BUCKEYE PARTNERS, LP — Notice of Probable Violation

party submissionOfficial PDF320105006_Operator Response to NOPV PCP PCO_05122010.pdf#

320105006_Decision on Petition_08012013_text.pdf, page 1Official PDFAUGUST 1, 2013 Mr. Clark Smith President & Chief Executive Officer Buckeye Partners, LP One Greenway Plaza Suite 600 Houston, TX 77046 Re: CPF No. 3-2010-5006 Dear Mr. Smith: Enclosed please find the Decision on the Petition for Reconsideration filed by Buckeye Partners, LP, in the above-referenced case. It denies your Petition and affirms the Final Order without modification. 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, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Robert E. Hogfoss, Esq., Counsel for Buckeye Partners, LP, Hunton & Williams, Bank of America Plaza, 600 Peachtree Street, N.E., Suite 4100, Atlanta, Georgia 30308 Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS Mr. David Barrett, Director, Central Region, OPS CERTIFIED MAIL – RETURN RECEIPT REQUESTED#

320105006_Decision on Petition_08012013_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 ____________________________________ In the Matter of ) Buckeye Partners, LP, ) CPF No. 3-2010-5006 ) ) ) Petitioner. ) ____________________________________) DECISION ON PETITION FOR RECONSIDERATION On November 19, 2012, the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), issued a Final Order in this case to Buckeye Partners, LP (Buckeye or Petitioner), finding that Buckeye had committed five violations of the hazardous liquid pipeline safety regulations and assessing a total civil penalty of $402,500.1 The Final Order also required Buckeye to take certain corrective measures. On December 10, 2012, Buckeye filed a Petition for Reconsideration (Petition) seeking review of Items #1 (timeliness of reporting a release), #4 (covered tasks), and #5 (training on a particular covered task).2 Buckeye requested that PHMSA withdraw all three items or, in the alternative, withdraw Item #1, convert Items #4 and 5 to either a Notice of Amendment or Warning Item, and withdraw the associated civil penalty amounts. Buckeye did not dispute the other findings or civil penalty assessments. It is noteworthy that pursuant to the pipeline safety regulations, “[t]he filing of a petition…stays the payment of any civil penalty assessed. However, unless the Associate Administrator, OPS otherwise provides, the order, including any required corrective action, is not stayed.”3 To date, Buckeye has not completed the compliance order included in the November 19, 2012 Final Order. 1 The assessed civil penalty represented a $79,300 reduction from the proposed civil penalty amount. 2 Pursuant to 49 C.F.R. § 190.215, a petition must be received no later than 20 days after service of the final order upon the respondent. Service is defined as being complete upon mailing. See 49 C.F.R. § 190.5. The Final Order was mailed on or around November 19, 2012. The petition was received on December 11, 2012, 22 days after service was completed. Buckeye stated in its Petition that the Final Order was received on November 26, 2012, and therefore the December 10, 2012 Petition was timely. A review of the certified mail tracking database on the United States Postal Service website confirms that the Final Order was indeed received on November 26, 2012, and therefore the December 10, 2012 Petition is timely. 3 See 49 C.F.R. § 190.215(d).#

320105006_Decision on Petition_08012013_text.pdf, page 32 Section 190.215 provides that a respondent may petition the Associate Administrator for reconsideration of a final order. It states that the Associate Administrator will not consider repetitious information, arguments, or petitions, but may consider additional facts or arguments, provided the respondent submits a valid reason why such information was not presented prior to issuance of the final order. This rule allows a respondent to present information or arguments that were unavailable or unknown prior to issuance of the final order, and gives PHMSA an opportunity to correct any errors. The Associate Administrator may grant or deny, in whole or in part, a petition for reconsideration without further proceedings, or may request additional information, data, and comment as deemed appropriate. Item 1: Finding of Violation of § 195.52 Petition In the Final Order, PHMSA stated that Buckeye failed to provide telephonic notice to the National Response Center (NRC) at the earliest practicable moment, or within 1-2 hours, following the company’s discovery of a release of 85 barrels of gasoline. Buckeye notified the NRC 15 hours after the release occurred. PHMSA held that this was a violation of § 195.52. In its Petition, Buckeye objected to this finding, arguing: (1) that the pipeline safety regulations do not explicitly require an operator to report a release within 1-2 hours and therefore Item #1 is not a violation; (2) that Buckeye did in fact report the release within 1-2 hours of discovering that the release was reportable; and (3) that PHMSA’s rulemaking and enforcement cases have not consistently supported the 1-2 hour interpretation. Analysis Petitions for reconsideration provide a vehicle for respondents to submit evidence not previously available during the proceeding. As stated above, the Associate Administrator does not consider repetitious information but may consider additional facts or arguments, provided that the respondent submits a valid reason why such information was not presented prior to issuance of the final order. Buckeye has not provided any additional documents or arguments in its Petition that were not previously reviewed. All of the evidence and arguments that Buckeye relies on in its Petition were previously submitted in the Response, Post-Hearing Brief, and at the hearing. Buckeye’s argument that PHMSA cannot enforce its interpretation of “earliest practicable moment” is unpersuasive. First, courts have held that an agency can formulate requirements through enforcement decisions. An agency is “not precluded from announcing new principles in an adjudicative proceeding.”4 Federal courts have held that an order issued in an adjudicatory proceeding is not subject to the notice and comment procedures of the Administrative Procedure Act.5 PHMSA can and does develop such interpretations in its enforcement decisions, just as 4 NLRB v. Bell Aerospace Co., 416 U.S. 267, 292-94 (1974) (finding that prior case law dictates that the agency is "not precluded from announcing new principles in an adjudicative proceeding and that the choice between rulemaking and adjudication lies in the first instance within the [agency's] discretion") (citing SEC v. Chenery Corp., 332 U.S. 194,202 (1947) and NLRB v. Wyman-Gordon Co., 394 U.S. 759 (1969)). 5 R/T 182, LLC v. FAA, 519 F.3d 307, 310 (6th Cir. 2008) (emphasis added).#

