PLAINS PIPELINE, L.P. — Notice of Probable Violation

party submissionOfficial PDF420095005_response to nopv pcp pco_05282009.pdf#

420095005_nopv pcp pco_03042009_text.pdf, page 1Official PDFIJ, S. Depanment of Transportation Pipeline ond Hozordous ttttoterlots sofety Admlntstroti on 8701 South Gessnsr, Suite 1tt0 ttoustoo, 7X 7707S NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED March 4, 2009 Mr. Dan Nerbonne Vice President, Engineering Pfains Pipeline, L. P. P. O. Box 4648 Houston, Texas 77210-4648 CPF 4-2009-5005 Dear Mr. Nerbonne: From February to July, 2008, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the California State Fire Marshal pursuant to Chapter 601 of 49 United States Code inspected your records and pipeline facilities in the states of California, Colorado, Wyoming, Utah, Montana, Louisiana, Oklahoma, New Mexico, Mississippi, and Texas. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violations are: ()195. 402 Procedural manual for operations, maintenance, and emergencies (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline system commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted. Plains procedures (Instructions for Form 505 — Tank Inspection) states that each tank must be inspected monthly and documented on Form 505. A review of the Form 505#

420095005_nopv pcp pco_03042009_text.pdf, page 22. identified that multiple individuals had multiple ways to fill out Form 505. During the inspection, multiple Plains employees were asked to perform the monthly tank inspection. Each individual was qualified to perform this OQ task. It was determined that the procedure is not being followed. Also during the inspection of Plains, it was identified that the Plains Form 509, Tank Overfill Protection Inspection, was improperly filled out for Tank 1200 on 05/05/08; the tank was out of service for an API 653 inspection as noted on the form but the acknowledgement of the alarm by the control center is noted for the tank. t)195. 404 Maps and records. (a) Each operator shall maintain current maps and records of its pipeline systems. The Plains Pipeline, LP, Pipe Specification Sheet for the No. 3, 10" Pipeline Lumberton to Eucutta shows that the pipeline has ANSI valves rated at 1440 psi, yet the MOP listed for all but one section of the pipeline exceeds 1440 psi. ()195. 404 Maps and records. (c) Each operator shall maintain the following records for the periods specified: (3) A record of each inspection and test required by this subpart shall be maintained for at least 2 years or until the next inspection or test is performed, whichever is longer. As per f195. 432(b) the following items were identified during the inspection of Plains Pipeline, L. P. : The Monthly tank inspection records for tank 3800 at Gushing Terminal are not complete and properly filled out. The December 2006 and April 2007 records are dated and signed but the items inspected and their condition are not checked. Tank 4100 was placed in service on November 20, 2007, and according to the records at Cushing Terminal. There was no record available of the monthly inspection of the tank in December 2007 on the Plains tank inspection forms. Plains' does not have a record of the December 2007 inspection of Tank 1296 at Ten Mile Station. Tank 1296 was placed in service and filled with oil on November 22, 2007. The tank does not have a monthly tank inspection record. Plains' has a December 17, 2007, emissions inspection performed by the Alabama Department of Environmental Management. Plains tank inspection records for Eucutta Station Tanks 1205 and 1241 are not properly completed. During 2007 and 2008 records indicate that an individual conducted the tank inspections on February 1, 2007 and March 1, 2007 and another individual conducted the inspections on April 1, 2008; on these dates Plains' work schedule shows they were not working, rather they were working the day prior.#

420095005_nopv pcp pco_03042009_text.pdf, page 3$195. 406 Maximum operating pressure. (a) Except for surge pressures and other variations from normal operations, no operator may operate a pipeline at a pressure that exceeds any of the following: (2) The design pressure of any other component of the pipeline. At Eucutta Station, the MOP of the incoming No. 3 10" Pipeline has an MOP of 1317 psig, downstream of the receiving trap at Eucutta Station there are ANSI 150 valves in the station piping. There is no overpressure protection provided to ensure that the pressure in the station piping and valves do not exceed the maximum design pressure of the valves. 5195. 420 Valve maintenance. (b) Each operator shall, at intervals not exceeding 7 'h months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. According to documentation that was reviewed during the inspection, Valve M-17 and M- 18 was not operated since April 2006, missing 5 inspection cycles. This office understands that the inspections of these valves were performed in May of 2008. $195. 428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7 '/a months, but at least twice each calendar ear, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. During the inspection it was identified that ¹1 discharge piping Crane E. was inspected 07/25/2007. The set point was found at 1100 psig and was left at 1100 psig. The MOP for this system is 640 psig. Plains provided information on May 19, 2008, to indicate that this was corrected. 7. ()195. 430 Firefighting equipment. Each operator shall maintain adequate firefighting equipment at each pump station and breakout tank area. The equipment must be- (a) In proper operating condition at all times; (b) Plainly marked so that its identity as firefighting equipment is clear; and (c) Located so that it is easily accessible during a fire. Plains' Fireflghting Equipment procedure addresses the inspection of fire extinguishers and annual foam system tests. Plains' does not address how the firefighting equipment is determined to be adequate. In discussions with Plains personnel they stated that a#

420095005_nopv pcp pco_03042009_text.pdf, page 4Fire Plan is developed for each facility and that during pre-construction the Plains safety department conducts a pre-construction fire requirement determination using a third party and also works with local fire departments and state fire marshals to determine various things for the facility - foam dams on tanks, water lines, water point connections, adequate water supply, etc. The Fire Plans were checked at several facilities: At the Eucutta, Lumberton, Ten Mile, and Liberty Stations the Facility Response Plan covers firefighting. Plains relies on the local fire departments to fight facility fires Plains has not documented the coordination done with local fire departments to ensure that the local fire departments are aware of the extent of Plains facilities and ensure the compatibility of equipment responders in regards to what assistance would be required from the fire departments and coordination on. At the Odessa Station there were no fire extinguishers at this station. The fire plan was requested, but there was no fire plan available. During the week of May 19- 23, 2008, the fire extinguishers were visible at the Odessa Station. 8. t)195. 435 Security of facilities. Each operator shall provide protection for each pumping station and breakout area and other exposed facility (such as scraper traps) from vandalism and unauthorized entry. During the field evaluation of the Hendricks Tank Farm it was observed that it is not adequately protected from vandalism and unauthorized entry. At the Hendricks Tank Farm, livestock fencing is around the perimeter of the facility. Also, it was noted during the field evaluation of the Jal Tank Farm the security fencing was not around the facility. It appeared that there was construction equipment at the facility and the PHMSA inspector was informed that this was temporary situation. 9. I)195. 438 Smoking or open flames. Each operator shall prohibit smoking and open flames in each pump station area and each breakout tank area where there is a possibility of the leakage of a flammable hazardous liquid or of the presence of flammable vapors. At the time of the inspection, Plains did not have signs posted to indicate that they prohibited smoking and open flames at the Wink Tank Farm. 10. $195. 505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks. Plains' installed a Vapor Corrosion Inhibitor System (VpCI) under several breakout tanks at the Gushing Terminal Facility. The VpCI system is used to provide corrosion protection to the tank bottoms. Plains has not identified the installation, inspection, and#

