MAGELLAN PIPELINE COMPANY, LP — Notice of Probable Violation

party submissionOfficial PDF420105003_Response to NOPV PCP PCO_02232010.pdf#

420105003_FinalOrder_04142011_text.pdf, page 1Official PDFAPR 14 2011 Mr. Larry Davied Senior Vice President, Operations and Technical Services Magellan Pipeline Company, L.P. A subsidiary of Magellan Midstream Partners, L.P. One Williams Center P.O. Box 22186 Tulsa, OK 74121-2186 Re: CPF No. 4-2010-5003 Dear Mr. Davied: Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of violation, assesses a reduced civil penalty of $20,000, and specifies actions that must be taken by Magellan Pipeline Company, L.P. to comply with the pipeline safety regulations. The penalty payment terms are set forth in the Final Order. When the civil penalty has been paid and the terms of the compliance order 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 Mr. Paul Pratt, Associate General Counsel, Magellan Midstream Partners, L.P. CERTIFIED MAIL – RETURN RECEIPT REQUESTED [ 7005 1160 0001 0075 8827]#

420105003_FinalOrder_04142011_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 ) Magellan Pipeline Company, L.P., ) CPF No. 4-2010-5003 ) ) ) Respondent. ) ___________________________________ ) FINAL ORDER On December 17, 2009, the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), received a letter from Magellan Pipeline Company, L.P. (Magellan or Respondent) requesting an extension of time for certain smart pigging requirements contained in the company’s written procedures. Those requirements are specified in the Longhorn Mitigation Plan (LMP), a set of operating and maintenance procedures specifically- tailored for the Longhorn Pipeline. The Longhorn Pipeline transports refined petroleum products from Galena Park, Texas, near the Houston Ship Channel to El Paso, Texas. Magellan has operated the pipeline since its start-up in 2005. Magellan also owns or operates approximately 10,000 miles of pipelines transporting hazardous liquids in the midcontinent region of the United States. As a result of a review of Respondent’s letter, pursuant to 49 U.S.C. § 60117, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated January 19, 2010, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice), which also included a warning pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Magellan had violated 49 C.F.R. § 195.402(a) by failing to follow written procedures specified in its LMP, proposed a civil penalty of $51,000, and proposed to require that Respondent take certain corrective action to comply with the regulation. The warning item required no further action, but warned the operator to correct the probable violation. Magellan responded to the Notice by letter dated February 23, 2010 (Response). The company contested the allegation of violation, offered additional information in response to the Notice, and requested that the proposed compliance order be eliminated. Respondent did not request a hearing and therefore has waived its right to one. FINDING OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows:#

420105003_FinalOrder_04142011_text.pdf, page 32 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a), which states: § 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 49 C.F.R. § 195.402(a) by failing to follow the LMP contained in its manual of written procedures. The relevant portion of the LMP states: “As part of the Longhorn Continuing Integrity Commitment, [Magellan] has agreed to implement and be bound by . . . the Mitigation Commitments described in Section 1.2 hereof.”1 Mitigation Commitment (LMC) 39, the pertinent Mitigation Commitment in Section 1.2 of the LMP, states: Longhorn At the time [Magellan] submits any proposed changes or modifications to the Longhorn Mitigation Plan for DOT review and approval, the proposed changes or modifications along with [Magellan’s] justifications therefore shall (a) be made available to the public by posting the same on the [Magellan] corporate Internet website and (b) be provided to the General Manager of the Lower Colorado River Authority and to the Mayors of Houston, Austin, and El Paso.2 The Notice alleged that Magellan did not comply with LMC 39 when it sent a letter to OPS proposing to change or modify the LMP because it failed to make the proposal available to the public on the company’s website or provide it to the named local authorities at the same time. Specifically, Magellan sent its letter to the Director on December 17, 2009, requesting “PHMSA’s approval to extend the UT inspection timing requirement [in LMC 12] to December, 2010.” The Notice alleged that this request constituted a proposal to change or modify LMC 12 of the LMP. That provision requires Respondent to perform an in-line inspection of the pipeline “no more than 5 years after system startup.” System start occurred on January 27, 2005, making the deadline in LMC 12 for the in-line inspection January 27, 2010. In its Response, Magellan argued that the company’s December 17, 2009, letter did not constitute a proposal to change or modify the LMP and therefore the company did not need to comply with the requirements in LMC 39. Respondent explained that the letter did not propose a modification, because it did not propose “a permanent change to the [procedures] that becomes incorporated into the [procedures] as a new, lasting, and legally binding standard that is enforceable by the regulator. ” 1 The LMP, dated September 2000, as amended, consists of detailed commitments and mitigation measures for the Longhorn Pipeline that address environmental and safety concerns raised by Federal agencies and the general public during an environmental assessment of the Longhorn Partners Pipeline system. The LMP is incorporated into Magellan's manual of written procedures for the operations and maintenance of the Longhorn Pipeline. Respondent is required to comply with such procedures pursuant to 49 C.F.R. § 195.402. 2 Violation Report, Exhibit A (Longhorn Mitigation Plan excerpt).#