320105006_Decision on Petition_08012013_text.pdf, page 43 courts routinely apply statutes in civil and criminal enforcement decisions.6 Second, PHMSA has consistently found that “earliest practicable moment” means between 1-2 hours. As mentioned in the Final Order, this particular interpretation dates back to at least 1971, when the agency stated that “in most cases this telephonic report can and should be made within one to two hours after discovery…”7 Numerous enforcement cases have reinforced the agency’s position on the reporting requirement.8 In the referenced cases, operators exceeded the required time frame from just a few hours to more than 24. In addition, as discussed in the Final Order in this proceeding, PHMSA has addressed the reporting requirements in a 1991 Alert Notice and a 2002 Advisory Bulletin.9 Contrary to Buckeye’s argument in its Response, Post-Hearing Brief, and now in the Petition, the word “discovery” means discovery of the release itself, not the discovery or acknowledgment that the accident meets the reporting requirements listed in the regulation. This point was discussed at length in the Final Order on pages 2 and 3: PHMSA has applied this interpretation in various enforcement actions and found that “discovery” relates to the actual release, not to the realization that an incident has resulted in circumstances (e.g. property damage) that renders the release reportable.10 Furthermore, the rationale for this position was summarized in detail: The reason for this interpretation is both logical and practical. In Enstar Natural Gas Company, PHMSA stated that “[i]f the regulation were read to 6 See In the Matter of ANR Pipeline Company, Final Order, CPF No. 3-2007-1006 (available at www.phmsa.dot.gov/pipeline/enforcement). 7 See PI-71-011, located at http://www.phmsa.dot.gov/pipeline/regs/interps. 8 In the Matter of Public Service Company of New Mexico, Final Order, CPF No. 44003 (March 2, 1998); In the Matter of Hunt Refining Company, Final Order, CPF No. 2-2005-5002 (November 15, 2005); In the Matter of Amerigas Propane, L.P., Final Order, CPF No. 57702 (October 20, 2005); In the Matter of Chevron Pipe Line Company, Final Order, CPF No. 4-2002-5013 (March 15, 2004); In the Matter of Belle Fourche Pipeline Company, CPF No. 52514 (April 28, 1998). 9 See ALN 91-01 and ADB-02-04, located at http://phmsa.dot.gov/pipeline/regs/advisory-bulletin. In its Petition, Buckeye makes reference to the statutory mandates of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, signed into law on January 3, 2012. As noted in PHMSA’s January 30, 2013 Advisory Bulletin on reporting requirements, PHMSA is required by this statute to issue a proposed rule to revise telephonic reporting requirements to require notification not later than one hour following the time of confirmed discovery. See “Pipeline Safety: Accident and Incident Notification Time Limit,” 78 Fed. Reg. 6402 (January 30, 2013) (citing The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011). In referencing this new statutory mandate, Buckeye attempts to argue that the agency should not enforce the existing reporting requirement until these new regulations are issued. Obviously, the regulatory mandate created by the 2011 legislation does not affect the Buckeye case, as the May 2005 release predates the statute by almost seven years. The existing reporting requirements of 1-2 hours have been enforced for decades. The new mandate from Congress seeks to tighten the reporting deadline even more than exists under the current regulation by requiring releases to be reported within one hour and has no bearing on this case. 10 Final Order, at 3 (citing In the Matter of Enstar Natural Gas Company, CPF No. 52016 (May 14, 1997)).#

320105006_Decision on Petition_08012013_text.pdf, page 54 mean at the earliest practicable moment following discovery of the cause of the incident, the operator would never be required to report an incident until the cause of the incident was definitely determined.”11 In addition, PHMSA has stated that “[t]he delay to reporting caused by an operator waiting until it definitely decides an event meets the reporting criteria would frustrate a fundamental purpose of the regulation, which is to give OPS and other agencies the earliest opportunity to assess whether an immediate response to a pipeline incident is needed. Therefore, OPS requires pipeline operators to report incidents to the NRC at the earliest practicable moment following discovery of the incident, even if at the time of reporting there is some question as to whether reporting will be required.” There are also valid public safety reasons why an operator needs to make a NRC report within 1-2 hours, including PHMSA’s need for immediate information to determine whether the line or facility should be shut down. PHMSA must evaluate the cause of a release as soon as possible, not after the evidence is stale. 12 Enstar is not the only case that supports this position; PHMSA has issued numerous decisions in agreement on this point. The agency stated In the Matter of the City of Richmond, Virginia, that “…OPS interprets “discovery” to mean discovery of the incident itself, not discovery that the reporting criteria have been met…[t]his gives OPS and other Federal and state agencies the ability to assess whether an immediate response to a pipeline incident is needed.”13 In support of its Petition, Buckeye argued that there was no need for a federal response in this case, so therefore the rationale that PHMSA needs operators to report releases within 1-2 hours for public safety reasons did not apply here. The decision to roll out a federal response and accident investigation is the agency’s decision, not the operator’s, and is necessitated upon proper reporting of a release. If an operator waits 15 hours to report a release of 85 barrels, as occurred in this case, then PHMSA is delayed by 15 hours from initiating its accident investigation, should it find a need to do so. In a similar argument, Buckeye contended that the agency’s past rulemaking and enforcement cases contradict the Final Order here. Buckeye is referring to a final rule issued in 1994 that increased the property damage threshold for reporting from $5,000 to $50,000.14 As discussed in the rulemaking documents, this Final Rule acknowledged that there was confusion as to which cost estimates operators were using to estimate property damage. The agency noted that operators were frequently not including the fair market value of lost product when calculating property damage and therefore the agency amended § 195.52(a)(3). In addition, the agency decided that increasing the property damage threshold from $5,000 to $50,000 would match the 11 Enstar, at 2. 12 Final Order, at 3. 13 In the Matter of the City of Richmond, Virginia, CPF No. 1-2004-0006 (January 12, 2006) 14 “Regulatory Review: Hazardous Liquid and Carbon Dioxide Pipeline Safety Standards”, 59 FR 33388 (June 28, 1994).#

320105006_Decision on Petition_08012013_text.pdf, page 65 existing Part 192 reporting requirement and eliminate the need to report minor accidents under $5,000. I fail to see how these changes, 11 years prior to Buckeye’s accident, support its position. The 2005 release that is the focus of this case involved 85 gallons of spilled product and $60,100 in estimated property damage. Buckeye also argued in its Petition that the cases used by PHMSA to support its finding in the Final Order were inapposite because they involved natural gas operators; in addition, it argued that PHMSA’s interpretation has not been applied consistently across enforcement cases. In its Petition, Buckeye argued that the references to In the Matter of Texas Eastern Transmission Corporation, CPF No. 4-2001-1003 (May 5, 2005) and In the Matter of Enstar Natural Gas Company, CPF No. 52016 (May 14, 1997) are inapposite because those matters involved the violation of the natural gas reporting requirement at § 191.5 and not the hazardous liquid reporting requirement at § 195.52. Although both cases happen to focus on natural gas pipeline requirements, the language of both regulations is identical. They both require the reporting of certain incidents or releases “at the earliest practicable moment following discovery.” Buckeye also suggested that PHMSA has not enforced this provision consistently. I disagree. As noted above, there have been numerous enforcement cases issued by PHMSA where both gas and hazardous liquid operators failed to report a release within 1-2 hours. Finally, the fact that the Central Region chose to issue a Notice four years after the inspection does not bar the agency from taking such action. There is no question that this case was initiated within the applicable five-year statute of limitations under 28 U.S.C. §2462. Accordingly, I find no basis for a withdrawal of this violation or a reduction of the $10,500 civil penalty assessed in the Final Order. This item stands as written in the Final Order. Item 4: Finding of Violation of § 195.505(a) In the Final Order, PHMSA found that Buckeye failed to include “all necessary covered tasks” in its Operator Qualification (OQ) program, in particular, to include delivery operations at regulated tank facilities. In its Petition, Buckeye objected to this finding of violation, stating that the regulation is vague and PHMSA should be estopped from bringing a violation because this specific facility had been previously inspected without any allegation of a § 195.505(a) violation. Buckeye argued that this item should either be withdrawn or converted to a Notice of Amendment or Warning Item. Analysis Buckeye presented the same arguments in its Petition that it had previously raised in its Response, at the hearing, and in its Post-Hearing Brief. These were all reviewed and analyzed in the Final Order. I specifically discussed Buckeye’s argument regarding the content of the OQ regulations: Section 195.505(a) requires each operator to have and follow a written qualification program that includes provisions to identify covered tasks. Although Buckeye is correct that many of the requirements of the pipeline safety regulations are performance-based and not prescriptive, this does#