420095005_nopv pcp pco_03042009_text.pdf, page 5maintenance of the VpCI as covered tasks. Protection of the tank bottom from corrosion is an O&M requirements of Part 195. 11. $195. 507 Recordkeeping Each operator shall maintain records that demonstrate compliance with this subpart. (a) Qualification records shall include: (1) Identification of qualified individuals; (2) Identification of the covered tasks the individual is qualified to perform; (3) Date(s) of current qualification; and (4) Qualification method(s). Plains is required to have OQ qualification records for individuals performing covered tasks on the pipeline, the qualifications are to cover current work and work going back 5 years. Plains did not have OQ qualification records for several welders who performed work on: Tank 7055 at Healdton Station on the Red River System; Tank 1182 at Lumberton Mississippi; and Tank 553 in Liberty, Mississippi. Plains OQ Procedure Section 4 does not allow non-qualified personnel to perform covered tasks under supervision for critical tasks such as welding. 12. I)195. 573 What I must I do to monitor external corrosion control? (c ) Rectifiers and other devices. You must electrically check for proper performance each device in the first column at the frequency stated in the second column. Device Rectifier ~Check f e At least six times each calendar year, but with intervals not exceeding 2 /k months. Reverse current switch. Diode. Interference bond whose failure would jeopardize structural protection. Other interference bond At least once each calendar year, but with intervals not exceeding 15 months. It was identified during the inspection of the Goldsmith-Midland pipeline system that rectifier inspections exceeded the 2 "/h month cycle for 2006 and 2007. In 2006, there were 11 rectifiers that exceeded the 2 '/. month cycle and in 2007 there were 6 rectifiers that exceed the 2 "/k month cycle. Records were validated in 2008 and there were no rectifiers that exceed the 2 f/k month inspection cycle. 13. $195. 573 What must I do to monitor external corrosion control? (e) Corrective action. You must correct any identified deficiency in corrosion control as required by $195. 401(b). However, if the deficiency involves a pipeline in an integrity management program under $195. 452, you must correct the deficiency as required by $195. 452(h).#

420095005_nopv pcp pco_03042009_text.pdf, page 6Plains did not promptly take corrective action for low readings on tanks 800, 1800, 2100, 2200, 2300, and 2500 at Gushing Terminal, prompt corrective action is defined at prior to the next scheduled inspection — annually, not to exceed 15 months. For tanks with HDPE bottoms Plains procedure (Spec no. 718) states that "Tanks with HDPE Liners, the potentials should be taken with permanent reference electrodes and or access tubes, the potentials taken around the perimeter will give a false level of cathodic protection. " Tanks 800, 1800, 2000, 2100, 2200, 2300, and 2500 have HDPE liners. 14. $195. 579 What must I do to mitigate internal corrosiong (b) Inhibitors. If you use corrosion inhibitors to mitigate internal corrosion, you must— (3) Examine the coupons or other monitoring equipment at least twice each calendar year, but with intervals not exceeding 7/* months. At Pauls Valley Station, on the Red River system line, there are no records showing that the coupon was read between August 2005 and September 2006. Plains' injects inhibitors in the Red River pipeline for corrosion control. Pro osed Civil Penalt Under 49 United States Code, g 60122, you are subject to a civil penalty not to exceed $100, 000 for each violation for each day the violation persists up to a maximum of $1, 000, 000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $92, 700 as follows: Item number 5 11 12 13 14 PENALTY $22, 500 $11, 300 $16, 300 $31, 300 $11, 300 Wwi ~ w Ite With respect to items 2, 3, 6 and 9 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these item(s). Be advised that failure to do so may result in Plains Pipeline, L. P. being subject to additional enforcement action. Pro osed Com liance Order With respect to items 1, 4, 7, 8, and 10 pursuant to 49 United States Code g 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Plains#

420095005_nopv pcp pco_03042009_text.pdf, page 7Pipeline, L. P. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Res onse to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U. S. C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U. S. C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 4-2009-5005 and for each document you submit, please provide a copy in electronic format whenever possible. R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operatorsin Compliance Proceedings#

420095005_nopv pcp pco_03042009_text.pdf, page 8PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code g 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Plains Pipeline, L. P. , a Compliance Order incorporating the following remedial requirements to ensure the compliance of Plains Pipeline, L. P. with the pipeline safety regulations: 1. In regard to Item Number 1 of the Notice pertaining to the improperly filling out the paperwork: a. Review procedures for the inspection of breakout tanks, including the inspection of tank overfill protection, and modify the procedures to assure that employees understand what is required during the inspection of breakout tanks and how to fill out the appropriate inspection reports. b. Submit completed procedures and your plan to assure that the procedures are being followed and carried out by Plains employees. In regard to Item Number 4 of the Notice pertaining to the lack of overpressure protection at Eucutta Station for the ANSI 150 valves in the station piping downstream of the receiving trap on the incoming No. 3 10" Pipeline, Plains will: b. Provide appropriate pressure protection to the station piping downstream of the No. 3 10" pipeline at Eucutta Station to protect the Maximum Operating Pressure of the station piping as determined by the pipe, valves, and fittings per 195. 406 Review the station piping at Eucutta Station to ensure that jurisdictional piping, valves, and fittings are properly protected per their Maximum Operating Pressure. In regard to Item Number 7 of the Notice pertaining to the lack of adequate fire fighting equipment and preplanned responses to tank and station fires at Eucutta, Liberty, Lumberton, Ten Mile and Odessa facilities, Plains will: Update its Facility Response Plans and Pre-Fire plans for Eucutta, Liberty, Lumberton, Ten Mile, and Odessa facilities on how tank and station fires beyond incipient fires will be fought in coordination with the responding fire departments. b. Conduct coordination meetings and establish fire plans for tank and station fires with the fire departments that will respond to fires at Plains' Eucutta, Liberty, Lumberton, Ten Mile and Odessa facilities. 3. In regard to Item Number 8 of the Notice pertaining to secunty of facilities at the Hendricks Tank Farm. a. Review procedures for security of facilities and modify the procedures to#

