KIANTONE PIPELINE CORP — Notice of Probable Violation

party submissionOfficial PDF12022050NOPV_Operator Petition for Reconsideration_01162024_(21-217159).pdf#

party submissionOfficial PDF12022050NOPV_Operator Post-hearing Brief_05222023_(21-217159).pdf#

case documentOfficial PDF12022050NOPV_Operator Pre-Hearing Submisson_04102023_(21-217159).pdf#

party submissionOfficial PDF12022050NOPV_Operator RtN and Request for Hearing_11212022_(21-217159).pdf#

case documentOfficial PDF12022050NOPV_PCP_10062022_(21-217159).pdf#

case documentOfficial PDF12022050NOPV_PCP_10062022_(21-217159)_text.pdf#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 1Official PDFJune 3, 2024 VIA ELECTRONIC MAIL TO: dwortman@urc.com Mr. Dave Wortman Vice President, Supply and Transportation Kiantone Pipeline Corporation 15 Bradley Street, P.O. Box 780 Warren, PA 16365 Re: CPF No. 1-2022-050-NOPV Dear Mr. Wortman: Enclosed please find the Decision on the Petition for Reconsideration issued in the above- referenced case. It denies your Petition for Reconsideration. Service of the Decision 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, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Mr. Robert Burrough, Director, Eastern Region, Office of Pipeline Safety, PHMSA Mr. John Wagner, Vice President, General Counsel and Corporate Secretary, Kiantone Pipeline Corp., jwagner@urc.com Mr. George C. Hopkins, Counsel for Kiantone Pipeline Corp., Vinson & Elkins, LLP, ghopkins@velaw.com CONFIRMATION OF RECEIPT REQUESTED#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_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 ) Kiantone Pipeline Corporation, ) CPF No. 1-2022-050-NOPV ) ) ) Petitioner. ) ____________________________________) DECISION ON PETITION FOR RECONSIDERATION In a December 26, 2023 Final Order, I found that Kiantone Pipeline Corporation (Kiantone or Petitioner) had committed two violations of 49 C.F.R. Part 195 following an on-site pipeline safety inspection by the Office of Pipeline Safety (OPS) of Petitioner’s facilities and records in connection with investigating a release of crude oil at a facility operated by Kiantone in Warren, Pennsylvania.1 In the Final Order, I assessed a civil penalty of $225,134 for Petitioner’s violation of 49 C.F.R. § 195.402(a) for failing to follow Operations, Maintenance, and Emergency (OM&E) Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm (Item 1). I also assessed a civil penalty of $225,134 for Petitioner’s violation of 49 C.F.R. § 195.402(a) for failing to follow its OM&E Procedure Section 5.7.10 – Tank Farm Dike Drain Operations (Item 2). I withdrew one allegation of violation (Item 3) after being persuaded by Kiantone’s argument that this allegation was duplicative of Item 1. 2 On January 16, 2024, Kiantone submitted a Petition for Reconsideration (Petition) of the Final Order. 3 Specifically, the Petition seeks reconsideration of Items 1 and 2 in the Final Order and requests that these two findings of violation and the associated civil penalties be withdrawn. 4 Having considered the record and the arguments presented in the Petition, I am denying the Petition and affirming the Final Order without modification. 1 Kiantone Pipeline Corporation, Final Order, CPF No. 1-2022-050-NOPV (Dec. 26, 2023) (Final Order). 2 OPS alleged a total of six violations including three warning items that required no further action, but warned Kiantone to correct the alleged probable violations or face possible future enforcement action (Items 4, 5, and 6). 3 Petition for Reconsideration submitted by Mr. George C. Hopkins, Vinson & Elkins LLP, Counsel for Kiantone Pipeline Corporation, to Mr. Alan K. Mayberry, Associate Administrator for Pipeline Safety, PHMSA, dated January 16, 2024 (Petition). 4 Id.#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 3Background From July 8, 2021 through July 9, 2021, pursuant to 49 U.S.C. § 60117, representatives of OPS conducted an on-site pipeline safety inspection of the facilities and records of Petitioner in connection with investigating a release of crude oil in Warren, Pennsylvania. Kiantone manages the 78-mile-long Kiantone Pipeline from West Seneca, New York to United Refining Company’s facility in Warren, Pennsylvania including a tank farm for storage located on Cobham Park Road in Warren, Pennsylvania (Cobham Tank Farm).5 On July 8, 2021, at approximately 12:20 a.m. Eastern Daylight Time (EDT), Kiantone Pipeline experienced an overflow of Tank 652 at the Cobham Tank Farm. The overflow resulted in a release of 2,672 barrels (bbl) of crude oil into secondary containment, which exited an open dike drain valve and flowed downhill to a firewater retention pond. Following notification of the incident to the National Response Center (NRC), OPS deployed accident investigation personnel to the release site, along with the Pennsylvania Public Utility Commission.6 The material facts of the incident are not in dispute. A heavy storm caused a loss of power at the Cobham Tank farm on July 7, 2021, at approximately 6:49 p.m. EDT. The power loss initiated the uninterruptible power supply (UPS) to maintain communications with the facility’s control center, but all other electrical equipment at the Cobham Tank Farm was inoperable, including lights, pumps, and motor-operated valves. Kiantone’s UPS system, which powered the communications at the facility, operated for about two hours before being depleted at approximately 8:36 p.m. EDT. Commercial power was temporarily restored at approximately 9:22 p.m. EDT for 32 seconds. The restoration of power caused the remotely operated inlet valves to Tanks 650, 651, and 652 to begin to open, but the valve operation ceased when power was subsequently lost again. Tanks 650, 651, and 652 were all connected to the same manifold. Tank 651 was in the process of receiving product at this time. Because Tank 652 now had a partially opened inlet valve, Tank 652 also started to receive product. However, as the UPS was depleted and thus the facility had no communications, Kiantone’s control center failed to detect Tank 652’s valve operation. Therefore, the receiving of product by Tank 652 and its resulting overflow was not detected by Kiantone until approximately 12:50 a.m. EDT on July 8, 2021. The release was discovered when Kiantone’s pump house blender visually noticed oil coming from the tank vents via illumination from his headlights as he drove within the facility after being notified of a heavy smell of petroleum in the air by other personnel at the facility.7 As a result of the inspection and investigation, the Director, Eastern Region, OPS (Director), issued to Petitioner, by letter dated October 6, 2022, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Kiantone had committed three violations of 49 C.F.R. Part 195 and proposed 5 Kiantone’s parent company, United Refining Company, is an independent refiner and marketer of petroleum products in Pennsylvania and portions of New York and Ohio. United Refining Company website, Pipeline Operations, available at https://www.urc.com/pipelines (last accessed Nov. 5, 2023). 6 Failure Investigation Report – Kiantone Pipeline Corporation – Incorrect Operation Aboveground Storage Tank Overflow (Dec. 21, 2021), Executive Summary. 7 Recommendation, at 2-3.#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 4assessing a total civil penalty of $675,402 for the alleged violations. The Notice also included an additional three warning items pursuant to 49 C.F.R. § 190.205, which warned the operator to correct these alleged probable violations or face possible future enforcement action. Kiantone contested the allegations in the Notice and requested an informal hearing. A hearing was subsequently held on April 20, 2023, in West Trenton, New Jersey, before a Presiding Official from the Office of Chief Counsel, PHMSA. At the hearing, Petitioner was represented by counsel. On December 26, 2023, I issued a Final Order in this case. With respect to Item 1, I found that Petitioner violated 49 C.F.R. § 195.402(a) by failing to follow OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm and assessed a civil penalty of $225,134. In assessing the civil penalty for this item, I applied the statutory civil penalty assessment factors including the nature, circumstances, gravity, and culpability of this violation.8 I noted that properly monitoring oil storage tank levels connected to the same manifold during product delivery is a critical part of safe operations and must be accomplished locally in the event of power or communications failures. Accordingly, I found that the proposed civil penalty of $225,134 was supported by the record. With respect to Item 2, I found that Petitioner violated 49 C.F.R. § 195.402(a) by