FLINT HILLS RESOURCES PINE BEND, LLC — Notice of Probable Violation

case documentOfficial PDF320205021_NOPV PCP_12152020.pdf#

case documentOfficial PDF320205021_NOPV PCP_12152020_text.pdf#

party submissionOfficial PDF320205021_Operator Petition for Reconsideration_09112021_(19-166915S).pdf#

party submissionOfficial PDF320205021_Operator Response to Notice_01142021.pdf#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 1Official PDFAugust 23, 2021 VIA ELECTRONIC MAIL TO: jeff.ramsey@fhr.com Mr. Jeff Ramsey President and Chief Executive Officer Flint Hills Resources, LLC 4111 E. 37th Street North Wichita, Kansas 67220 Re: CPF No. 3-2020-5021 Dear Mr. Ramsey: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation and assesses a reduced civil penalty of $19,000. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon receipt of payment. Service of the Final Order by certified mail is effective upon the date of mailing as provided under 49 C.F.R. § 190.5. Service of the Final Order by electronic mail is effective upon the date of transmission as 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 cc: Mr. Gregory Ochs, Director, Central Region, Office of Pipeline Safety, PHMSA Ms. Kimberly A. Gerold, Manager, Pipeline Safety, Flint Hills Resources, LLC, kim.gerold@fhr.com Mr. James B. Curry, Babst Calland, Counsel for Flint Hills Resources, LLC, jcurry@babstcalland.com CONFIRMATION OF RECEIPT REQUESTED#

320205021_Final Order_08232021_(19-166915S)_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 ) ) Flint Hills Resources, LLC, ) CPF No. 3-2020-5021 ) Respondent. ) ____________________________________) FINAL ORDER From March 6, 2019, through August 16, 2019, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted a pipeline safety inspection of Flint Hills Resources, LLC’s (FHR or Respondent) procedures, records, and facilities in Minnesota and Wisconsin. FHR transports crude oil, natural gas liquids, and refined products through more than 4,000 miles of pipeline, traversing six states.1 As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated December 15, 2020, a Notice of Probable Violation and Proposed Civil Penalty (Notice), which also included three warnings pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that FHR had committed two violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $38,300 for the alleged violations. The warning items required no further action, but warned the operator to correct the probable violations or face possible future enforcement action. FHR responded to the Notice by letter dated January 12, 2021 (Response). FHR contested one of the allegations requesting withdrawal of the allegation and the associated civil penalty, requested a re-examination of the civil penalty for the other allegation, and offered additional information. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: 1 See, FHR, Products and Services, Pipelines, website, available at https://www.fhr.com/products-services/pipeline (last accessed July 30, 2021).#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 3CPF No. 3-2020-5021 Page 2 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.403, which states in relevant part: § 195.403 Emergency response training. (a) . . . (b) At the intervals not exceeding 15 months, but at least once each calendar year, each operator shall: (1) Review with personnel their performance in meeting the objectives of the emergency response training program set forth in paragraph (a) of this section; and . . . The Notice alleged that Respondent violated 49 C.F.R. § 195.403(b)(1) by failing to review with personnel, during calendar year 2016, their performance in meeting the objectives of its emergency response training program. Specifically, the Notice alleged that during the inspection, FHR’s Emergency Response Manager stated that reviews of the Emergency Plan had been completed on the following dates: December 27, 2014; December 30, 2015; April 25, 2017; and December 4, 2017. FHR’s Emergency Response Manager further acknowledged that no review has been completed for calendar year 2016. In its Response, FHR did not contest this alleged violation, indicating that it recognized that the company failed to conduct the annual review of its emergency response training program in 2016 or within 15 months of the December 30, 2015 review. However, as discussed in more detail below in the assessment of penalty of this item, FHR requested a reduction to the proposed civil penalty amount. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.403(b)(1) by failing to review with personnel their performance in meeting the objectives of the emergency response training set forth in § 195.403(a) at least once each calendar year, but at intervals not exceeding 15 months. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.412, which states in relevant part: § 195.412 Inspection of rights-of-way and crossing under navigable waters. (a) Each operator shall, at intervals not exceeding 3 weeks, but at least 26 times each calendar year, inspection 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. The Notice alleged that Respondent violated 49 C.F.R. § 195.412(a) by failing to inspect the surface conditions on or adjacent to each pipeline right-of-way at intervals not exceeding 3 weeks, but at least 26 times each calendar year. Specifically, the Notice alleged that FHR used aerial patrolling, but neither maintained the pipeline right-of-way conditions at a level that is appropriate for aerial patrolling nor selected an alternate patrol method that would allow effective patrols based on the condition of the right-of-way for the period from January 1, 2019,#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 4CPF No. 3-2020-5021 Page 3 through August 14, 2019, at the following two