420095005_nopv pcp pco_03042009_text.pdf, page 94. assure that they address the security of facilities that they include the protection from vandalism and unauthorized entry. b. Submit completed procedures and your plan to assure that the Hendricks Tank Farm is protected from vandalism and unauthorized entry. In regard to Item Number 10 of the Notice pertaining to the operator qualification program, and the Vapor Corrosion Inhibitor System (VpCI): a. Review and update OQ procedures to assure that individuals that would install, inspect, and maintain the VpCI will be included in Plains procedures. b. Submit the revised procedures to assure that procedures include the installation, inspection, and maintenance of the VpCI. Plains shall complete the items above within 60 days after receipt of the Final Order. Plains Pipeline, L. P. shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration. Costs shall be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure.#

420095005_Closure Letter_03282011_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED March 28, 2011 Mr. Troy E. Valenzuela Vice President, Environmental Health and Safety Plains Pipeline 333 Clay Street, Suite 1600 Houston, Texas 77002 CPF 4-2009-5005 Dear Mr. Valenzuela: On April 6, 2010, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Plains Pipeline a Final Order in the above-referenced case. This Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation you provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of this Order. Accordingly, this case is now closed and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#

420095005_FinalOrder_04062010_text.pdf, page 1Official PDFAPR 6 2010 Mr. Troy E. Valenzuela Vice President—Environmental, Health and Safety Plains Pipeline, L.P. 333 Clay St., Suite 1600 Houston, TX 77002 Re: CPF No. 4-2009-5005 Dear Mr. Valenzuela: Enclosed is the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $92,700, and specifies actions that need to be taken by Plains Pipeline, L.P., to comply with the pipeline safety regulations. I acknowledge receipt of and accept your wire transfer, dated May 22, 2009, for $92,700 as payment in full of the civil penalty assessed in the Final Order. When the terms of the compliance order have been completed, as determined by the Director, Southwest Region, this enforcement action will be closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. R. M. Seeley, Director, Southwest Region, PHMSA VIA CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7009 1410 0000 2472 5255]#

420095005_FinalOrder_04062010_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 ) Plains Pipeline, L.P., ) CPF No. 4-2009-5005 ) ) ) Respondent. ) ____________________________________) FINAL ORDER From February to July 2008, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), and the California State Fire Marshal conducted an inspection of the records and pipeline facilities of Plains Pipeline, L.P. (Respondent or Plains), in approximately ten states located in the southern and western regions of the United States. Plains, a subsidiary of Plains All American Pipeline, L.P., operates approximately 3,500 miles of interstate crude oil and refined petroleum products pipelines. As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Plains, by letter dated March 4, 2009, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice alleged that Plains had committed violations of 49 C.F.R. Part 195 and proposed a civil penalty of $92,700 for the alleged violations. The Notice also proposed to order Respondent to take certain measures to correct the alleged violations. After requesting and receiving an extension of time, Plains responded to the Notice by submitting a wire transfer on May 22, 2009, in the amount of the proposed civil penalty ($92,700), thereby waiving further right to respond and authorizing entry of this Final Order. Plains submitted a subsequent letter dated May 28, 2009, in which the company contested certain other allegations and provided information about the company’s corrective actions. FINDINGS OF VIOLATION The Notice alleged that Respondent committed violations of 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states:#

420095005_FinalOrder_04062010_text.pdf, page 32 § 195.402 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies . . . . The Notice alleged that Respondent violated § 195.402(a) by failing to have and follow written procedures for filling out tank inspection Form 505. Specifically, the Notice alleged that different individuals filled out the form in different ways. The Notice further alleged that on May 5, 2008, Respondent improperly filled out tank overfill protection inspection Form 509 for Tank 1200, as evidenced by a notation that the control center had acknowledged the high-level alarm even though the tank was out of service. In regard to the first allegation, Respondent contended in its Response that the employees performing tank inspections were all qualified and highly experienced, and that even if they documented their inspections on Form 505 in different ways, they always achieved their primary objective of noting and documenting any unsatisfactory conditions. Respondent argued that “minor inconsistencies in how inspections [were] performed or documented” did not constitute violations. were not being followed. 1 Furthermore, Respondent argued the Notice did not specify exactly how procedures After a review of the evidence in this case, which includes several completed forms as well as Respondent’s written procedures for filling out Form 505, it appears that the written procedures were not followed in certain instances. For example, inspection dates were not always entered as required by Respondent’s procedures (instruction 9), and notations about inspection areas that had an unsatisfactory condition were not regularly correlated with a description of the condition (instruction 12). In some instances, a description of corrective action and further evaluation was not documented for each unsatisfactory condition (instruction 13). In regard to the second allegation concerning Form 509, Respondent admitted that its employee noted on the May 5, 2008 form that the control center had acknowledged a high-level alarm. Plains argued there was nothing improper about such an acknowledgment because a test of the high-level alarm can be performed regardless of the tank being out-of-service. After a review of the evidence, which consists of the Form 509 in question, I note that the form does not indicate whether the high-level alarm set points had been checked as part of the out-of- service tank inspection. It is not clear how Respondent could have verified that the control center acknowledged a high-level alarm if the set points were not also checked. More importantly, the allegation is that Respondent did not have and follow procedures for performing inspections of out-of-service tanks in this manner. Despite the allegation, Plains did not submit any evidence demonstrating the company had procedures that permitted or explained the testing of high-level alarms on out-of-service tanks. In fact, no procedures were submitted for inspecting out-of-service tanks at all, leading me to find that Respondent did not have and follow written procedures for the inspections as alleged in the Notice. 1 Response at 1.#

