DSPC did not have a documented process for providing programs in both English and in other languages commonly used by significant concentration of non-English speaking population along the pipeline. Pursuant to API RP 1162 Section 4, “communications materials should be provided in language(s) spoken by a significant portion of the intended audience.” The Public Awareness Program for DSPC had no information on what data would be evaluated to make the determination whether or not the program should be provided in both English and other languages, the frequency of evaluation, and defining what the operator deems “significant number and concentration.”#

120136001W_Warning Letter_07092012_text.pdf, page 21-2013-6001W 2. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.1 Pipeline Purpose and Reliability. Pursuant to API RP 1162 Section 4.1, “[o]perators should consider providing a general explanation of the purpose of the pipeline and/or facilities and the reliability of pipelines meet the energy needs of the region. . . .” The Public Awareness Program for DSPC (including materials that were sent to stakeholders) did not contain a general explanation of the purpose of the pipeline and/ or facilities and the reliability of pipelines to meet the energy needs of the region it is in. 3. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.2 Hazard Awareness and Prevention Measures. Pursuant to API RP 1162 Section 4.2, “[o]perators should provide a very broad overview of potential hazards, their potential consequences and the measures undertaken by the operator to prevent or mitigate the risks from pipeline. . . .” The Public Awareness Program for DSPC (including materials that were sent to the affected public and excavators stakeholders) did not contain potential hazards, its potential consequences and the measures undertaken by the operator to prevent or mitigate the risks from pipelines information. 4. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.3.4 Liaison with Emergency Officials. Pursuant to API RP 1162 Section 4.3.4, the message content should have “information that describes the ongoing relationship between the operator and local emergency response officials to help prevent incidents and assure preparedness for emergencies.” The Public Awareness Program for DSPC (including material sent to the affected public and excavators stakeholders) did not describe an ongoing relationship between the operator and local emergency response officials. 5. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.9 Right-of-Way (ROW) Encroachment Prevention. Pursuant to API RP 1162 Section 4.9, “[p]ipeline operators should communicate that encroachments upon the pipeline ROW inhibit the operator’s ability to respond to pipeline emergencies, eliminate third-party 120136001W_WL_07092013 Page 2 of 5#

120136001W_Warning Letter_07092012_text.pdf, page 31-2013-6001W damage, provide ROW surveillance, perform routine maintenance, and perform required federal/state inspections. . . ” The Public Awareness Program for DSPC (including materials that were sent to stakeholders) did not communicate information regarding ROW encroachment. 6. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.10 Pipeline Maintenance Construction Activities. Pursuant to API RP 1162 Section 4.10, “[p]ipeline maintenance-related construction activities should be communicated to the audience affected by the specific activity in a timely manner appropriate to the nature and extent of the activity.” The Public Awareness Program for DSPC did not contain procedures for communicating any pipeline construction activities to any stakeholders. 7. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.11 Security. Pursuant to API RP Section 4.11, “[w]here applicable and in accordance with the national Homeland Security efforts, pipeline operators should communicate an overview pertaining to security of their pipelines and related facilities.” The Public Awareness Program for DSPC (including materials that were sent to stakeholders) did not contain information pertaining to security of its pipelines and related facilities. 8. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Sections 7.2 Program Recordkeeping. Pursuant to API RP 1162 Section 7.2 (c), an operator must keep records of all program evaluations, including current results, follow-up actions and expected results. The Public Awareness Program for DSPC did not address this requirement. 9. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance in API RP 1162 Sections 8.4 Measuring Program Effectiveness. API RP 1162 Section 8.4 identifies four measures that an operator should evaluate for effectiveness for the four intended stakeholder audience (affected public, emergency responders, public officials, and excavators). 120136001W_WL_07092013 Page 3 of 5#