420105003_FinalOrder_04142011_text.pdf, page 43 I find Magellan’s argument unconvincing. The deadline itself is a fundamental part of the requirement to perform the in-line inspection. A proposal to change the deadline, therefore, necessarily equates to a proposal to change that key part of the requirement. For this reason, Magellan’s proposal to change the deadline to December 2010, which was submitted for PHMSA review and approval, constituted a proposal to change the LMP. This conclusion is no different under Magellan’s own theory of “modification,” since any new deadline resulting from the company’s request would be “a new, lasting, and legally binding standard that is enforceable by the regulator.” Furthermore, it is important to consider the purpose of LMC 39 is to ensure the public and specified parties remain fully informed of any potential changes to the terms of the LMP. As such, LMC 39 required Magellan to make its proposal available to the public and provide it to the local authorities at the same time the request was submitted to PHMSA for review and approval. The evidence demonstrates Magellan did not comply with this requirement. The company did not post its extension request on the company’s website or provide it to the local authorities until January 26, 2010—prior to the deadline for performing the in-line inspection, but more than a month after the request was submitted to PHMSA. 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 specified in LMC 39 for proposing changes to the LMP. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent.3 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 $51,000 for the violation of § 195.402(a) (Notice Item 1). In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; the Respondent’s ability to pay the penalty and any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. 3 Magellan also contested an allegation in Item 1 of the Notice that it had reduced the availability of public information about the Longhorn pipeline by allowing it to become cumbersome and difficult to find the information on the company’s website. In its Response, Magellan indicated that it has made changes to the website to ensure easy access to the information by the public, but argued nevertheless that any reduced availability did not rise to the level of a violation. Since the issue of general availability of information does not directly pertain to the issue of whether or not Magellan complied with LMC 39 on December 17, 2009, this allegation is not considered part of the violation.#

420105003_FinalOrder_04142011_text.pdf, page 54 Although Respondent contested the allegation of violation, the company did not direct any of its arguments to the civil penalty assessment criteria. That said, as a part of my review pursuant to 49 C.F.R. § 190.213(c), I have determined that the proposed civil penalty for this violation should be reduced. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a reduced civil penalty of $20,000. Payment of the civil penalty must be made within 20 days of receipt of this Final Order. Federal regulations (49 C.F.R. § 89.21(b)(3)) require this payment 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 (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, OK 73125; (405) 954- 8893. Failure to pay the $20,000 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 United States District Court. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 1 in the Notice for the violation of 49 C.F.R. § 195.402(a). 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. 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. With respect to the violation of § 195.402(a) (Notice Item 1), Respondent must perform each of the following. To the extent an item has already been performed, submit documentation to the Director demonstrating that such has been completed: 1. Revise Magellan’s System Integrity Plan to incorporate the requirements of the LMP, specifically LMC 39, and submit a copy of the revised procedures to the Director. 2. Following development of the procedure in Item 1 of this Compliance Order, revise Magellan’s request for extending the deadline in the LMP with respect to LMC 12 and resubmit it to the Director in accordance with LMC 39 and the other items in this Compliance Order. The resubmission must provide a detailed justification for not meeting the original deadline, and developed alternative actions to be taken until the performance of the internal inspection by ultrasonic wall measurement tool in accordance with LMC 12 can be completed.#

