SINCLAIR TRANSPORTATION COMPANY — Notice of Probable Violation

party submissionOfficial PDF320205020_Operator Response to Notice and Request for Hearing and Request for Case File_11022020.pdf#

320205020_Closure Letter_02242021_text.pdf, page 1Official PDFVIA ELECTRONIC MAIL TO: mpetersen@sinclairoil.com and jbrown@sinclairoil.com February 24, 2021 Mr. Mark Peterson President Sinclair Transportation Company 550 East South Temple Salt Lake City, Utah 84102 Re: CPF 3-2020-5020 Dear Mr. Peterson: On February 5, 2021, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Sinclair Transportation Company a Consent Order in the above-referenced case. This Order included a Consent Agreement 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, Gregory Ochs Director, Central Region, OPS Pipeline and Hazardous Materials Safety Administration#

320205020_NOPV PCP PCO_10132020_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER VIA ELECTRONIC MAIL TO: mpetersen@sinclairoil.com and jbrown@sinclairoil.com October 13, 2020 Mr. Mark Petersen President Sinclair Transportation Company 550 East South Temple Salt Lake City, Utah 84102 mpetersen@sinclairoil.com CPF 3-2020-5020 Dear Mr. Petersen: From April 4, 2019 to September 24, 2019, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code (U.S.C.), inspected records and field facilities of Sinclair Tranportation Company’s (Sinclair) refined products Midcon system in Kansas, Missouri, and Iowa. As a result of the inspection, it is alleged that Sinclair has committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected and the probable violations are: 1. §195.260 Valves: Location. A valve must be installed at each of the following locations:#

320205020_NOPV PCP PCO_10132020_text.pdf, page 2(a) . . . (e) On each side of a water crossing that is more than 100 feet (30 meters) wide from high-water mark to high-water mark unless the Administrator finds in a particular case that valves are not justified. Sinclair failed to install valves on each side of a water crossing this is more than 100 feet wide from high-water mark to high-water mark. In 2011 Sinclair installed a new crossing of more than 100 feet on Santa Fe Lake near Laplata, Missouri, but did not install the valves required by §195.260(e). PHMSA reviewed the project files and inspected the area during the inspection to confirm the required valves to protect the lake crossing had not been installed. 2. §195.412 Inspection of rights-of-way and crossings under navigable waters (a) Each operator shall, at intervals not exceeding 3 weeks, but at least 26 times each calendar year, inspect the surface conditions on or adjacent to each pipeline right- of-way. Methods of inspection include walking, driving, flying or other appropriate means of traversing the right-of-way. Sinclair failed to inspect the surface conditions on or adjacent to each pipeline right-of-way (ROW). Sinclair conducted the inspections required by §195.412(a) by aerial patrol, however, it failed to maintain the pipeline ROW in a condition that is appropriate for aerial patrolling to inspect the surface conditions on or adjacent to each pipeline ROW. PHMSA’s field inspection observed tree canopy and vegetation cover over the ROW, which precluded Sinclair from inspecting the surface conditions at the following locations by aerial patrol: • ROW to the west of the Hwy 218 crossing south of Montrose, IA • ROW on Sessford Property west of Argyle, IA • ROW approximately 0.5 miles east of Gorin, MO • ROW between Hwy 139 and Maple St, Bosworth, MO • ROW on the west side of the North Missouri River block valve • ROW on both sides of Robinson Pike Rd, Grandview, MO • ROW north of 3rd St in Grandview, MO • ROW on both sides of Martha Truman Rd , Grandview, MO • ROW on Burr Oak Woods Nature Center, (Missouri Conservation Department property) north of the South Burr Oak Woods Block Valve Proposed Civil Penalty Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed $218,647 per violation per day the violation persists, up to a maximum of $2,186,465 for a related series of violations. For violation occurring on or after November 27, 2018 and before July 31, 2019, the maximum penalty may not exceed $213,268 per violation per day, with a maximum penalty not to exceed $2,132,679. For violation occurring on or after November 2, 2#

