MAGELLAN PIPELINE COMPANY, LP — Notice of Probable Violation

320045006_Final Order_10142005.pdf, page 1Official PDF@ U.S. Deportment of Tronsportolion Pipeline ond Hqzordous tnderlols sofety Administrqtion 400 SWenth Streel, S.W. washington, D.c.20590 ocT 1 4 2005 Rick A. Olsen Vice President, Pipeline Operations Magellan Pipeline Company One Williams Center P.O. Box 22186 Tulsa, OK 74t2|-2t86 Re: CPF No. 3-2004-5006 Dear Mr. Olsen: Enclosed is the Final Order issued by the Associate Administrator for Pi Safety in the above-referenced case. It makes findings of violation and assesses a civil pena ty of $32,000. ft further finds that you have completed the actions specified in the Notice required complywiththe pipeline safety regulations. When the civil penalty is paid, this enforcement actt will be closed. Your receipt of the Final Order constitutes service of that document under 49 C. .R. $ 190.s. Sincerely, &,.- t/k* James Reynolds Pipeline Compliance RegistrY Office of Pipeline SafetY Enclosure cc: Ivan Huntoon, Director Central Region, Office of Pipeline Safety#

320045006_Final Order_10142005.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY AD OFFICE OF PIPELINE SAFETY WASHINGTON. DC 20590 In the Matter of Magellan Pipeline Company, Respondent. CPF No. 3-2004- FINAL ORDER Between May 2003 and November 2003, pursuant to 49 U.S.C. $ 60117, Office of Pipeline Safety (OPS) and the Minnesota Office of Pipeline Safety pipeline safety inspections of Respondent's facilities and records in Mi Nebraska, North Dakota, South Dakota, and Minnesota. As a result of the i Central Region, OPS, issued to Respondent, by letter dated March 4,2004, a Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). 49 C.F.R. S 190.207, the Notice proposed finding that Respondent had commi 49 C.F.R. Part 195 and proposed assessing a civil penalty of $40,000 for the alle Notice also proposed that Respondent take certain measures to correct the al Respondent responded to the Notice by letter dated April 9,2004 (Response). explanations and contested some of the allegations, offered information measures it has taken, and requested that the proposed civil penalty amount be did not request a hearing, and therefore has waived its right to one. FINDINGS OF VIOLATION ives of the ucted on-site Kansas, Iowa, the Director, , ice of Probable accordance with violations of violations. The violations. t offered corrective Respondent In its Response, Respondent did not contest several of the alleged violati in the Notice. Accordingly, I find that Respondent violated the following sections of49 C.F.R.Part 195, as more fully described in the Notice: 49 C.F.R. 9 195.402(cX3) (Notice Item 2b) - failing to have wri monitoring and controlling pressures when the Capehart Junction to is being operated; procedures for Terminal line#

320045006_Final Order_10142005.pdf, page 32 49 c.F.R. $ 195.406(b) (Notice Item 5) - failing to prevent pressure su to Eppley and the omaha to KCI lines from exceeding 1r0 percent of pressure; and on the Omaha mum operatmg 49 c.F.R. $ 195.428 (Notice Item 7b) - failing to timely inspect and r devices at the Topeka Terminal. 35 thermal relief Item I in the Notice alleged that Respondent violated 49 c.F.R. g 195.402( Xl) by failing to maintain up-to-date maps ofthe piping configuration ofits Faribault and Albert stations at each facility where they may be necessary in the event of a safety-related incident. Specifically, the Notice alleged that the "as built" prints of the Faribault and Albert Lea stations last updated on october 6, 19 87 andseptember | 6, lggz,respectively, and that subsequent to stationpiping were "penciled-in" on the diagrams. The Notice further alleged that rnaps for these stations were not maintained at the Tulsa headquarters facility. In its response, Respondent contended that the drawings at the stations were suffrcient to enable its operations personnel to safely operate the stations. Respo not dispute that it failed to maintain up-to-date maps of the specified headquarters. Accordingly, I find that Respondent violated g195.402(cXl) bv up-to-date maps of the piping configuration of its Faribault and Albert Lea where they may be necessary in the event of a safety-related incident. urate and were at its Tulsa iling to maintain at each facilitv Item 3 in the Notice alleged that Respondent violated 49 c.F.R. g 1 95.402( c)(12) its written procedures for establishing and maintaining liaison with fire, police, public officials in certain of its operating areas. Specifically, the Notice alleged Missouri, while Respondent generallymet with the heads of the county Local Committees (LEPCs), in many counties it failed to establish liaison with police or other actual responders, particularlyin areas where onlyunderground facilities Notice further alleged that with respect to South D akota,Respondent was unable any liaison meetings had been conducted in 2001. The procedures Respondent time required planning meetings to be conducted with the responders on an failingto follow with respect to fire departments demonstrate that in place at the basis. In its response, Respondent stated that with respect to Missouri, it had met with police, 911 centers, and highway patrol departments in addition to the meet described to OPS during the inspection visit. Respondent acknowledged, how these additional meetings were not conducted until after the OPS inspection. Wi Dakota, Respondentdidnot disputethatitfailedto conductplanningmeetings in I find that Respondent violated $195.402(c)(12) by failing to follow its wri establishing and maintaining liaison with fire, police, and other appropriate publ specified areas on an annual basis. number of fire, gs with LEPCs , that many of respect to South 1. Accordingly, procedures for c officials in the#