failing to follow its OM&E Procedure Section 5.7.10 – Tank Farm Dike Drain Operations and assessed a civil penalty of $225,134. In assessing the civil penalty for this item, I applied the statutory civil penalty assessment factors including the nature, circumstances, gravity, and culpability of this violation. I noted that properly logging and monitoring a dike drain water discharge for oil after a drain valve is opened is a critical part of safe operations. Accordingly, I found that a civil penalty of $225,134 for the violation was supported by the record. With respect to Item 3, I found that although Petitioner was required to identify and correct the deficiencies that caused a prior abnormal operation event on June 30, 2021, involving a power loss and had not done so by the time of the July 8, 2021 incident, its procedures did not specify a time deadline to do so and it was not reasonable for OPS to expect that the process of identifying and correcting the deficiencies that caused the June 30, 2021 incident to be resolved within this time period. Accordingly, I withdrew this allegation. On January 16, 2024, Kiantone submitted a petition requesting reconsideration of Items 1 and 2 in the Final Order. Standard of Review Under 49 C.F.R. § 190.243, Kiantone has the right to petition the Associate Administrator for reconsideration of the Final Order. However, that right is not an appeal or an opportunity to seek a de novo review of the record.9 It is a venue for presenting the Associate Administrator with information that was not previously available or requesting that any errors in the Final Order be corrected. Requests for consideration of additional facts or arguments must be supported by a 8 49 U.S.C. § 60122(b). 9 49 C.F.R. § 190.243(a)-(d).#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 5statement of reasons as to why those facts or arguments were not presented prior to the issuance of the Final Order. Repetitious information or arguments will not be considered. Item 1 Throughout this proceeding, and again in its Petition, Kiantone argues that OPS’s allegation that it failed to follow Product Receipt Procedure 11.6.3 was flawed because it was based on the wrong OM&E procedure and as a result OPS was enforcing requirements that did not apply.10 While Item 1 in the Notice was based on an alleged failure to follow Product Receipt Procedure 11.6.3, Petitioner contended that during an unplanned communications failure such as the power outage that occurred during the incident, its personnel were not required to follow the Product Receipt Procedure. Petitioner continues to argue that instead, its Control Room Management (CRM) Procedure 2.3.4 – Unplanned Communications Failure-Tank Farm (CRM 2.3.4) applied to the exclusion of Product Receipt Procedure 11.6.3.11 In evaluating Kiantone’s argument, I noted in the Final Order that Product Receipt Procedure 11.6.3 includes a Table that defines a “Category 1” situation as occurring when power is lost, communications are lost, or radar/laser on an active tank is lost. The plain meaning of the word “or” in this procedure indicates that if any of those three conditions applied, that the hourly reading and tank monitoring and facility attendance requirements of this procedure applied. Thus, the existence of Category 1 in the Table of this procedure meant that Product Receipt Procedure 11.6.3 encompassed either a loss of power scenario or a loss of communication scenario such as occurred in this incident. I found that OPS met its burden of establishing that the facility was in a “Category 1” situation on the night of the incident and the tank monitoring and reading procedures set forth in the Product Receipt Procedure 11.6.3 and its included table clearly applied. When the back-up power failed at approximately 8:36 p.m. EDT, the facility was then without communications. Thus, the tank monitoring and hourly readings and manning requirements described in 11.6.3 applied, to include the “Facility Category” table requirement in a “Category 1” situation. Under the procedure, these readings may be taken remotely under 11.6.3 (when a facility has power and the control center systems are working properly), or “locally” per the “current Facility Category” listed in the table in 11.6.3. Per that table, during a “Category 1” situation, the facility must be fully attended and the tanks at the facility must be monitored to ensure they do not show unexpected loss or gain of inventory, and hourly tank readings must be taken. Based on the manner in which Product Receipt Procedure 11.6.3 and the included table expressly apply to either a loss of power scenario or a loss of communications scenario, Kiantone’s argument that its procedures called for following CRM 2.3.4 to the exclusion of the Product Receipt Procedure 11.6.3 is flatly contradicted by the plain language of its written procedures. 10 Pre-hearing submission, at 2. 11 Under CRM 2.3.4, as it was written then, that procedure required that if the active tank lost power, communications, or radar/ laser, that the facility must be fully attended, that the tank must be attended during first and last hour of receipt, and that readings must be obtained from the tank gauge each hour during receipt.#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 6Petitioner questioned whether I understood that both of these procedures used the same table and continued to insist that CRM 2.3.4 operates to the exclusion of Product Receipt Procedure 11.6.3, arguing in its Petition that applying both procedures could be redundant.12 I continue to find Kiantone’s argument unpersuasive. Section 11.6.3 as it existed at the time of the Accident references CRM 2.3.4, and instructs that the pump house blender must “[f]ollow additional manning requirements as listed in the table below for situations where the facility or tank may change from Category 3 to a Category 1 or 2 (see Control Room Management procedures CRM 2.3.4, & CRM 2.3.5 for communications failures)”. Not only do the procedures omit any instruction that Product Receipt Procedure 11.6.3 may be disregarded when communications are lost, in fact, the procedures instruct the opposite, that “additional manning requirements” are to be followed in situations where the facility or tank farm may change to a Category 1 situation.13 Petitioner stated that in its past practice, it had only applied CRM 2.3.4 during unplanned communications failures and questioned whether I failed to consider a statement by a company employee during the hearing to this effect.14 That is incorrect. In determining the preponderance of the evidence, I weighed this statement against the evidence in its totality including the plain black letter language of Petitioner’s written OM&E procedures. OM&E procedures are put in writing for a reason. The procedures in effect at the time of the incident must be followed by personnel in the field. Otherwise ad hoc practices that deviate from the procedures could result in further risks to safety. An attempt to justify a failure to follow written procedures by expressing someone’s opinion after the fact that the procedures mean something other than what they actually say does not overcome the facts and the record in this case. Petitioner went on to argue that although it deviated from CRM 2.3.4 in this instance, the deviation occurred with respect to Tank 651 and had no impact on the release from Tank 652.15 However, OPS did not allege a failure to follow CRM 2.3.4 or that Product Receipt Procedure 11.6.3 applied exclusively. There is no suggestion that even if CRM 2.3.4 had been followed with or without any deviation, it would have been impossible for Kiantone to follow Product Receipt Procedure 11.6.3. Written procedures often interact with and contain internal references to other procedures. It is not uncommon that more than one procedure may apply during an incident and even if some of the same actions would be triggered, there is nothing unlawful about OPS making the choice about which procedure it would cite to bring the allegation as long as it meets its burden of proof with respect to cited procedure. Having fully reconsidered all information in the record, I find that nothing in the Petition warrants any change in the findings made in Item 1 of the Final Order. Having considered Petitioner’s arguments, the preponderance of the evidence in this proceeding supports the finding in the Final Order that Petitioner violated 49 C.F.R. § 195.402(a) by failing to follow OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm. 12 Petition, at 3. 13 Recommendation, at 7. It should also be noted that even if Petitioner had taken actions fully consistent with CRM 2.3.4, doing so would not have made following Product Receipt Procedure 11.6.3 an impossibility. 