320105006_Decision on Petition_08012013_text.pdf, page 76 not mean that performance-based activities should not be included as “covered tasks” under an operator’s OQ program. An operator is required to identify all of its covered tasks, using the four-part definition set forth in § 195.501(b). Specifically, “a covered task is an activity identified by the operator, that: (1) Is performed on a pipeline facility; (2) Is an operations and maintenance task; (3) Is performed as a requirement of this part; and (4) Affects the operation or integrity of the pipeline.”15 Buckeye’s Task 412 meets this four-part test. It is performed on a pipeline facility, is an operations and maintenance task, is performed as a requirement of Part 195,16 and, as evident from the Accident, can affect the operation or integrity of the pipeline. Therefore, Buckeye should have included Task 412 in its covered task list.17 I also addressed Buckeye’s estoppel argument: I also find no merit in Buckeye’s argument that since OPS did not find a violation in 2004, it is somehow estopped from asserting a probable violation following a failure and subsequent inspection. Buckeye was required to have a covered task list for tasks that met the four-part test by April 27, 2001. If another inspection in another region chose not to cite a violation at that time, it does not eliminate Buckeye’s responsibility to be in compliance with the code. Since Buckeye must identify covered tasks in its OQ program and failed to include Task 412, which meets the definition of a covered task in § 195.501(a), I find that Buckeye violated § 195.505(a) and the proposed compliance order is appropriate.18 Finally, Buckeye contended that this item should have been a Notice of Amendment and that the only reason this violation was included in the Notice of Probable Violation was to serve as a predicate for Item #5. In the Final Order, I discussed in detail how § 195.505 violations are not necessarily handled by a Notice of Amendment, stating that a review of past enforcement cases demonstrates that § 195.505(a) violations have been addressed by civil penalties, compliance orders, or both. The fact that this item did not have a civil penalty has no bearing on the fact that Item #5 did. They are separate violations and PHMSA has the discretion to select the most appropriate enforcement tool to address them. I find no support for Buckeye’s request to either withdraw or convert this Item. This item stands as written in the Final Order. 15 See 49 C.F.R. § 195.501(b). 16 Each operator is required under § 195.505 to scrutinize its own unique system to identify all those activities performed on its system that meet the four-part definition of a “covered task” and to develop a proper qualification process for each one. In this case, Buckeye was required under § 195.402(c) to have and follow procedures for starting up and shutting down all parts of its system and for controlling receipt and delivery of product. Task 412 was one of Buckeye’s own procedures to meet this requirement. 17 Final Order, at 6. 18 Final Order, at 7.#

320105006_Decision on Petition_08012013_text.pdf, page 87 Item 5: Finding of Violation of § 195.505(b) In its Petition, Buckeye argued that Item #5 should be withdrawn for two reasons. First, the regulation itself was vague. Second, the underlying violation (Item #4) had no civil penalty, so it would be inappropriate to issue one for this item. I do not agree. The fact that the agency did not issue a civil penalty for Item #4 does not have any bearing on this Item. As discussed earlier, the decision to assess a civil penalty or a compliance order is a discretionary enforcement decision based on the facts and evidence constituting each allegation. Each item in a Notice of Probable Violation is separate and stands on its own evidence. Buckeye was cited in Item #5 for a violation of § 195.505(b)— to ensure through evaluation that individuals performing covered tasks are qualified. Considering that the May 5, 2005 accident involved a release of 85 barrels during delivery operations, that the local operator on scene was not trained in delivery operations, and that Buckeye could not produce delivery-operations qualification records, I believe the assessed civil penalty for this item is appropriate. Having not found any of these arguments persuasive to withdraw Item #5, this item will remain as written in the Final Order.19 Conclusion Based on a review of the record and the information provided in the Petition, I hereby deny the Petition and affirm the Final Order without modification, for the reasons set forth above. Payment of the $402,500 civil penalty must be made within 20 days of service of this Decision. The payment instructions were set forth in detail in the Final Order. Failure to pay the $402,500 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 United States District Court. In addition, the Petitioner is reminded that the Compliance Order was not stayed by the filing of the Petition and should have been completed within the timelines listed in the Final Order. If Petitioner should need an extension, it can file such a request with the Director, Central Region. This Decision is the final administrative action in this proceeding. _____________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety 19 Buckeye argues in Section I of its Petition that Item # 5 should be converted to Notices of Amendment or Warning Items but provides no further detail in Section C of its Petition.#

320105006_Closure Letter_06022016_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED June 2, 2016 Mr. Clark Smith President & Chief Executive Officer Buckeye Partners, LP One Greenway Plaza Suite 600 Houston, TX 77046 RE: CPF 3-2010-5006 Dear Mr. Smith: On November 19, 2012, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Buckeye Partners, LP, a Final Order in the above-referenced case. This Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation you provided and confirmation of payment of the civil penalty, 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 cc: Mr. Thomas (Scott) Collier#

320105006_Final Order_11192012_text.pdf, page 1Official PDFNOVEMBER 19, 2012 Mr. Clark Smith President & Chief Executive Officer Buckeye Partners, LP One Greenway Plaza Suite 600 Houston, TX 77046 Re: CPF No. 3-2010-5006 Dear Mr. Smith: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a reduced civil penalty of $402,500, and specifies actions that need to be taken by Buckeye Partners, LP, to comply with the pipeline safety regulations. When the civil penalty has been paid and the terms of the compliance order 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. Thomas (Scott) Collier, Vice President, Buckeye Partners LP – 5 TEK Park, 9999 Hamilton Boulevard, Breinigsville, PA 18031 Robert E. Hogfoss, Esq., Counsel for Buckeye Partners, LP, Hunton & Williams - Bank of America Plaza - 600 Peachtree Street, N.E., Suite 4100, Atlanta, Georgia 30308 Mr. Dave Barrett, Director, Central Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS CERTIFIED MAIL – RETURN RECEIPT REQUESTED#

320105006_Final Order_11192012_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 ____________________________________ In the Matter of ) Buckeye Partners, LP, ) CPF No. 3-2010-5006 ) ) ) Respondent. ) ___________________________________ ) FINAL ORDER Pursuant to 49 U.S.C. § 60117, on May 6, 2005, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an investigation of an overfill incident that occurred on May 5, 2005, at Tank #133, a facility operated by Buckeye Partners, LP (Buckeye or Respondent), in East Chicago, Indiana (Accident). Buckeye owns and operates petroleum refined-products pipelines and facilities in the Northeast and Upper Midwest, including 6,000 miles of pipelines and 100 liquid petroleum products terminals.1 As a result of the investigation and a follow-up inspection in 2008, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated April 14, 2010, a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Respondent had committed several violations of 49 C.F.R. Part 195 and assessing a civil penalty of $481,800 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct one of the alleged violations. Buckeye responded to the Notice by letter dated May 12, 2010 (Response). The company contested the items in the Notice and requested that the proposed civil penalty be reduced or rescinded. A hearing was subsequently held on November 18, 2010, in Kansas City, Missouri, with an attorney from the Office of Chief Counsel, PHMSA, presiding. At the hearing, Respondent was represented by counsel. After the hearing, counsel for Buckeye provided a post- hearing statement for the record, by letter dated December 3, 2010 (Closing). FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: 1 See http://www.buckeye.com/BusinessOperations/tabid/56/Default.aspx (last accessed July 30, 2012).#