320045006_Final Order_10142005.pdf, page 4Item 8 in the Notice alleged that Respondent violated 49 C.F.R. $ 195. Xl) bV failing to demonstrate that the lists of excavators who engage in excavation activities in areainwhich its pipelines are located were sufficiently current to ensure effective notificat on of its damage prevention program. Specifically, the Notice alleged that Respondent failed to verifywhether the third-parties it used in some cases to meet this requirement maintained lists lyreflecting its pipeline, and failed to ensure that information concerning excavation activit obtained by its personnel in the course of maintaining and operating its pipelines was i into the lists. In its response, Respondent described the actions that it was currently taking to ifuthe accuracy of the lists of excavators but did not dispute the allegation of violation. Respondent violated $195 .a42@)( 1) by failing to demonstrate that the lists of ex in excavation activities in the area in which its pipelines are located as they exi inspection were sufficientlSr current to ensure effective notification of its ingly, I find that who engage at the time ofthe preventlon program. These findings of violation will be considered prior offenses in any subsequent taken against Respondent. action ASSESSMENT OF PENALTY subject to a civil penalty not to $100,000 per to a maximum of $1,000,000 for an related series of Under 49 U.S.C. 5 60122, Respondent is violation for each day of the violation up violations. 49 U.S.C. 5 60122 and 49 C.F.R. 5 190.225 require that, in determining the of the civil penalty, I consider the following criteria: nature, circumstances, and gravity of violation, degree of Respondent's culpability, history of Respondent's prior offenses, Respondent ability to pay the penalty, good faith byRespondent in attempting to achieve compliance, the on Respondent's ability to continue in business, and such other matters as justice may require. With respect to Item 1, the Notice proposed that Respondent be assessed a civil ty of $10,000 for violating $195.a02(cX1) by failing to maintain up-to-date maps of the pipi configuration of its Faribault and Albert Lea stations at each facility where they may be in the event of a safety-related incident. Adequate maintenance of station maps at both the stations the associated headquarters facility is essential to ensuring safety because in the event of a sa incident, decisions about control of the stations mav have to be made at the facility. We acknowledge that Respondent took corrective action following the OPS inspecti implementing a facility drawings management program inJanuary 2004. Respondent, however, not presented information that would warrant a reduction in the civil penalty amount proposed in the Notice for this .riolation. Accordingly, hal'ing lsyisr;led the record and considered the as t criteria, Iassess Respondent a civil penalty of $10,000 for this violation.#