locations: east of County Road Z in Pepin Country, Wisconsin, and at mile post 182, near Stevens Point, Wisconsin. The Notice also alleged that during the inspection, OPS observed excessive vegetation cover over the right-of- way at these two locations, which would make it impossible to complete effective aerial patrols of the right-of-way. In support of its observation, OPS provided one photograph taken in Stevens Point, Wisconsin and a Google Earth image of County Road Z in Pepin County, Wisconsin.2 In its Response, FHR contested this allegation of violation and requested that PHMSA withdraw the alleged violation. Respondent contended that PHMSA has not met its burden of proof to establish a violation of § 195.412(a) occurred, and that the photographic evidence submitted by OPS fails to prove that there was excessive vegetation obscuring the surface conditions of the right-of-way during aerial patrol. Respondent further contended that the aerial patrol records submitted by OPS do not substantiate a violation of § 195.412(a); instead, they demonstrate that right-of-way was sufficiently clear to perform aerial patrols. Section 195.412(a) requires each operator to inspect the surface conditions on or adjacent to each pipeline right-of-way at intervals not exceeding 3 weeks, but at least 26 times each calendar year. Methods of inspection specified by the regulation include walking, driving, flying or other appropriate means of traversing the right-of-way. The purpose of this regulation is to “ensure that operators regularly inspect the surface conditions of their pipeline rights-of-way, by appropriate means, in order to detect encroachments and various other threats to the integrity of their facilities.”3 If an operator cannot view surface conditions using aerial patrols, then flying is not a method that achieves compliance with § 195.412(a).4 In this case, there are two locations at issue for this alleged violation: (1) east of County Road Z in Pepin County, Wisconsin; and (2) mile post 182, near Stevens Point, Wisconsin, between Wisconsin River and West River Drive. I will discuss each in turn. For the first location, OPS submitted a May 2018 Google Earth image of County Road Z in Pepin County and FHR’s aerial patrol records as evidence to support this instance of an alleged violation.5 As Respondent correctly notes, OPS bears the burden of proof in demonstrating that an operator violated the pipeline safety regulations. Having reviewed the evidence, I find that OPS did not carry its burden for this instance of a violation. While OPS may submit a Google Earth image as evidence to support an allegation of violation, in this case, the allegation is based solely on a Google Earth image that predates OPS’ inspection and does not prove the condition of the right-of-way during the alleged period of non-compliance from January 1, 2019, through August 14, 2019. Without any other evidence proving the surface condition of the right-of-way 2 Pipeline Safety Violation Report (Violation Report), Evidence Exhibit A. 3 In The Matter of Nustar Energy, LP, CPF No. 3-2007-5002, Final Order (issued Feb. 5, 2009) (emphasis in original). 4 In the Matter of Plains Pipeline, LP, CPF No. 4-2016-5015, Final Order (issued Mar. 7, 2018). 5 Violation Report, Evidence Exhibit A.#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 5CPF No. 3-2020-5021 Page 4 during the alleged period of non-compliance, the aerial patrol records submitted by OPS simply show that FHR performed the aerial patrols within the requisite intervals. OPS has presented no other evidence demonstrating that FHR failed to maintain the pipeline right-of-way condition at the location east of County Road Z from January 1, 2019, through August 14, 2019, at a level that was not appropriate for aerial patrolling. For the second location, in support of its claim that it observed excessive vegetation cover at the right-of-way, OPS submitted a photograph taken of mile post 182, near Stevens Point, Wisconsin, between Wisconsin River and West River Drive. Respondent contends that the photograph shows a “visible line marker and ample sky, suggesting that the right-of-way could be seen by the pilot performing an aerial patrol at this location.”6 However, I disagree. While the photograph shows a line marker in the foreground and an open sky beyond the tree line, I find that the photograph also shows excessive vegetation, specifically brush and overgrown grass, immediately behind the line marker along the right of way at that location such that an aerial patrol at this location would not have been an appropriate means to observe the surface conditions of the right-of-way. In this case, the excessive vegetation is not limited to tree canopy in the background of the photograph, which Respondent claims is not on the right-of-way. Respondent further contends that while the aerial patrol records tended to show that the right-of- way was clear because of the lack of reported excessive vegetation cover, they also showed that the pilot patrolling the pipeline was attentive to reporting vegetation conditions when they were present.7 Without discrediting the pilot for his attention to and reporting of vegetation conditions near and along the right-of-way at the location roughly 0.2 miles south of the location at issue, such evidence is unpersuasive to the location at issue for this instance of violation. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.412(a) by failing in one instance to inspect the surface conditions on or adjacent to the right-of-way where excessive vegetation cover on the right-of-way precluded inspection of the pipeline surface conditions by aerial patrol. The Assessment of Penalty below will reflect a reduction to account for only one of the two alleged instances of violation having been proven. These findings of violation will be considered prior offenses 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.8 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I 6 Response, at 8. 