420095005_FinalOrder_04062010_text.pdf, page 43 Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(a) by failing to follow its written procedures for documenting tank inspections on Form 505. I also find that Respondent violated 49 C.F.R. § 195.402(a) by failing to have and follow procedures for performing inspections of out-of-service tanks. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.406(a)(2), which states: § 195.406 Maximum operating pressure. (a) Except for surge pressures and other variations from normal operations, no operator may operate a pipeline at a pressure that exceeds any of the following . . . (2) The design pressure of any other component of the pipeline. The Notice alleged that Respondent violated § 195.406(a)(2) by failing to provide overpressure protection to prevent pressure in station piping and valves at Eucutta Station from exceeding their maximum design pressure. The Notice explained that the maximum operating pressure (MOP) of the incoming Number 3 pipeline (10-inch) at Eucutta Station exceeded the maximum design pressure of the valves; therefore, overpressure protection equipment was needed to prevent station piping and valves from exceeding their maximum design pressure. In its Response, Plains did not contest the allegation and provided information concerning the corrective action it had taken. Therefore, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.406(a)(2) as alleged in the Notice. Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.420(b), which states: § 195.420 Valve maintenance. (a) . . . . (b) Each operator shall, at intervals not exceeding 7½ months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. The Notice alleged that Respondent violated § 195.420(b) by failing to inspect mainline valves M-17 and M-18 at least twice each calendar year, with intervals not exceeding 7½ months, between April 2006 and May 2008. In its Response, Plains did not contest the allegation and explained that the inspections were missed due to a misunderstanding between personnel in adjacent districts about who would conduct the inspections. Plains also provided information about the corrective action it was taking. Therefore, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.420(b) by failing to inspect each mainline valve at the required intervals. Item 7: The Notice alleged that Respondent violated 49 C.F.R. § 195.430, which states:#

420095005_FinalOrder_04062010_text.pdf, page 54 § 195.430 Firefighting equipment. Each operator shall maintain adequate firefighting equipment at each pump station and breakout tank area. The equipment must be— (a) In proper operating condition at all times; (b) Plainly marked so that its identity as firefighting equipment is clear; and (c) Located so that it is easily accessible during a fire. The Notice alleged that Respondent violated § 195.430 by failing to maintain adequate firefighting equipment at each pump station and breakout tank area. Specifically, the Notice alleged that Respondent’s firefighting equipment procedures did not provide for determining whether firefighting equipment was adequate, even though Plains personnel indicated that the company worked with local fire departments and state fire marshals to develop fire plans and determine which measures of firefighting equipment should be at each facility. In addition, the Notice alleged that at the Eucutta, Lumberton, Ten Mile, and Liberty stations, Plains relied on the local fire departments to fight facility fires, but that the company had no documentation to demonstrate that it had coordinated with local fire departments to ensure they were aware of Respondent’s facilities and had adequate capabilities to respond to the types of fire emergencies that could arise. Furthermore, the Notice alleged that Plains did not have fire extinguishers or a fire plan at the Odessa Station. In its Response, Plains did not contest the allegations and provided information concerning the corrective action it planned to take. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.430 by failing to maintain adequate firefighting equipment at each pump station and breakout tank area. Item 8: The Notice alleged that Respondent violated 49 C.F.R. § 195.436, which states: § 195.436 Security of facilities. Each operator shall provide protection for each pumping station and breakout tank area and other exposed facility (such as scraper traps) from vandalism and unauthorized entry. The Notice alleged that Respondent violated § 195.436 by failing to provide protection against vandalism and unauthorized entry at two tank farms. Specifically, the Notice alleged that the Hendricks Tank Farm only had livestock fencing around its perimeter. The Jal Tank Farm allegedly did not have security fencing entirely around the perimeter, but the Notice explained that this condition may have been a temporary situation due to construction. In its Response, Plains contested the allegation of violation with regard to the Hendricks Tank Farm and contended that added security was not required because it was a very low security risk facility. Plains also stated that the Hendricks and Jal stations are not critical pipeline facilities under the Department of Homeland Security (DHS) vulnerability assessment requirements. Respondent acknowledged that a section of fencing around the Jal Tank Farm had been removed due to construction activities, but the perimeter fencing around the station had been restored. Section 195.436 requires pipeline operators to provide protection from vandalism and unauthorized entry for “each pumping station and breakout tank area and other exposed facility.” The regulations do not exempt from this requirement facilities located in rural areas, those that#

420095005_FinalOrder_04062010_text.pdf, page 65 have not experienced vandalism in the past, or facilities that are not “critical” under DHS regulations. Therefore, Respondent is required to provide protection from vandalism and unauthorized entry for both the Hendricks and Jal stations. The evidence demonstrates Respondent had not provided such protection to either station at the time of the OPS inspection. Livestock fencing keeps livestock out, but does not protect from vandalism and unauthorized entry. Security fencing that does not extend entirely around the perimeter is also vulnerable to unauthorized entry and vandalism. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.436 by failing to provide protection from vandalism and unauthorized entry at the two tank farms. Item 10: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(a), which states: § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks . . . . The Notice alleged that Respondent violated § 195.505(a) by failing to have and follow a written qualification program that included the identification of all covered tasks. Notice alleged that Plains had not identified the covered tasks of installing, inspecting, and maintaining its Vapor Corrosion Inhibitor (VpCI) system, which the company installed under breakout tanks at the Cushing Terminal Facility to protect the tank bottoms against corrosion. The Notice alleged that protection of the tank bottom from corrosion is an operations and maintenance requirement of 49 C.F.R. Part 195, making the installation, inspection, and maintenance of the VpCI system covered tasks. 2 Specifically, the In its Response, Plains contested the allegation of violation and explained that the company did not have a qualification program for the VpCI system because it was a proprietary system that a vendor had installed and tested. Plains indicated that since the system was proprietary, the company did not have subject-matter expertise to develop a qualification program for personnel to act as qualification evaluators. Respondent also explained that the vendor’s personnel who installed the system had NACE certifications, as well as “qualifications on various CP covered system as a covered task and its personnel could be qualified to perform that task based on tasks.”3 Plains indicated that it had now identified the maintenance and monitoring of the VpCI training by the system vendor and a written exam developed by Plains. 2 A “covered task” is an activity, identified by the operator, that: (1) is performed on a pipeline facility; (2) is an operations or maintenance task; (3) is performed as a requirement of this part; and (4) affects the operation or integrity of the pipeline. § 195.501(b). 3 Response at 5. NACE International is a professional organization that offers training and certifications in corrosion control.#

