CRESTWOOD DAKOTA PIPELINE LLC — Notice of Probable Violation

case documentOfficial PDF320145007_NOPV PCO_Revised_10022014_text.pdf#

party submissionOfficial PDF320145007_Operator Response to Notice_10272014.pdf#

320145007_Final Order_07022015_text.pdf, page 1Official PDFJuly 2, 2015 Mr. Joel Moxley Senior Vice President, Operations Services Crestwood Equity Partners, LP 700 Louisiana Street Suite 2550 Houston, Texas 77002 Re: CPF No. 3-2014-5007 Dear Mr. Moxley: Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of violation and confirms that Crestwood Dakota Pipeline, LLC, has completed the actions specified in the Notice to comply with the pipeline safety regulations. Therefore, this case is now 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. Allan Beshore, Director, Central Region, Office of Pipeline Safety (OPS) Ms. Alice Ratcliffe, Pipeline Compliance Manager, Crestwood Midstream Partners, LP, 801Cherry Street, Suite 3800, Unit 20, Fort Worth, Texas 76102 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

320145007_Final Order_07022015_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 ) Crestwood Dakota Pipeline, LLC, ) CPF No. 3-2014-5007 a subsidiary of Crestwood Equity Partners, LP, ) ) ) ) Respondent. ) _________________________________________ ) FINAL ORDER Between October 28 – November 1, 2013, 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 Crestwood Dakota Pipeline, LLC, (Crestwood or Respondent) in Epping, North Dakota. Crestwood, a subsidiary of Crestwood Equity Partners, LP, owns and operates 20.9 miles of crude oil pipelines, as well as other pipeline facilities, in and around Epping, North Dakota.1 As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated October 2, 2014, a Notice of Probable Violation and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Crestwood had violated 49 C.F.R. § 195.561 and ordered Respondent take certain measures to correct the alleged violation. The Notice also proposed finding that Crestwood had committed probable violations of 49 C.F.R. §§ 194.107, 195.402, 195.404, 195.432, and 195.563, and warned Respondent to take corrective action to address them or be subject to future enforcement actions. Crestwood responded to the Notice by letter dated October 27, 2014 (Response). Respondent did not contest the allegation of violation or the proposed compliance order, but did provide information on the corrective actions it had taken. Crestwood did not request a hearing and therefore has waived its right to one. 1 See Operations – Crude Facilities – COLT Hub, Crestwood Midstream Partners, LP, http://www.crestwoodlp.com/operations/ngl-crude-services/crude-colt-hub.asp (last visited March 4, 2015); see also Operations – Crude Facilities – Arrow Midstream, Crestwood Midstream Partners, LP, http://www.crestwoodlp.com/operations/ngl-crude-services/crude-arrow.asp (last visited March 4, 2015).#

320145007_Final Order_07022015_text.pdf, page 3CPF No. 3-2014-5007 Page 2 FINDING OF VIOLATION In its Response, Crestwood did not contest the allegations in the Notice that it violated 49 C.F.R. Part 195.561(a), as follows: Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.561(a), which states: § 195.561 when must I inspect pipe coating used for external corrosion control? (a) You must inspect all external pipe coating required by § 195.557 just prior to lowering the pipe into the ditch or submerging the pipe. The Notice alleged that Respondent violated 49 C.F.R. § 195.561(a) by lowering a section of pipe into a ditch without first inspecting its external coating. Specifically, the Notice alleged that on November 19, 2011, a contractor employed by Crestwood failed to “jeep”2 or inspect the external pipe coating on 900 feet of pipe before lowering it into a ditch between stations 720+00 and 729+00 on Crestwood’s Colt Connector system. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find Crestwood violated 49 C.F.R. § 195.561(a) by failing to inspect the external pipe coating on 900 feet of pipe before lowering it into a ditch between stations 720+00 and 729+00 on its Colt Connector system. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 6 in the Notice for a violation of 49 C.F.R. 195.561(a). 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. The Director has indicated that Respondent has taken the following actions to address some of the cited violations: 1. Respondent has completed a Direct Current Voltage Gradient (DCVG) Survey for the entire length of the Colt Connector system. Following the DCVG Survey, Crestwood submitted a final report indicating that all anomalies noted during the survey were minor, and recommending that a confirmatory dig be completed to validate these findings. 2. Respondent has provided documentation that a confirmatory dig was performed, and a report of this dig sent to the Central Region on November 17, 2014. 2 “To jeep” is a term used to describe a method of holiday detection using an instrument that applies a voltage between the external surface of the coating and the pipe.#