320045006_Final Order_10142005.pdf, page 5With respect to Item 3, the Notice proposed that Respondent be assessed a ci for violating 9195.402(c)(12) by failing to follow its written procedures maintaining liaison with fire, police, and other appropriate public officials in r areas. In its response, Respondent provided information concerning addi responders, implementation ofcommunityrelationsprograms to enhance consistr and improved documenlation of liaison activities. Based on the forgoing, I reduction in the civil penaltyproposed in the Notice for this item is waranted. reviewed the record and considered the assessment citena,I assess Respo $1,000 for this violation. I penalty of $5,000 establishing and in of its operating meetings with ywithAPI1162, find that a partial ingly, having a civil penalty of With respect to Item 5, the Notice proposed that Respondent be assessed a civil of $10,000 for violating $195.a06@) bv failing to prevent pressure surges on the omaha to Eppley and the omaha to KCI lines from exceeding 110 percent of rnaximum operatin pressure (MOP). Preventing pressure surges from exceeding 110 percent of MOP is critical to t safe operation of a pipeline because such surges can adversely impact the integrity of the pipe In this case, the specified line segments run through highly populated urban areas and a relea could have had serious consequences. We acknowledge that Respondent has now taken measures intended to better control the operating pressures of the specified line ents and prevent excessive surges. Respondent, however, has not presented information would warrant a reduction in the civil penalty amount proposed in the Notice for this item. ingly, having reviewed the record and considered the assessment criteria, I assess Respo a civil penalty of $10,000 for this violation. With respect to Item Tb,theNotice proposed that Respondent be assessed a civil of $10,000 for violating $195.428 by failing to timely inspect and test 35 thermal relief at the Topeka Terminal. Inspecting control system components within the time interv specified in the regulations is a key part of ensuring the safe operation of a pipeline system malfunctioning components must be identified and corrected before they cause or conbibute a safety-elated incident. Respondent has not presented information that would warrant a tion in the civil penalty amount proposed in the notice for this item. Accordingly, having revi the record and considered the assessment criteria, I assess Respondent a civil penalty of $10, for this violation. With respect to Item 8, the Notice proposed that Respondent be assessed a civil of $5,000 for violating $195.442(cX1) by failing to demonstrate that the lists of excav who engage in excavation activities in the areainwhich its pipelines are located were sufficientl current to ensure effective notification of its damage prevention program. In its response, provided information conceming amendments it has made to its wrifien operating and described its commitment to ensuring that all relevant information concerning excavators operate in the vicinity of its pipeline is integrated into its damage prevention program notifi process. Based on the frrgoing, I find t-hat apartial reduction in the civil penaltyproposed in the ine fnrfhic ifem is warranted. Accordingly, having reviewed the record and considered the criteria, Iassess Respondent a civil penalty of $1,000 for this violation.#

320045006_Final Order_10142005.pdf, page 65 Respondent Accordingly, havingreviewed the record andconsidered the assessment criteria. a total civil penalty of $32,000. Payment of the civil penalty must be made within 20 days of service. Federal (49 c.F.R. $ 89.21 (b)(3)) require this payrnent be made bywire transfer, through Communications System (Fedwire), to the account of the U.S. Treasury. Detai contained in the enclosure. Questions concerning wire transfers should be dirr operations Division (AMZ-120), Federal Aviation Administration, Mike Center, P.O. Box 25082, Oklahoma City, OK 73125; (405) 954-4719. FederalReserve instructions are to: Financial Aeronautical Failure to pay the $32,000 civil penalty will result in accrual of interest at the annual rate in accordancewith3l u.s.c. 53717,31 c.F.R. g 901.9 and49 c.F.R. g s9.23. t to those same authorities, alate penalty charge of six percent (6%)per annum will be c if payrnent is not made within 110 days of service. Furthennore, failure to paythe civil penaltyr result in referral of the matter to the Attorney General for appropriate action in a United States ict Court. COMPLIANCE ORDER The Notice proposed a Compliance Order with respect to Item 2b intheNotice $ 195.402(c)(3) - failing to have written procedures for monitoring and controlli the Capehart Junction to Capehart Terminal line is being operated. Under 49 each person who engages in the transportation of hazardous liquids or who pipeline facility is required to comply with the applicable safety standards establis 601. The Regional Director has indicated that Respondent has taken the followi in the Proposed Compliance Order: the violation of pressures when .C. $ 60118(a), or operates a underChapter actions specified Respondent established operational procedures for controlling the line to be used until an over-pressure protection device could be instal of these procedures available to oPS. Respondent installed the device i in the specified and made a copy May 2004. Since compliance has been achieved with respect to this violation, it is u directing compliance in this Order. to include terms WARNING ITEMS The Notice did not propose a civil penalty or corrective action for Items 2a, 4 Notice. Therefore, these are considered warning items. Respondent presented response showing that it is addressing these items. Respondent is again warned t 6, and 7a in the formation in its if OPS finds a violation for any of these items in a subsequent inspection, enforcement action ll be taken. Under 49 C.F.R. $ 190.215, Respondent has a right to submit apetition for Final Order. Should Respondent elect to do so, the petition must be received ithin 20 days of Respondent's receipt ofthis Final Order and must contain a brief statement ofthe i ideration of this s). The filing#

320045006_Final Order_10142005.pdf, page 7of apetition automatically stays thepayrnent of any civil penalty assessed. H ifRespondent submits payment forthe civil penalty, the Final Orderbecomes the final admini the right to petition for reconsideration is waived. The terms and conditions of ve decision and Final Order are effective on receipt. b.for Pipeline Safety#