420095005_FinalOrder_04062010_text.pdf, page 76 PHMSA recognizes there will be instances in which a pipeline operator may contract for the performance of specialized services for which company personnel do not have subject-matter expertise. In such situations however, § 195.505 still requires the pipeline operator to identify the covered tasks that will be performed and to ensure that persons performing such tasks are capable of performing the task and able to recognize and react to abnormal operating conditions (AOCs). For purposes of these requirements, there is no difference between tasks performed by third-party contractors or pipeline employees—all covered tasks performed on the pipeline must be identified and all persons qualified.4 Plains had not identified the installation, inspection, and maintenance of the VpCI system as a covered task prior to the task being performed. There is also no evidence that Plains worked with the contractor, despite the system’s proprietary designation, to ensure that the vendor’s personnel were qualified and could recognize and react to potential AOCs that might arise on the Plains pipeline system. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.505(a) by failing to have and follow a written qualification program that included the identification of covered tasks associated with the VpCI system. Item 11: The Notice alleged that Respondent violated 49 C.F.R. § 195.507, which states: § 195.507 Recordkeeping. Each operator shall maintain records that demonstrate compliance with this subpart. (a) Qualification records shall include: (1) Identification of qualified individual(s); (2) Identification of the covered tasks the individual is qualified to perform; (3) Date(s) of current qualification; and (4) Qualification method(s). (b) Records supporting an individual’s current qualification shall be maintained while the individual is performing the covered task. Records of prior qualification and records of individuals no longer performing covered tasks shall be retained for a period of five years. The Notice alleged that Respondent violated § 195.507 by failing to maintain qualification records for several welders who performed work on the following equipment: Tank 7055 at Healdton Station on the Red River System; Tank 1182 at Lumberton, Mississippi; and Tank 553 in Liberty, Mississippi. In its Response, Plains did not contest the allegation and explained that even though the qualification records of contract welders could not be found, all the welds made by those welders were non-destructively tested and determined to meet acceptance criteria. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.507 by failing to maintain certain qualification records. 4 See, e.g., § 195.10 (providing that “[a]n operator may make arrangements with another person for the performance of any action required by this part. However, the operator is not thereby relieved from the responsibility for compliance . . . .”)#

420095005_FinalOrder_04062010_text.pdf, page 87 Item 12: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(c), which states: § 195.573 What must I do to monitor external corrosion control? (a) . . . . (c) Rectifiers and other devices. You must electrically check for proper performance each device in the first column at the frequency stated in the second column. Device Check frequency Rectifier . . . . . . . . . . . . . At least six times each calendar year, but with intervals not exceeding 2½ months. The Notice alleged that Respondent violated § 195.573(c) by failing to electrically check each rectifier of the Goldsmith-Midland pipeline system at intervals not exceeding 2½ months during calendar years 2006 and 2007. Specifically, the Notice alleged that in 2006, there were 11 rectifiers, and in 2007, there were 6 rectifiers, for which Respondent exceeded the required inspection intervals. In its Response, Plains did not contest the allegation and provided information concerning the corrective action it had taken. Accordingly, after considering the evidence, I find that Respondent violated 49 C.F.R. § 195.573(c) by failing to electrically check each rectifier at intervals not exceeding 2½ months. Item 13: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(e), which states: § 195.573 What must I do to monitor external corrosion control? (a) . . . . (e) Corrective action. You must correct any identified deficiency in corrosion control as required by § 195.401(b). However, if the deficiency involves a pipeline in an integrity management program under § 195.452, you must correct the deficiency as required by § 195.452(h). The Notice alleged that Respondent violated § 195.573(e) by failing to promptly correct deficiencies in corrosion control (low readings) at Tanks 800, 1800, 2100, 2200, 2300, and 2500 at Cushing Terminal. In its Response, Plains did not contest the allegation and provided information concerning the corrective action it had taken. Accordingly, after considering the evidence, I find that Respondent violated 49 C.F.R. § 195.573(e) by failing to promptly correct deficiencies in corrosion control. Item 14: The Notice alleged that Respondent violated 49 C.F.R. § 195.579(b)(3), which states: § 195.579 What must I do to mitigate internal corrosion? (a) . . . . (b) Inhibitors. If you use corrosion inhibitors to mitigate internal corrosion, you must— … (3) Examine the coupons or other monitoring equipment at least twice each calendar year, but with intervals not exceeding 7½ months.#

420095005_FinalOrder_04062010_text.pdf, page 98 The Notice alleged that Respondent violated § 195.579(b)(3) by failing to examine coupons at its Pauls Valley Station on the Red River system line between August 2005 and September 2006. In its Response, Plains did not contest the allegation. Accordingly, after considering the evidence, I find that Respondent violated 49 C.F.R. § 195.579(b)(3) by failing to examine certain coupons. 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 $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related series of violations. The Notice proposed a total civil penalty of $92,700 for the violations of §§ 195.420(b) (Item 5), 195.507 (Item 11), 195.573(c) (Item 12), 195.573(e) (Item 13), and 195.579(b)(3) (Item 14). Respondent has submitted a wire transfer dated May 22, 2009, in the full amount of the proposed civil penalty ($92,700). Accordingly, having reviewed the record and considered the assessment criteria set forth in 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I assess Respondent a civil penalty of $92,700, which has already been paid. COMPLIANCE ORDER The Notice proposed a compliance order with respect to the violations of §§ 195.402(a) (Item 1), 195.406(a)(2) (Item 4), 195.430 (Item 7), 195.436 (Item 8), and 195.505(a) (Item 10). Under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids by pipeline or who owns or operates a hazardous liquid pipeline facility is required to comply with the applicable safety standards established under chapter 601. The Director has indicated that Respondent has taken the following actions to address one of the cited violations: In regards to § 195.406(a)(2) (Item 4), Respondent has installed a pressure limiting device between the incoming pipeline and the station piping at Eucutta Station to provide the proper protection for station piping. Accordingly, since compliance has been achieved with respect to this violation, the compliance terms for Item 4 are not included in this Order. As for the remaining compliance terms, Respondent indicated that it has taken certain actions, but for the following reasons, I do not find the corresponding compliance terms have been completely satisfied.#