120136001W_Warning Letter_07092012_text.pdf, page 41-2013-6001W According to the Public Awareness Program for DSPC, “[a] survey has been designed to evaluate the effectiveness of the Program message delivery materials and methods for the affected public stakeholder audience.” (emphasis added) DSPC did not have procedures for evaluating the effectiveness of its program for emergency responders, public officials, and excavators. 10. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to implement Section 11.3.1 Evaluation of Survey Responses for Affected Public Stakeholder of its written continuing public education program. Section 11.3.1 Evaluation of Survey Responses for Affected Public Stakeholder describes a scoring system and evaluation process for the answers/responses for affected public survey. However, DSPC could not produce any records that demonstrated that it scored and evaluated the answer/responses from the affected public survey. 11. §195.440 Public awareness. (a) . . . (b) The operator's program must follow the general program recommendations of API RP 1162 and assess the unique attributes and characteristics of the operator's pipeline and facilities. DSPC’s Public Awareness Program for DSPC failed to follow API RP 1162 Section 4.6.1 Transmission Pipeline Markers and assess the unique attributes and characteristic of the its pipeline and facilities. API RP 1162 Section 4.6.1 states that “[t]he operator’s awareness communications should include information about what pipeline markers look like. . . .” API RP 1162 Section 4.6.1 refers to Appendix C for additional details. In Appendix C of API RP 1162, under C.6.1 Transmission Pipeline Markers, it states that the “[p]ublic awareness materials should include illustrations and descriptions of pipeline markers used by the operator and the information that the markers contain.” (emphasis added) The Public Awareness Program for DSPC (including materials that were provided to stakeholders) illustrated generic pipeline markers, which was not a representation of DSPC’s pipeline markers. 12. §195.440 Public awareness. (a) . . . (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety. DSPC failed to follow the general program recommendation of Section 7.3 Record Retention. Specifically, DSPC did not retain records of stakeholder audiences with whom it communicated and its program evaluation for a minimum of five (5) years. Pursuant to API RP 1162 Section 7.3, records of stakeholder audiences with whom it has communicated and program evaluation should be retained for a minimum of five (5) years. However, DSPC was unable produce those records prior to 2008. 120136001W_WL_07092013 Page 4 of 5#

120136001W_Warning Letter_07092012_text.pdf, page 51-2013-6001W 13. §195.440 Public awareness. (a) . . . (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety. DSPC failed to follow the general program recommendation, including baseline and supplemental requirement of API RP 1162 Section 8.4 Measuring Program Effectiveness because it did not conduct an effectiveness evaluation for the emergency responders, public officials, and excavators. API RP 1162 Section 8.4 identifies four measures that an operator should evaluate for effectiveness for the four intended stakeholder audience (affected public, emergency responders, public officials, and excavators). At the time of this inspection, DSPC was unable to produce any documentation or evidence to show that it conducted an effectiveness evaluation for the emergency responders, public officials, and excavators. 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. 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 correct the items identified in this letter. Failure to do so will result in DSPC being subject to additional enforcement action. No reply to this letter is required. If you choose to reply, please address your correspondence to: Byron Coy, PE, Director, PHMSA Eastern Region, 820 Bear Tavern Road, Suite 103, W. Trenton, NJ 08628 and please refer to CPF 1-2013-6001W. 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). Sincerely, Byron E. Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration 120136001W_WL_07092013 Page 5 of 5#

120136001W_Warning Letter_07092013.pdf, page 1Official PDFU.S. Department 820 Bear Tavern Road, Suite 103 Of Transportation Pipeline and West Trenton, NJ 08628 Safety Administration Hazardous Materials 609-989.2171 WARNING LETTER OVERNIGHT EXPRESS MAIL July 09, 2013 Charles Denault, President Delaware Storage & Pipeline Company 400 Amherst Street, Suite 405 Nashua, NH 03063 CPF 1-2013-6001W Dear Mr. Denault: From December 6 to December 8, 2011, 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 Delaware Storage and Pipeline Company's (DSPC) Public Awareness Program, Public Awareness Program for Delaware Storage & Pipeline Company, Revised November 10, 2009 (Public Awareness Program for DSPC) and materials in Little Creek, Delaware. 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. $195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). in API RP 1162 Section 4 Message Content. Specifically, DSPC did not have a documented process for DSPC failed to develop a written continuing public education program that followed the guidance provided providing programs in both English and in other languages commonly used by significant concentration of non-English speaking population along the pipeline. Pursuant to API RP 1162 Section 4, "communications materials should be provided in languages) spoken by information on what data would be evaluated to make the determination whether or not the program should a significant portion of the intended audience." The Public Awareness Program for DSPC had no be provided in both English and other languages, the frequency of evaluation, and defining what the operator deems significant number and concentration."#