7 Response, at 9. 8 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 6CPF No. 3-2020-5021 Page 5 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; any effect that the penalty may have on its ability to continue doing business; the good faith of Respondent in attempting to comply with the pipeline safety regulations; and self-disclosure or actions to correct a violation prior to discovery by PHMSA. 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 $38,300 for the violations cited above. Item 1: The Notice proposed a civil penalty of $19,000 for Respondent’s violation of 49 C.F.R. § 195.403(b)(1) for failing to review with personnel, during calendar year 2016, their performance in meeting the objectives of FHR’s emergency response training program. Respondent did not contest the allegation of violation but argued the penalty should be reduced based on the culpability penalty assessment criterion because the company discovered and corrected the violation before it was discovered by PHMSA. Respondent also argued that pipeline safety was minimally affected during the period after the 2016 review interval had passed and that the duration of the violation was four months, and not the two and half years cited in the Violation Report. Respondent further argued that based on PHMSA’s Pipeline Safety Enforcement Procedures (Enforcement Procedures)9 and the Department of Transportation’s regulations in 49 CFR Part 5 (now rescinded), PHMSA should further reduce the penalty assessment. With regard to culpability argument, FHR contended that upon learning that the company had missed the required emergency response training review in 2016, it took prompt action to conduct the required review in April 2017.10 In support of its contention, Respondent provided a work order demonstrating that the emergency response training review was completed on April 25, 2017.11 Respondent also asserted that since missing the required review in 2016, it has since conducted the emergency response training reviews at the requisite intervals pursuant to § 195.403(b)(1). The Notice and evidence support this position by showing that FHR completed the required review for calendar year 2017. Moreover, the record shows Respondent performed two emergency response training reviews in 2017. While Respondent missed the required review for calendar year 2016, it completed four emergency response training reviews in the four years from 2014 to 2017, which is the required amount of reviews for that period. Respondent’s decision to perform a review in April 2017, and then a subsequent review in December 2017, demonstrates that Respondent took documented action in April 2017 to correct a non-compliance before PHMSA discovered the violation. Having considered the arguments raised by Respondent, I find that FHR found the non-compliance, took documented action to address the cause of the non-compliance, and corrected the non-compliance before PHMSA learned of the violation. As such, I find a reduction in penalty is warranted under the culpability criterion. 9 PHMSA, Pipeline Safety Enforcement Procedures, at § 3.1.1.4 (Sept. 15, 2020), available at https://www.phmsa.dot.gov/pipeline/enforcement/pipeline-enforcement-procedures. 10 Response, at 2. 11 Response, Attachment 1.#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 7CPF No. 3-2020-5021 Page 6 With regard to Respondent’s additional arguments, pipeline safety being minimally affected has already been considered under the gravity criterion.12 Additionally, while FHR noted that it had remedied the non-compliance in April 2017, four months after the non-compliance occurred, this does not serve to change the penalty amount, as the duration of the violation remains greater than 10 days for penalty assessment purposes. As for Respondent’s citation to PHMSA’s Enforcement Procedures, the purpose of those procedures is to provide PHMSA personnel with guidance on implementation of PHMSA’s enforcement program. The Enforcement Procedures do not bind PHMSA to any particular course of action and do not mandate that PHMSA consider any penalty assessment criteria other than those required by statute and regulation.13 Furthermore, the provisions of 49 CFR Part 5 cited by Respondent have been rescinded. Even before they were rescinded, they did not create any right or benefit, substantive or procedural, enforceable at law or in equity to any party.14 Accordingly, neither the Enforcement Procedures nor the rescinded Part 5 regulations require further reduction to the civil penalty. Accordingly, having reviewed the record and the assessment criteria, and based upon a finding that a culpability credit is warranted, the civil penalty assessed is reduced to $0 for the violation of 49 C.F.R. § 195.403(b)(1). Item 3: The Notice proposed a civil penalty of $19,300 for Respondent’s alleged violation of 49 C.F.R. § 195.412(a), for failing to inspect the surface conditions on or adjacent to the right-of- way where excessive vegetation cover on the right-of-way precluded inspection of the pipeline surface conditions by aerial patrol. Respondent requested that the penalty be eliminated consistent with statutory factors, as well as PHMSA’s Enforcement Procedures and the Department of Transportation’s regulations in 49 CFR Part 5. As discussed above, I withdrew the instance of violation associated with the right-of-way east of County Road Z in Pepin County, Wisconsin, which results in a reduction to the proposed civil penalty. As for the remaining instance of violation associated with the right-of-way at mile