14 Petition, at 4. 15 Petition, at 5.#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 7Item 2 Throughout this proceeding, and again in its Petition, Kiantone argues that it met the requirements of its procedures to periodically monitor the dike drain discharge for Tank 652 when the Pump House Operator drove through the facility at approximately 12:50 a.m. EDT. Petitioner argues that the finding of violation in the Final Order for this item was erroneous because it was based on an inference that when Petitioner’s Pump House Operator drove through the facility and observed Tank 652 to be overflowing from the tank vents, the purpose of the drive through the facility was not to investigate a heavy odor of petroleum that has been reported and therefore satisfied the requirement for periodic monitoring of the dike drain discharge. Specifically, the Petition stated: The Final Order contends that “the pump house blender’s drive through the facility occurred approximately 20 minutes after a call to him from the personnel ‘sitting at 651 tank’ indicating there was a strong smell in the air” and that from that point in time the Pump House Operator “[w]ent back to the Farm around 12:50 AM to check on [ ] sitting at 651 tank.”48 In other words, the Final Order presumes that the Pump House Operator was not at the Tank Farm to monitor draining water, but rather to investigate the smell of odor, a potential sign of release. This contention, however, is belied by the signed witness statements. In his witness statement, the Tank Gauger stated that at “12:30AM” he “gauged 651 tank and called West Seneca. Shortly after this the light flickered twice. I let Carl Anderson and Ted know that this happened. I also let Ted know there was a heavy smell.” The next time entry in the statement is not until “1:30AM” because the entries are mostly hourly.49 The Final Order appears to infer that all of the events listed by the Tank Gauger for 12:30am occurred at or around that time (as opposed to anywhere between 12:30am and 1:30am), including the gauging of Tank 651, the call to West Seneca, the flickering of the lights, and the communication of the smell of crude oil to the Pump House Operator. But this disregards the clear sequencing of multiple events over the span of an hour and the use of a phrase like “[s]hortly after this” to indicate a lapse in time. Furthermore, it conflates the forms of communication. The Tank Gauger “called” the control room at West Seneca, 50 whereas he “let Ted know there was a heavy smell.”51 The Final Order presumes the Tank Gauger “let” the Pump House Operator know about the smell via phone call, but other witness statements would contradict that inference. For#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 8instance, the Pump House Operator’s witness statement nowhere says that the Tank Gauger called him to alert him to the smell of oil, particularly not between 12:30am and 12:50am. Rather, the witness statements from both the Pump House Operator and the incoming Operations Shift Supervisor show that they arrived at the Tank Farm at approximately 12:50am. These statements show that it was after their arrival when they had a brief conversation with the Tank Gauger at Tank 651 regarding the smell of crude oil.52 This finding thus rests on a single inference from one of three statements and is not a firm basis to suggest that the Pump House Operator’s return to the Tank Farm (or subsequent monitoring of Tank 651 dike) was directly prompted by a phone call from the Tank Gauger about the smell of oil. That is a premise that is unsupported by a careful consideration of the record. In other words, they did not come to the Tank Farm because of the reported odor of oil, but learned of it when they arrived as part of their monitoring.16 Petitioner argued that the Final Order inaccurately inferred that the Tank Gauger reported the heavy crude oil smell and that the statement prepared by its employee for the informal hearing proved that the Pump House Operator’s drive through the facility at 12:50 a.m. EDT was not done for the purpose of investigating the crude oil smell. Kiantone stated that the path of the vehicle happened to result in the Pump House Operator’s observation of the crude oil overflow from Tank 652 before he could reach the dike drain valve.17 While this employee statement appears to be somewhat at odds with the contemporaneous evidence that a strong odor of petroleum had been reported and was being investigated, even conceding that the purpose of the drive through the facility was for purposes other than investigating the odor, the evidence in the record shows that Kiantone still failed to complete documented periodic monitoring of the dike drain valve discharge. First, there is no dispute that the dike drain valve was not logged open (nor later logged closed) as required under Kiantone’s Dike Drain Procedure.18 The evidence shows those logs being updated days after the incident (July 9, 2021) rather than when those actions were conducted as required by Kiantone’s procedures.19 Second, while Kiantone may not have defined “periodically” in its procedures, Petitioner never refuted the allegation that monitoring of the type required by the procedure (i.e., at the drain discharge) was not conducted at all. Petitioner’s argument is, at best, an attempt at explaining why its employee did not perform the monitoring, even at 12:50 a.m. EDT. 16 Petition, at 8-9. 17 Petition, at 7. 18 See, e.g., Tr. at 96-104 and Kiantone Post-Hearing Brief, at 8. 19 Tr. at 109: 23-35; 110 1-10. See also Exhibit 21-217159 B-2 and Kiantone Exhibit No. 4 (labeled in Kiantone’s Pre-Hearing Brief electronic exhibits as ((#24) 652 Dike Drain Log).#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 9Petitioner’s argument that the required monitoring did not even need to begin until over three hours had elapsed since the dike drain began discharging is also inconsistent with the purpose of the monitoring required by the procedure which is to monitor the water discharge from the dike drain for Tank 652 for oil. The purpose of monitoring a dike drain is to identify the escape of crude oil into the containment area if and when it begins to take place. In other words, if the operator doesn’t identify the escape of crude oil until it can be seen heavily flowing out of the tank vents that happen to be visible from a passing vehicle’s headlamps at night, the operator is not periodically monitoring the dike drain in an effective manner that has any possibility of achieving the purpose of dike drain water monitoring down in the containment area. Kiantone’s argument that its requirement to perform periodic monitoring of the water flowing from a dike drain valve down in the containment area was met when a passing vehicle could see oil flowing out of the tank vents lacks any merit even if it were true that the Pump House Operator was not investigating the reported heavy crude oil smell as the purpose of his drive through the facility. The failure to complete a written log of the valve opening/closure which would have been done if the procedure were being followed is further evidence of this violation. Having fully reconsidered all information in the record, I find that nothing in the Petition warrants any change in the findings made in Item 2 of the Final Order. Having considered Petitioner’s arguments, the preponderance of the evidence in this proceeding supports the finding in the Final Order that Petitioner violated 49 C.F.R. § 195.402(a) by failing to follow its OM&E Procedure Section 5.7.10 – Tank Farm Dike Drain Operations. Assessment of Penalty With respect to Item 1, Petitioner contends that rather than being assessed a civil penalty for failure to follow OM&E Procedure 11.6.3 with respect to Tank 652, it should have been assessed a de minimis penalty for failing to follow CRM 2.3.4 with respect to Tank 651.20 With respect to Item 2, Petitioner contends that rather than being assessed a civil penalty for failure to follow OM&E Procedure 5.7.10, it should receive a significantly reduced penalty for “a short delay in filling out the logbook.”21 With respect to both items, Petitioner contends that the civil penalties assessed in the Final Order were arbitrary and had misapplied the gravity factor because it had engaged in cleanup and recovery efforts of the crude oil that was released and the Final Order erred in considering any environmental impact in assessing the penalty. With respect to Item 1, I have discussed at length above why Kiantone’s argument that rather than being assessed a civil penalty for failure to follow OM&E Procedure 11.6.3 with respect to Tank 652, it should have been assessed a de minimis penalty for failing to follow CRM 2.3.4 with respect to Tank 651 is unpersuasive. With respect to Item 2, I have also discussed above why Petitioner’s failure to follow OM&E Procedure 5.7.10 is much more than a mere recordkeeping violation. 