DCP MIDSTREAM — Notice of Probable Violation

case documentOfficial PDF320095026_NOPV PCO_12232009.pdf#

320095026_Closure_08132015_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED August 13, 2015 Mr. Brent Backes General Counsel and Vice President DCP Midstream 370 17th Street Denver, Colorado 80202 CPF 3-2009-5026 Dear Mr. Backes: On July 26, 2010, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Marysville Hydrocarbons, LLC, a Final Order in the above-referenced case. In the annual status report dated June 10, 2011, it was indicated that DCP Midstream had acquired the Marysville Storage facility and would fulfill the remaining obligations under the Compliance Order. The Compliance Order is part of the Final Order (Order). Based on our review of the documentation that was provided by Marysville Hydrocarbon and DCP Midstream, it has been determined that you have 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, Allan C. Beshore Director, Central Region, OPS Pipeline and Hazardous Materials Safety Administration#

320095026_FinalOrder_07262010_text.pdf, page 1Official PDFJUL 26 2010 Mr. Manouch Daneshvar Vice President Marysville Hydrocarbons, LLC 2510 Busha Highway Marysville, MI 48040 Re: CPF No. 3-2009-5026 Dear Mr. Daneshvar: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation and specifies actions that need to be taken by Marysville Hydrocarbons, LLC, to comply with the pipeline safety regulations. When the terms of the compliance order have been completed, as determined by the Director, Central 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. David Barrett, Director, Central Region, PHMSA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 1160 0001 0039 0713]#

320095026_FinalOrder_07262010_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 ) ) Marysville Hydrocarbons, LLC, ) CPF No. 3-2009-5026 ) Respondent. ) ____________________________________) FINAL ORDER On April 27-May 1, 2009, pursuant to 49 U.S.C. § 60117, a representative 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 Marysville Hydrocarbons, LLC (Marysville or Respondent), at its highly volatile liquids terminal in Marysville, Michigan. As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated December 23, 2009, a Notice of Probable Violation, and Proposed Compliance Order. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Marysville had violated 49 C.F.R. §§ 195.304 and 195.440(a) and proposed ordering Respondent to take certain measures to correct the alleged violations. The Notice also proposed finding that Respondent had committed certain other probable violations of 49 C.F.R. Part 195 and warning the company to take appropriate corrective action or be subject to future enforcement action. Marysville responded to the Notice by letter dated January 26, 2010 (Response). The company did not contest the allegations of violation and provided information concerning the corrective actions it planned to take. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION In its Response, Marysville did not contest the allegations in the Notice that it violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.304, which states:#

320095026_FinalOrder_07262010_text.pdf, page 32 § 195.304 Test pressure. The test pressure for each pressure test conducted under this subpart must be maintained throughout the part of the system being tested for at least 4 continuous hours at a pressure equal to 125 percent, or more, of the maximum operating pressure and, in the case of a pipeline that is not visually inspected for leakage during the test, for at least an additional 4 continuous hours at a pressure equal to 110 percent, or more, of the maximum operating pressure. The Notice alleged that Respondent violated 49 C.F.R. § 195.304 by failing to perform documented pressure tests as required. Specifically, the Notice alleged that portions of the facility were pressure tested for only one hour, rather than four or eight continuous hours, and that Respondent did not have proper documentation that included pressure charts. 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. § 195.304 by failing to perform documented pressure tests as required. Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.440(a), which states: § 195.440 Public awareness. (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute’s (API) Recommended Practice (RP) 1162 (incorporated by reference, see § 195.3). The Notice alleged that Respondent violated 49 C.F.R. § 195.440(a) by failing to develop a written continuing public education program that followed the guidance of API RP 1162. 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. § 195.440(a) by failing to develop a written continuing public education program that followed the guidance of API RP 1162. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1 and 6 in the Notice for violations of 49 C.F.R. §§ 195.304 and 195.440(a), respectively. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. 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:#