420095005_FinalOrder_04062010_text.pdf, page 109 In regards to § 195.402(a) (Item 1), Respondent indicated that it has revised Form 505 and the associated written instructions and has trained personnel to ensure better consistency and accuracy in performing and documenting inspections. Plains, however, did not submit the revised procedures, nor did the company provide any documentation of the training it has conducted. Respondent also did not submit any documentation demonstrating it has revised and modified procedures for inspecting out-of-service tanks. In regards to § 195.430 (Item 7), Respondent indicated it is developing a standardized plan for coordinating meetings with local fire departments and for creating facility-specific fire plans, but the company has not yet submitted evidence that such plans have been completed. In regards to § 195.436 (Item 8), Respondent indicated that it has requested and received confirmation from local police that officers will regularly patrol the Hendricks facility. Plains also stated that the company plans to conduct its own perimeter patrols. The company did not indicate that it has modified the livestock fencing, however, which fails to provide adequate protection from vandalism and unauthorized entry, even with increased patrolling. With respect to the Jal station, I find Respondent has restored the perimeter fencing to protect the station from vandalism and unauthorized entry. In regards to § 195.505(a) (Item 10), Respondent indicated that it has added the maintenance and monitoring of the VpCI system as a covered task in its operator qualification program. Covered Task 10.3, Inspection and Maintenance of Tank Vapor Corrosion Inhibitor System, has been reviewed by the Director and found acceptable. Plains has still not identified the installation of the system as a covered task, and therefore must develop procedures to ensure individuals installing the proprietary system are qualified. Accordingly, pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 195.402(a) (Item 1), Respondent must: a. Review the procedures for inspecting breakout tanks, including the inspection of out- of-service tanks and overfill protection, and modify the procedures to assure that employees understand what is required during the inspection of breakout tanks and how to fill out the appropriate inspection reports. b. Submit completed procedures and a plan to assure that the procedures are being followed and carried out by personnel. 2. With respect to the violation of § 195.430 (Item 7), Respondent must: a. Update its Facility Response Plans and Pre-Fire plans for Eucutta, Liberty, Lumberton, Ten Mile, and Odessa facilities on how tank and station fires beyond incipient fires will be fought in coordination with the responding fire departments; and b. Conduct coordination meetings and establish fire plans for tank and station fires with the fire departments that will respond to fires at the Eucutta, Liberty, Lumberton, Ten Mile and Odessa facilities.#

420095005_FinalOrder_04062010_text.pdf, page 1110 3. With respect to the violation of § 195.436 (Item 8), Respondent must: a. Review procedures for security of facilities and modify the procedures to assure that they address the security of facilities, including protection from vandalism and unauthorized entry; and b. Submit completed procedures and its plan to assure that the Hendricks Tank Farm is protected from vandalism and unauthorized entry. 4. With respect to the violation of § 195.505(a) (Item 10), Respondent must: a. Review and update the operator qualification procedures to assure that individuals installing the VpCI system are qualified. b. Submit the revised procedures for review. 5. Maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and report the total cost as follows: (a) total cost associated with preparation and revision of plans and procedures, and performance of studies and analyses; and (b) total cost associated with physical changes, if any, to the pipeline infrastructure, including replacements and additions. 6. Complete each of the above items and submit documentation of compliance within 60 days of receipt of this Final Order. Documentation shall be submitted to the Director, Southwest Region, Office of Pipeline Safety, 8701 South Gessner Dr, Suite 1110, Houston, TX 77074-2949. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent demonstrating good cause for an extension. Failure to comply with this Order may result in administrative assessment of civil penalties not to exceed $100,000 for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. WARNING ITEMS With respect to Items 2, 3, 6 and 9, the Notice alleged probable violations of Part 195 but did not propose a civil penalty or compliance order for these items. Therefore, these are considered to be warning items. The warnings were for: 49 C.F.R. § 195.404(a) (Item 2) – Respondent’s alleged failure to keep up-to-date information on the Pipe Specification Sheet for the No3, 10-inch, Lumberton to Eucutta pipeline, regarding the pressure of certain valves. 49 C.F.R. § 195.404(c)(3) (Item 3) – Respondent’s alleged failure to maintain a record of certain inspections required by Subpart F of the pipeline safety regulations for at least two years or until the next inspection is performed, whichever is longer. 49 C.F.R. § 195.428(a) (Item 6) – Respondent’s alleged failure to correct the set point of discharge piping that had been inspected.#

420095005_FinalOrder_04062010_text.pdf, page 1211 49 C.F.R. § 195.438 (Item 9) – Respondent’s alleged failure to have signs prohibiting smoking and open flames at a tank farm. Respondent provided information in its Response to explain some of the allegations and to show that it had taken certain actions to address the cited items. Having considered such information, I find, pursuant to 49 C.F.R. § 190.205, that probable violations have occurred and Respondent is hereby advised to correct such conditions. In the event that OPS finds a violation for any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. Under 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. If submitted, 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, and a copy sent to the Chief Counsel, PHMSA, at the same address. The petition must be received within 20 days of service, but may be considered timely if received within 20 days of Respondent’s receipt of this Final Order. The petition must contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. The terms of the Final Order, including any required corrective action, shall remain in full force and effect unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ___________________________________ ___________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

420095005_ nopv pcp pco_03042009_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED March 4, 2009 Mr. Dan Nerbonne Vice President, Engineering Plains Pipeline, L.P. P.O. Box 4648 Houston, Texas 77210-4648 CPF 4-2009-5005 Dear Mr. Nerbonne: From February to July, 2008, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the California State Fire Marshal pursuant to Chapter 601 of 49 United States Code inspected your records and pipeline facilities in the states of California, Colorado, Wyoming, Utah, Montana, Louisiana, Oklahoma, New Mexico, Mississippi, and Texas. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violations are: 1. §195.402 Procedural manual for operations, maintenance, and emergencies (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline system commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted. Plains procedures (Instructions for Form 505 – Tank Inspection) states that each tank must be inspected monthly and documented on Form 505. A review of the Form 505#

