TE PRODUCTS PIPELINE COMPANY, LLC — Notice of Probable Violation

420105011_Final Order_12142012_text.pdf, page 1Official PDFDECEMBER 14, 2012 Mr. Terry Hurlburt Group Senior Vice President, Operations & EHS&T TE Products Pipeline Company, LLC 1100 Louisiana Street Houston, TX 77002-5227 Re: CPF No. 4-2010-5011 Dear Mr. Hurlburt: Enclosed please find the Final Order issued for the above-referenced case. It makes a finding of violation and assesses a civil penalty of $22,500. This letter acknowledges receipt of payment of the full penalty amount, by wire transfer, dated July 9, 2012. It further finds that TE Products Pipeline Company, LLC has completed the actions specified in the Notice to comply with the pipeline safety regulations. This enforcement action is now 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: 2893 BJ Walker, Esq., Rose Law Firm, 120 East Fourth Street, Little Rock, Arkansas 72201- Mr. R. M. Seeley, Director, Southwest Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420105011_Final Order_12142012_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 ) TE Products Pipeline Company, LLC, ) ) ) ) Respondent. ) ____________________________________) CPF No. 4-2010-5011 FINAL ORDER Pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), initiated an investigation of an accident involving the explosion of an out-of-service breakout tank operated by TE Products Pipeline Company, LLC (TEPPCO or Respondent) at the McRae Product Terminal near Garner, Arkansas on May 12, 2009. Respondent owns and operates refined products and liquefied petroleum gas pipelines in the United States. TE Products Pipeline Company, LLC is a subsidiary of TEPPCO Partners LP. In its correspondence with PHMSA throughout the course of this case, Respondent has referred to itself as “TEPPCO.” The explosion of the out-of-service breakout tank occurred during the installation of a gauge pole in the tank. Gauge poles are intended to reduce emissions and product loss from aboveground storage tanks and breakout tanks. After the tank was emptied and cleaned, hazardous vapors were ignited when a welder used a flame cutter to cut the internal floating roof. The explosion and destruction of the tank resulted in three fatalities of contract personnel working inside the tank. The Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated June 22, 2010, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that TEPPCO had violated 49 C.F.R. § 195.54, and proposed assessing a civil penalty of $22,500 for the alleged violation. TEPPCO responded to the Notice by letter dated July 22, 2010. Respondent contested the allegation, presented information seeking mitigation and/or elimination of the proposed penalty, and requested a hearing. The hearing was to include discussion of this case and also a follow up case related to the May 12, 2009 incident concerning TEPPCO’s alleged failure to follow its own procedures, C.P.F. 4-2010-5015.#

420105011_Final Order_12142012_text.pdf, page 32 By letter dated May 21, 2012, Respondent withdrew its request for a hearing and thereby authorized entry of this Final Order without further notice. On July 7, 2012, Respondent paid the proposed civil penalty of $22,500. Notwithstanding its payment of the civil penalty, TEPPCO asked for permission to submit a formal response and documentation for consideration of the hearing officer prior to preparation of this Final Order. On July 30, 2012, TEPPCO submitted said document, which included deposition testimony related to ongoing litigation for tortious suits, documents concerning the cleaning and planning for the gauge pole installation, and contracts between Respondent and its contractors for the project. Respondent also requested that PHMSA “acknowledge all that TEPPCO did to ensure the work was done safely, in accordance with regulations and guiding safety principles.” Under 49 C.F.R. § 190.209(a)(1), however, payment of the penalty serves to close the case with prejudice to Respondent. Therefore, the additional information provided and the defenses asserted by Respondent are neither discussed nor considered in this Order. The findings and conclusions set forth below are based entirely on the information referenced in the Notice and discussed in this Order, insofar as such information relates to the specific regulatory violations alleged in the Notice. FINDING OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195.54, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.54, which states: § 195.54 Accident reports. (a) Each operator that experiences an accident that is required to be reported under §195.50 shall as soon as practicable, but not later than 30 days after discovery of the accident, prepare and file an accident report on DOT Form 7000-1, or a facsimile. (b) Whenever an operator receives any changes in the information reported or additions to the original report on DOT Form 7000-1, it shall file a supplemental report within 30 days. The Notice alleged that Respondent violated 49 C.F.R. § 195.54 by failing to file a supplemental report after it received updated information about the cause of the May 12, 2009 incident. Specifically, the Notice alleged that TEPPCO failed to file a supplemental report within 30 days after it obtained a failure investigation report from Baker Engineering and Risk Consultants, Inc. (BakerRisk) on March 5, 2010.1 The report concluded that the probable cause of the explosion was ignition of a flammable gasoline/air mixture inside the floating roof pontoons, created by leakage of gasoline vapors into the pontoons. As of May 19, 2010, a supplemental PHMSA 7000-1 report still had not been filed by Respondent to update the original report with the information included in the BakerRisk report. By May 19, 2010, Respondent had also not reported estimated losses as a result of the accident in the PHMSA 7000-1 report on file (20090164-8872). Respondent did not contest this allegation of violation. Accordingly, I find that Respondent 1 See The BakerRisk Report # 01-02565-001-09, as included in the Violation Report.#