420105003_FinalOrder_04142011_text.pdf, page 65 3. Revise the Longhorn Corporate Internet site to make the LMP and other public information required by the LMP readily apparent and available. Post the revised change request and associated justifications and alternatives developed under this Compliance Order on the Internet site at the same time they are submitted to the Director for review and approval. 4. Notify the entities identified in LMC 39 regarding the status of compliance with LMC 12, and provide to those entities a copy of the revised change request and associated justifications and alternatives to be developed under this Compliance Order at the same time they are submitted to the Director for review and approval. 5. Identify the alternatives and the associated costs for each alternative considered in lieu of meeting the original timing requirements of LMC 12 and submit the alternative cost analysis to the Director. 6. Provide a detailed schedule for the timing of the inspections (and applicable proposed alternatives to the inspections) required under both LMC 12 and LMC 12A for each pipeline segment on the Longhorn System. 7. Upon approval by the Director of the revised change request and associated justification and alternatives to be developed under this Compliance Order, provide monthly updates to the Director regarding the status of approved activities, costs, and schedule for the completion of LMC 12 (and applicable alternatives) and LMC 12A, until such time that the alternatives or the requirements of LMCs 12 and 12A are complete and the Director no longer requires updates be provided. 8. Complete each of the above items and submit necessary documentation to demonstrate compliance within 45 days of receipt of this Final Order. The revised change request, associated justification and alternatives, shall be subject to the review and approval of the Director. The Director will consider any comments from those entities named in LMC 39 in his review and approval determination. Documentation shall be submitted to the Director, Southwest Region, Office of Pipeline Safety, 8701 South Gessner, Suite 1110, Houston, TX 77074-2949. 9. 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. The Director may grant an extension of time to comply with any of the requirements of the Compliance Order 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.#

420105003_FinalOrder_04142011_text.pdf, page 76 WARNING ITEM With respect to Item 2, the Notice alleged a probable violation of Part 195 and specifically considered this to be a warning item. The warning was for: 49 C.F.R. § 195.402(a) (Item 2) – Respondent’s alleged failure to meet the requirements in LMC 12, which required the company to perform an in-line inspection by January 27, 2010. Magellan allegedly failed to provide timely notice to PHMSA that an extension was needed, as the preparations alone for such an in-line inspection would require more than the time between December 17, 2009, when Respondent requested the extension, and the original deadline of January 27, 2010. In the event that OPS finds a violation of this provision 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 submitting a petition, 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 filing of the petition automatically stays the payment of any civil penalty assessed. All other terms of the 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#

420105003_NOPV PCP PCO_01192010_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED January 19, 2010 Mr. Rick Olson Senior Vice President, Operations and Technical Services Magellan Midstream Partners, L.P. One Williams Center P. O. Box 22186 Tulsa, OK 74172-2186 CPF 4-2010-5003 Dear Mr. Olson: The Pipeline and Hazardous Materials Safety Administration’s (PHMSA) SW Region Office has reviewed the Magellan Midstream Partners, L.P. (Magellan) letter dated December 17, 2009, regarding the Longhorn Mitigation Plan, Commitment Number 12 (LMC 12 Letter). That letter requests an extension of time for the completion of the UT inspection specified in the Longhorn Mitigation Plan (LMP) Longhorn Mitigation Commitment (LMC) Number 12. This constitutes a modification to the LMP, and is subject to the requirements set forth in the First Supplement to the LMP, more specifically LMC 39 which requires that any changes or modifications proposed by Longhorn to the LMP shall be for the purpose of adapting to changing technology and circumstances. LMC 39 contains explicit requirements for submitting proposed changes or modifications:#