420095005_ nopv pcp pco_03042009_text.pdf, page 2identified that multiple individuals had multiple ways to fill out Form 505. During the inspection, multiple Plains employees were asked to perform the monthly tank inspection. Each individual was qualified to perform this OQ task. It was determined that the procedure is not being followed. Also during the inspection of Plains, it was identified that the Plains Form 509, Tank Overfill Protection Inspection, was improperly filled out for Tank 1200 on 05/05/08; the tank was out of service for an API 653 inspection as noted on the form but the acknowledgement of the alarm by the control center is noted for the tank. 2. §195.404 Maps and records. (a) Each operator shall maintain current maps and records of its pipeline systems. The Plains Pipeline, LP, Pipe Specification Sheet for the No. 3, 10” Pipeline Lumberton to Eucutta shows that the pipeline has ANSI valves rated at 1440 psi, yet the MOP listed for all but one section of the pipeline exceeds 1440 psi. 3. §195.404 Maps and records. (c) Each operator shall maintain the following records for the periods specified: (3) A record of each inspection and test required by this subpart shall be maintained for at least 2 years or until the next inspection or test is performed, whichever is longer. As per §195.432(b) the following items were identified during the inspection of Plains Pipeline, L.P.: The Monthly tank inspection records for tank 3800 at Cushing Terminal are not complete and properly filled out. The December 2006 and April 2007 records are dated and signed but the items inspected and their condition are not checked. Tank 4100 was placed in service on November 20, 2007, and according to the records at Cushing Terminal. There was no record available of the monthly inspection of the tank in December 2007 on the Plains tank inspection forms. Plains’ does not have a record of the December 2007 inspection of Tank 1296 at Ten Mile Station. Tank 1296 was placed in service and filled with oil on November 22, 2007. The tank does not have a monthly tank inspection record. Plains’ has a December 17, 2007, emissions inspection performed by the Alabama Department of Environmental Management. Plains tank inspection records for Eucutta Station Tanks 1205 and 1241 are not properly completed. During 2007 and 2008 records indicate that an individual conducted the tank inspections on February 1, 2007 and March 1, 2007 and another individual conducted the inspections on April 1, 2008; on these dates Plains’ work schedule shows they were not working, rather they were working the day prior.#

420095005_ nopv pcp pco_03042009_text.pdf, page 34. §195.406 Maximum operating pressure. (a) Except for surge pressures and other variations from normal operations, no operator may operate a pipeline at a pressure that exceeds any of the following: (2) The design pressure of any other component of the pipeline. At Eucutta Station, the MOP of the incoming No. 3 10” Pipeline has an MOP of 1317 psig, downstream of the receiving trap at Eucutta Station there are ANSI 150 valves in the station piping. There is no overpressure protection provided to ensure that the pressure in the station piping and valves do not exceed the maximum design pressure of the valves. 5. §195.420 Valve maintenance. (b) Each operator shall, at intervals not exceeding 7 ½ months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. According to documentation that was reviewed during the inspection, Valve M-17 and M- 18 was not operated since April 2006, missing 5 inspection cycles. This office understands that the inspections of these valves were performed in May of 2008. 6. §195.428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7 ½ months, but at least twice each calendar ear, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. During the inspection it was identified that #1 discharge piping Crane E. was inspected 07/25/2007. The set point was found at 1100 psig and was left at 1100 psig. The MOP for this system is 640 psig. Plains provided information on May 19, 2008, to indicate that this was corrected. 7. §195.430 Firefighting equipment. Each operator shall maintain adequate firefighting equipment at each pump station and breakout tank area. The equipment must be- (a) In proper operating condition at all times; (b) Plainly marked so that its identity as firefighting equipment is clear; and (c) Located so that it is easily accessible during a fire. Plains’ Firefighting Equipment procedure addresses the inspection of fire extinguishers and annual foam system tests. Plains’ does not address how the firefighting equipment is determined to be adequate. In discussions with Plains personnel they stated that a#

420095005_ nopv pcp pco_03042009_text.pdf, page 4Fire Plan is developed for each facility and that during pre-construction the Plains safety department conducts a pre-construction fire requirement determination using a third party and also works with local fire departments and state fire marshals to determine various things for the facility - foam dams on tanks, water lines, water point connections, adequate water supply, etc. The Fire Plans were checked at several facilities: - At the Eucutta, Lumberton, Ten Mile, and Liberty Stations the Facility Response Plan covers firefighting. Plains relies on the local fire departments to fight facility fires Plains has not documented the coordination done with local fire departments to ensure that the local fire departments are aware of the extent of Plains facilities and ensure the compatibility of equipment responders in regards to what assistance would be required from the fire departments and coordination on. - At the Odessa Station there were no fire extinguishers at this station. The fire plan was requested, but there was no fire plan available. During the week of May 19- 23, 2008, the fire extinguishers were visible at the Odessa Station. 8. §195.436 Security of facilities. Each operator shall provide protection for each pumping station and breakout area and other exposed facility (such as scraper traps) from vandalism and unauthorized entry. During the field evaluation of the Hendricks Tank Farm it was observed that it is not adequately protected from vandalism and unauthorized entry. At the Hendricks Tank Farm, livestock fencing is around the perimeter of the facility. Also, it was noted during the field evaluation of the Jal Tank Farm the security fencing was not around the facility. It appeared that there was construction equipment at the facility and the PHMSA inspector was informed that this was temporary situation. 9. §195.438 Smoking or open flames. Each operator shall prohibit smoking and open flames in each pump station area and each breakout tank area where there is a possibility of the leakage of a flammable hazardous liquid or of the presence of flammable vapors. At the time of the inspection, Plains did not have signs posted to indicate that they prohibited smoking and open flames at the Wink Tank Farm. 10. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks. Plains’ installed a Vapor Corrosion Inhibitor System (VpCI) under several breakout tanks at the Cushing Terminal Facility. The VpCI system is used to provide corrosion protection to the tank bottoms. Plains has not identified the installation, inspection, and#

