HARVEST MIDSTREAM COMPANY — Notice of Probable Violation

party submissionOfficial PDF420115004_Operator Response to NOPV PCP PCO_03152011.pdf#

420115004_NOPV PCP PCO_02152011_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED February 15, 2011 Mr. Steve Jacobs President Harvest Pipeline Company 1201 Louisiana, Suite 1400 Houston, Texas 77002 CPF 4-2011-5004 Dear Mr. Jacobs: During the months August thru October 2010, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your Southwest Pass 24 Oil Terminal facility located in Venice, LA. Records were inspected in Houston, TX. 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 violation(s) are: 1. §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 7½ months, but at least twice each calendar year, 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. Harvest failed to inspect and test three pressure limiting devices each calendar year, specifically 2009. During the inspection, Harvest provided PHMSA records of the tests that were#

420115004_NOPV PCP PCO_02152011_text.pdf, page 2performed. These records were reviewed during the inspections and there was no documentation provided at the time to demonstrate that three overpressure protection devices on SW Pass 24 Terminal were performed for calendar year 2009. The available documentation indicated that these devices were inspected on September 23, 2008. All Overpressure Protection devices were inspected for calendar year 2010. The following Overpressure Protection devices were missed in 2009: Location ID# Type Manufacture EPL Delivery line PR103 Pressure Relief Grove 83 Prover TR106/SWP-2 Thermal Relief Anderson Greenwood 8364 Station Suction TR108/SWP-1 Thermal Relief Anderson Greenwood G1PMCY6-4 The evidence demonstrates that the operator violated § 195.428(a) by failing to inspect and test these overpressure protection devices at the required interval. In the event that such inspections were, in fact, performed, the evidence demonstrates the operator violated §195.404(c)(3) by failing to maintain a record of each inspection and test required by this subpart for at least 2 years or until the next inspection or test is performed, whichever is longer. 2. §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. During the field inspection, the PHMSA inspector found that Harvest did not provide protection at the SW Pass 24 Oil Terminal Facility in order to prevent vandalism and unauthorized entry as required by §195.436. Additionally, Harvest’s “Breakout Tank In-service Visual Inspection Report” which provides monthly inspection information (provided by the operator at the time of the inspection) indicates that the facility is not secure. 3. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (b) Ensure through evaluation that individuals performing covered tasks are qualified; While reviewing inspection records, PHMSA inspectors found that individuals had performed covered tasks prior to being qualified. Harvest provided forms entitled “Operator Qualification Solutions Group” for several individuals as qualification records. These records indicate the earliest time an individual is qualified to perform a covered task. PHMSA reviewed these forms during the inspection and found that an individual (GDB) performed covered task “CT03 Inspect Cathodic Protection Rectifiers” twice on March 27, 2009 and twice on July 31, 2009. However, the individual was not initially qualified to perform this covered task until October 11, 2009. Another individual (GRJ) performed covered task “CT03” twice on May 8, 2009 and was not qualified until June 28, 2009. Neither individual was observed by a qualified individual while performing these tasks.#

420115004_NOPV PCP PCO_02152011_text.pdf, page 3In addition, an individual (LRG) performed covered task “CT24 Inspect, Test and Calibrate Relief Valves” on August 6, 2010 on three relief valves. However, this individual was not initially qualified to perform this covered task until October 12, 2010. He was not observed by a qualified individual. 4. §195.573 What must I do to monitor external corrosion control? (a) Protected pipelines. You must do the following to determine whether cathodic protection required by this subpart complies with Sec. 195.571: (1) Conduct tests on the protected pipeline at least once each calendar year, but with intervals not exceeding 15 months. However, if tests at those intervals are impractical for separately protected short sections of bare or ineffectively coated pipelines, testing may be done at least once every 3 calendar years, but with intervals not exceeding 39 months. Harvest failed to conduct tests of the cathodic protection system for the terminal piping and breakout tanks #103 & 104 for each calendar year, specifically 2009. During the inspection, Harvest provided PHMSA records of the tests that were performed. These records were reviewed during the inspections and there was no documentation provided at the time to demonstrate that the cathodic protection system for the terminal piping and breakout tanks #103 & 104 were performed for calendar year 2009. The available documentation indicated that these test were performed on August 21, 2008 and again on April 16, 2010. The evidence demonstrates that the operator violated § 195.573 by failing to test the cathodic protection system at the required interval. In the event that such inspections were, in fact, performed, the evidence demonstrates the operator violated §195.589(c) by failing to maintain a record of each test required by this subpart as long as the pipeline remains in service. 5. §195.579 What must I do to mitigate internal corrosion? (a) General. If you transport any hazardous liquid or carbon dioxide that would corrode the pipeline, you must investigate the corrosive effect of the hazardous liquid or carbon dioxide on the pipeline and take adequate steps to mitigate internal corrosion. Harvest failed to investigate the corrosive effect of the product transported by its pipeline to determine if it would corrode the pipeline. Harvest utilizes the procedure entitled “Hilcorp Energy Company Pipeline Assets Corrosion Control Program” (Corrosion Procedure) last revised 11-19-2007 as their corrosion control program procedures and to comply with 195.579. During the procedures review, PHMSA inspectors found that Harvest did not follow “Section C Internal Corrosion” of the Corrosion Procedure or take any other action to investigate the corrosive effect of the product. Paragraph 1.a. of the procedure states: “Corrosive gas or liquids will not be transported by pipeline unless the corrosive effect of the liquid on the pipeline has been investigated and steps have been taken to minimize internal corrosion (inhibitor and /or monitoring equipment). An analysis of fluids and gases will be conducted to identify corrosive materials”. During the inspection, PHMSA inspectors asked Harvest to demonstrate that they had investigated the corrosive effect of the hazardous liquid. Harvest did not provide any#