420105003_NOPV PCP PCO_01192010_text.pdf, page 2“At the time Longhorn submits any proposed changes or modifications to the Longhorn Mitigation Plan for DOT [PHMSA] review and approval, the proposed changes or modifications along with Longhorn’s justification therefore shall (a) be made available to the public by posting the same on the Longhorn corporate Internet website and (b) be provided to the General Manager of the Lower Colorado River Authority and to the Mayors of Houston, Austin, and El Paso.” Furthermore, Magellan is reminded that the LMP and associated Pipeline System Integrity Plan and Operational Reliability Assessment shall be considered part of Longhorn’s written procedures for conducting normal operations and maintenance activities, as specified under 49 CFR §195.402 and any violation of the Longhorn Mitigation Plan is subject to enforcement under 49 CFR Part 190. On January 5, 2010, a PHMSA representative contacted Mr. Doug Chabino by telephone, at which time it was confirmed that Magellan had not provided notification of your proposed change to the LMP to the parties requiring notification of any such proposed changes to the LMP. Additionally, it was confirmed that Magellan is not proposing alternative actions to the requirements of LMC 12. Based on the LMC 12 Letter, and the telephone conversation of January 5, 2010, it appears that Magellan has committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items observed and the probable violation(s) 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. Magellan has failed to follow the procedure in LMC 39 for requesting changes to the LMP by failing to post the proposed changes on its corporate Internet site, and failing to make notification to the entities required by LMC 39. Magellan has also removed the LMP and the System Integrity Plan information that is to be made available to the public from the Longhorn Corporate Internet site the, instead referring the public to the EPA website. Magellan has redirected the former Longhorn Partners Pipeline corporate website http://www.longhornpipeline.com/ to the Magellan Corporate Internet site, but does not identify Longhorn Partners Pipeline on the Magellan homepage. Magellan has made it cumbersome and difficult for the public to obtain information regarding the Longhorn Mitigation Plan and the Longhorn Mitigation Commitments by burying them under the safety/environment tab. The System Integrity Plan that is accessible at this tab is the Magellan System Integrity Plan, and is not the Longhorn Mitigation Plan System Integrity Plan referenced in LMC 39. 2#

420105003_NOPV PCP PCO_01192010_text.pdf, page 3The Longhorn Pipeline Management Commitment expressly requires the “operations, maintenance, and improvement activities will be governed by an overall system integrity and risk management process through adoption of this LPSIP,” found in the LMP Section 3.2 which further requires the LPSIP information to be available to the public. LMP Section 3.2.14 states that “As part of the Longhorn Continuing Integrity Commitment, Longhorn has agreed to implement and be bound in the future by (a) the System Integrity commitments set out in Section 3.2 hereof, (b) the Mitigation Commitments described in Section 1.2 hereof…” and further states that “Through the reports made available to the public, the public will be able to monitor Longhorn’s continuing commitment to maintain the integrity of the pipeline at levels equivalent to those in place at start up.” Magellan appears to have reduced the availability of the reports and information that is available to the public through modifications to the Longhorn Corporate Internet site and removal of information previously available to the public on that site. 2. §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. By virtue of the LMC 12 Letter, Magellan has identified its failure to meet the requirements of LMC 12 within the specified time. Specifically, Magellan has not completed an in-line inspection of the existing pipeline (Valve J-1 to Crane) with an ultrasonic wall measurement tool no more than 5 years after system startup. System startup of the Longhorn Pipeline occurred on January 27, 2005, making the deadline for performance of LMC 12 within the specified timeline January 27, 2010. Magellan has failed to provide timely notice for a revision to the LMP as just the preparations for such an in-line inspection require more than the time between December 17, 2009 and January 27, 2010. Further, Magellan has not provided an alternative proposal to ensure equivalent levels of safety are maintained as required by LMP 3.2.14. Magellan is further reminded that LMC 12A requires that no more than three years shall pass without an in-line inspection being performed using an in-line tool capable of detecting third party damage (e.g. TFI, HRMFL, or geometry). Based upon the annual status reports submitted by Longhorn to PHMSA, SW Region, it appears that these dates will fall sometime within the calendar year of 2010, but no later than January 27, 2011, depending upon the date of the last tool run for each segment on the Longhorn system. 3#

420105003_NOPV PCP PCO_01192010_text.pdf, page 4As a direct result of the actions described herein, DOT/PHMSA cannot approve Magellan’s request for a time extension to LMC 12 until such time that Magellan has followed the notification requirements of LMC 39, including justification for the change and proposed alternatives to ensure equivalent levels of safety are maintained. 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 $51,000 as follows: Item number PENALTY 1 $51,000 Warning Item With respect to item 2, 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 HEP being subject to additional enforcement action. Proposed Compliance Order With respect to item 1, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Magellan. 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. 4#