420095005_ nopv pcp pco_03042009_text.pdf, page 5maintenance of the VpCI as covered tasks. Protection of the tank bottom from corrosion is an O&M requirements of Part 195. 11. §195.507 Recordkeeping Each operator shall maintain records that demonstrate compliance with this subpart. (a) Qualification records shall include: (1) Identification of qualified individuals; (2) Identification of the covered tasks the individual is qualified to perform; (3) Date(s) of current qualification; and (4) Qualification method(s). Plains is required to have OQ qualification records for individuals performing covered tasks on the pipeline, the qualifications are to cover current work and work going back 5 years. Plains did not have OQ qualification records for several welders who performed work on: Tank 7055 at Healdton Station on the Red River System; Tank 1182 at Lumberton Mississippi; and Tank 553 in Liberty, Mississippi. Plains OQ Procedure Section 4 does not allow non-qualified personnel to perform covered tasks under supervision for critical tasks such as welding. 12. §195.573 What I must I do to monitor external corrosion control? (c ) Rectifiers and other devices. You must electrically check for proper performance each device in the first column at the frequency stated in the second column. Device Check frequency Rectifier At least six times each calendar year, but with intervals not exceeding 2 ½ months. Reverse current switch. Diode. Interference bond whose failure would jeopardize structural protection. Other interference bond At least once each calendar year, but with intervals not exceeding 15 months. It was identified during the inspection of the Goldsmith-Midland pipeline system that rectifier inspections exceeded the 2 ½ month cycle for 2006 and 2007. In 2006, there were 11 rectifiers that exceeded the 2 ½ month cycle and in 2007 there were 6 rectifiers that exceed the 2 ½ month cycle. Records were validated in 2008 and there were no rectifiers that exceed the 2 ½ month inspection cycle. 13. §195.573 What must I do to monitor external corrosion control? (e) Corrective action. You must correct any identified deficiency in corrosion control as required by §195.401(b). However, if the deficiency involves a pipeline in an integrity management program under §195.452, you must correct the deficiency as required by §195.452(h).#

420095005_ nopv pcp pco_03042009_text.pdf, page 6Plains did not promptly take corrective action for low readings on tanks 800, 1800, 2100, 2200, 2300, and 2500 at Cushing Terminal, prompt corrective action is defined at prior to the next scheduled inspection – annually, not to exceed 15 months. For tanks with HDPE bottoms Plains procedure (Spec no. 718) states that “Tanks with HDPE Liners, the potentials should be taken with permanent reference electrodes and or access tubes, the potentials taken around the perimeter will give a false level of cathodic protection.” Tanks 800, 1800, 2000, 2100, 2200, 2300, and 2500 have HDPE liners. 14. §195.579 What must I do to mitigate internal corrosion? (b) Inhibitors. If you use corrosion inhibitors to mitigate internal corrosion, you must – (3) Examine the coupons or other monitoring equipment at least twice each calendar year, but with intervals not exceeding 7½ months. At Pauls Valley Station, on the Red River system line, there are no records showing that the coupon was read between August 2005 and September 2006. Plains’ injects inhibitors in the Red River pipeline for corrosion control. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s) and has recommended that you be preliminarily assessed a civil penalty of $92,700 as follows: Item number PENALTY 5 $22,500 11 $11,300 12 $16,300 13 $31,300 14 $11,300 Warning Items With respect to items 2, 3, 6 and 9 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these item(s). Be advised that failure to do so may result in Plains Pipeline, L.P. being subject to additional enforcement action. Proposed Compliance OrderWith respect to items 1, 4, 7, 8, and 10 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Plains#

420095005_ nopv pcp pco_03042009_text.pdf, page 7Pipeline, L.P. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 4-2009-5005 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings#

420095005_ nopv pcp pco_03042009_text.pdf, page 8PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Plains Pipeline, L.P., a Compliance Order incorporating the following remedial requirements to ensure the compliance of Plains Pipeline, L.P. with the pipeline safety regulations: 1. In regard to Item Number 1 of the Notice pertaining to the improperly filling out the paperwork: a. Review procedures for the inspection of breakout tanks, including the inspection of tank overfill protection, and modify the procedures to assure that employees understand what is required during the inspection of breakout tanks and how to fill out the appropriate inspection reports. b. Submit completed procedures and your plan to assure that the procedures are being followed and carried out by Plains employees. 1. In regard to Item Number 4 of the Notice pertaining to the lack of overpressure protection at Eucutta Station for the ANSI 150 valves in the station piping downstream of the receiving trap on the incoming No. 3 10” Pipeline, Plains will: a. Provide appropriate pressure protection to the station piping downstream of the No. 3 10” pipeline at Eucutta Station to protect the Maximum Operating Pressure of the station piping as determined by the pipe, valves, and fittings per 195.406 b. Review the station piping at Eucutta Station to ensure that jurisdictional piping, valves, and fittings are properly protected per their Maximum Operating Pressure. 2. In regard to Item Number 7 of the Notice pertaining to the lack of adequate fire fighting equipment and preplanned responses to tank and station fires at Eucutta, Liberty, Lumberton, Ten Mile and Odessa facilities, Plains will: a. Update its Facility Response Plans and Pre-Fire plans for Eucutta, Liberty, Lumberton, Ten Mile, and Odessa facilities on how tank and station fires beyond incipient fires will be fought in coordination with the responding fire departments. b. Conduct coordination meetings and establish fire plans for tank and station fires with the fire departments that will respond to fires at Plains’ Eucutta, Liberty, Lumberton, Ten Mile and Odessa facilities. 3. In regard to Item Number 8 of the Notice pertaining to security of facilities at the Hendricks Tank Farm. a. Review procedures for security of facilities and modify the procedures to#

420095005_ nopv pcp pco_03042009_text.pdf, page 9assure that they address the security of facilities that they include the protection from vandalism and unauthorized entry. b. Submit completed procedures and your plan to assure that the Hendricks Tank Farm is protected from vandalism and unauthorized entry. 4. In regard to Item Number 10 of the Notice pertaining to the operator qualification program, and the Vapor Corrosion Inhibitor System (VpCI): a. Review and update OQ procedures to assure that individuals that would install, inspect, and maintain the VpCI will be included in Plains procedures. b. Submit the revised procedures to assure that procedures include the installation, inspection, and maintenance of the VpCI. 5. Plains shall complete the items above within 60 days after receipt of the Final Order. 6. Plains Pipeline, L.P. shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R.M. Seeley, Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration. Costs shall be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure.#