20 Petition, at 2. 21 Petition, at 10.#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 10With regard to whether the Final Order erred in considering any environmental impact in assessing the penalty and misapplied the gravity factor because Kiantone had engaged in cleanup and recovery efforts, I find Petitioner’s arguments unpersuasive. Under PHMSA’s statutory civil penalty framework, the gravity of a violation, which includes its consequences, is required to be considered by PHMSA. In assessing the civil penalties, the Final Order found that Kiantone’s failure to follow OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm (Item 1) was a causal factor in the crude oil spill and the failure to periodically monitor the dike drain discharge for Tank 652 on the night of the incident (Item 2) increased the severity (i.e., the volume) of the spill. With respect to Item 1, the civil penalty and the gravity factor in particular reflect the fact that this accident was preventable. If Petitioner had followed the applicable procedure and not allowed Tank 652 to receive the unplanned delivery of oil, the spill would not have occurred. With respect to Item 2, the civil penalty and the gravity factor in particular reflect the fact that the amount of oil spilled was more severe than it otherwise would have been. If Petitioner had properly monitored the dike drain discharge for Tank 652, it would likely have detected and been able to stop the overflow after a few hundred or even a few thousand gallons of oil had spilled. Instead, approximately 112,000 gallons of oil were spilled. With respect to Petitioner’s argument that the fact a spill occurred should have been irrelevant to the gravity factor because the oil was cleaned up before it could spread beyond the firewater pond, the fact that Kiantone had to clean up its own spill after it occurred is not a mitigating factor. Nothing in the history of PHMSA’s civil penalty assessments requires that a spill must spread to further environmental areas such as wildlife areas, or other property owners’ land before it can be considered as part of the gravity factor. Moreover, there is nothing unlawful about PHMSA considering the sheer size or volume of a given spill in assessing a civil penalty because even if oil-soaked soil is removed and taken elsewhere, for example, some environmental impact is involved. Having considered Petitioner’s arguments and the record in this case, I find that the civil penalty assessments in this matter, in both the amounts and the factors to be considered in formulating such, comply with the governing statute at 49 U.S.C. § 60122 and 49 C.F.R. § 190.223. Accordingly, I find that nothing in the Petition warrants a reduction in the civil penalties assessed in the Final Order for these violations. Warning Items The Final Order included three items, Items 4, 5 and 6, that were identified as warning items pursuant to § 190.205. The warnings were for Petitioner’s alleged failure to follow its Abnormal Operation Procedure 18.1.2 and associated form for reporting of abnormal operations; Petitioner’s alleged failure to give notice of a September 15, 2018 tank fire to the National Response Center; and Petitioner’s alleged failure to file an accident report on DOT Form 7000-1 after discovery of the September 15, 2018 tank fire. In its response to the Notice and again in its Petition, Kiantone took issue with the OPS practice of issuing warnings. Petitioner argued that the three warning items were unjustified because they created the impression of non-compliance without the opportunity for any objection by the pipeline operator.#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 11The authority for OPS to issue warnings comes from 49 C.F.R. § 190.205 which states: § 190.205 Warnings. Upon determining that a probable violation of 49 U.S.C. 60101 et seq., 33 U.S.C. 1321(j), or any regulation or order issued thereunder has occurred, the Associate Administrator or a Regional Director may issue a written warning notifying the operator of the probable violation and advising the operator to correct it or be subject to potential enforcement action in the future. The operator may submit a response to a warning, but is not required to. An adjudication under this subpart to determine whether a violation occurred is not conducted for warnings. OPS has issued warnings to pipeline operators under this authority for decades. The Final Order stated that if OPS finds a violation of any of these warning items in a subsequent inspection, “Respondent may be subject to future enforcement action.” Thus, a warning item is not a finding of violation, is not a prior offense, and involves no penalty. It is perplexing that Petitioner took issue with these three items because if they were not mere warnings, the case may have ended up involving three additional violations and associated civil penalties. To the extent Petitioner is concerned that warnings allege noncompliance without any adjudication, it should be noted that the phrase “Respondent may be subject to future enforcement action” does not mean that the evidence of the past conduct referenced in the Notice will be the basis for another Notice. Again, it is not a prior offense. The allegations in a future enforcement action, if any, would have to be based on new evidence that the issue remained present after the Final Order is issued and the operator would have a full opportunity to contest such allegations. In short, unless 49 C.F.R. § 190.205 is repealed, there is nothing stopping OPS from issuing warnings where appropriate. Due Process Arguments Throughout this proceeding, Kiantone has contended that OPS continually deviated from the legal theories initially proposed in the Notice, argued that OPS’ claims were entirely without merit, and questioned whether it could receive fair treatment in an administrative agency adjudication as opposed to a judicial proceeding.22 I disagree with these arguments. First, OPS has held to the original allegations in the Notice. Nothing about the allegations in the Notice, or the evidentiary basis put forward by OPS at the time the Notice was issued changed during the course of this proceeding. The purpose of this proceeding was simply to apply the facts to the enforceable requirements, nothing more, nothing less. Petitioner had ample opportunities to present its arguments for all three items at every stage of this proceeding including: (1) in response to the Notice; (2) during the hearing; (3) following the hearing; and (4) in its Petition. Petitioner had a full and fair opportunity to present its arguments. While Items 1 and 2 were not withdrawn as Item 3 was, the reason is that OPS met its burden of proving these two allegations, not any lack of fairness in the process. 22 Post-hearing submission, at 15.#

12022050NOPV_Decision on Petition for Reconsideration_06032024_(21-217159)_text.pdf, page 12Petitioner is correct that the Part 190 administrative adjudication process, which has been in place for decades, does not have all of the same procedures as a jury trial. However, the Part 190 administrative adjudication process is consistent with basic constitutional due process including the right to notice of the proceeding, the right to appear and contest the evidence, the right to counsel, and the opportunity for judicial review. With respect to Petitioner’s arguments regarding the constitutionality of PHMSA’s governing statutes and underlying enforcement regulations, the pipeline safety standards were mandated by Congress and do not arise from common law predating the relevant statutes at 49 U.S.C. Chapter 601, nor are they predicated on torts.23 Moreover, the Part 190 administrative process and the agency’s authority to assess civil penalties for non-compliance was mandated by Congress and is codified at 49 U.S.C. 60122. Notably, the U.S. Court of Appeals for the Sixth Circuit recently issued a decision on June 2, 2023, denying a pipeline operator’s petition for review of a PHMSA pipeline safety enforcement civil penalty matter.24 In that case, the Court upheld PHMSA’s assessment of civil penalties in a contested pipeline safety enforcement case, in which an administrative hearing was also held, under the same procedural statutes and regulations which governed here.25 PHMSA takes its enforcement responsibilities very seriously and recognizes that its administrative authority must be used judiciously and in a fair manner. At the same time, the transportation of large volumes of flammable and toxic hazardous products by pipeline through populated and environmentally sensitive areas has inherent risks and pipeline operators, including large, sophisticated companies like Petitioner, are aware that they have chosen to engage in a regulated industry that calls for prompt and efficient safety and compliance proceedings. RELIEF DENIED Based on the information provided in the Petition, a review of the record, and for the reasons stated above, I am affirming the Final Order without modification. This Decision is the final administrative action in this proceeding. June 3, 2024 _____________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety 23 See Jarkesy v. Sec. & Exch. Comm'n, 34 F.4th 446, 453 (5th Cir. 2022) (citing Atlas Roofing Co. v. Occupational Safety & Health Rev. Comm'n, 430 U.S. 442, 458 (1977)). See also American Power & Light Co. v. SEC, 329 U.S. 90 (1946). 24 See Wolverine Pipe Line Company v. DOT, PHMSA, Case No. 21-3405 (6th Cir., June 2, 2023); available online at: https://www.govinfo.gov/content/pkg/USCOURTS-ca6-21-03405/pdf/USCOURTS-ca6-21-03405-0.pdf. 25 Id.#