120136001W_Warning Letter_07092013.pdf, page 21-2013-6001W 2. $195.440 Public awareness. program that follows the guidance provided in the American Petroleum Institute's (API) (a) Each pipeline operator must develop and implement a written continuing public education Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.1 Pipeline Purpose and Reliability. Pursuant to API RP 1162 Section 4.1, "lo]perators should consider providing a general explanation of the urpose of the pipeline and/or facilities and the reliability of pipelines meet the energy needs of the region.. " The Public Awareness Program for DSPC (including materials that were sent to stakeholders) did no contain a general explanation of the purpose of the pipeline and/ or facilities and the reliability of pipelines to meet the energy needs of the region it is in. 3. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.2 Hazard Awareness and Prevention Measures. Pursuant to API RP 1162 Section 4.2, "[o]perators should provide a very broad overview of potential risks from pipeline...." The Public Awareness Program for DSPC (including materials that were sent to the hazards, their potential consequences and the measures undertaken by the operator to prevent or mitigate the affected public and excavators stakeholders) did not contain potential hazards, its potential consequences and the measures undertaken by the operator to prevent or mitigate the risks from pipelines information. 4. $195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.3.4 Liaison with Emergency Officials. Pursuant to API RP 1162 Section 4.3.4, the message content should have information that describes the ongoing relationship between the operator and local emergency response officials to help prevent incidents and assure preparedness for emergencies." The Public Awareness Program for DSPC (including material sent to the affected public and excavators stakeholders) did not describe an ongoing relationship between the operator and local emergency response officials. 5. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance provided in API RP 1162 Section 4.9 Right-of-Way (ROW) Encroachment Prevention. Pursuant to API RP 1162 Section 4.9, "[p]ipeline operators should communicate that encroachments upon the pipeline ROW inhibit the operator's ability to respond to pipeline emergencies, eliminate third-party 120136001W_WL_07092013 Page 2 of 5#

120136001W_Warning Letter_07092013.pdf, page 31-2013-6001W damage, provide ROW surveillance, perform routine maintenance, and perform required federal/state inspections.. " stakeholders) did not communicate information regarding ROW encroachment. The Public Awareness Program for DSPC (including materials that were sent to 6. $195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). program that follows the guidance provided in the American Petroleum Institute's (API) in API RP 1162 Section 4.10 Pipeline Maintenance Construction Activities. DSPC failed to develop a written continuing public education program that followed the guidance provided Pursuant to API RP 1162 Section 4.10, "[plipeline maintenance-related construction activities should be communicated to the audience affected by the specific activity in a timely manner appropriate to the nature communicating any pipeline construction activities to any stakeholders. and extent of the activity." The Public Awareness Program for DSPC did not contain procedures for §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). in API RP 1162 Section 4.11 Security. DSPC failed to develop a written continuing public education program that followed the guidance provided Pursuant to API RP Section 4.11, "[where applicable and in accordance with the national Homeland and related facilities." The Public Awareness Program for DSPC (including materials that were sent to Security efforts, pipeline operators should communicate an overview pertaining to security of their pipelines stakeholders) did not contain information pertaining to security of its pipelines and related facilities. 8. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (R) 1162 (incorporated by reference, see § 195.3). in API RP 1162 Sections 7.2 Program Recordkeeping. DSPC failed to develop a written continuing public education program that followed the guidance provided Pursuant to API RP 1162 Section 7.2 (c), an operator must keep records of all program evaluations, including current results, follow-up actions and expected results. The Public Awareness Program for DSPC did not address this requirement. $195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). DSPC failed to develop a written continuing public education program that followed the guidance in API RP 1162 Sections 8.4 Measuring Program Effectiveness. API RP 1162 Section 8.4 identifies four measures that an operator should evaluate for effectiveness for the four intended stakeholder audience (affected public, emergency responders, public officials, and excavators). 120136001W_WL_07092013 Page 3 of 5#