320105006_Final Order_11192012_text.pdf, page 32 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.52(a)(3), which states: § 195.52 Telephonic notice of certain accidents. (a) At the earliest practicable moment following discovery of a release of the hazardous liquid or carbon dioxide transported resulting in an event described in § 195.50, the operator of the system shall give notice, in accordance with paragraph (b) of this section, of any failure that: (1) . . . (3) Caused estimated property damage, including cost of cleanup and recovery, value of lost product, and damage to the property of the operator or others, or both, exceeding $50,000; . . . . The Notice alleged that Respondent violated 49 C.F.R. § 195.52(a)(3) by failing to provide telephonic notice to the National Response Center (NRC) at the earliest practicable moment following the company’s discovery of a release of 85 barrels of gasoline. Specifically, the Notice alleged that 15 hours elapsed between the time Buckeye experienced a release at its East Chicago, Indiana storage tank facility and the time the company finally notified the NRC. At the hearing and in the Response, Buckeye contended that the Accident did not initially meet the notification threshold of § 195.50. Rather, it was only after the Indiana Department of Environmental Protection (DEP) requested that Buckeye excavate an additional two feet of soil within the dike area to remove hydrocarbons that Buckeye determined that the clean-up costs would exceed the $50,000 threshold. The operator stated that the Accident occurred in the late afternoon and although Buckeye contacted emergency response operators immediately, it was not until the following day that the company met with the DEP and thereafter determined that the property damage threshold for reporting had been met. Therefore, Buckeye maintained that the Accident was reported at the “earliest practicable moment following discovery of a release.” At the hearing, OPS introduced two alert notices, dated April 15, 1991 (ALN-91-01) and August 30, 2002 (ADB-02-04), which provided guidance to the industry on how the agency interpreted the term “earliest practicable moment.”2 This guidance and the interpretation letters that preceded the bulletins stated that PHMSA considered “earliest practicable moment” generally to mean one to two hours.3 Since Buckeye notified the NRC approximately 15 hours after discovery of the Accident, OPS argued that Buckeye had not given notice at the earliest practicable moment and therefore was in violation of § 195.52(a)(3). Analysis PHMSA has consistently interpreted “earliest practicable moment” to mean within one to two hours of discovery of a release of hazardous liquid. Beginning in 1997, PHMSA has applied this interpretation in various enforcement actions and found that “discovery” relates to the actual 2 See ALN-91-01 and ADB-02-04, located at http://phmsa.dot.gov/pipeline/regs/advisory-bulletin. 3 See PI-71-011, located at http://www.phmsa.dot.gov/pipeline/regs/interps.#

320105006_Final Order_11192012_text.pdf, page 43 release, not to the realization that an incident has resulted in circumstances (e.g., property damage) that render the release reportable. 4 The rationale for this interpretation is both logical and practical. In Enstar Natural Gas Company, PHMSA concluded that “[i]f the regulation were read to mean at the earliest practicable moment following discovery of the cause of the incident, the operator would never be required to report an incident until the cause of the incident was definitely determined.”5 In addition, PHMSA has stated that “[t]he delay to reporting caused by an operator waiting until it definitely decides an event meets the reporting criteria would frustrate a fundamental purpose of the regulation, which is to give OPS and other agencies the earliest opportunity to assess whether an immediate response to a pipeline incident is needed. Therefore, OPS requires pipeline operators to report incidents to the NRC at the earliest practicable moment following discovery of the incident, even if at the time of reporting there is some question as to whether reporting will be required.”6 There are also important public safety reasons why an operator needs to make a NRC report within one to two hours, including PHMSA’s need for immediate information to determine whether a pipeline or facility should be shut down. PHMSA must also evaluate the cause of a release as soon as possible after the release has been discovered, not after the evidence is stale. Based on the information in the record, I find that the release in this case was reportable because it exceeded the $50,000 threshold and therefore should have been reported within one to two hours of discovery. Instead, Buckeye reported the spill 15 hours after the release. Accordingly, I find that Respondent violated 49 C.F.R. § 195.52(a)(3) by failing to make a telephonic notice to the NRC at the earliest practicable moment following discovery of the release. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.401(b), which states: § 195.401 General requirements. 7 (a) . . . (b) An operator must make repairs on its pipeline system according to the following requirements: (1) Non- Integrity Management repairs. Whenever an operator discovers any condition that could adversely affect the safe operation of its pipeline system, it shall correct it within a 4 E.g., In the Matter of Texas Eastern Transmission Corporation, CPF No. 4-2001-1003, at 3 (May 5, 2005), citing In the Matter of Enstar Natural Gas Company, CPF No. 52016 (May 14, 1997). 5 Enstar, at 2. 6 Id. 7 On August 11, 2010, PHMSA modified the language of § 195.401 to distinguish between non-integrity management repairs and integrity management repairs. See “Pipeline Safety: Periodic Updates of Regulatory References to Technical Standards and Miscellaneous Edits,” 75 FR 48607 (August 11, 2010). The language referenced in this item reflects the current regulation but the text of (b)(1) does not vary from the language that was in effect at the time of the inspection and quoted in the Notice.#

320105006_Final Order_11192012_text.pdf, page 54 reasonable time. However, if the condition is of such a nature that it presents an immediate hazard to persons or property, the operator may not operate the affected part of the system until it has corrected the unsafe condition. The Notice alleged that Respondent violated 49 C.F.R. § 195.401(b) by failing to correct an unsafe condition on its pipeline. Specifically, it alleged that Buckeye continued to fill Tank #133 at its East Chicago storage tank facility despite the discovery of a condition that presented an immediate hazard to persons or property. On the day of the Accident, Buckeye experienced three different alarms that alerted the operator of an imminent hazard (overfilling) on Tank #133, yet company personnel continued filling operations. The first alarm occurred an hour before the release. Two subsequent alarms occurred but Buckeye continued filling. According to Buckeye’s own Internal Investigation Report, its Control Center contacted the local operator after the first alarm, who responded that the alarm was not accurate due to an issue with the electronic gauging of the tank levels. Buckeye’s investigation later confirmed that the local operator was incorrect in this assessment of the first alarm.8 In its Response and at the hearing, Buckeye did not contest this violation but argued that Items 2 and 3 should be combined. I will address the merits of this argument in the Analysis section of Item #3. For the reasons set forth below, I find that Respondent violated 49 C.F.R. § 195.401(b) by continuing to operate its pipeline system after discovery of a condition that presented an immediate hazard to persons or property. 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 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 Buckeye failed to follow two of its own written procedures when filling Tank #133 on May 5, 2005. First, it alleged that the local operator did not accurately confirm batch information from the Control Center when he arrived for the start of his shift and that he failed to compare the available room in the tank to the batch volume, as required by Buckeye’s Operating Manual Procedures B-10 Section 2.1 and 2.4. 8 Pipeline Safety Violation Report (Violation Report), (April 9, 2010) (on file with PHMSA), Exhibit B.#

320105006_Final Order_11192012_text.pdf, page 65 Second, the Notice alleged that Buckeye experienced two high level alarms and one “high-high” level alarm during the filling of Tank #133 and that its procedures required personnel to take specific actions in response to these alarms, including shutting down the incoming stream and notifying the Control Center. OPS alleged that Buckeye personnel failed to follow these procedures in shutting down the incoming stream. Buckeye contended at the hearing and in its Closing that although it did not contest that the local operator’s actions caused the Accident, Items #2 and #3 should be combined. Buckeye maintained that it should not be charged with two separate violations and civil penalties for a single instance of operator error.9 Analysis I have reviewed both the facts and evidence presented by OPS that support Notice Items 2 and 3 and Buckeye’s opposing evidence and arguments. In Item #2, the Notice alleged that Buckeye became aware of a condition that presented an immediate hazard to its system but continued filling operations, in direct violation of § 195.401(b). In Item #3, Buckeye personnel failed to follow the company’s own procedures, which required the local operator to confirm batch information at the start of his shift and to compare the available tank room to the batch volume. In addition, company procedures required the Control Center to shut down the incoming stream upon acknowledgment of a “high-high” level alarm. None of these actions took place. Since Items 2 and 3 are based on different actions that Buckeye was supposed to take in this situation and because the allegations are supported by different evidence, I find that both items can stand independently as separate violations. Accordingly, I find that Respondent violated § 195.401(b), by failing to correct an unsafe condition, and § 195.402(a), by failing to follow its own procedures when filling Tank #133. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(a), which states: § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks;… The Notice alleged that Buckeye did not include all necessary covered tasks in its Operator Qualification (OQ) program, including tasks associated with abnormal operating conditions. The missing tasks included delivery operations at regulated tank facilities, radiographic examination, and magnetic particle surveys.10 Buckeye argued at the Hearing and in its Closing that there is no list of specific covered tasks required by Part 195 and that it is a “performance based program like much of the Part 195 regulations,” under which an operator can determine its own list of 9 Closing at 4. 10 Although the Notice alleged that Buckeye violated 49 C.F.R. § 195.505 by failing to include radiographic examinations and magnetic particle surveys as covered tasks in its OQ program, the record does not contain sufficient evidence to conclude that these two activities meet the four-part test in § 195.501 for purposes of Buckeye’s system. Therefore, this Order neither addresses nor finds that Buckeye should have included radiographic examinations or magnetic particle surveys as covered tasks on its system.#