420105011_Final Order_12142012_text.pdf, page 43 violated 49 C.F.R. § 195.54 by failing to file a supplemental report after it received changes in the information reported in the original report. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 for any related series of violations. In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, PHMSA 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, PHMSA may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $22,500 for the violations cited above. Item 1: The Notice proposed a civil penalty of $22,500 for Respondent’s violation of 49 C.F.R. § 195.54, for failing to file a supplemental report after it received changes in the information reported in the report. Accordingly, I assess Respondent a civil penalty of $22,500 for violation of 49 C.F.R. § 195.54. TEPPCO paid the proposed penalty, which serves to close the case with prejudice to Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 1 in the Notice for violation of 49 C.F.R. § 195.54. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of hazardous liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. The Director indicates that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to the violation of § 195.54 (Item 1), Respondent filed a supplemental report on May 26, 2011. Accordingly, I find that compliance has been achieved with respect to this violation. Therefore, the compliance terms proposed in the Notice are not included in this Order.#

420105011_Final Order_12142012_text.pdf, page 54 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#

420105011_NOPV PCP PCO_06222010_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED June 22, 2010 Mr. Terry Hurlburt Senior Vice President Texas Eastern Products Pipeline Company, LLC P. O. Box 4735 Houston, Texas 77210-4735 CPF 4-2010-5011 Mr. Hurlburt: In May, 2009, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code investigated an accident that occurred on May 12, 2009 at Texas Eastern Products Pipeline Company, LLC’s (TEPPCO) McRae Product Terminal near Garner, AR. As a result of the accident investigation, it appears that you have committed a probable violation of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The item inspected and the probable violation is: 1. §195.54 Accident reports. (a) Each operator that experiences an accident that is required to be reported under §195.50 shall as soon as practicable, but not later than 30 days after discovery of the accident, prepare and file an accident report on DOT Form 7000-1, or a facsimile. (b) Whenever an operator receives any changes in the information reported or additions to the original report on DOT Form 7000-1, it shall file a supplemental report within 30 days.#

420105011_NOPV PCP PCO_06222010_text.pdf, page 2TEPPCO failed to file a supplemental report for the McRae Product Terminal facility accident that occurred on May 12, 2009 within 30 days after the failure investigation report was obtained that provided information on the probable cause of failure. On May 12, 2009, at approximately 2:17 p.m. CST, an explosion occurred in a gasoline storage tank, Tank 1303, at TEPPCO’s McRae Product Terminal near Garner, AR. Three contractor employees were fatally injured in the explosion. A failure analysis was performed by Baker Engineering and Risk Consultants, Inc (BakerRisk) of San Antonio, TX. The probable cause of the explosion was determined to be deflagration of a flammable gasoline/air mixture inside the floating roof pontoons, created by leakage of gasoline vapors into the pontoons, and which was ignited by an oxygen/acetylene cutting torch being used by C&C Welding personnel. The BakerRisk Report # 01-02565-001-09 was provided by BakerRisk to the operator on or about March 5, 2010. As of May 19, 2010, a supplemental PHMSA 7000-1 report has not been filed, updating the original report with the final failure report information as to the cause of the accident. There have also not been any losses estimated by TEPPCO as a result of this accident in the PHMSA 7000-1 report on file (20090164-8872). 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 $22,500 as follows: Item number PENALTY 1 $ 22,500 Proposed Compliance Order With respect to item number 1 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to TEPPCO. 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 2#

420105011_NOPV PCP PCO_06222010_text.pdf, page 3must 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 4-2010-5011 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 3#

420105011_NOPV PCP PCO_06222010_text.pdf, page 4PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Texas Eastern Products Pipeline Company, LLC (TEPPCO) a Compliance Order incorporating the following remedial requirements to ensure the compliance of TEPPCO with the pipeline safety regulations: 1. In regard to Item Number 1 of the Notice pertaining to failure to comply with the requirements of §195.54, TEPPCO must immediately file a supplemental DOT Form 7000-1 report for number 20090164 specifying the cause of failure of the Tank 1303 explosion at the McRae Products Terminal near Garner, AR on May 12, 2009 and updating any other information obtained since the accident. If all of the information about the accident is known, this information must be included and the accident report filed as a final report. 2. TEPPCO 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. 4#