post 182, with respect to the nature and circumstances of the violation, inspection the surface conditions on or adjacent to each pipeline right-of-way is a routine pipeline maintenance activity. With respect to gravity, the civil penalty assessment already considered that pipeline safety was minimally affected. With respect to culpability and good faith, Respondent’s failure to inspect the surface conditions on or adjacent to the right-of-way at mile post 182 was not consistent with the purpose of the regulation, which is an added means of detecting threats and monitoring and minimizing the risk of a pipeline failure. Furthermore, nothing in the record would indicate that the proposed civil penalty amount would impact Respondent’s ability to continue in business. Respondent has not presented any information or arguments that would warrant a reduction in the civil penalty amount proposed in the Notice for the one remaining instance of violation. Finally, for the reasons discussed under Item 1, the penalty will not be further reduced based on the PHMSA Enforcement Procedures or the Part 5 regulations. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a reduced civil penalty of 12 Violation Report, at 8. 13 49 U.S.C. 60122; 49 CFR § 190.225. 14 See Enforcement Procedures, Section 3, page 1; 86 Fed. Reg. 17,292 (Apr. 2, 2021); and 49 CFR § 5.111 (2020).#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 8CPF No. 3-2020-5021 Page 7 $19,000 for the one instance of violation of 49 C.F.R. § 195.412(a). 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 $19,000. 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, Mike Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the $19,000 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. WARNING ITEMS With respect to Items 2, 4 and 5, the Notice alleged probable violations of Part 195, but identified them as warning items pursuant to § 190.205. The warnings were for: 49 C.F.R. § 195.410(a)(1) (Item 2) ─ Respondent’s alleged failure to maintain line markers as required at certain locations in Wisconsin. PHMSA observed a lack of sufficient line markers at two locations so that the location of the pipeline could be accurately known. 49 C.F.R. § 195.428(d) (Item 4) ─ Respondent’s alleged failure to complete the annual overfill protection system inspection for Tank 541 at the Milwaukee Terminal in 2015; and 49 C.F.R. § 195.452(l)(1)(ii) (Item 5) ─ Respondent’s alleged failure to maintain records of the decisions and analysis for the periodic evaluation of pipeline integrity in 2018. If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final Order to the 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, no later than 20 days after receipt of service of the#

320205021_Final Order_08232021_(19-166915S)_text.pdf, page 9CPF No. 3-2020-5021 Page 8 Final Order by Respondent. Any petition submitted must 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. The other terms of the order, including any corrective action, remain in effect unless the Associate Administrator, upon request, grants a stay. If Respondent submits payment of the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. August 23, 2021 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 1Official PDFJanuary 18, 2022 VIA ELECTRONIC MAIL TO: jeff.ramsey@fhr.com Mr. Jeff Ramsey President and Chief Executive Officer Flint Hills Resources, LLC 4111 E. 37th Street North Wichita, Kansas 67220 Re: CPF No. 3-2020-5021 Dear Mr. Ramsey: Enclosed is the Decision on the Petition for Reconsideration issued in the above-referenced case. For the reasons explained therein, the Decision denies your Petition and affirms Item 3 and the associated Civil Penalty of the August 23, 2021 Final Order. This Decision constitutes the final administrative action in this proceeding. Service of this Decision by electronic mail is effective upon the date of transmission as 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 cc: Mr. Gregory Ochs, Director, Central Region, Office of Pipeline Safety, PHMSA Ms. Kimberly A. Gerold, Manager, Pipeline Safety, Flint Hills Resources, LLC, kim.gerold@fhr.com Mr. James B. Curry, Babst Calland, Counsel for Flint Hills Resources, LLC, jcurry@babstcalland.com CONFIRMATION OF RECEIPT REQUESTED#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_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 ) ) Flint Hills Resources, LLC, ) CPF No. 3-2020-5021 ) Respondent. ) ____________________________________) DECISION ON PETITION FOR RECONSIDERATION In an August 23, 2021 Final Order, the Pipeline and Hazardous Materials Safety Administration (PHMSA or Agency) determined that Flint Hills Resources, LLC, (FHR or Petitioner) had committed two violations of 49 C.F.R. Part 195 following an inspection by the Office of Pipeline Safety (OPS) of FHR’s procedures, records, and pipeline facilities in Minnesota and Wisconsin and assessed a civil penalty of $19,000 for the violations.1 On September 11, 2021, FHR filed a Petition for Reconsideration pursuant to 49 C.F.R. § 190.243 (Petition). The Petition requested that PHMSA reconsider its finding in Item 3 of the Final Order that FHR had violated 49 C.F.R. § 195.412(a) for failing to inspect the surface conditions on or adjacent to the right-of-way where excessive vegetation cover on the right-of-way precluded inspection of the pipeline surface conditions by aerial patrol at mile post 182, near Stevens Point, Wisconsin (MP 182). After consideration of the arguments and record in this case, the Petition is denied, and Item 3 of the Final Order is affirmed. Background From March 6, 2019 through August 16, 2019, pursuant to 49 U.S.C. § 60117, a representative of OPS conducted a pipeline safety inspection of the facilities, procedures, and records of FHR’s pipeline facility from the Pine Bend Refinery to the Milwaukee and Madison terminals. As a result of the inspection, the Director, Central Region, OPS (Director), issued to FHR, by letter dated December 15, 2020, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that FHR had committed two violations of 49 C.F.R. Part 195, proposed assessing a civil penalty of $38,300 for the alleged violations, and included an additional three warning items which required no further action but warned FHR to correct the probable violations or face possible future enforcement action. 