320105006_Final Order_11192012_text.pdf, page 76 covered tasks. Buckeye focused specifically on delivery operations and contended that since there is no explicit regulatory requirement to include tank operations (Task 412) as a covered task, there is no basis to include a compliance order for this Item. Instead, Buckeye argued that it would be more appropriate and typical for this Item to be covered by a Notice of Amendment.11 In addition, Buckeye pointed out that OPS had previously reviewed the company’s OQ program in October 2004, which resulted in two enforcement cases (CPF Nos. 1-2005-5007M and 1- 2006-5006). Neither enforcement action, however, required Buckeye to add Task 412 to its covered task list. Therefore, Buckeye asserted that OPS was now estopped from bringing such a violation. Analysis Section 195.505(a) requires each operator to have and follow a written qualification program that includes provisions to identify covered tasks. Although Buckeye is correct that many of the requirements in the pipeline safety regulations are performance-based and not prescriptive in nature, this does not mean that performance-based activities are somehow excluded as “covered tasks” under an operator’s OQ program.12 An operator is required to identify all of its covered tasks, using the four-part definition set forth in § 195.501(b). Specifically, “a covered task is an activity identified by the operator, that: (1) Is performed on a pipeline facility; (2) Is an operations and maintenance task; (3) Is performed as a requirement of [Part 195]; and (4) Affects the operation or integrity of the pipeline.”13 Buckeye’s breakout tank operations, as addressed generally by Task 412, meet this four-part test. It is a task performed on a pipeline facility, is an operations and maintenance task, is performed as a requirement of Part 195,14 and, as is evident from the Accident, affects the operation or integrity of the pipeline. Therefore, Buckeye should have included tank operations, particularly those procedures related to abnormal operations, on its covered task list.15 In the Notice, OPS proposed a compliance order for Item #4. Although Buckeye did not cite any prior cases to support its argument that a Notice of Amendment would be the most appropriate enforcement tool, I have reviewed past enforcement cases involving violations of § 195.505(a) and have determined that a proposed civil penalty, a compliance order, or both, may be 11 Id. 12 E.g., In the Matter of Enterprise Products Operating, LLC, CPF No. 3-2009-5022 (August 14, 2012). 13 See 49 C.F.R. § 195.501(b). 14 Each operator is required under § 195.505 to scrutinize its own unique system to identify all those activities performed on its system that meet the four-part definition of a “covered task” and to develop a proper qualification process for each one. In this case, Buckeye was required under § 195.402 to have and follow procedures for identifying, responding to, and correcting abnormal conditions in the receipt and delivery of product. 15 The Violation Report noted that the API 1161 Committee had previously identified breakout tank operations as a covered task. While the adoption of consensus standards and industry committee policies may be supportive of PHMSA’s interpretation and application of its regulations, they are not dispositive.#

320105006_Final Order_11192012_text.pdf, page 87 appropriate enforcement actions in such cases, particularly ones involving accidents. For example, in The Matter of Sunoco Pipeline L.P., CPF No. 1-2009-5003, PHMSA issued a compliance order for failure to identify the installation of completion plugs as a covered task.16 In The Matter of Enbridge Energy Company, Inc., CPF No. 4-2005-8004, PHMSA issued a compliance order and a civil penalty for failure to include a large number of tasks in the operator’s covered task list.17 Finally, in The Matter of Norfolk Southern Corporation, CPF No. 2-2010-6004, PHMSA issued a compliance order and a civil penalty for failure to include many specific covered tasks that were performed on the operator’s pipeline system.18 Under the circumstances of the instant case, I find that a compliance order is an appropriate remedy to address Buckeye’s failure to include Task 412 as a covered task. I also find no merit in Buckeye’s argument that because OPS did not find this particular OQ violation in 2004, it is somehow estopped from asserting a probable violation following a failure and subsequent inspection. Buckeye was required to include in its OQ program all those particular tasks that met the four-part test by April 27, 2001. If another inspector in another region chose not to cite a violation at that time, it does not eliminate Buckeye’s responsibility to be in compliance with the code. Since Buckeye must identify covered tasks in its OQ program and failed to include tank operations activities that met the four-part definition of a covered task under § 195.501(a), I find that Buckeye violated § 195.505(a) and that the proposed compliance order is appropriate. Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(b), which states: § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) . . . (b) Ensure through evaluation that individuals performing covered tasks are qualified. The Notice alleged that Buckeye failed to ensure through evaluation that individuals performing covered tasks were qualified. Specifically, OPS alleged that Buckeye failed to qualify the local operator at the East Chicago tank storage facility for performing the covered task of operating regulated breakout tanks. Buckeye did not have a qualification record for the individual involved in delivery operations at the time of the Accident. In its Response and Closing, Buckeye argued that this task was not a covered task and therefore the evaluation requirements did not apply. As discussed above in Item # 4, Task 412 is a covered task and therefore Buckeye was required to ensure through evaluation that individuals performing covered tasks were qualified. Buckeye also argues that this Item should have been 16 In the Matter of Sunoco Pipeline L.P., CPF No. 1-2009-5003 (November 25, 2011). 17 In The Matter of Enbridge Energy Company, Inc., CPF No. 4-2005-8004 (October 2, 2009). 18 In the Matter of Norfolk Southern Corporation, CPF No. 2-2010-6004 (April 8, 2011).#

320105006_Final Order_11192012_text.pdf, page 98 addressed by a Notice of Amendment instead of a proposed civil penalty. As discussed above, I find no authority for this argument. PHMSA has issued several civil penalties for violations of § 195.505(b).19 Accordingly, I find that a probable violation and civil penalty, not a notice of amendment, is appropriate under the circumstances and that Buckeye violated § 195.505(b) by failing to ensure through evaluation that individuals performing covered tasks were qualified. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. WITHDRAWAL OF ITEM Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(b), as quoted above, by failing to ensure, as of the date of the Integrated Inspection in 2008, that all individuals performing covered tasks on breakout tanks were qualified through evaluation under the company’s OQ Program. As alleged in the Notice, between 2005 and 2008, up to 373 individuals “would have been involved in various tasks associated with operating and maintaining tanks across all of Buckeye’s tank facilities,” yet the company had no records demonstrating that any of these individuals had been qualified through evaluation for tank operations under its operator qualification program. As discussed above in Item #5, I have found that Buckeye failed to ensure through evaluation that the local operator of the East Chicago tank facility was qualified to perform Task 412. The allegation here, however, is that “up to 373 individuals would have been involved in various tasks associated with operating and maintaining tanks across all of Buckeye’s tank facilities….” I can find no evidence in the record that 373 individuals actually performed Task 412 or other tasks that should have properly been considered “covered tasks” under § 195.504. Instead, there is only a list of Buckeye personnel who received tank operations training and were therefore permitted by company policy to perform such activities. I find such a list insufficient to prove that these individuals actually performed one or more covered tasks without being properly qualified. Therefore, I am withdrawing Item #6. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related series of violations. 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; the Respondent’s ability to pay the penalty and any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety 19 E.g., In the Matter of Kinder Morgan Energy Partners, L.P., CPF No. 5-2008-5042 (March 4, 2010); In the Matter of Tampa Bay Pipeline Company, CPF No. 2-2008-6002 (April 26, 2010); In the Matter of Norfolk Southern Corporation, CPF No. 2-2010-6004 (April 8, 2011).#

