ARLINGTON STORAGE COMPANY LLC — Notice of Probable Violation

party submissionOfficial PDF120151002_Operator Response to Notice_02132015.pdf#

120151002_Final Order_09152015_text.pdf, page 1Official PDFSeptember 15, 2015 Ms. Miranda Jones Vice President, Environmental Safety and Regulatory Crestwood Midstream Partners LP 801 Cherry Street, Suite 3800, Unit 20 Fort Worth, TX 76102 Re: CPF No. 1-2015-1002 Dear Ms. Jones: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $15,800, and specifies actions that need to be taken by Arlington Storage Company, LLC to comply with the pipeline safety regulations. This is to acknowledge receipt of payment of the full penalty amount, by wire transfer, dated February 9, 2015. When the terms of the compliance order have been 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, PE, Director, Eastern Region, OPS Ms. Alice Ratcliffe, Pipeline Compliance Manager, Crestwood Midstream Partners LP CERTIFIED MAIL - RETURN RECEIPT REQUESTED [INSERT RECEIPT NO.]#

120151002_Final Order_09152015_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 ) ) Arlington Storage Company, LLC, ) CPF No. 1-2015-1002 ) Respondent. ) ____________________________________) FINAL ORDER Between September 1 and October 31, 2013, pursuant to 49 U.S.C. § 60117, representatives of the New York State Department of Public Service (NYSDPS), as agent for the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the Seneca Lake facilities and records of Arlington Gas Storage (ASC or Respondent) in Watkins Glen, New York. ASC is a subsidiary of Crestwood Midstream Partners LP. Crestwood operates five storage facilities with approximately 80 billion cubic feet of natural gas storage primarily serving producers in the Northeastern U.S. Seneca Lake gas storage system is an 18.6 mile, 16-inch diameter pipeline system that connects the Seneca Lake storage facility on its northern end to the Dominion Transmission Corporation’s Yawger Road station on its southern end.1 As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated January 13, 2015, a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that ASC had violated 49 C.F.R. § 192.605 and proposed assessing a civil penalty of $15,800 for the alleged violation. The Notice also proposed that Respondent be required to take certain measures to correct the alleged violation. Crestwood Midstream Partners LP responded to the Notice on behalf of ASC by letter dated February 13, 2015 (Response). The company did not contest the allegation of violation and paid the proposed civil penalty of $15,800, as provided in 49 C.F.R. § 190.227. The company also provided information concerning the corrective actions it intended to take. Respondent did not request a hearing and therefore has waived its right to one. 1 Pipeline Safety Violation Report, (Jan. 13, 2015) (on file with PHMSA), at 1.#

120151002_Final Order_09152015_text.pdf, page 3CPF No. 1-2015-1002 Page 2 FINDING OF VIOLATION In its Response, ASC did not contest the allegation in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.605, which states, in relevant part: § 192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for emergency response. For transmission lines, the manual must also include procedures for handling abnormal operations. This manual must be reviewed and updated by the operator at intervals not exceeding 15 months, but at least once each calendar year. This manual must be prepared before operations of a pipeline system commence. Appropriate parts of the manual must be kept at locations where operations and maintenance activities are conducted. (b) Maintenance and normal operations. The manual required by paragraph (a) of this section must include procedures for the following, if applicable, to provide safety during maintenance and operations. (1) Operating, maintaining, and repairing the pipeline in accordance with each of the requirements of this subpart and subpart M of this part. (2) Controlling corrosion in accordance with the operations and maintenance requirements of subpart I of this part. The Notice alleged that Respondent violated 49 C.F.R. § 192.605 by failing to have procedures for the internal corrosion control requirements of § 192.476 applicable to the design and construction of transmission lines. Specifically, the Notice alleged that ASC’s Operating and Maintenance (O&M) Procedure 906 did not cover internal corrosion requirements applicable to the Project 415-Upson Road M&R Station built in 2012. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.605 by failing to have procedures for the internal corrosion control requirements of § 192.476 applicable to the design and construction of transmission lines. This finding of violation will be considered a prior offense 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 $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any#

120151002_Final Order_09152015_text.pdf, page 4CPF No. 1-2015-1002 Page 3 related series of violations.2 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; 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 civil penalty of $15,800 for the violation cited above. Item 1: The Notice proposed a civil penalty of $15,800 for Respondent’s violation of 49 C.F.R. § 192.605, for failing to have procedures for the internal corrosion control requirements of § 192.476 applicable to the design and construction of transmission lines. ASC neither contested the allegation nor presented any evidence or argument justifying a reduction in the proposed penalty. I find that the penalty amount proposed in the notice is warranted considering the nature, circumstances, and gravity of the violation and Respondent’s culpability for the violation. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $15,800 for violation of 49 C.F.R. § 192.605, which amount has already been paid by Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 1 in the Notice for violation of 49 C.F.R. § 192.605. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of gas 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 actions to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 192.605 (Item 1), Respondent must: (a) Within 90 days of receipt of this Order, prepare written procedures that address the § 192.476 design and construction requirements and submit a final report demonstrating completion of this item to the Director in accordance with Item 2 of this Compliance Order; and (b) Within 180 days of receipt of this Order, evaluate the transmission line and each replacement of line pipe, valve, fitting, or other line component that was installed as part of “Project 415-Upson Road M&R Station” to determine whether or not they comply with § 192.476 and retrofit any that do not unless it is impracticable or unnecessary to do so and submit a final report demonstrating completion of this item to the Director in accordance with Item 2 of this Compliance Order. 2 The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, Pub. L. No. 112-90, § 2(a)(1), 125 Stat. 1904, January 3, 2012, increased the civil penalty liability for violating a pipeline safety standard to $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.#