1 Flint Hills Resources, LLC, Final Order, CPF No. 3-2020-5021, 2021 WL 4055259, at *1 (Aug. 23, 2021) (Final Order).#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 3CPF No. 3-2020-5021 Page 2 FHR responded to the Notice by letter dated January 12, 2021 (Response). FHR requested withdrawal of one of the allegations and the associated civil penalty and offered additional information and requested re-examination of the civil penalty for the other allegation. FHR did not request a hearing and therefore waived its right to one. On August 23, 2021, pursuant to 49 U.S.C. §§ 60118 and 60122 and 49 C.F.R. § 190.213, the Associate Administrator for Pipeline Safety issued a Final Order finding that FHR had committed a violation of 49 C.F.R. § 195.403(b)(1) (Item 1), with respect to its emergency response training reviews, and 49 C.F.R. § 195.412(a) (Item 3), with respect to its right-of-way inspections at MP 182. Specifically, Item 1 of the Final Order found that FHR had failed to review with personnel their performance in meeting the objectives of the emergency response training set forth in § 195.403(a) at least once each calendar year, but at intervals not exceeding 15 months, as required by § 195.403(b)(1). Item 3 of the Final Order found that FHR violated § 195.412(a) when it failed to inspect the surface conditions on or adjacent to the right-of-way where excessive vegetation cover on the right-of-way precluded inspection of the pipeline surface conditions by aerial patrol. While the Notice had alleged two instances of this violation, the Final Order withdrew one instance of the alleged violation of § 195.412(a) for insufficient evidence. Pursuant to the authority of 49 U.S.C. § 60122 and 49 C.F.R. § 190.221, the Final Order assessed a civil penalty of $19,000 for the violations. The Final Order reduced the civil penalty for Item 1 from $19,000 to $0 after considering FHR’s actions in light of the assessment considerations in 49 C.F.R. § 190.225. Specifically, the Final Order found that FHR had identified and addressed the non-compliance before PHMSA learned of the violation. Therefore, a penalty reduction was warranted under the culpability criterion. The Final Order also reduced the civil penalty for Item 3 from $19,300 to $19,000. This reduction was commensurate with withdrawing one instance of the alleged violation. On September 11, 2021, FHR filed a Petition for Reconsideration pursuant to 49 C.F.R. § 190.243 (Petition). In its Petition, FHR seeks reconsideration of Item 3 in the Final Order and the accompanying Civil Penalty. FHR presents two grounds for reconsideration. First, FHR contends that PHMSA did not meet its burden of proof regarding the violation of § 195.412(a) that occurred at MP 182. Second, FHR contends that the Final Order should be set aside for policy reasons and alleges that the Final Order creates uncertainty for pipeline operators who use aerial patrols to inspect rights-of- ways. On September 17, 2021, the Central Region (Region) filed a Motion for Leave to File Response to Petition for Reconsideration of Final Order (Region Response). The Region requested that the Petition be denied in full because FHR’s arguments had already been considered in the Final Order and FHR introduced new evidence and advanced new arguments without sufficient justification.#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 4CPF No. 3-2020-5021 Page 3 On October 4, 2021, FHR filed a Motion for Leave to File Reply to Central Region’s Response (Reply). In its Reply, FHR again requested that PHMSA withdraw Item 3 and the associated Civil Penalty and asserted that its new arguments were necessary in light of the analysis in the Final Order. Standard of Review Section 190.243 allows a respondent to petition the Associate Administrator for reconsideration of a final order that has been issued pursuant to § 190.213. Reconsideration is not an appeal or a completely new review of the record. A respondent may ask for correction of an error or, in limited circumstances, may present previously unavailable information. If a respondent requests consideration of additional facts or arguments, the respondent must submit the reasons they were not presented prior to the issuance of the final order. Repetitious information or arguments will not be considered.2 The Associate Administrator may grant or deny, in whole or in part, a petition for reconsideration without further proceedings. Additional Facts and Repetitious Arguments In its Petition, FHR reiterates arguments from its Response, presents additional facts and arguments, and asserts that these facts and arguments should be considered on reconsideration.3 In its Region Response, the Region argues first, that the reiterated arguments should not be considered because they were taken into account earlier in the enforcement proceeding, and second, that the additional facts and arguments should not be considered because FHR fails to provide a valid justification as to why they were not presented prior to the issuance of the Final Order.4 In its Reply, FHR states that the need for the additional information only became evident after issuance of the Final Order because PHMSA erred in its evaluation of the burden of proof.5 When a petition is repetitious of the record or presents new arguments and evidence without valid reason, the additional information need not be considered.6 In justifying its presentation of new information, FHR states that it is providing additional detail and arguments that it did not provide earlier “because it believed that the evidence in the case demonstrated that PHMSA did 2 Plains All American Pipeline, LP, (Plains), Decision on Reconsideration, CPF No. 5-2009-00118, 2013 WL 5883403, at *3 (Aug. 30, 2013) (stating that the right to petition the Associate Administrator for reconsideration is a limited one and repetitious information or arguments will not be considered). 