TALLGRASS PONY EXPRESS PIPELINE, LLC — Notice of Probable Violation

party submissionOfficial PDF320165001_Operator Response to Notice_04192016.pdf#

320165001_NOPV PCP PCO_03162016_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED March 16, 2016 Mr. Mick Rafter Vice-President – Operations and Environmental, Health, and Safety Tallgrass Pony Express Pipeline, LLC 370 Van Gordon Street Lakewood, Colorado 80228 CPF 3-2016-5001 Dear Mr. Rafter: On February 13, 2015, the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), Central Region, pursuant to Chapter 601 of 49 United States Code, sent a Request for Specific Information for two over-pressure incidents that occurred on October 7, 2014, between Jennings Station and Natoma Station in Kansas and again on October 28, 2014, at Cushing Station in Cushing, Oklahoma. As a result of the review of the information, 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 violations are: 1. §195.406 Maximum operating pressure. (b) No operator may permit the pressure in a pipeline during surges or other variations from normal operations to exceed 110 percent of the operating pressure limit established under paragraph (a) of this section. Each operator must provide adequate controls and protective equipment to control the pressure within this limit.#

320165001_NOPV PCP PCO_03162016_text.pdf, page 2Tallgrass did not provide adequate controls and protective equipment to limit the pressure to 110% on two occasions during the operation of the Pony Express pipeline in October of 2014. a) On October 7, 2014, during the line fill operations of the Pony Express Pipeline, Tallgrass personnel did not open a valve at Cushing to relieve the nitrogen that was being used as backpressure to keep the line from going slack. As a result, the pressure of the line began to build up to over 110% of the maximum operating pressure (MOP) at several locations between Jennings and Natoma Stations in Kansas. Tallgrass recorded the following pressures at the pressure transmitters located at BG-MOV-100 upstream, BG-MOV-100 downstream, MLV 69-upstream, and MLV-71-downstream: Transmitter MOP Pressures Recorded Time Length BG-MOV-1000 upstream 956 psig 1053 – 1076 psig 11 minutes BG-MOV-1000 downstream 956 psig 1053 – 1072 psig 11 minutes MLV 69-upstream 956 psig 1054 – 1080 psig 20 minutes MLV 71-upstream 956 psig 1053 – 1061 psig 9 minutes MLV 71-downstream 956 psig 1055 – 1070 psig 9 minutes b) On October 28, 2014, a controller was checking the operation of main line valves at the Cushing Station because he had noted that a couple of mainline valves on the northern end of the pipeline had not responded. As the valves opened, head pressure on the mainline caused the Cushing Station piping to reach over 110% of the 285 psig MOP. The station outlet was shut-in at the time. Because the flow control valve did not react fast enough to limit the pressure and the set point of the rupture pin (285 psig) was too high in this scenario, the station piping was subjected to pressure of approximately 350 psig for about 45 seconds. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a related series of violations. For violations occurring prior to January 4, 2012, the maximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation and has recommended that you be preliminarily assessed a civil penalty of $14,700. 2#

320165001_NOPV PCP PCO_03162016_text.pdf, page 3Proposed Compliance Order With respect to item 1 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Tallgrass Pony Express Pipeline, LLC. 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. All material submitted in response to this enforcement action may be 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 3-2016-5001 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Allan C. Beshore Director, Central Region, OPS Pipeline and Hazardous Materials Safety Administration Enclosure: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 3#

320165001_NOPV PCP PCO_03162016_text.pdf, page 4PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Tallgrass Pony Express Pipeline, LLC a Compliance Order incorporating the following remedial requirements to ensure the compliance of Tallgrass Pony Express Pipeline, LLC with the pipeline safety regulations: 1. 2. 3. In regard to Item Number 1 of the Notice pertaining to the overpressure incidents on the Pony Express pipeline between Jennings and Natoma Stations and at Cushing Station, Tallgrass will perform an evaluation of all overpressure set points at each station on the Pony Express Pipeline to ensure that the set points will adequately protect the pipeline and station’s maximum operating pressure and re-set as necessary. Additionally, Tallgrass will identify all personnel involved in the incidents and retrain them on the procedures for line fill and start-up of all stations as well as review controller training and operating procedures to address any needed enhancements as a result of the two incidents. Tallgrass must complete and submit records demonstrating the re-evaluation of all overpressure protection equipment and reset of set-points as necessary within 60 days of the date of the Final Order. Further, Tallgrass will submit records that demonstrate the identification and re-training of all personnel on the line fill and start-up procedures of the stations and the review of the controller operating and training procedures within 30 days of the date of the Final Order. It is requested (not mandated) that Tallgrass maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Allan C. Beshore, Director, Central Region, OPS, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs 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. 4#

320165001_Final Order_12012016_text.pdf, page 1Official PDFDecember 1, 2016 Mr. David G. Dehaemers, Jr. President & CEO Tallgrass Energy Partners, LP 370 Van Gordon Street Lakewood, CO 80228 Re: CPF No. 3-2016-5001 Dear Mr. Dehaemers: Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of violation and assesses a civil penalty of $14,700. It further finds that Tallgrass Energy Partners, LP has completed the actions specified in the Notice to comply with the pipeline safety regulations. When the civil penalty has been paid, 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, Alan K. Mayberry Acting Associate Administrator for Pipeline Safety Enclosure cc: Mr. Allan C. Beshore, Director, Central Region, OPS CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