320145007_Final Order_07022015_text.pdf, page 4CPF No. 3-2014-5007 Page 3 3. Respondent applied cathodic protection to the line, which was found to be acceptable. Crestwood added three more test stations to the line, one of which being located in the area specified in the Proposed Compliance Order. Accordingly, I find compliance has been achieved with respect to this violation. Therefore, the compliance terms proposed in the Notice for Item 6 are not included in this Order. WARNING ITEMS With respect to Items 1, 2, 3, 4, 5, and 7, the Notice alleged probable violations of 49 C.F.R. §§ 194.107, 195.402, 195.404, 195.432, and 195.563, 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. § 194.107(c)(1)(vi) (Item 1) ─ Respondent’s alleged failure to ensure that its Facility Response Plan included the names and telephone numbers of contacts for Federal, State, and local agencies at which it expected to have pollution control responsibilities or support; 49 C.F.R. § 194.107(c)(ix) (Item 2) ─ Respondent’s alleged failure to follow a drill program as outlined in the guidelines found in the National Preparedness for Response Exercise Program (PREP), or a program equivalent to that set forth in PREP; 49 C.F.R. § 195.402(a) (Item 3) ─ Respondent’s alleged failure to follow its written procedural manual for normal operations and maintenance of pipelines, which required Crestwood to conduct monthly visual inspections of its firefighting equipment; 49 C.F.R. § 195.404(a)(2) (Item 4) ─ Respondent’s alleged failure to maintain written maps of its pipeline systems that documented all crossings of public roads, railroads, rivers, buried utilities, and foreign pipelines along Crestwood’s rights- of-way. Specifically, the Notice alleged that Crestwood failed to document a particular location where another operator’s pipeline crossed Respondent’s right- of-way and, further, that Crestwood did not have a process to ensure that crossings found during maintenance actions were properly documented on the company’s “as-built” maps; 49 C.F.R. § 195.432(b) (Item 5) ─ Respondent’s alleged failure to follow Section 4 of American Petroleum Institute Standard 653 (incorporated by reference in 49 C.F.R § 195.3) for the monthly inspection of its in-service atmospheric and low- pressure steel aboveground breakout tanks; and#

320145007_Final Order_07022015_text.pdf, page 5CPF No. 3-2014-5007 Page 4 49 C.F.R. § 195.563(a) (Item 7) ─ Respondent’s alleged failure to apply cathodic protection to the Colt Connector pipeline system within one year of the pipeline becoming operational. Crestwood presented information in its Response showing it had taken certain actions to address the cited items. If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. The terms and conditions of this Final Order are effective upon receipt of service. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

320145007_NOPV PCO Revised_10022014.pdf, page 1Official PDF0 u.s. Department of Transportation Pipeline and Hazardous Materials Safety Administration 901 Locust Street, Suite 462 Kansas City, MO 641 06-2641 October 2, 2014 Mr. George Grau Vice President, Operations Crude and NGL Crestwood Dakota Pipeline LLC 801 Cherry Street Suite 3800, Unit 20 Fort Worth, Texas 76102 CPF 3-2014-5007 Dear Mr. Grau: Please find attached a corrected copy ofCPF 3-2014-5007. The original version referenced the wrong violation number for the Proposed Compliance Order and the dates for the initial operation of the pipeline and when Crestwood merged with Inergy were incorrect. We apologize for any inconvenience that this may have caused. Sincerely, Linda Daugherty Director, Central Region Pipeline and Hazardous Materials Safety Administration#

320145007_NOPV PCO Revised_10022014.pdf, page 2~J U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 901 Locust Street, Suite 462 Kansas City, Missouri 64106-2641 NOTICE OF PROBABLE VIOLATION and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL- RETURN RECEIPT REQUESTED October 2, 2014 Mr. George Grau Vice President, Operations Crude and NGL Crestwood Dakota Pipeline LLC 801 Cherry Street Suite 3800, Unit 20 Fort Worth, Texas 76102 CPF 3-2014-5007 Dear Mr. Grau: On October 28 - November 1, 2013, representatives ofthe Central Region office ofthe Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your records and facilities in Epping, ND. 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. §194.107 General response plan requirements (c) Each response plan must include: (1) A core plan consisting of- (vi) Names and telephone numbers of Federal, State and local agencies which the operator expects to have pollution control responsibilities or support, Crestwood did not ensure that the names and contacts in the facility response plan were current. Review of the plan identified that the names and phone numbers for the internal notification were not updated. Additionally, Crestwood was unable to confirm if any of the government agencies listed had correct phone numbers.#