3 Motion for Leave to File Reply to Central Region’s Response (Reply to Central Region’s Response), at 2–3 (Oct. 4, 2021). 4 Central Region’s Motion for Leave to File Response to Petition for Reconsideration of Final Order, at 2 (Sept. 17, 2021) (Central Region’s Response). 5 Reply to Central Region’s Response, at 1. 6 Plains, at *3; see also TPM, Inc., Decision on Petition for Reconsideration, CPF No. 2-2010-6007, 2012 WL 6184434, at *2 (Oct. 12, 2012).#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 5CPF No. 3-2020-5021 Page 4 not meet its burden of proof.”7 FHR supports this argument by citing to four decisions on reconsideration where they say PHMSA considered new arguments to determine whether the burden of proof had been carried.8 FHR’s citation to other decisions is not a valid justification for raising new details and arguments they had access to all along and glosses over the fact- specific nature of each case. FHR asserts that the new information is needed because the Final Order’s analysis of the burden of proof was flawed. But, by introducing new details and arguments in its Petition, FHR concedes that it did not present its full case at a stage of the proceeding where it could have been used to assist in final review of the issues. FHR should have raised all arguments prior to the issuance of the Final Order to assist in developing the record prior to final review. Alternatively, the Petition should have stated case- specific reasons, beyond dissatisfaction with the outcome of the Final Order, that the new information was not previously made available. Stating that the new information is necessary because the Final Order did not adopt the position in FHR’s Response is not enough. The reconsideration stage is a limited one and while FHR has appropriately asked for correction of an error, it has not justified the consideration of new evidence to determine whether an error was made. Therefore, I find reason to deny the petition on these grounds. Notwithstanding this finding, I have considered the information and arguments submitted by FHR and further find no basis to alter the finding of violation in Item 3. Analysis for Item 3 The Final Order found FHR violated 49 C.F.R. § 195.412, which states: § 195.412 Inspection of rights-of-way and crossing 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. The Final Order found that FHR violated § 195.412(a) by failing to inspect the surface conditions on or adjacent to its right-of-way. Specifically, it found that Respondent had used aerial patrolling to inspect its pipeline right-of-way, but excessive vegetation cover on the right- of-way at MP 182 precluded inspection of the surface conditions by aerial patrol. Evidence supporting the violation included a photograph of the right-of way taken at MP 182, near Stevens Point, Wisconsin, between Wisconsin River and West River Drive. As noted above, FHR presents two grounds for reconsideration. First, FHR contends that PHMSA did not meet its burden of proof regarding the violation of § 195.412(a) that occurred at 7 Petition for Reconsideration, at 2 (Sept. 11, 2021) (Petition). 8 Reply to Central Region’s Response, at n.1.#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 6CPF No. 3-2020-5021 Page 5 MP 182. Second, FHR contends that the Final Order should be set aside for policy reasons and alleges that the Final Order creates uncertainty for pipeline operators who use aerial patrols to inspect rights-of-ways. I. Burden of Proof Throughout these proceedings, FHR has asserted that PHMSA’s evidence, consisting of a photograph of the right-of-way at MP 182, fails to meet the burden of proof that PHMSA must carry. Specifically, FHR contends that the photographic evidence submitted by PHMSA does not establish that there was excessive vegetation obscuring the surface conditions of the right-of- way at MP 182, such that aerial patrol was an inappropriate method of inspection.9 FHR notes that PHMSA had the burden of proof, the burden of presentation, and the burden of persuasion in this enforcement matter.10 FHR alleges that because the regulation is performance-based, PHMSA has an additional burden of proving why the method chosen by the operator was not effective to establish compliance.11 In order to find that FHR violated § 195.412(a) as alleged in the Notice, PHMSA must determine, by a preponderance of the evidence, that Respondent failed to inspect the surface conditions of its right-of-way at MP 182.12 Aerial patrols, the method selected by FHR to inspect its right-of-way, are a permissible method of right-of-way inspections if the operator can view surface conditions while flying.13 If the operator could not view surface conditions while conducting aerial patrols, then the operator’s inspections were not in compliance with § 195.412(a). After reviewing the evidence, I find that PHMSA appropriately found FHR violated § 195.412(a) based on the photograph of the right-of-way. 9 Pipeline Safety Violation Report (Violation Report), Evidence Exhibit A (A-Photographs of right-of-way). 10 49 U.S.C. § 60117(b)(1)(F). 