320095026_FinalOrder_07262010_text.pdf, page 43 1. With respect to the violation of § 195.304 (Item 1), Respondent must: (a) Develop a program and schedule for pressure testing the facility in a manner consistent with § 195.304, and must submit it to the Director, Central Region, for approval within 60 days of receipt of this Final Order. The program must include provisions for analysis of any failures, as well as re-evaluation of safe operating pressures and prioritization of test sections based on the results. Respondent must provide the Director with annual updates on the status of the pressure test program and must complete the program within five years of the date of this order; and (b) To maintain safe conditions, Respondent must immediately reset the relief valves and high pressure shutdowns to protect the 1200 psig MOP until the facilities have been pressure tested. 2. With respect to the violation of § 195.440(a) (Item 6), Respondent must develop a written continuing public education program that meets the requirements of § 195.440, and must submit it to the Director, Central Region, for review within 60 days of receipt of this Final Order. Unless otherwise instructed by the Director, Central Region, Respondent must then implement the plan as submitted. 3. Respondent must maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the Director, Central Region. Costs must 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. 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 $100,000 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. WARNING ITEMS With respect to Items 2, 3, 4, and 5, the Notice alleged probable violations of Part 195 but did not propose a civil penalty or compliance order for these items. Therefore, these are considered to be warning items. The warnings were for: 49 C.F.R. § 195.404(b) (Item 2) ─ Respondent’s alleged failure to maintain daily operating records indicating the discharge pressure at each pump station. Specifically, the Notice alleged that from approximately April 2008 to February 2009, Marysville’s new SCADA system did not record discharge pressures for pumps located in the company’s storage fields;#

320095026_FinalOrder_07262010_text.pdf, page 54 49 C.F.R. § 195.410(a) (Item 3) ─ Respondent’s alleged failure to place the proper line markers at one road crossing. Specifically, the Notice alleged that the markers at a road crossing stated the wrong operator name, product, and telephone number; 49 C.F.R. § 195.420(b) (Item 4) ─ Respondent’s alleged failure to inspect each mainline valve at least twice each calendar year, at intervals not exceeding 7 ½ months. Specifically, the Notice alleged that Respondent inspected its mainline valves only once each calendar year and had not classified certain valves as mainline valves; and 49 C.F.R. § 195.428(a) (Item 5) ─ Respondent’s alleged failure to inspect its high pressure shutdown switches and control valves at least twice per calendar year. Marysville presented information in its Response showing that it had taken certain actions to address the cited items. Accordingly, having considered such information, I find, pursuant to 49 C.F.R. § 190.205, that probable violations of 49 C.F.R. § 195.404(b) (Notice Item 2), 49 C.F.R. § 195.410(a) (Notice Item 3), 49 C.F.R. § 195.420(b) (Notice Item 4), and 49 C.F.R. § 195.428(a) (Notice Item 5) have occurred and Respondent is hereby advised to correct such conditions. In the event that OPS finds a violation of any of these provisions in a subsequent inspection, Respondent may be subject to future enforcement action. 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#

320095026_ NOPV PCO_12232009_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED December 23, 2009 Mr. Manouch Daneshvar Vice President Marysville Hydrocarbons 30078 Schoenherr, Suite 150 Warren, MI 48088 CPF 3-2009-5026 Dear Mr. Daneshvar: On April 27 – May 1, 2009, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Marysville Hydrocarbons’ records and facilities for the highly volatile liquid storage field in Marysville, Michigan. The Marysville facilities were recently identified as being subject to the Pipeline Safety Regulations and Marysville Hydrocarbons (Marysville) has been in the process of transitioning their operations to comply with Part 195. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are: 1. §195.304 Test pressure. The test pressure for each pressure test conducted under this subpart must be maintained throughout the part of the system being tested for at least 4 continuous hours at a pressure equal to 125 percent, or more, of the maximum operating pressure and, in the case of a pipeline that is not visually inspected for leakage#