320205020_NOPV PCP PCO_10132020_text.pdf, page 32015 and before November 27, 2018, the maximum penalty may not exceed $209,002 per violation per day, with a maximum penalty not to exceed $2,090,022. For violations occurring prior to November 2, 2015, the maximum penalty may not exceed $200,000 per violation per day, with a maximum penalty not to exceed $2,000,000 for a related series of violations. We have reviewed the circumstances and supporting documentation involved for the above probable violations and have recommended that you be preliminarily assessed a civil penalty of $97,100 as follows: Item number PENALTY 2 $97,100 Proposed Compliance Order With respect to items 1 and 2, pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Sinclair Transporation Company. 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 Enforcement Proceedings. Please refer to this document and note the response options. All material you submit 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). Following the receipt of this Notice, you have 30 days to submit written comments, or request a hearing under 49 CFR § 190.211. 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. If you are responding to this Notice, we propose that you submit your correspondence to my office within 30 days from receipt of this Notice. This period may be extended by written request for good cause. In your correspondence on this matter, please refer to CPF 3-2020-5020 and, for each document you submit, please provide a copy in electronic format whenever possible. 3#

320205020_NOPV PCP PCO_10132020_text.pdf, page 4Sincerely, Gregory A. Ochs Director, Central Region, OPS Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Enforcement Proceedings Cc: Jon Brown, Regulatory Compliance Coordiantor, jbrown@sinclairoil.com 4#

320205020_NOPV PCP PCO_10132020_text.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Sinclair Transportation Company (Sinclair) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Sinclair with the pipeline safety regulations: 1. 2. 3. In regard to Item Number 1 of the Notice pertaining to Sinclair’s failure install valves on each side of the water crossing of Sante Fe Lake outside of Laplata, MO as required by §195.260(e), Sinclair must complete the following measures: a. Within 30 days of the issuance of the Final Order: assess the location of the valves and update the Emergency Flow Restricing Devices study as needed to identify the location of any additional valves required to protect the Sante Fe Lake crossing. b. Within 90 days of the issuance of the Final Order: provide to the Director, Central Region, a plan and schedule to complete the installation of the valves required to protect Sante Fe Lake with the following requirements: i. Peform the installation of required valves within 12 months; and ii. Provide to the Director quarterly progress reports and a final report upon completed of the installation of required valves. In regard to Item Number 2 of the Notice pertaining to Sinclair’s failure to inspect the surface conditions on or adjacent to each pipeline right-of-way as required by §195.412(a), Sinclair must complete the following measures: a. Within 30 days of the issuance of the Final Order: assess the right-of-way to determine which locations require clearing to allow for effective aerial patrols or establish alternate effective patrols for those locations where clearing will not be conducted. b. Within 90 days of issuance of the Final Order: provide to the Director, Central Region, a plan and schedule to complete the identified right-of-way clearing and records of the completed patrols with the following requirements: i. Complete all necessary clearing within 12 months; and ii. Provide to the Director quarterly progress reports and a final report upon completion of all planned right-of-way clearing. It is requested (not mandated) that Sinclair maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Allan Beshore, Director, Central Region, 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. 5#

320205020_Consent Agreement and Order_02052021_text.pdf, page 1Official PDFFebruary 5, 2021 VIA ELECTRONIC MAIL TO: mpetersen@sinclairoil.com Mr. Mark Peterson President Sinclair Transportation Company 550 East South Temple Salt Lake City, Utah 84102 CPF No. 3-2020-5020 Dear Mr. Peterson: Enclosed please find a Consent Order incorporating the terms of the Consent Agreement between the Pipeline and Hazardous Materials Safety Administration (PHMSA) and Sinclair Transportation Company which was executed on January 4 and January 17, 2021, respectively. Service of the Consent Order and Consent Agreement by electronic mail is deemed effective upon the date of transmission, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure: Order and Consent Agreement cc: Mr. Gregory Ochs, Director, Central Region, Office of Pipeline Safety, PHMSA Mr. Jon S. Lindsey, Corporate Counsel, Sinclair Transportation Company, jlindsey@sinclairoil.com#