11 Petition, at 1–2. FHR asserts that 49 C.F.R. § 195.412(a) is a performance-based regulation. Section 195.412(a) has two components: a timing component and a methods of inspection component. The timing component is prescriptive and not at issue in the present matter. The method of inspection component provides operators with flexibility in determining how they will carry out right-of-way inspections, so long as the method chosen is appropriate. The method component of § 195.412(a) may be considered performance-based because it allows the operator to select the method that they deem most appropriate to carry out the inspections. However, the validity of FHR’s assertion that § 195.412(a) is a performance-based regulation does not change the burden of proof standard. 12 See, e.g., Express Holdings (USA), LLC, a subsidiary of Enbridge, Inc., Decision on Reconsideration, CPF No. 3-2020-5005, 2021 WL 4055257, at **4–5 (July 26, 2021) (finding that the preponderance of the evidence in the proceeding supported the finding in the Final Order); see also Sunoco Pipeline, LP, a subsidiary of Energy Transfer, LP, Final Order, CPF No. 1-2019-5006, 2020 WL 6955633, at *3 (June 26, 2020); Centurion Pipeline, LP, a subsidiary of Lotus Midstream, LLC, Decision on Petition for Reconsideration, CPF No. 4-2014-5028, 2019 WL 4257142, at *4 (June 27, 2019); Citgo Pipeline Co., Decision on Reconsideration, CPF No. 4-2007-5010, 2011 WL 7517716, at *5 (Dec. 29, 2011). 13 Plains Pipeline, LP, Final Order, CPF No. 4-2016-5015, 2018 WL 2229413 (Mar. 7, 2018) (stating that “[I]f an operator cannot view surface conditions using aerial patrols, then flying is not a method that achieves compliance with the regulation.”).#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 7CPF No. 3-2020-5021 Page 6 a. Trees in the Right-of-Way First, FHR argues that PHMSA has failed to demonstrate how the trees in the photograph prevented FHR’s aerial patrols from inspecting the surface conditions of the right-of-way and that, therefore, PHMSA erred when it found that the trees obscured the right-of-way.14 However, FHR misstates the finding in the Final Order. PHMSA did not find that trees obscured the right- of-way. Rather, the Final Order states: “[W]hile the photograph shows a line marker in the foreground and an open sky beyond the tree line, I find that the photograph also shows excessive vegetation, specifically brush and overgrown grass, immediately behind the line marker along the right-of-way at that location such that an aerial patrol at this location would not have been an appropriate means to observe the surface conditions of the right-of-way. In this case, the excessive vegetation is not limited to tree canopy in the background of the photograph, which Respondent claims is not on the right of way.”15 PHMSA did not find a violation of § 195.412(a) at MP 182 because of trees in the right-of-way. Therefore, PHMSA rejects this argument by FHR. b. Grass and Brush in the Right-of-Way Second, FHR newly argues that the grass and brush was not excessive because the pipeline marker is visible in the photograph and activities and conditions listed in PHMSA’s O&M Enforcement Guidance (Guidance) could be viewed at the location by aerial patrol.16 Contrary to FHR’s position, the fact that the pipeline right-of-way marker is visible in the photograph is not indicative of whether the excessive vegetation prevented FHR from inspecting its right-of-way. The right-of-way marker is in the foreground of the photo and the Final Order states that the excessive vegetation is located immediately behind the marker on the right-of- way. The fact that the marker is visible in the photo does not preclude finding the vegetation behind the marker is excessive. FHR argues that the vegetation is not excessive because it would not prevent the pilot conducting aerial patrol inspections from observing the activities and conditions that the Guidance notes should be observable by patrol programs.17 However, that is not the case. FHR does not address 14 Petition, at 4–5. 15 Final Order, at 4. 16 Petition, at 5. 17 Id.#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 8CPF No. 3-2020-5021 Page 7 all of the activities that the Guidance lists. Namely, that the patrol program should be able to observe the presence of “marking flags, ribbon, or paint on or near the (right-of-way).”18 The PHMSA photo shows brush and overgrown grass that would obscure these markings from an aerial patrol inspection of the surface conditions due to the vegetation’s height and density. Further, the patrol program should be able to observe the presence of leaks on the right-of-way.19 The PHMSA photo shows dense brush and overgrown grass that obscures the surface conditions such that an aerial patrol inspection would be unable to observe product, sheen, or other evidence of a leak on the surface of the right-of-way. Additionally, the Guidance on § 195.412(a) explicitly calls out excessive vegetation obscuring the right-of-way as a surface condition that the inspection program should include.20 The Final Order did not err when it found that FHR violated § 195.412(a) by failing to inspect the surface conditions of its right-of-way at MP 182 where the brush and overgrown grass prevented inspection by the aerial method of patrols utilized. c. Evidence Submitted by FHR Third, FHR contends that the Final Order erred because the Final Order should have found that the evidence offered in its Response was persuasive to rebut the allegation of violation. The Final Order considered the evidence offered by FHR against the evidence offered by PHMSA and concluded that, taken together, the evidence supported a finding that FHR had violated § 195.412(a) at MP 182. The issue of material fact in this case is whether there was