320095026_ NOPV PCO_12232009_text.pdf, page 2during test, for at least an additional 4 continuous hours at a pressure equal to 110 percent, or more, of the maximum operating pressure. Review of Marysville records found that the pressure tests of the facility did not meet the requirements of Part 195. The construction of this facility began in 1972. The records indicated that portions of the facility were pressure tested to either 1500 psig or 1800 psig for one hour per ASME B31.3 “Process Piping” (The industry code to which this facility was built in the early 1970’s and to which it was operated since then). Additionally, these records were simply statements on the alignment sheets. There were no pressure charts or other documentation. The maximum operating pressure Marysville claimed to have established was 1440 psig. 2. §195.404 Maps and Records. b) Each operator shall maintain for at least 3 years daily operating records that indicate- (1) The discharge pressure at each pump station; Marysville did not have records of the discharge pressure for their pumps located in the storage field for several months. Marysville is updating the control center to a new SCADA system. However, due to a problem, the new SCADA system did not record the discharge pressures from approximately April 2008 to February 2009. The system has been corrected, and it has maintained pressure records since that time. 3. §195.410 Line markers. (a) Except as provided in paragraph (b) of this section, each operator shall place and maintain line markers over each buried pipeline in accordance with the following: (2) The marker must state at least the following on a background of sharply contrasting color: (i) The word "Warning," "Caution," or "Danger" followed by the words ``Petroleum (or the name of the hazardous liquid transported) Pipeline'', or ``Carbon Dioxide Pipeline,'' all of which, except for markers in heavily developed urban areas, must be in letters at least 1 inch (25 millimeters) high with an approximate stroke of \1/4\ inch (6.4 millimeters). (ii) The name of the operator and a telephone number (including area code) where the operator can be reached at all times. Marysville did not have the correct line markers at one road crossing. The two lines leave the storage facility and go to the Sun station about a mile away. The line markers at Witt Road were marked with Consumer Pipeline markers. Additionally, the markers did not state the right product, nor was the phone number up to date. Marysville indicated that 2#

320095026_ NOPV PCO_12232009_text.pdf, page 3they were now in the process of changing those line markers out. The next road crossing inspection found the updated line markers on the pipelines. 4. §195.420 Valve maintenance. (b) Each operator shall, at intervals not exceeding 7 1/2 months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. The review of records found that the mainline valves were only being inspected once a year. Marysville must classify certain valves as mainline in this facility and should ensure that they are inspected and documented at a minimum of twice a year. 5. §195.428 Overpressure safety devices and overfill protection systems a. Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7½ months, but at least twice each calendar year, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. Review of records found that the high pressure shutdown switches and control valves were not being inspected twice a year. The thermal reliefs were placed on a six month schedule in 2008. This was done in conjunction with the transition from adherence to the ASME B31.3 Code to compliance with Part 195. 6. §195.440 Public awareness (a) Each pipeline operator must develop and implement a written continuing public education program that follows the guidance provided in the American Petroleum Institute's (API) Recommended Practice (RP) 1162 (IBR, see § 195.3). At the time of the PHMSA inspection, Marysville Hydrocarbon did not have a completed written public awareness program that followed the guidance of API RP 1162. Prior to 2008, Marysville did not consider themselves a jurisdictional operator and did not follow Part 195 regulations. In 2008, Marysville began taking steps to comply with Part 195. Proposed Compliance Order With respect to items 1 and 6 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to 3#

320095026_ NOPV PCO_12232009_text.pdf, page 4Marysville Hydrocarbon. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Warning Items With respect to items 2-5, we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these items. Be advised that failure to do so may result in Marysville Hydrocarbon being subject to additional enforcement action. 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. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). 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. In your correspondence on this matter, please refer to CPF 3-2009-5026 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Ivan A. Huntoon Director, Central Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 4#

320095026_ NOPV PCO_12232009_text.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Marysville Hydrocarbon a Compliance Order incorporating the following remedial requirements to ensure the compliance of Marysville HydroCarbon with the pipeline safety regulations: 1. In regard to Item Number 1 of the Notice pertaining to the pressure test of the facility, Marysville must submit a program and schedule to pressure test the facility per 49 CFR Part 195 requirements. The program must include provisions for analysis of any failures and the re-evaluation of safe operating pressures and prioritization of test sections based on the results. a. The program and schedule must be submitted within 60 days from the receipt of the Final Order to the Director Central Region for approval. b. Implement the schedule upon approval from the Director Central Region. c. To maintain safety, reset the relief valves and high pressure shut downs to protect the 1200 psig MOP until the facilities are pressure tested. d. Provide annual updates on the status of the pressure test program. 2. The pressure test program must be completed within five years from the date the Final Order is received. 3. In regard to Item Number 6 of the Notice pertaining to the Public Awareness Program, Marysville must submit the public awareness program per 49CFR Part 195. a. The program must be submitted within 60 days of the receipt of the Final Order to the Director Central Region for review. b. Implement the plan as submitted, unless otherwise instructed by the Director, Central Region. 4. Marysville shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Ivan A. Huntoon, Director, Central Region, Pipeline and Hazardous Materials Safety Administration. Costs shall 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 and additions. 5#