120151002_Final Order_09152015_text.pdf, page 5CPF No. 1-2015-1002 Page 4 2. Within 30 days following the completion of each item in this Compliance Order, Respondent must submit documentation demonstrating the completion of each item to Byron Coy, PE, Director, Eastern Region, Pipeline and Hazardous Materials Safety Administration, 820 Bear Tavern Road, Suite 103, West Trenton, NJ 08628, for review and acceptance. 3. It is requested, but not required, that Respondent maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the Director. Costs should 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 physical changes to pipeline facilities and 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. Failure to comply with this Order may result in the 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. 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#

120151002_NOPV PCP PCO_01132015_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 DELIVERY January 13, 2015 Miranda Jones Vice President, Environmental Safety and Regulatory Crestwood Midstream Partners LP 801 Cherry Street, Suite 3800, Unit 20 Fort Worth, TX 76102 CPF 1-2015-1002 Dear Ms. Jones: Between September 1 and October 31, 2013, inspectors from the New York State Department of Public Service (NYSDPS), acting as agents for the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Arlington Storage Company, LLC’s (ASC) (a subsidiary of Crestwood Midstream Partners LP) Seneca Lake gas storage facilities in Watkins Glen, New York. 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. §192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for emergency response. For transmission lines, the manual must also include procedures for handling abnormal operations. This manual must be reviewed and updated by the operator at intervals not exceeding 15 months, but at least one each calendar year. This manual must be prepared before operations of a pipeline system commence. Appropriate parts of the manual must be kept at locations where operations and maintenance activities are conducted. (b) Maintenance and normal operations. The manual required by paragraph (a) of this section must include procedures for the following, if applicable, to provide safety during maintenance and operations. . . (2) Controlling corrosion in accordance with the operations and maintenance requirements of Subpart I of this part.#

120151002_NOPV PCP PCO_01132015_text.pdf, page 21-2015-1002 ASC failed to have procedures for the internal corrosion control: design and construction of transmission line requirements under §192.476. The NYSDPS reviewed ASC’s O&M Procedure 906, Internal Corrosion Control – revised 1/18/2012, and noted that the requirements of §192.476 (Internal corrosion control: Design and construction of transmission line) were not covered in the procedure. ASC installed new facilities in 2012, specifically the Project 415-Upson Road M&R Station project, and therefore these requirements should have been fully developed prior to the construction of these new facilities. In an e-mail dated March 14, 2014, the NYSDPS asked ASC “How does (Arlington-Seneca facilities) address §192.476 in company procedures or company construction/design standards?” ASC responded in an e-mail dated March 14, 2014 that “The best I can find is that Procedure 906, Section 3.1, vaguely addresses §192.476(a)(3).” 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 $15,800 as follows: Item number PENALTY 1 $15,800 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 Arlington Storage Company, LLC (ASC). 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 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 1-2015-1002 on each document you submit and please, whenever possible, provide a signed PDF copy in electronic format. Smaller files may be e-mailed to Byron.Coy@dot.gov. Larger files should be sent on a CD accompanied by the original paper copy to the Eastern Region Office. 120151002_NOPV_PCP_PCO_ 01132014 Page 2 of 4#

120151002_NOPV PCP PCO_01132015_text.pdf, page 31-2015-1002 Additionally, if you choose to respond to this (or any other case), please ensure that any response letter pertains solely to one CPF case number. Sincerely, Byron Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Cc: Kevin Speicher NYSDPS Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 120151002_NOPV_PCP_PCO_ 01132014 Page 3 of 4#

120151002_NOPV PCP PCO_01132015_text.pdf, page 41-2015-1002 PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Arlington Storage Company, LLC (ASC) a Compliance Order incorporating the following remedial requirements to ensure the compliance of ASC with the pipeline safety regulations: 1. 2. 3. 4. With respect to Item Number 1 of the Notice pertaining to ASC’s failure to have procedures for internal corrosion control: design and construction of transmission line requirements under §192.476, ASC must: a. Prepare procedures that address the design and construction requirements under §192.476; and b. Evaluate the transmission line and each replacement of line pipe, valve, fitting, or other line component that was installed as part of “Project 415-Upson Road M&R Station” to determine whether or not they comply with §192.476. If they do not, unless it is impracticable or unnecessary to do so, ASC must retrofit them so that they do comply with §192.476. ASC must submit the procedures stipulated in Item 1 a. of this Compliance Order to the Region Director within 90 days of receipt of the Final Order. ASC must submit documentation demonstrating completion of Item 1 b. of this Compliance Order to the Region Director within 180 days of receipt of the Final Order. It is requested (not mandated) that ASC 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. 120151002_NOPV_PCP_PCO_ 01132014 Page 4 of 4#

120151002_Closure Letter_01282016_text.pdf, page 1Official PDFOVERNIGHT EXPRESS DELIVERY January 28, 2016 Ms. Miranda Jones Vice President, Environmental Safety and Regulatory Crestwood Midstream Partners LP 801 Cherry Street, Suite 3800, Unit 20 Fort Worth, TX 76102 CPF 1-2015-1002 Dear Ms. Jones: On September 15, 2015, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Crestwood Midstream Partners LP (Crestwood) a Final Order in the above-referenced case. This Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation Crestwood provided, and confirmation of payment of the civil penalty, it has been determined that Crestwood has complied with the terms of this Order. Accordingly, this case is now closed, and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, Byron Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Cc: Mr. Kevin Speicher, NYSDPS#