12022050NOPV_PHC Hearing Scheduled_12142022_(21-217159)_text.pdf, page 1Official PDFDecember 14, 2022 VIA ELECTRONIC MAIL TO: ghopkins@velaw.com and robert.burrough@dot.gov Mr. George C. Hopkins, Esq. Counsel for Kiantone Pipeline Corporation Vinson & Elkins LLP 2200 Pennsylvania Avenue, NW, Suite 500 Washington, DC 20037 Mr. Robert Burrough Director, Eastern Region Pipeline and Hazardous Materials Safety Administration 820 Bear Tavern Road, Suite 300 West Trenton, NJ 08628 Re: Notice of Hearing, Kiantone Pipeline Corporation CPF No. 1-2022-050-NOPV Dear Mr. Hopkins and Mr. Burrough: In accordance with 49 C.F.R. § 190.211, an informal hearing will be held regarding the Notice of Probable Violation and Proposed Civil Penalty issued by the Pipeline and Hazardous Materials Safety Administration in the above-referenced case. The hearing will take place on April 20, 2023, beginning at 8:30 a.m. Eastern Time. The hearing will be held at the PHMSA Eastern Region office, 820 Bear Tavern Road, Suite 103, West Trenton, NJ 08628. Upon arrival at the building, attendees will be required to present photo identification to security personnel. A contact phone number for the day of the hearing is (609) 989-2171. At least 10 calendar days prior to the hearing (or by April 10, 2023), both parties must submit and exchange any additional written materials they intend to present at the hearing and the name and email address of each attendee. This information should be provided electronically. Materials not submitted by this date may be excluded. If you have any questions, please do not hesitate to contact me. Sincerely, Larry White Presiding Official#

12022050NOPV_PHC Hearing Scheduled_12142022_(21-217159)_text.pdf, page 2cc: Mr. Dave Wortman, Vice President Supply and Transportation, Kiantone Pipeline Corporation, dwortman@urc.com Mr. Joseph St. Peter, Eastern Region Counsel, Office of Pipeline Safety, PHMSA, joseph.st.peter@dot.gov#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 1Official PDFDecember 26, 2023 VIA ELECTRONIC MAIL TO: dwortman@urc.com Mr. Dave Wortman Vice President, Supply and Transportation Kiantone Pipeline Corporation 15 Bradley Street, P.O. Box 780 Warren, PA 16365 Re: CPF No. 1-2022-050-NOPV Dear Mr. Wortman: Enclosed please find the Final Order issued in the above-referenced case. It withdraws one allegation of violation, makes findings of violation, and assesses a civil penalty of $450,268. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon receipt of payment. Service of the Final Order by e-mail is effective upon the date of transmission and acknowledgement of receipt as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Mr. Robert Burrough, Director, Eastern Region, Office of Pipeline Safety, PHMSA Mr. John Wagner, Vice President, General Counsel and Corporate Secretary, Kiantone Pipeline Corp., jwagner@urc.com Mr. George C. Hopkins, Counsel for Kiantone Pipeline Corp., Vinson & Elkins, LLP, ghopkins@velaw.com CONFIRMATION OF RECEIPT REQUESTED#

12022050NOPV_Final Order_12262023_(21-217159)_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 ) Kiantone Pipeline Corporation, ) CPF No. 1-2022-050-NOPV ) ) ) Respondent. ) ____________________________________) FINAL ORDER From July 8, 2021 through July 9, 2021, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of Kiantone Pipeline Corporation (Kiantone or Respondent) in connection with investigating a release of crude oil in Warren, Pennsylvania. Kiantone’s parent company, United Refining Company (URC), is an independent refiner and marketer of petroleum products in Pennsylvania and portions of New York and Ohio. Kiantone Pipeline Corporation manages the 78-mile-long Kiantone Pipeline from West Seneca, New York to URC’s refinery in Warren, Pennsylvania including a tank farm for storage located on Cobham Park Road in Warren, Pennsylvania (Cobham Tank Farm).1 On July 8, 2021, at approximately 12:20 a.m. Eastern Daylight Time (EDT), Kiantone Pipeline experienced an overflow of Tank 652 at the Cobham Tank Farm. The overflow resulted in a release of 2,672 barrels (bbl) of crude oil into secondary containment, which exited an open dike drain valve and flowed downhill to a firewater retention pond. Following notification of the incident to the National Response Center (NRC), PHMSA deployed accident investigation personnel to the release site, along with the Pennsylvania Public Utility Commission.2 As a result of the inspection and investigation, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated October 6, 2022, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Kiantone had committed three violations of 49 C.F.R. Part 195 and proposed assessing a total civil penalty of $675,402 for the alleged violations. The Notice also included an 1 United Refining Company website, Pipeline Operations, available at https://www.urc.com/pipelines (last accessed Nov. 5, 2023). 2 Failure Investigation Report – Kiantone Pipeline Corporation – Incorrect Operation Aboveground Storage Tank Overflow (Dec. 21, 2021), Executive Summary.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 3additional three warning items pursuant to 49 C.F.R. § 190.205, which warned the operator to correct these probable violations or face possible future enforcement action Kiantone responded to the Notice by letter dated November 21, 2022 (Response), as supplemented by material submitted on April 10, 2023 (Pre-hearing submission). Kiantone contested the allegations and requested an informal hearing. A hearing was subsequently held on April 20, 2023, in West Trenton, New Jersey, before a Presiding Official from the Office of Chief Counsel, PHMSA. At the hearing, Respondent was represented by counsel. After the hearing, Respondent provided additional written material for the record, by letter dated May 22, 2023 (Post-hearing submission) and the Director provided a recommendation on June 21, 2023 (Recommendation). FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states: § 195.402 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline system commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted. The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow its written procedure for operations, maintenance & emergencies (OM&E Procedure) 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm (Product Receipt Procedure). Specifically, the Notice alleged that Kiantone did not verify that tanks not scheduled to receive product at the Cobham Tank Farm did not show an unexpected loss or gain of inventory, nor did Kiantone obtain level gauge readings from each tank within the active manifolded system according to its procedures and as a result, when Tank 652 started receiving product due to a partially opened inlet valve, it went undetected until the tank overflowed. The material facts of the incident are not in dispute. A heavy storm caused a loss of power at the Cobham Tank farm on July 7, 2021, at approximately 6:49 p.m. EDT. The power loss initiated the uninterruptible power supply (UPS) to maintain communications with the facility’s control center, but all other electrical equipment at the Cobham Tank Farm was inoperable, including lights, pumps, and motor-operated valves. Kiantone’s UPS system, which powered the communications at the facility, operated for nearly two hours before being depleted at approximately 8:36 p.m. Commercial power was temporarily restored at approximately 9:22#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 4p.m. for 32 seconds. The restoration of power caused the remotely operated inlet valves to Tanks 650, 651, and 652 to begin to open, but the valve operation ceased when power was subsequently lost again. Tanks 650, 651, and 652 were all connected to the same manifold. Tank 651 was in the process of receiving product at this time. Because Tank 652 now had a partially opened inlet valve, Tank 652 also started to receive product. However, as the UPS was depleted and thus the facility had no communications, Kiantone’s control center failed to detect Tank 652’s valve operation. Therefore, the receiving of product by Tank 652 and its resulting overflow was not detected by Kiantone until at or around approximately either 12:50 or 12:55 a.m. on July 8, 2021. The release was discovered when Kiantone’s pump house blender visually noticed oil coming from the vents of the tank via illumination from his headlights as he drove within the facility and after being notified of a heavy smell of petroleum in the air by other personnel at the facility.3 In its Response and at the hearing, Kiantone contested Item 1, arguing that OPS’s allegation was flawed because it was based “on the wrong O&M procedure” and as a result OPS was enforcing requirements that did not apply. 