420115004_NOPV PCP PCO_02152011_text.pdf, page 4explanation nor documentation that showed they had performed the required investigation. In addition, at the time of the inspection, Harvest was not using inhibitors to mitigate internal corrosion and did not have a coupon corrosion monitoring program to determine corrosive effects 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 $72,400 as follows: Item number PENALTY Item 1 $14,100 Item 3 $42,500 Item 4 $15,800 Proposed Compliance Order With respect to items 2 and 5 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Harvest Pipeline Company. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in 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.#

420115004_NOPV PCP PCO_02152011_text.pdf, page 5In your correspondence on this matter, please refer to CPF 4-2011-5004 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#

420115004_NOPV PCP PCO_02152011_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 Harvest Pipeline Company (Harvest) a Compliance Order incorporating the following remedial requirement to ensure the compliance of Harvest Pipeline Company with the pipeline safety regulations: 1. In regards to Item Number 2 of the Notice pertaining to failure to provide protection for breakout tank area; from vandalism and unauthorized entry, Harvest Pipeline Company must provide security from vandalism and entry by unauthorized persons. Harvest must provide this office its plans, procedures and records that demonstrate that a process has been implemented or that barriers have been installed that demonstrate compliance with 49 CFR §195.436. 2. In regards to Item Number 5 of the Notice pertaining to the failure to investigate the corrosive effect of the hazardous liquid on the pipeline, Harvest must investigate the corrosive effect of hazardous liquids on its pipelines, including on “dead legs,” low- flow lines, and infrequently used pump station lines. Harvest must review all relevant procedures and amend them as necessary. Harvest must survey all applicable segments of its pipeline facility and ensure that they are protected from corrosion and are subject to internal corrosion inspection, testing, and monitoring that meet applicable requirements. Based on this review and survey, Respondent must develop a plan for conducting internal corrosion surveys in a manner consistent with § 195.579(a). 3. Aforementioned to be accomplished within 30 days following receipt of the Final Order. 4. It is requested (not mandated) that Harvest 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. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure.#

420115004_Final Order_06122012_text.pdf, page 1Official PDFJUNE 12, 2012 Mr. Steve Jacobs President Harvest Pipeline Company 1201 Louisiana, Suite 1400 Houston, TX 77002 Re: CPF No. 4-2011-5004 Dear Mr. Jacobs: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a reduced civil penalty of $45,100, and specifies actions that need to be taken by Harvest Pipeline Company 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. Rod M. Seeley, Director, Southwest Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420115004_Final Order_06122012_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 ) ) Harvest Pipeline Company, ) CPF No. 4-2011-5004 ) Respondent. ) ____________________________________) FINAL ORDER From August to October, 2010, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the Southwest Pass 24 Oil Terminal facility of Harvest Pipeline Company (Harvest or Respondent) in Venice, Louisiana, and of its records in Houston, Texas. Southwest Pass 24 Oil Terminal is a pump station with two breakout tanks and interconnected piping located on an island at the mouth of the Mississippi River. As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated February 15, 2011, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Harvest had committed various violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $72,400 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. Harvest responded to the Notice by letter dated March 15, 2011 (Response). The company provided an explanation of its actions and requested that the proposed civil penalty be reduced. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a), which states: § 195.428 Overpressure safety devices and overfill protection systems. (a) Except as provided in paragraph (b) of this section, each operator#