120136001W_Warning Letter_07092013.pdf, page 41-2013-6001W According to the Public Awareness Program for DSPC, "[a] survey has been designed to evaluate the effectiveness of the Program message delivery materials and methods for the affected public stakeholder audience." (emphasis added) DSPC did not have procedures for evaluating the effectiveness of its program for emergency responders, public officials, and excavators. 10. §195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). its written continuing public education program. DSPC failed to implement Section 11.3.1 Evaluation of Survey Responses for Affected Public Stakeholder of Section 11.3.1 Evaluation of Survey Responses for Affected Public Stakeholder describes a scoring system and evaluation process for the answers/responses for affected public survey. However, DSPC could not public survey. produce any records that demonstrated that it scored and evaluated the answer/responses from the affected 11. §195.440 Public awareness. (b) The operator's program must follow the general program recommendations of API RP (a) ... facilities. 1162 and assess the unique attributes and characteristics of the operator's pipeline and DSPC's Public Awareness Program for DSPC failed to follow API RP 1162 Section 4.6.1 Transmission Pipeline Markers and assess the unique attributes and characteristic of the its pipeline and facilities. API RP 1162 Section 4.6.1 states that "[t]he operator's awareness communications should include information about what pipeline markers look like..." API RP 1162 Section 4.6.1 refers to Appendix C for additional details. In Appendix C of API RP 1162, under C.6.1 Transmission Pipeline Markers, it states that the "[p]ublic awareness materials should include illustrations and descriptions of pipeline markers used by the operator and the information that the markers contain." (emphasis added) The Public Awareness Program for DSPC (including materials that were provided to stakeholders) illustrated generic pipeline markers, which was not a representation of DSPC's pipeline markers. 12. $195.440 Public awareness. (a) ... (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its recommended practice is not practicable and not necessary for safety. program or procedural manual as to why compliance with all or certain provisions of the DSPC did not retain records of stakeholder audiences with whom it communicated and its program DSPC failed to follow the general program recommendation of Section 7.3 Record Retention. Specifically, evaluation for a minimum of five (5) years. Pursuant to API RP 1162 Section 7.3, records of stakeholder audiences with whom it has communicated and program evaluation should be retained for a minimum of five (5) years. However, DSPC was unable produce those records prior to 2008. 120136001W_WL_07092013 Page 4 of 5#

120136001W_Warning Letter_07092013.pdf, page 51-2013-6001W 13. $195.440 Public awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety. DSPC failed to follow the general recommendation, including baseline and supplemental requirement of API RP 1162 Section 8.4 Measuring Program Effectiveness because it did not conduct an effectiveness evaluation for the emergency responders, public officials, and excavators. API RP 1162 Section 8.4 identifies four measures that an operator should evaluate for effectiveness for the four intended stakeholder audience (affected public, emergency responders, public officials, and excavators). At the time of this inspection, DSPC was unable to produce any documentation or evidence to show that it conducted an effectiveness evaluation for the emergency responders, public officials, and excavators. Under 49 United States Code,§ 60122, you are subject to a civil penalty not to exceed $200,000 per 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. 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 correct the items identified in this letter. Failure to do so will result in DSPC being subject to additional enforcement action. No reply to this letter is required. If you choose to reply, please address your correspondence to: Byron Coy, PE, Director, PHMSA Eastern Region, 820 Bear Tavern Road, Suite 103, W. Trenton, NJ 08628 and please refer to CPF 1-2013-6001W. 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 under 5 U.S.C. 552(b). redacted and an explanation of why you believe the redacted information qualifies for confidential treatment Sincerely, Bye Coyr Byron E. Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration 120136001W_WL_07092013 Page 5 of 5#