4 While Item 1 in the Notice was based on an alleged failure to follow Product Receipt Procedure 11.6.3, Respondent contended that during an unplanned communications failure such as the power outage that occurred during the incident, its personnel were not required to follow the Product Receipt Procedure. Respondent argued that instead, its Control Room Management (CRM) Procedure 2.3.4 – Unplanned Communications Failure-Tank Farm (CRM 2.3.4) applied.5 Kiantone stated that:During the outage and unplanned communications failure on July 8th, Kiantone followed the requirements of CRM 2.3.4 then in effect. First, the facility was “fully attended” because Kiantone had as many as four personnel present at the Tank Farm Facility at various times while Tank 651 was receiving crude oil product: the Pump House Operator; the incoming and outgoing Shift Supervisors; and the Maintenance Laborer, who stayed on the premises all night and took readings of Tank 651 during the operations to move product to Tank 651. To Kiantone’s knowledge at the time, Tank 651 was the only active tank, and thus the only tank subject to CRM 2.3.4’s requirement to take manual readings every hour. The chart provided in Exhibit 6 shows the hourly tank level readings taken at Tank 651 during receipt, including the first and last hour. The record thus demonstrates that Kiantone followed the applicable written procedure—i.e., CRM 2.3.4, not Procedure 11.6.3—and there is therefore no factual basis for PHMSA’s alleged violation of 49C.F.R. § 195.402(a) for failure to follow the relevant O&M procedure.6 3 Recommendation, at 2-3. 4 Pre-hearing submission, at 2. 5 Under CRM 2.3.4, as it was written then, that procedure required that if the active tank lost power, communications, or radar/ laser, that the facility must be fully attended, that the tank must be attended during first and last hour of receipt, and that readings must be obtained from the tank gauge each hour during receipt. 6 Pre-hearing submission, at 8.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 5As part of its argument that only CRM 2.3.4 applied, Kiantone also expressed the view that the tasks in Product Receipt Procedure 11.6.3 that OPS maintained Kiantone should have performed, such as monitoring tank product levels in all crude tanks hourly and verifying that tanks not scheduled to receive product do not show an unexpected loss or gain of inventory, could only be performed when the Control Center has normal communications.7 However, OPS emphasized that Product Receipt Procedure 11.6.3 includes a Table that defines a “Category 1” situation as occurring when power is lost, communications are lost, or radar/laser on an active tank is lost. The “or” in the procedure indicates that if any of those three conditions applied, that the hourly reading and tank monitoring and facility attendance requirements applied. Thus, the existence of Category 1 in the Table of this procedure meant that Product Receipt Procedure 11.6.3 encompassed either a loss of power scenario or a loss of communication scenario such as occurred in this incident. With regard to Respondent’s argument that the CRM 2.3.4 Procedure applied to the exclusion of the Product Receipt Procedure 11.6.3, OPS noted: Section 11.6.3 as it existed at the time of the Accident references CRM 2.3.4, and instructs that the pump house blender must “[f]ollow additional manning requirements as listed in the table below for situations where the facility or tank may change from Category 3 to a Category 1 or 2 (see Control Room Management procedures CRM 2.3.4, & CRM 2.3.5 for communications failures)”. Nowhere does 11.6.3 say that it no longer applies at a certain point or upon a facility moving to a “Category 1” situation.8 In other words, a loss of power scenario or a loss of communications scenario are expressly encompassed within the Product Receipt Procedure 11.6.3. In such a scenario, the Product Receipt Procedure requires verification that tanks not scheduled to receive product do not show unexpected loss or gain of inventory, and that hourly tank readings must be taken. Based on the manner in which Product Receipt Procedure 11.6.3 and the included table apply to either a loss of power scenario or a loss of communications scenario, Kiantone’s argument that its procedures called for following CRM 2.3.4 to the exclusion of the Product Receipt Procedure 11.6.3 is unpersuasive. In fact, the procedures instruct the opposite, that “additional manning requirements as listed in the table below” are to be followed in situations where the facility or tank farm may change to a Category 1 situation, in addition to also referring the reader to procedures governing its control rooms at CRM 2.3.4 and 2.3.5 when communications are lost.9 Therefore, OPS met its burden of establishing that the facility was in a “Category 1” situation on the night of the incident and the tank monitoring and reading procedures set forth in the Product Receipt Procedure 11.6.3 and its included table clearly applied. When the back-up power failed at approximately 8:36 p.m., the facility was then without communications. Thus, the tank 7 Post-hearing submission, at 4. 8 Recommendation, at 6-7. 9 Recommendation, at 7. It should also be noted that even if Respondent had taken actions fully consistent with CRM 2.3.4, doing so would not have made following Product Receipt Procedure 11.6.3 an impossibility.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 6monitoring and hourly reading and manning requirements described in 11.6.3 applied, to include the “Facility Category” table requirement in a “Category 1” situation. These readings may be taken remotely under 11.6.3 (when a facility has power and the control center systems are working properly), or “locally” per the “current Facility Category” listed in the table in 11.6.3. Per that table, during a “Category 1” situation, the facility must be fully attended and the tanks at the facility must be monitored to ensure they do not show unexpected loss or gain of inventory, and hourly tank readings must be taken. However, there is no dispute that no tank readings at all occurred until approximately 10:15 p.m. at the earliest, according Kiantone. When the monitoring of tanks did begin sometime around 10:15 p.m., readings were only taken for Tank 651, and not for “all crude tanks” as required under 11.6.3, nor to verify that “tanks not scheduled to receive product do not show an unexpected loss or gain of inventory” as also required by the plain language of that procedure despite Tanks 651 and 652 sharing a common manifold. Finally, while there was some discussion at the hearing concerning the extent to which Respondent’s actions were consistent with CRM 2.3.4 when the subject was raised by Kiantone in its defense, OPS did not take a position on whether Respondent complied with CRM 2.3.4 or ever allege that it failed to do so. Throughout this proceeding, OPS consistently maintained that Kiantone failed to follow its Product Receipt Procedure 11.6.3 as alleged in the Notice. Therefore, Respondent’s contention that OPS “continually moved further afield from the violations and legal theories it initially alleged in the NOPV”10 or otherwise raised new claims that were not alleged in the Notice is unfounded. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states: § 195.402 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline system commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted. The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow its OM&E Procedure 5.7.10 – Tank Farm Dike Drain Operations (Dike Drain Procedure). This procedure requires, in pertinent part, that Kiantone personnel: 10 Post-hearing submission, at 1, 15-16.