320205020_Consent Agreement and Order_02052021_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 Sinclair Transportation Company, Respondent. ) ) ) ) ) ) ) CPF No. 3-2020-5020 CONSENT ORDER By letter dated October 13, 2020, the Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety, issued a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order (Notice) to Sinclair Transportation Company (Sinclair). In response to the Notice, Sinclair requested an informal consultation, whereupon the parties engaged in good-faith settlement discussions that have resulted in the Consent Agreement attached to this Order that settles all of the allegations in the Notice. Accordingly, the Consent Agreement is hereby approved and incorporated by reference into this Order. FLNG is hereby ordered to comply with the terms of the Consent Agreement, effective immediately. Pursuant to 49 U.S.C. 60101, et seq., failure to comply with this Consent Order may result in the assessment of civil penalties as set forth in 49 C.F.R. § 190.223. The terms and conditions of this Consent Order are effective upon service in accordance with 49 C.F.R. § 190.5. February 5, 2021 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

320205020_Consent Agreement and Order_02052021_text.pdf, page 3U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 ____________________________________ In the Matter of Sinclair Transportation Company, Respondent. ) ) ) ) ) ) ) CPF No. 3-2020-5020 CONSENT AGREEMENT From April 4, 2019, to September 24, 2019, pursuant to 49 U.S.C. § 60117, representatives 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 Sinclair Transportation Company’s (Sinclair or Respondent) refined-products Midcon system in Kansas, Missouri, and Iowa. As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated October 13, 2020, 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 Sinclair had violated 49 C.F.R. §§ 195.260(e) and 195.412(a), and proposed ordering Respondent to take certain measures to correct the alleged violations, and to pay a civil penalty in the amount of $97,100. Sinclair responded to the Notice by letter dated November 2, 2020 (Response). The company contested the allegations and requesting a hearing. On November 13, 2020, Sinclair and PHMSA (collectively, the Parties), participated in a scheduling conference with the presiding official. During the conference, the Parties agreed that the issues in the Notice could potentially be resolved through informal discussions. On December 2, 2020, and again on December 16, 2020, the Parties met to discuss a possible resolution of the case. During each meeting, both Parties offered additional information in response to the Notice, and an agreement was reached that resolves all of the issues in the Notice. Having agreed that settlement of this proceeding will avoid further administrative proceedings or litigation and will serve the public interest by promoting safety and protection of the environment, pursuant to 49 C.F.R. Part 190, and upon consent and agreement of the Sinclair and PHMSA, the Parties hereby agree as follows:#

320205020_Consent Agreement and Order_02052021_text.pdf, page 4I. General Provisions 1. Respondent acknowledges that as the operator of the Midcon system in Kansas, Missouri, and Iowa, Respondent and its Midcon system are subject to the jurisdiction of the Federal pipeline safety laws, 49 U.S.C. § 60101, et seq., and the regulations and administrative orders issued thereunder. For purposes of this Agreement, Respondent acknowledges that it received proper notice of PHMSA's action in this proceeding and that the Notice states claims upon which relief may be granted pursuant to 49 U.S.C. 60101, et seq., and the regulations and orders issued thereunder. 2. After Sinclair returns this signed Agreement to PHMSA, the Agency’s representative will present it to the Associate Administrator for Pipeline Safety, recommending that the Associate Administrator adopt the terms of this Agreement by issuing an administrative order (Consent Order) incorporating the terms of this Agreement. The terms of this Agreement constitute an offer of settlement until accepted by the Associate Administrator. Once accepted, the Associate Administrator will issue a Consent Order incorporating the terms of this Agreement 3. Respondent consents to the issuance of the Consent Order, and hereby waives any further procedural requirements with respect to its issuance. Respondent waives all rights to contest the adequacy of notice, or the validity of the Consent Order or this Agreement, including all rights to administrative or judicial hearings or appeals, except as set forth herein. 4. This Agreement shall apply to and be binding upon PHMSA and Sinclair, its officers, directors, and employees, and its successors, assigns, or other entities or persons otherwise bound by law. Respondent agrees to provide a copy of this Agreement and any incorporated work plans and schedules to all of Sinclair’s officers, employees, and agents whose duties might reasonably include compliance with this Agreement. 5. This Agreement constitutes the final, complete and exclusive agreement and understanding between the Parties with respect to the settlement embodied in this Agreement. The Parties acknowledge that there are no representations, agreements or understandings relating to settlement other than those expressly contained in this Agreement, except that the terms of this Agreement may be construed by reference to the Notice. 6. Nothing in this Agreement affects or relieves Respondent of its responsibility to comply with all applicable requirements of the Federal pipeline safety laws, 49 U.S.C. § 60101, et seq., and the regulations and orders issued thereunder. Nothing in this Agreement alters PHMSA's right of access, entry, inspection, and information gathering or PHMSA's authority to bring enforcement actions against Sinclair pursuant to the Federal pipeline safety laws, the regulations and orders issued thereunder, or any other provision of Federal or State law. 7. For all transfers of ownership or operating responsibility of Sinclair’s Midcon pipeline system, Sinclair will provide a copy of this Agreement to the prospective transferee at least 30 days prior to such transfer. Sinclair will provide written notice of the transfer to the PHMSA Central Regional Director no later than 60 days after the transfer occurs.#