420105003_NOPV PCP PCO_01192010_text.pdf, page 5In your correspondence on this matter, please refer to CPF 4-2010-5003 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 cc: Larry Davied Doug Chabino Vice President, Technical Services Manager, Asset Integrity Engineering Magellan Midstream Partners, L.P. Magellan Midstream Partners, L.P. One Williams Center One Williams Center P. O. Box 22186 P. O. Box 22186 Tulsa, OK 74172-2186 Tulsa, OK 74172-2186 Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 5#

420105003_NOPV PCP PCO_01192010_text.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Magellan Midstream Partners, L. P. (Magellan) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Magellan with the pipeline safety regulations: 1. In regard to Item Number 1 of the Notice pertaining to failure to follow its operating manual which includes the procedures specified in the Longhorn Mitigation Plan (LMP), a. Magellan shall revise its System Integrity Plan to incorporate the requirements of the LMP, specifically Longhorn Mitigation Commitment (LMC) 39, and provide a copy of the revised procedures to PHMSA, Southwest (SW) Region. b. Following the procedure developed in Item 1a, above, Magellan shall revise its request for revision of the LMP with respect to LMC 12 and resubmit it to PHMSA, SW Region, in accordance with items 1d though 1h of this Compliance Order. c. Magellan shall revise the Longhorn Corporate Internet site to make the LMP and other public information required by the LMP readily apparent and available. Magellan shall then post the revised change request and associated justifications and alternatives to be developed under this Compliance Order, to the Internet site. d. Magellan shall provide a detailed justification for not performing the requirements of LMC 12 in accordance with the LMP, and develop alternative actions to be taken until the performance of the internal inspection by ultrasonic wall measurement tool in accordance with LMC 12 can be completed. e. Magellan shall notify the entities identified in LMC 39 of the LMP regarding its failure to meet the timing requirements of LMC 12, and provide a copy of the justification and proposed alternatives to LMC 12 to those entities. f. Magellan shall identify the alternatives and the associated costs for each alternative it has considered in lieu of meeting the timing requirements of LMC 12 and submit its alternative cost analysis to PHMSA, SW Region. g. Magellan shall provide a detailed schedule for the timing of the inspections (or proposed alternatives to the inspections) required under both LMC 12 and LMC 12A for each pipeline segment on the Longhorn System. h. Upon approval of Magellan’s proposal by PHMSA, SW Region, Magellan shall provide monthly updates on its activities, costs and schedule for the completion of the alternatives to the completion of LMC 12 and scheduling of LMC 12A, until such time that the alternatives or the requirements of LMCs 12 and 12A are complete and PHMSA, SW Region no longer requires updates be provided. 6#

420105003_NOPV PCP PCO_01192010_text.pdf, page 72. Magellan shall submit its proposed alternatives and cost analysis to PHMSA, SW Region no later than thirty (30) days from the Final Order. Magellan’s proposal shall be subject to the review and approval of PHMSA, SW Region. Magellan’s submittal to PHMSA shall identify and copy all entities in LMC 39. PHMSA, SW Region will consider the comments from the LMC 39 entities in its review and approval of Magellan’s alternative to meeting the timing requirements of LMC 12. Magellan shall post its justification and proposed alternatives to its corporate Internet site at the same time it makes notification to PHMSA, SW Region. 3. Magellan shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, SW 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. 7#

420105003_Closure Letter_01062012_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED January 6, 2012 Mr. Larry Davied Senior Vice President, Operations and Technical Services Magellan Pipeline Company, L.P. A subsidiary of Magellan Midstream Partners, L.P. One Williams Center Tulsa, OK 74172-2186 CPF 4-2010-5003 Dear Mr. Davied: On April 14, 2011, the Pipeline and Hazardous Materials Administration issued a Final Order to Magellan Midstream Partners, L.P. (“Magellan”) in the referenced case. Based on review of the documentation you provided and confirmation that the administrative civil penalty has been paid, it has been determined that Magellan has complied with the terms and conditions of the Final Order. Accordingly, PHMSA now considers this case closed and no further action is contemplated with respect to the maters 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#