excessive vegetation at MP 182 that prevented aerial patrols from observing the surface conditions of the right-of-way. The evidence presented by PHMSA is the photograph taken by a PHMSA inspector that shows the right-of-way at MP 182. The evidence presented by FHR includes a pilot’s affidavit, pilot’s report, and aerial photographs of the right-of-way. In its analysis, the Final Order correctly points out that the pilot’s report and affidavit are not persuasive as to whether there was excessive vegetation on the right-of-way at MP 182. FHR argues that because the pilot attests to being appropriately trained and attentive to vegetative conditions on the right-of-way, he would have identified excessive vegetation at MP 182 in his reports if it existed.21 FHR then points to his reports and the lack of notation of excessive vegetation at MP 182 as evidence that the right-of-way was indeed free of excessive vegetation. 18 Operations and Maintenance Enforcement Guidance, Part 195 Subpart F, § 195.412, Guidance Information 2(d), o-m-enforcement-guidance-part-195-7-21-2017.pdf (dot.gov) (last accessed Dec. 21, 2021). 19 Id., at Guidance Information 2(a). 20 Id., at Guidance Information 2(l). 21 Operator Response to Notice of Probable Violation and Proposed Civil Penalty, Flint Hills Resources, LLC, CPF No. 3-2020-5021, Affidavit of Tom Dean, ¶ 7, 9 (Jan. 13, 2021) (Response).#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 9CPF No. 3-2020-5021 Page 8 However, I affirm the Final Order, which found that evidence of the condition of other locations and the pilot’s general training is not as persuasive regarding whether there was excessive vegetation at MP 182 compared to the photograph of MP 182 that shows excessive vegetation. In short, evidence of the pilot’s training and actions at other locations does not outweigh the photographic evidence of excessive vegetation on the right-of-way at MP 182. FHR also submitted two aerial photographs of the right-of-way route to prove that the trees in the background of PHMSA’s photo did not cover the right-of-way. These photographs do not outweigh PHMSA’s evidence because the Final Order found that the excessive vegetation that prevented inspection was brush and overgrown grass, rather than trees. 22 A third image submitted by FHR shows a different location where the pilot had spotted and reported vegetation on the right-of-way. This photo, like the reports and affidavit discussed above, is indicative of the condition of the right-of-way at another location but is not persuasive regarding the conditions at MP 182. Therefore, the Final Order correctly found that PHMSA’s evidence outweighs FHR’s evidence and demonstrates that there was excessive vegetation on the right-of way at MP 182 which prevented FHR from inspecting the surface conditions by aerial patrols. II. Policy Implications Finally, FHR asserts that the Final Order should be set aside because it creates “substantial policy concerns” and FHR suggests that if the Final Order is affirmed it will mean that PHMSA may assert that any amount of vegetation on a right-of-way is excessive.23 Specifically, FHR states that if PHMSA does not withdraw the violation, operators will be forced to forgo the use of aerial patrols and will have to change their procedures for right-of-way clearing programs to avoid subjective and arbitrary and capricious review by PHMSA. Having considered this argument, I find it overstates the potential impacts of this finding of violation, which as noted above, is based on factual evidence that the amount of vegetation seen in a photograph of Respondent’s right-of-way prevented inspection of the surface condition by aerial patrol. FHR’s argument overlooks that, while § 195.412(a) affords operators flexibility in choosing the method of inspection, operators must still comply with the Pipeline Safety Regulation by inspecting the surface condition.24 In order to be in compliance with § 195.412(a), the operator must conduct inspections of the surface conditions on or adjacent to each pipeline right-of-way by a method that allows for inspection of the surface conditions such that various threats to the integrity of a pipeline facility can be determined and leaks can be detected. In this case, excessive vegetation prevented inspection of the surface conditions of the right-of-way as required by § 195.412(a). This is not, as FHR contends, a purely subjective exercise. Nor does 22 Final Order, at 4. 23 Petition, at 6. 24 Id.#

320205021_Decision on Petition for Reconsideration_01182022_(19-166915S)_text.pdf, page 10CPF No. 3-2020-5021 Page 9 it imply, as Respondent suggests, that any amount of vegetation is excessive, or that operators will forever be prohibited from using aerial patrols. Accordingly, this argument is rejected. Relief Denied Based on the information provided in the Petition, a review of the record, and for the reasons stated above, the preponderance of the evidence in this proceeding supports the finding in the Final Order that FHR violated 49 C.F.R. § 195.412(a) for failing to inspect the surface conditions on or adjacent to the right-of-way where excessive vegetation cover at MP 182 precluded inspection of the pipeline surface conditions by aerial patrol. Therefore, I am affirming Item 3 in the Final Order without modification. FHR must pay the civil penalty of $19,000 assessed in the Final Order. Payment of the civil penalty must be made within 20 days of service of this decision. 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, Mike Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the $19,000 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. This Decision is the final administrative action in this proceeding. January 18, 2022 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#