320105006_Final Order_11192012_text.pdf, page 109 regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $481,800 for the violations cited above. Item 1: The Notice proposed a civil penalty of $10,500 for Respondent’s violation of 49 C.F.R. § 195.52, for failing to make a telephonic report to the NRC at the earliest practicable moment following discovery of a reportable release. In its Response, Buckeye argued that this Item was not a violation and therefore the civil penalty should be removed. Having analyzed and determined that a violation did occur and having considered the assessment criteria listed under 49 C.F.R. § 190.225, I find that the proposed penalty is appropriate. Buckeye has not produced any evidence or argument that would warrant a reduction or elimination of the penalty. Accordingly, I assess Respondent a civil penalty of $10,500 for violation of 49 C.F.R. § 195.52. Item 2: The Notice proposed a civil penalty of $100,000 for Respondent’s violation of 49 C.F.R. § 195.401(b), for failing to correct a condition that could adversely affect the safe operation of its pipeline system. Specifically, Buckeye experienced an imminent hazard involving three separate alarms and yet continued filling operations. In its Response, Buckeye argued that the proposed civil penalty amount is excessive and should be reduced. At the hearing and in its Closing, the operator argued that this item should have been brought as a Notice of Amendment and not a probable violation punishable by civil penalty. I considered that argument, as discussed above, and have determined that a civil penalty in this case is appropriate. The proposed civil penalty amount of $100,000 is based on the assessment criteria set out in 49 C.F.R. § 190.225, including the fact that the violation was a causal factor in the Accident. Had Buckeye personnel acknowledged the alarms and discontinued filling operations, the spill amount would have been reduced or eliminated. Accordingly, based upon the foregoing, I assess Respondent a civil penalty of $100,000 for violation of 49 C.F.R. § 195.401(b). Item 3: The Notice proposed a civil penalty of $100,000 for Respondent’s violation of 49 C.F.R. § 195.402(a), for failing to follow its own procedures when filling a regulated breakout tank. In its Response, Buckeye argued that the proposed civil penalty amount is excessive and should be reduced. At the hearing and in its Closing, the operator argued that this item should have been brought as a Notice of Amendment and not a probable violation punishable by civil penalty. I have considered Respondent’s argument, as discussed above, and have determined that a civil penalty in this case is appropriate. The proposed civil penalty amount of $100,000 is based on the assessment criteria set out in 49 C.F.R. § 190.225, including the fact that the violation was a causal factor in the Accident. If the Buckeye control center had shut down the line or the local operator had taken other precautions, as discussed in the Findings section above, the Accident could have been avoided. Accordingly, based upon the foregoing, I assess Respondent a civil penalty of $100,000 for violation of 49 C.F.R. § 195.402(a). Item 5: The Notice proposed a civil penalty of $192,000 for Respondent’s violation of 49 C.F.R. § 195.505(b), for failing to ensure through evaluation that the local operator at the East#

320105006_Final Order_11192012_text.pdf, page 1110 Chicago storage tank facility was qualified to perform Task 412. In its Response, Buckeye argued that the civil penalty should be removed because OPS had previously inspected Buckeye’s OQ program and had not alleged a violation. I have reviewed the proposed civil penalty and the assessment factors set out in 49 C.F.R. § 190.225. I find that the proposed civil penalty was appropriately based on the fact that PHMSA, not the operator, discovered the violation and that the violation contributed to an accident. Therefore, I assess a civil penalty of $192,000. Item 6: The Notice proposed a civil penalty of $79,300 for Respondent’s violation of 49 C.F.R. § 195.505(b), for failing to ensure through evaluation that all personnel were qualified to perform Task 412. As stated above, I have withdrawn this Item and therefore also withdraw the associated civil penalty of $79,300. 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 $402,500. Payment of the civil penalty must be made within 20 days of service. 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 (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial Operations Division telephone number is (405) 954-8893. Failure to pay the $402,500 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. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 4 in the Notice for violation of 49 C.F.R. §195.505(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: 1. With respect to the violation of § 195.505(a) (Item 4), Respondent must include the missing covered task (delivery operations at regulated tank facilities) in its OQ program. Buckeye must also develop training, evaluation, and qualification requirements for this covered task.#

320105006_Final Order_11192012_text.pdf, page 1211 2. 3. Buckeye must provide documentation of completion of these actions within three months of receipt of the Final Order. Buckeye must evaluate and qualify all personnel currently performing this task and any additional tasks deemed pertinent after a review of covered tasks. 4. Buckeye must provide documentation of this action within six months of receipt of the Final Order. 5. It is requested (but not required) that Buckeye maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Mr. David Barrett, Director, Central Region, Pipeline and Hazardous Materials Safety Administration. Costs should be reported in two categories: 1) total costs associated with preparation/revision of plans; procedures, studies, and analyses; and 2) total costs 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. Under 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be sent to: 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. PHMSA will accept petitions received no later than 20 days after receipt of service of this Final Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of any civil penalty assessed. Unless the Associate Administrator, upon request, grants a stay, all other 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#

320105006_NOPV PCP PCO_04142010_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY AND PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 14, 2010 Mr. Jerry J. Ashcroft Vice President, Field Operations Buckeye Partners, L.P. Five TEK Park 9999 Hamilton Boulevard Breinigsville, PA 18031 CPF 3-2010-5006 Dear Mr. Ashcroft: On May 6, 2005, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected the Buckeye Partners, L.P. (Buckeye) procedures, records and field operations during an accident investigation of the May 5, 2005 overfill of Tank #133 at a Buckeye storage tank facility in East Chicago, Indiana. On May 5 – June 22, and August 18-22 and August 25-28, 2008, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the State of New York Department of Public Safety pursuant to Chapter 601 of 49 United States Code inspected Buckeye procedures, records and field operations during an Integrated Inspection in Breinigsville, PA and other areas of Pennsylvania. During the 2008 inspection, a follow-up review of the East Chicago, IN accident that had occurred in 2005 and a review of Buckeye’s response to their internal findings during the accident investigation were completed.#