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 74. Logs the valve open in the dike drain log and periodically monitors discharge. KPL/URC personnel must be present at the Tank Farm Facility while any dike drain is manually open for draining. 5. Returns valve to closed position when draining is complete and documents in the dike drain log. Specifically, the Notice alleged that Kiantone failed to have personnel present while the Tank 652 dike drain was manually opened for draining and required returning the valve to the closed position when draining is complete. In its Response and at the hearing, Kiantone contested Item 2. Respondent acknowledged that neither the opening of the drain valve nor any monitoring was logged, but argued that: (1) the observation of oil escaping from Tank 652 by the Pump House Operator on his drive through the facility approximately three hours after the dike drain was opened constituted the periodic monitoring required by the procedure; and (2) that a three hour interval was appropriate under the circumstances.11 Specifically, Respondent contended that: PHMSA’s entire claim is premised on reading a precise time limit into the term “periodically” so that it incorporates a set frequency for monitoring. PHMSA has offered no support either in the Kiantone manual itself or based on a legal or programmatic position that “periodic” requires a specific time period. The use of the term “periodically” means that Kiantone has the flexibility to determine what frequency is appropriate under a particular set of circumstances. Rather than pursuing a claim against Kiantone for having failed to comply with its manual of written procedure, PHMSA is trying to enforce a limitation that is not in Kiantone’s manual. Moreover, PHMSA presented no evidence that the circumstances surrounding the amount of rainfall the Tank Farm Facility received on July 7th and 8th warranted a shorter timeframe for inspections.12 Respondent’s arguments, however, are unpersuasive. First, there is no dispute that the dike drain valve was not logged open (nor later logged closed after the Accident) as required under Kiantone’s Dike Drain Procedure.13 The evidence shows those logs being updated in days following the Accident (July 9, 2021) rather than when those actions were conducted as required by Kiantone’s procedures.14 11 Post-hearing submission, at 7. 12 Post-hearing submission, at 6. 13 See, e.g., Tr. at 96-104 and Kiantone Post-Hearing Brief, at 8. 14 Tr. at 109: 23-35; 110 1-10. See also Exhibit 21-217159 B-2 and Kiantone Exhibit No. 4 (labeled in Kiantone’s Pre-Hearing Brief electronic exhibits as ((#24) 652 Dike Drain Log).#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 8Kiantone’s argument that observing the oil spill via the illumination of vehicle headlights while driving within the facility three hours after the drain was opened constituted an attempt to periodically monitor the dike drain discharge for Tank 652, is not consistent with the evidence. As OPS noted, the pump house blender’s drive through the facility occurred approximately 20 minutes after a call to him from the personnel “sitting at 651 tank” indicating there was a strong smell in the air. He stated that he “[w]ent back to the Farm around 12:50 AM to check on [ ] sitting at 651 tank. After a brief conversation I proceeded to check the rest of area. While driving out of 651 dike I saw the that the vents on 652 were flowing oil.”15 In short, he does not even assert that he was conducting the periodic monitoring of the water discharge from the dike drain required by the procedure. Respondent’s argument is also inconsistent with the purpose of the monitoring required by the procedure which is to monitor the water discharge from the dike drain for Tank 652 for oil. While Kiantone may not have defined “periodically” in its procedures, no showing was made that monitoring of the type required by the procedure was conducted at all. Rather, the oil spill was fortunately discovered via happenstance. OPS met its burden of showing that Kiantone’s assertion that discovery of the ongoing oil spill via car headlights hitting Tank 652 constituted “periodic” monitoring of the water flowing from a dike drain valve is not a method contemplated by its procedures and lacks any merit. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow its OM&E Procedure Section 5.7.10 – Tank Farm Dike Drain Operations. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states: § 195.402 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline system commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted. The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow its OM&E Procedure section 18.1 - Abnormal Operations (AO Procedures). Specifically, the Notice alleged that Kiantone failed to conduct a proper review of a prior abnormal operation on 15 During the hearing, Kiantone’s representative opined that the pump house blender was on his way to check the “dike drain valve that’s marked there at 652”, but the pump house blender’s actual statement contains no such assertion and there was no testimony given to suggest that the witness had personal knowledge of the pump house blender’s motivations.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 9June 30, 2021 (eight days earlier) to determine and correct all the deficiencies in procedures, safety equipment, and monitoring or control systems prior to the incident, resulting in recurrence of the malfunction and the release of product. On June 30, 2021, the facility lost commercial power, prompting the UPS to take over. Once the UPS was depleted about two hours later, communications between the facility and the control center were lost. When power was fully restored shortly thereafter, communications were reestablished with the tanks. At that point, the valve for only Tank 651 was supposed to be open, but the control center observed that the inlet valves for Tanks 650 and 652 had been inadvertently opened. At the same time, the high-level alarm for Tank 651 was triggered—despite the fact that the high-level point had not been reached—prompting the pipeline to shut down. The control center remotely closed the inlet valve for Tank 652, but the valve for Tank 650 had to be manually closed. Respondent recorded these abnormal operations and initiated the process of conducting a root cause analysis.16 In its Response and at the hearing, Kiantone contested Item 3. Respondent explained that only 8 days had elapsed since the June 30, 2021 incident and it was not reasonable for OPS to expect that the process of identifying and correcting the deficiencies that caused the incident to be resolved. Respondent’s applicable Procedure 18.1 for reviewing and resolving such an issue states: Once abnormal operations have ended, operators at the Pipeline Control Center and/or the Pipeline Manager will monitor pipeline operations to be sure the abnormal condition has been corrected and the pipeline is operating safely. The Pipeline Manager is responsible to review the actions of personnel who responded to an abnormal operation to determine: • Whether the response was timely and appropriate, to ensure protection of persons and property. • Whether employee actions followed company-approved procedures. • Whether any deficiencies exist in Kiantone O&M procedures, safety equipment, or pipeline monitoring and/or control systems. Kiantone pointed out that neither OPS regulations nor its applicable procedure contained a time requirement for completing these reviews and correcting any deficiency. Respondent pointed to OPS’ own pre-hearing brief in which OPS stated, “eight days after a power loss, when the Accident occurred, Kiantone was still not monitoring all tanks connected to the same manifold during the Power Loss.” Kiantone argued this proved that in its Item 3 citation, OPS was really just repackaging the allegation in Item 1. Kiantone argued that Item 3 should be struck as duplicative of Item 1.17 For its part, OPS acknowledged that the requirement in Respondent’s procedure to identify and 16 Pre-hearing submission, at 12. 17 Post-hearing submission, at 10.