320165001_Final Order_12012016_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 ) Tallgrass Pony Express Pipeline, LLC, ) a subsidiary of Tallgrass Energy ) Partners, LP, ) CPF No. 3-2016-5001 ) ) ) Respondent. ) ___________________________________ ) FINAL ORDER On February 13, 2015, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), sent Tallgrass Pony Express Pipeline, LLC, a subsidiary of Tallgrass Energy Partners, LP (Tallgrass or Respondent) a Request for Specific Information for two over-pressure incidents that occurred on October 7, 2014, between Jennings Station and Natoma Station in Kansas and on October 28, 2014, at Cushing Station in Cushing, Oklahoma. The Tallgrass systems consist of a crude oil line that operates approximately 700 miles of pipeline from Wyoming to Oklahoma.1 As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated March 16, 2016, 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 Tallgrass had violated 49 C.F.R. § 195.406, and proposed assessing a civil penalty of $14,700 for the alleged violation. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violation. Tallgrass responded to the Notice by letter dated April 19, 2016 (Response). The company did not contest the allegations of violation but provided information concerning the corrective actions it had taken and submitted copies of its revised procedures. Respondent did not request a hearing and therefore has waived its right to one. FINDING OF VIOLATION In its Response, Tallgrass did not contest the allegation in the Notice that it violated 49 C.F.R. Part 195, as follows: 1 Pipeline Safety Violation Report (Violation Report), (Mar. 16, 2016) (on file with PHMSA), at 1.#

320165001_Final Order_12012016_text.pdf, page 3CPF No. 3-2016-5001 Page 2 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.406, which states in relevant part: § 195.406 Maximum Operating Pressure. (a) . . . . (b) No operator may permit the pressure in a pipeline during surges or other variations from normal operations to exceed 110 percent of the operating pressure limit established under paragraph (a) of this section. Each operator must provide adequate controls and protective equipment to control the pressure within this limit. The Notice alleged that Respondent violated 49 C.F.R. § 195.406 by failing to provide adequate controls and protective equipment to ensure the pressure in its pipeline did not exceed 110 percent of the permitted maximum operating pressure. Specifically, the Notice alleged Tallgrass failed to provide adequate controls and protective equipment to limit the pressure to 110 percent on two occasions during the operation of the Tallgrass pipeline in October of 2014. On October 7, 2014, during the line fill operations of Tallgrass, Tallgrass personnel did not open a valve at the Cushing Station to relieve the nitrogen that was being used as backpressure to keep the line from going slack.2 As a result, the pressure of the line began to build up to over 110 percent of the maximum operating pressure at several locations between Jennings and Natoma Stations in Kansas.3 On October 28, 2014, a controller was checking the operation of main line valves at the Cushing Station because he had noted that a couple of mainline valves on the northern end of the pipeline had not responded.4 As the valves opened, head pressure on the mainline caused the Cushing Station piping to reach over 110 percent of the 285 psig maximum operating pressure.5 Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.406 by failing to provide adequate controls and protective equipment to ensure the pressure in its pipeline did not exceed 110 percent of the permitted maximum operating pressure. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations. 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 2 Notice at 2. 3 Id. 4 Id. 5 Id.#

320165001_Final Order_12012016_text.pdf, page 4CPF No. 3-2016-5001 Page 3 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 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 $14,700 for the violations cited above. Item 1: The Notice proposed a civil penalty of $14,700 for Respondent’s violation of 49 C.F.R. § 195.406, for failing to provide adequate controls and protective equipment to ensure the pressure did not exceed 110 percent of the permitted maximum operating pressure. Tallgrass did not contest the allegation, but requested that the proposed penalty be reduced or eliminated based on the immediate actions taken by the company and the substantial costs incurred as a result of the over-pressure incidents.6 I find that the penalty amount proposed in the notice is warranted considering the nature, circumstances, and gravity of the violation and Respondent’s culpability for the violation. Respondent is correct that the pipeline was subject to over-pressurization exceeding the 100 percent of the permitted maximum operating pressure for a short period of time, but this was taken into consideration when the proposed penalty amount was determined and would have been higher had the period of over-pressurization been longer. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $14,700 for violation of 49 C.F.R. § 192.605. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $14,700 for violation of 49 C.F.R. § 195. 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 $14,700. 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 (AMK-325), Federal Aviation Administration, 6500 S MacArthur Blvd., Oklahoma City, Oklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the $14,700 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. 6 Response at 2.#

320165001_Final Order_12012016_text.pdf, page 5CPF No. 3-2016-5001 Page 4 COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 1 in the Notice for violations of 49 C.F.R. § 195. 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 indicates that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to the violation of § 195.406 (Item 1), Respondent has evaluated all overpressure set points at each station on Tallgrass Pipeline to ensure that the set points will adequately protect the pipeline and station's maximum operating pressure and re-set as necessary. Tallgrass identified all personnel involved in the incidents and retrained them on the procedures for line fill and start-up of all stations. It also reviewed controller training an operating procedures to address any needed enhancements as a result of the two incidents. 2. Respondent has completed and submitted records demonstrating the re-evaluation of all overpressure protection equipment and reset of set-points. Tallgrass also submitted records that demonstrated the identification and re-training of all personnel on the line fill and start-up procedures of the stations and the review of the controller operating and training procedures. Accordingly, I find that compliance has been achieved with respect to this violation. Therefore, the compliance terms proposed in the Notice are not included in this Order. Under 49 C.F.R. § 190.243, 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. § 190.243. 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. December 1, 2016 ___________________________________ __________________________ Alan K. Mayberry Date Issued Acting Associate Administrator for Pipeline Safety#