320145007_NOPV PCO Revised_10022014.pdf, page 32. §194.107 General response plan requirements (c) Each response plan must include: (ix) Drill program-an operator will satisfy the requirement for a drill program by following the National Preparedness for Response Exercise Program (PREP) guidelines. An operator choosing not to follow PREP guidelines must have a drill program that is equivalent to PREP. The operator must describe the drill program in the response plan and OPS will determine if the program is equivalent to PREP. Crestwood did not conduct any drill programs for the Colt Connector system since it went into operation in June of2012. Crestwood acquired this system in December of 2013. Company personnel indicated that they had not yet conducted any table top spill drills or quarterly notifications drills and were unable to produce any records showing that the drills were done between June of2012 and December of2013. 3. §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. Crestwood did not follow their procedure for ensuring that their fire extinguishers were in proper operating conditions at all times. Procedure 14.05 indicates that Crestwood will conduct monthly visual inspections of the firefighting equipment. Review of the records found that they had only inspected the extinguishers in October of2013. 4. §195.404 Maps and Records. a) Each operator shall maintain current maps and records of its pipeline systems that include at least the following information; (2) All crossings of public roads, railroads, rivers, buried utilities, and foreign pipelines. Crestwood did not document a pipeline crossing of their line on any of their maps. Review of the patrol record found that on 10/9/2013, an observation was noted that a pipeline was crossing their line. No follow-up documentation was found that identified 2#

320145007_NOPV PCO Revised_10022014.pdf, page 4who was crossing. Further discussions with Crestwood personnel found that no process existed for ensuring that crossings found during routine maintenance actions along the line would be documented on the as-built maps. 5. §195.432 Inspection of in-service breakout tanks. (b) Each operator must inspect the physical integrity of in-service atmospheric and low-pressure steel aboveground breakout tanks according to API Standard 653 (incorporated by reference, see § 195.3). However, if structural conditions prevent access to the tank bottom, the bottom integrity may be assessed according to a plan included in the operations and maintenance manual under § 195.402( c )(3). Crestwood missed several monthly tank inspections as required by Section 4 of API 653 for the tank at Dry Fork Station. Review of the records found that the inspections for February, August, and September were missing for 2013. - 6. §195.561 When must I inspect pipe coating used for external corrosion control? (a) You must inspect all external pipe coating required by Sec. 195.557 just prior to lowering the pipe into the ditch or submerging the pipe. During the construction of the Colt Connector system, the contractor that installed the system put a section of pipe in the ditch without inspecting the coating prior to lowering it in. Review ofthe daily report dated 11 /19/2011 found that the contractor put 900 feet of pipe in the ditch without jeeping the pipe. This occurred between station numbers 720+00 to 729+00. The report indicated that this was done because of incoming bad weather. As indicated earlier, it should be noted that Crestwood purchased these assets in December of2012 after the construction of the system. 7. §195.563 Which pipelines must have cathodic protection? (a) Each buried or submerged pipeline that is constructed, relocated, replaced, or otherwise changed after the applicable date in Sec. 195.401(c) must have cathodic protection. The cathodic protection must be in operation not later than 1 year after the pipeline is constructed, relocated, replaced, or otherwise changed, as applicable. Crestwood did not apply cathodic protection to the Colt Connector pipeline system within one year of the pipeline going into operation. According to records and discussions with Crestwood personnel, the pipeline went into operation on June of 2012. The cathodic protection was not operational until October of2013. Cathodic protection should have been applied by June of2013. 3#

320145007_NOPV PCO Revised_10022014.pdf, page 5Proposed Compliance Order With respect to item six (6), pursuant to 49 United States Code§ 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Crestwood Dakota Pipelines LLC. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Warning Items With respect to item(s) one (1), two (2), three (3), four (4), five (5), and seven (7), 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 item(s). Be advised that failure to do so may result in Crestwood Dakota Pipelines LLC 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). lfyou 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 3-2014-5007 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, ~d~ Linda Daugherty Director, Central Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 4#

320145007_NOPV PCO Revised_10022014.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Crestwood Dakota Pipelines LP a Compliance Order incorporating the following remedial requirements to ensure the compliance of Crestwood Dakota Pipelines LP with the pipeline safety regulations: 1. 2. 3. 4. Pertaining to the line segment between station number 720+00 to 729+00 that was not jeeped, provide a plan to ensure that the coating is in good condition. The plan should include a DCVG survey and provisions for possible excavations and remedial actions. Provide the plan and action schedule within 60 days from the date of receipt of the Final Order. Implement the plan and schedule required by items 1, above, within 90 days from the date of receipt of the Final Order. Crestwood shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Linda Daugherty, Director, Central Region, Pipeline and Hazardous Materials Safety Administration, 901 Locust Street, Room 462, Kansas City, MO 64106. Costs shall be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total costs associated with replacements, additions and other changes to pipeline infrastructure. 5#