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 10correct all deficiencies did not have a time requirement, but stated that Respondent had a general obligation not to operate the facility until such operation could be done safely. During the hearing, OPS acknowledged that Respondent had begun the process of analyzing the root cause of the June 30, 2021 incident, but expressed its opinion that there were preventative and mitigative measures that could have been identified and completed by Respondent during the eight-day period.18 While OPS is correct that operators are obligated to operate its facilities safely at all times, in the absence of an applicable regulation that has a deadline, OPS is seeking to enforce Respondent’s existing procedures, but it did not call for the closure of the tanks. Moreover, I agree with Respondent that identifying and correcting the root causes of the deficiency at the storage facility in this case—for example procuring additional UPS equipment to increase the capacity during power outages to be much longer than two hours—would reasonably take longer than eight days to plan and complete. Therefore, the only actions that Respondent could reasonably be expected to take in the eight-day period would have been effective monitoring to verify that the tanks within the shared manifold system did not show an unexpected loss or gain of inventory. In this particular case, however, these are precisely the actions or lack thereof for which Kiantone was already cited in Item 1 of the Notice and found to be in violation of in Item 1 of this Order. Therefore, Respondent is correct that due to the period between the incidents only being eight days and it only being realistically possible that the same measures to ensure effective monitoring as required by Item 1 could be accomplished in less than eight days, the alleged failure to take such actions in Items 1 and 3 in the Notice are effectively duplicative. 19 However, I emphasize that nothing in this Order should be construed to diminish the obligation of pipeline operators to implement fully effective corrective actions as soon as they reasonably could be accomplished following a failure or accident as required. Accordingly, after considering all of the evidence, I find that under the particular circumstances of this case, the conduct or lack thereof that constituted alleged noncompliance in Item 3 of the Notice is materially the same conduct or lack thereof that was alleged to constitute noncompliance in Item 1, such that in this case Item 3 is effectively duplicative of Item 1. Based upon the foregoing, I hereby order that Item 3 be withdrawn. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. 18 For example, OPS stated that Respondent could have closed off its tanks entirely. 19 This does not mean that steps to address the cause of an accident need not be taken immediately. If there had been sufficient time for the operator to complete the analysis and complete the installation of new equipment, etc., or if Item 1 did not exist to make it duplicative, this item would likely have been upheld.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 11ASSESSMENT 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 related series of violations.20 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; any effect that the penalty may have on its ability to continue doing business; the good faith of Respondent in attempting to comply with the pipeline safety regulations; and self-disclosure or actions to correct a violation prior to discovery by PHMSA. 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 $675,402 for the violations cited above. Item 1: The Notice proposed a civil penalty of $225,134 for Respondent’s violation of 49 C.F.R. § 195.402(a), for failing to follow its OM&E Procedure 11.6.3 – Activities During Receipt of Crude Oil at Tank Farm. Respondent argued that the proposed civil penalty amount in the Notice for Item 1 should be reduced or eliminated. With respect to the nature and circumstances of this violation, properly monitoring oil storage tank levels connected to the same manifold during product delivery is a critical part of safe operations and must be accomplished locally in the event of power or communications failures. With respect to the gravity of this violation, 2,672 bbl of crude oil were in fact spilled from the tank requiring clean-up operations. With respect to culpability, the proposed penalty amount in the Notice was at the low end of the range (two points) and did not reflect any heightened level of egregiousness or deliberate decision not to comply. As to good faith, while the storm itself was beyond Respondent’s control, it presented no circumstances beyond its control that would have prevented it from accomplishing the required local monitoring during the outage incident and Respondent was aware of the potential for power failures to occur. Therefore, there is no justification for a good faith or other matters as justice may require credit. I find that the record supports the civil penalty amount proposed in the Notice. Respondent presented no information that would warrant a reduction in the civil penalty proposed in the Notice for this item. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $225,134 for this violation of 49 C.F.R. § 195.402(a). Item 2: The Notice proposed a civil penalty of $225,134 for Respondent’s violation of 49 C.F.R. § 195.402(a), for failing to follow its OM&E Procedure 5.7.10 – Tank Farm Dike Drain Operations Respondent argued that the proposed civil penalty amount in the Notice for Item 2 should be reduced or eliminated. With respect to the nature and circumstances of this violation, properly 20 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223 for adjusted amounts.#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 12logging and monitoring a dike drain water discharge for oil after a drain valve is opened is a critical part of safe operations. With respect to the gravity of this violation, 2,672 bbl of crude oil were in fact spilled from the tank requiring clean-up operations. With respect to culpability, the proposed penalty amount in the Notice was at the low end of the range (two points) and did not reflect any heightened level of egregiousness or deliberate decision not to comply. As to good faith, while the storm itself was beyond Respondent’s control, it presented no circumstances beyond its control that would have prevented it from properly logging and monitoring the dike drain water discharge after the valve was opened. Therefore, there is no justification for a good faith or other matters as justice may require credit. I find that the record supports the civil penalty amount proposed in the Notice. Respondent presented no information that would warrant a reduction in the civil penalty proposed in the Notice for this item. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $225,134 for this violation of 49 C.F.R. § 195.402(a). Item 3: The Notice proposed a civil penalty of $225,134 for Respondent’s violation of 49 C.F.R. § 195.402(a), for failing to follow its OM&E Procedure section 18.1 - Abnormal Operations. Since this alleged violation has been withdrawn, the proposed penalty is not assessed. In summary, having reviewed the record and considered the assessment criteria for each of the Items cited above, I assess Respondent a total civil penalty of $450,268. Payment of the civil penalty must be made within 20 days after receipt of this Final Order. 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 (AMK-325), Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the 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. WARNING ITEMS With respect to Items 4, 5 and 6, the Notice alleged probable violations of Part 195, but identified them as warning items pursuant to § 190.205. The warnings were for:#

12022050NOPV_Final Order_12262023_(21-217159)_text.pdf, page 1349 C.F.R. § 195.402(a) (Item 4) ─ Respondent’s alleged failure to follow its Abnormal Operation Procedure 18.1.2 and associated form for reporting of abnormal operations; 49 C.F.R. § 195.52(a) (Item 5) ─ Respondent’s alleged failure to give notice of a September 15, 2018 tank fire to the National Response Center; and 49 C.F.R. § 195.54(a) (Item 6) ─ Respondent’s alleged failure to file an accident report on DOT Form 7000-1 after discovery of the September 15, 2018 tank fire. Kiantone presented information in its Response showing that it had taken certain actions to address the cited items. If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final Order to the 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. The written petition must be received no later than 20 days after receipt of the Final Order by Respondent. Any petition submitted must contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays the payment of any civil penalty assessed. The other terms of the order, including any corrective action, remain in effect unless the Associate Administrator, upon request, grants a stay. If Respondent submits payment of the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. December 26, 2023 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#