320105006_NOPV PCP PCO_04142010_text.pdf, page 2As a result of the initial investigation and the follow up 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. § 195.52 Telephonic notice of certain accidents. (a) At the earliest practicable moment following discovery of a release of the hazardous liquid or carbon dioxide transported resulting in an event described in §195.50, the operator of the system shall give notice, in accordance with paragraph (b) of this section, of any failure that: 3) Caused estimated property damage, including cost of cleanup and recovery, value of lost product, and damage to the property of the operator or others, or both, exceeding $50,000; Buckeye did not make a telephonic notice to the National Response Center (NRC) at the earliest practicable moment following the release of gasoline at the East Chicago, Indiana storage tank facility. Sixteen hours elapsed from the time of the accident at 4:15 p.m. on May 5, 2005, and the time of notification to the NRC at 8:20 a.m. on May 6, 2005. A release of a hazardous liquid or carbon dioxide, resulting in cost of property damage and losses exceeding $50,000, requires an accident report for each failure in a pipeline system. Buckeye reported that the costs associated with the accident totaled $60,100. The telephonic notification is required to assure proper remedial measures are taken by the operator and to inform PHMSA in a timely manner of the occurrence. 2. § 195.401 General requirements. (b) Whenever an operator discovers any condition that could adversely affect the safe operation of its pipeline system, it shall correct it within a reasonable time. However, if the condition is of such a nature that it presents an immediate hazard to persons or property, the operator may not operate the affected part of the system until it has corrected the unsafe condition. On May 5, 2005, Buckeye did not correct the conditions that could adversely affect the safe operation of its system designated by three different alarms in a reasonable time. The three alarms indicated an imminent hazard to property by the overfilling of Tank #133, which occurred approximately one hour after the first alarm; but Buckeye continued the filling operations. Approximately fifteen minutes after the third alarm, a maintenance crew working in the area saw product spilling through the vents of Tank #133 onto the ground and notified the local operator who diverted the gasoline flow to another tank. 2#

320105006_NOPV PCP PCO_04142010_text.pdf, page 33. § 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. Buckeye did not follow procedures when filling a regulated breakout tank on May 5, 2005 at the East Chicago, Indiana storage tank facility. First, the local operator did not accurately confirm batch information from the Control Center when he arrived for the start of his shift at 7:00 a.m. and did not compare the available tank room to the batch volume as required in Buckeye’s Operating Manual Procedures B-10 Section 2.1 and 2.4. These sections state: 2.1 Confirm batch information shown on the orders, include product service of the designated receiving tank. 2.4 Compare the available tank room to the batch volume to ensure fill heights are not exceeded. If the room is inadequate, inform the Control Center so that appropriate schedule modifications can be made. Second, two high level alarms and one high-high level alarm occurred during the filling of Tank #133 and were not properly addressed by Buckeye personnel. Buckeye procedure B-10 Section 2.9 requires specific actions to be taken by Buckeye personnel: 2.9.1 states if the tank volume reaches the high level alarm prior to batch completion, switch the stream and/or shutdown in accordance with orders. 2.9.2 states if the tank volume causes the annunciation of a high-high alarm, immediately shut down the incoming stream and notify the Control Center. As a consequence of not following the written procedures, by either the local operator or the control center, an overfill spill occurred on Tank #133 at the East Chicago, Indiana storage tank facility. Buckeye’s Incident Investigation also identifies these procedure failures. 4. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks; 3#

320105006_NOPV PCP PCO_04142010_text.pdf, page 4As determined from reviewing Buckeye’s written operator qualification program following the 2005 tank overflow accident and again during the Integrated Inspection in 2008, Buckeye had not included all necessary covered tasks and associated requirements in its OQ program, including tasks associated with abnormal operating conditions. Missing covered tasks include, among other things, delivery operations at regulated tank facilities, radiographic examination and magnetic particle surveys. 5. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (b) Ensure through evaluation that individuals performing covered tasks are qualified; Buckeye did not qualify the local operator under its operator qualification program through evaluation for performing the covered task of operating regulated breakout tanks at the East Chicago, Indiana facility. Buckeye did not have a qualification record for the individual involved in delivery operations on May 5, 2005, whose actions contributed to product overflowing from Tank #133 vents onto the ground. 6. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (b) Ensure through evaluation that individuals performing covered tasks are qualified; At the time of the Integrated Inspection in 2008, Buckeye had not ensured that individuals performing covered tasks on breakout tanks were qualified through evaluation in Buckeye’s Qualification Program. Between 2005 and 2008, up to 373 individuals would have been involved in various tasks associated with operating and maintaining tanks across all of Buckeye’s tank facilities yet Buckeye had no records demonstrating that any of these individuals had been qualified for tank operations under its operator qualification program. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $481,800 as follows: 4#

320105006_NOPV PCP PCO_04142010_text.pdf, page 5Item number PENALTY #1 $ 10,500 #2 $100,000 #3 $100,000 #5 $192,000 #6 $ 79,300 Total $481,800 Proposed Compliance Order With respect to item #4 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Buckeye. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. 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 3-2010-5006 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 5#

320105006_NOPV PCP PCO_04142010_text.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Buckeye Partners, L.P. (Buckeye) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Buckeye with the pipeline safety regulations: 1. In regard to Item Number 4 of the Notice pertaining to Buckeye not having included all necessary covered tasks and associated requirements into their OQ program. The missing covered tasks include: A. Pipeline operations at regulated tank facilities (breakout tank operations) B. Radiographic examination C. Magnetic particle surveys. Buckeye shall include these covered tasks and any others deemed pertinent after a review of the covered tasks with regard to the four-part test. Buckeye shall also develop training, evaluation, and qualification requirements for those covered tasks added to the OQ program. Buckeye shall provide documentation when completed, within 3 months of receipt of the Final Order. 2. In regard to Item Number 4 of the Notice pertaining to not having all necessary covered tasks in their OQ Program, Buckeye will evaluate and qualify all personnel currently performing the three tasks and any additional tasks deemed pertinent after a review of covered tasks. Buckeye shall provide documentation when completed, within 6 months of receipt of the Final Order. 3. Buckeye shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Mr. 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, additions and other changes to pipeline infrastructure. 6#

320105006_NOPV PCP PCO_04142010_text.pdf, page 7Response Options for Pipeline Operators in Compliance Proceedings The requirements of 49 C.F.R. Part 190, Subpart B (§§ 190.201–190.237) govern response to Notices issued by a Regional Director, Pipeline and Hazardous Materials Safety Administration (PHMSA). Be advised that all material submitted by a respondent in response to an 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). I. Procedures for Responding to a NOTICE OF PROBABLE VIOLATION: Within 30 days of receipt of a Notice of Probable Violation, the respondent shall respond to the Regional Director who issued the Notice in the following way: a. When the Notice contains a proposed CIVIL PENALTY* -- 1. If you are not contesting any violations alleged in the Notice, pay the proposed civil penalty and advise the Regional Director of the payment. This authorizes PHMSA to issue an order making findings of violation and upon confirmation that the payment has been received PHMSA will close the case with prejudice to the respondent. Payment terms are outlined below; 2. If you are not contesting any violations alleged in the Notice but wish to submit written explanations, information, or other materials you believe warrant mitigation of the civil penalty, you may submit such materials. This authorizes PHMSA to make findings and to issue a Final Order assessing a penalty amount up to the amount proposed in the Notice. Refer to 49 C.F.R. § 190.225 for assessment considerations, which include the respondent’s ability to pay and the effect on the respondent’s ability to stay in business, upon which civil penalties are based; 3. If you are contesting one or more of the items in the Notice but are not requesting an oral hearing, submit a written response to the allegations and/or seek elimination or mitigation of the proposed civil penalty; or 4. Request a hearing as described below to contest the allegations and/or proposed assessment of a civil penalty. 7#