320205020_Consent Agreement and Order_02052021_text.pdf, page 58. This Agreement does not waive or modify any Federal, State, or local laws or regulations that are applicable to Respondent’s pipeline systems. This Agreement is not a permit, or a modification of any permit, under any Federal, State, or local laws or regulations. Sinclair remains responsible for achieving and maintaining compliance with all applicable Federal, State, and local laws, regulations and permits. 9. This Agreement does not create rights in, or grant any cause of action to, any third party not party to this Agreement. The U.S. Department of Transportation is not liable for any injuries or damages to persons or property arising from acts or omissions of Respondent or its officers, employees, or agents carrying out the work required by this Agreement. Sinclair agrees to hold harmless the U.S. Department of Transportation, its officers, employees, agents, and representatives from any and all causes of action arising from any acts or omissions of Respondent or its contractors in carrying out any work required by this Agreement. 10. Upon issuance of the Consent Order, the Parties agree to the following terms. II. Item 1 of the Notice: 12. Allegation of Violation - § 195.260(e): With respect to Item 1 of the Notice, the Director, Central Region, has reviewed additional information provided by Sinclair and determined that this Item should be reduced to a warning item. Sinclair provided PHMSA with an Emergency Flow Restricting Device (EFRD) study that supported Sinclair’s contention that the location of the valves are consistent with the requirements of the regulation. As such, the allegation of violation for Item 1 and the related compliance order associated with this Item are withdrawn. III. Item 2 of the Notice: 13. Allegation of Violation - § 195.412(a): With respect to Item 2 of the Notice, the Parties agree that Sinclair violated 49 C.F.R. § 195.412(a), as alleged in the Notice, for four of the nine instances of violation alleged and shall be considered by PHMSA as a prior offense in any future PHMSA enforcement action taken against Sinclair. In addition, the Director, Central Region has reviewed additional documentation provided by Sinclair and has determined that Sinclair has completed the corrective action detailed in the Proposed Compliance Order of the Notice. Accordingly, the compliance order associated with this Item is withdrawn. 14. Civil Penalty: With respect to Item 2 of the Notice, the Parties agree that the Civil Penalty is reduced from $97,100 to $67,700. The reduction the civil penalty is supported by the reduction in instances of violation from nine to four. Sinclair must pay the civil penalty in the amount of $67,700 no later than 30 days from the Effective Date of this Agreement. IV. Enforcement 15. This Agreement is subject to all enforcement authorities available to PHMSA under 49 U.S.C. § 60101, et seq., and 49 C.F.R. Part 190, including administrative civil penalties under 49 U.S.C. § 60122, of up to $200,000 per violation for each day the violation continues and referral of the case to the Attorney General for judicial enforcement, if PHMSA determines that Respondent is not complying with the terms of this Agreement in accordance with determinations#

320205020_Consent Agreement and Order_02052021_text.pdf, page 6made by the Director, or if appealed, in accordance with decisions of the Associate Administrator. The maximum civil penalty amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties, 82 Fed. Reg. 19325 (April 27, 2017). V. Effective Date 16. The term “Effective Date,” as used herein, is the date on which the Consent Order is issued by the Associate Administrator, PHMSA, incorporating the terms of this Agreement. VI. Modification 17. The terms of this Agreement may be modified by mutual agreement of the Parties. Such modifications must be in writing and signed by both parties. VIII. Ratification 19. The Parties’ undersigned representatives certify that they are fully authorized to enter into the terms and conditions of this Agreement and to execute and legally bind such party to this document. 20. The Parties hereby agree to all conditions and terms of this Agreement. For Sinclair Transportation Company: ___________________________________ ________________________ Date For PHMSA: ___________________________________ Region Director January 4, 2021________________ Date#