320105006_NOPV PCP PCO_04142010_text.pdf, page 8b. When the Notice contains a proposed COMPLIANCE ORDER* -- 1. If you are not contesting the compliance order, notify the Regional Director that you intend to take the steps in the proposed compliance order; 2. If you are not contesting the compliance order but wish to submit written explanations, information, or other materials you believe warrant modification of the proposed compliance order in whole or in part, or you seek clarification of the terms of the proposed compliance order, you may submit such materials. This authorizes PHMSA to make findings and issue a compliance order; 3. If you are contesting the proposed compliance order but are not requesting an oral hearing, submit written explanations, information, or other materials in answer to the allegations in the Notice and stating your reasons for objecting to the proposed compliance order items in whole or in part; or 4. Request a hearing as described below to contest the allegations and/or proposed compliance order items. c. When the Notice contains a WARNING ITEM -- No written response is required. The respondent is warned that if it does not take appropriate action to correct these items, enforcement action will be taken if a subsequent inspection reveals a violation. * Failure of the respondent to respond to the Notice within 30 days of receipt constitutes a waiver of the right to contest the allegations in the Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in the Notice without further notice to the respondent and to issue a Final Order. II. Procedures for Responding to a NOTICE OF AMENDMENT*-- Within 30 days of receipt of a Notice of Amendment, the respondent shall respond to the Regional Director who issued the Notice in the following way: a. If you are not contesting the Notice, notify the Regional Director of your plans to address the inadequacies identified in the Notice; b. If you are not contesting the Notice but wish to submit written explanations, information, or other materials you believe warrant modification of the Notice of Amendment in whole or in part, or you seek clarification of the terms of the Notice of Amendment, you may submit such materials. This 8#

320105006_NOPV PCP PCO_04142010_text.pdf, page 9authorizes PHMSA to make findings and issue an Order Directing Amendment; c. If you are contesting the Notice of Amendment but are not requesting an oral hearing, submit written explanations, information, or other materials in answer to the allegations in the Notice and stating your reasons for objecting to the Notice of Amendment items in whole or in part; or d. Request a hearing as described below to contest the allegations in the Notice. * Failure of the respondent to respond to the Notice within 30 days of receipt constitutes a waiver of the right to contest the allegations in the Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in the Notice without further notice to the respondent and to issue a Final Order. III. Procedure for Requesting a Hearing A request for a hearing must be in writing and accompanied by a statement of the issues that the respondent intends to raise at the hearing. The issues may relate to the allegations, new information, or to the proposed compliance order or proposed civil penalty amount. Refer to 49 C.F.R. § 190.225 for assessment considerations upon which civil penalties are based. A respondent's failure to specify an issue may result in waiver of the right to raise that issue at the hearing. The respondent's request must also indicate whether or not respondent will be represented by counsel at the hearing. Failure to request a hearing in writing within 30 days of receipt of a Notice waives the right to a hearing. In addition, if the amount of the proposed civil penalty or the proposed corrective action is less than $10,000, the hearing will be held by telephone, unless the respondent submits a written request for an in-person hearing. Complete hearing procedures can be found at 49 C.F.R. § 190.211. IV. Extensions of Time An extension of time to prepare an appropriate response to a Notice may be granted, at the agency's discretion, following submittal of a written request to the Regional Director. The request must indicate the amount of time needed and the reasons for the extension. The request must be submitted within 30 days of receipt of the Notice. V. Freedom of Information Act Any material provided to PHMSA by the respondent, and materials prepared by PHMSA including the Notice and any order issued in this case, may be considered public information and subject to disclosure under the Freedom of Information Act (FOIA). If you believe the information you are providing is security sensitive, privileged, confidential or may cause your company competitive disadvantages, please clearly identify the material and provide justification why the documents, or portions of a document, should not be released under FOIA. If we receive a request for your material, we will notify you if PHMSA, after reviewing the materials and your provided justification, determines that withholding the materials does not meet any exemption provided under the FOIA. You may appeal the agency's decision to release 9#

320105006_NOPV PCP PCO_04142010_text.pdf, page 10material under the FOIA at that time. Your appeal will stay the release of those materials until a final decision is made. VI. Small Business Regulatory Enforcement Fairness Act Information The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small businesses about federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the enforcement actions of the Pipeline and Hazardous Materials Safety Administration, call 1-888-REG-FAIR (1-888-734-3247) or go to http://www.sba.gov/ombudsman/dsp_faq.html. VII. Payment Instructions Civil Penalty Payments of Less Than $10,000 Payment of a civil penalty of less than $10,000 proposed or assessed, under Subpart B of Part 190 of the Pipeline Safety Regulations can be made by certified check, money order or wire transfer. Payment by certified check or money order (containing the CPF Number for this case) should be made payable to the "Department of Transportation" and should be sent to: Federal Aviation Administration Mike Monroney Aeronautical Center Financial Operations Division (AMZ-341) P.O. Box 269039 Oklahoma City, OK 73125-4915 Wire transfer payments of less than $10,000 may be made through the Federal Reserve Communications System (Fedwire) to the account of the U.S. Treasury. Detailed instructions are provided below. Questions concerning wire transfer should be directed to the Financial Operations Division at (405) 954-8893, or at the above address. Civil Penalty Payments of $10,000 or more Payment of a civil penalty of $10,000 or more proposed or assessed under Subpart B of Part 190 of the Pipeline Safety Regulations must be made wire transfer (49 C.F.R. § 89.21 (b)(3)), through the Federal Reserve Communications System (Fedwire) to the account of the U.S. Treasury. Detailed instructions are provided below. Questions concerning wire transfers should be directed to the Financial Operations Division at (405) 954-8893, or at the above address. 10#

320105006_NOPV PCP PCO_04142010_text.pdf, page 11INSTRUCTIONS FOR ELECTRONIC FUND TRANSFERS (1) RECEIVER ABA NO. 021030004 (2) TYPE/SUB-TYPE (Provided by sending bank) (3) SENDING BANK ABA NO. (Provided by sending bank) (4) SENDING BANK REF NO. (Provided by sending bank) (5) AMOUNT (6) SENDING BANK NAME (Provided by sending bank) (7) RECEIVER NAME TREAS NYC (8) PRODUCT CODE (Normally CTR, or as provided by sending bank) (9) BENEFICIAL (BNF) = AGENCY LOCATION CODE BNF = /ALC-69-14-0001 (10) REASONS FOR PAYMENT Example: PHMSA - CPF # / Ticket Number/Pipeline Assessment number INSTRUCTIONS: You, as sender of the wire transfer, must provide the sending bank with the information for blocks (1), (5), (7), (9), and (10). The information provided in Blocks (1), (7), and (9) are constant and remain the same for all wire transfers to the Pipeline and Hazardous Materials Safety Administration, Department of Transportation. Block #1 - RECEIVER ABA NO. - "021030004". Ensure the sending bank enters this 9-digit identification number; it represents the routing symbol for the U.S. Treasury at the Federal Reserve Bank in New York. Block #5 - AMOUNT - You as the sender provide the amount of the transfer. Please be sure the transfer amount is punctuated with commas and a decimal point. EXAMPLE: $10,000.00 Block #7 - RECEIVER NAME - "TREAS NYC". Ensure the sending bank enters this abbreviation. It must be used for all wire transfers to the Treasury Department. Block #9 - BENEFICIAL - AGENCY LOCATION CODE - "BNF=/ALC-69-14-0001". Ensure the sending bank enters this information. This is the Agency Location Code for the Pipeline and Hazardous Materials Safety Administration, Department of Transportation. Block #10 - REASON FOR PAYMENT - “AC-payment for PHMSA Case # / To ensure your wire transfer is credited properly, enter the case number/ticket number or Pipeline Assessment number, and country.” NOTE: A wire transfer must comply with the format and instructions or the Department cannot accept the wire transfer. You as the sender can assist this process by notifying the Financial Operations Division (405) 954-8893 at the time you send the wire transfer. February 2009 11#