420115004_Final Order_06122012_text.pdf, page 32 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 7½ months, but at least twice each calendar year, 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. The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and test each pressure limiting device each calendar year. Specifically, the Notice alleged that three pressure limiting devices had not been inspected and tested in 2009, or that, if such inspections were in fact performed, that Respondent violated § 195.404(c)(3) by failing to maintain a record of each inspection and test required by Subpart F of 49 C.F.R. Part 195 for at least 2 years or until the next inspection or test is performed, whichever is longer. 1 Respondent did not contest this allegation of violation, and indicated that it had taken steps to ensure that pressure limiting devices were tested at the required frequency in the future. of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and test each pressure limiting device in calendar year 2009. 2 Accordingly, based upon a review Item 2: 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 49 C.F.R. § 195.436 by failing to protect the Southwest Pass 24 Oil Terminal Facility from vandalism and unauthorized entry. Evidence in the record included Harvest’s “Breakout Tank In-service Visual Inspection Report,” which listed the facility as not secured. 3 In its Response, Harvest made note of the “remote location of the island on which the terminal is located,” and stated that it had believed that the terminal was exempt from PHMSA’s security requirements because it is exempt from US Coast Guard (USCG) security requirements. 4 Harvest’s facility and operations must comply with all applicable federal regulations. The remote location of the facility and its exemption from certain USCG requirements do not exempt the facility from the Pipeline Safety Regulations. Harvest stated that its “security-related activities have been reviewed” and stated that it “believes 1 Notice at 1. 2 Response at 2. 3 Violation Report, Exhibit B. 4 Response at 2.#

420115004_Final Order_06122012_text.pdf, page 43 the existing and improved components provide the appropriate security for the current environment and conditions provided by the remote location of the facility and island.”5 Harvest further stated that additional security measures, such as gates, cameras, fences, lighting, or a 24- hour security guard, would not be cost-effective or provide significant additional security. Harvest’s list of security-related components provided in its Response does not satisfy the requirements of this regulation. Harvest stated that the terminal is manned 24 hours a day, 7 days a week, and that it is patrolled twice daily by Harvest personnel, but provided no evidence of this. Harvest stated that aerial surveillance is conducted twice weekly, but this frequency of patrolling does not protect the facility from vandalism and unauthorized entry. Harvest discussed the patrolling activities of EPL, another company that operates a facility on the same island, and the USCG, and stated that “the USCG contacts EPL with any concerns, who in turn contacts Harvest,” but did not provide any evidence of these monitoring activities or of any formal arrangement with these entities. 6 Harvest also gave no evidence to support its claim of significant cost. provide the facility with adequate protection from vandalism and unauthorized entry. 7 In short, the improved security measures described in the Response do not Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.436 by failing to protect the Southwest Pass 24 Oil Terminal Facility from vandalism and unauthorized entry. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(b), which states: § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) … (b) Ensure through evaluation that individuals performing covered tasks are qualified…. The Notice alleged that Respondent violated 49 C.F.R. § 195.505(b) by failing to ensure through evaluation that individuals performing covered tasks were qualified. Specifically, the Notice alleged that Harvest’s records showed that three individuals had performed covered tasks prior to being qualified for those tasks on nine occasions. 8 Respondent did not contest this allegation of violation, and stated that after the inspection it reviewed operator qualification to ensure that all employees were up-to-date in their operator qualification. 9 Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.505(b) by failing to ensure through evaluation that individuals performing covered tasks were qualified. 5 Response at 2. 6 Response at 3. 7 Response at 4-5. 8 Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice) at 2-3. 9 Response to the Notice (Response) at 5.#

420115004_Final Order_06122012_text.pdf, page 54 Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a), which states in relevant part: § 195.573 What must I do to monitor external corrosion control? (a) Protected pipelines. You must do the following to determine whether cathodic protection required by this subpart complies with § 195.571: (1) Conduct tests on the protected pipeline at least once each calendar year, but with intervals not exceeding 15 months. However, if tests at those intervals are impractical for separately protected short sections of bare or ineffectively coated pipelines, testing may be done at least once every 3 calendar years, but with intervals not exceeding 39 months…. The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a) by failing to conduct tests of the cathodic protection on the pipeline at least once each calendar year. Specifically, the Notice alleged that Harvest failed to test the cathodic protection system on the terminal piping and breakout tanks 103 and 104 for the year 2009, or that, if such inspections were in fact performed, that Respondent violated § 195.589(c) by failing to maintain a record of each test required by Subpart H of 49 C.F.R. Part 195 for as long as the pipeline remained in service. 10 Respondent did not contest this allegation of violation, and stated that it had taken steps to ensure future compliance. violated 49 C.F.R. § 195.573(a) by failing to conduct tests of the cathodic protection on the pipeline at least once in calendar year 2009. 11 Accordingly, based upon a review of all of the evidence, I find that Respondent Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.579(a), which states: § 195.579 What must I do to mitigate internal corrosion? (a) General. If you transport any hazardous liquid or carbon dioxide that would corrode the pipeline, you must investigate the corrosive effect of the hazardous liquid or carbon dioxide on the pipeline and take adequate steps to mitigate internal corrosion. The Notice alleged that Respondent violated 49 C.F.R. § 195.579(a) by failing to investigate the corrosive effect of the hazardous liquid on the pipeline. Specifically, the Notice alleged that Harvest could not demonstrate that it had investigated the corrosive effects of the hazardous liquid as required by § 195.579 and its own procedures. 12 In its Response, Harvest stated that it believed it had satisfied the regulatory requirement by relying on the producers of the hazardous liquid to analyze the product, take appropriate steps to address any corrosiveness in their products, and inform Harvest of any such action.13 Harvest did not provide any evidence that it 10 Notice at 3. 11 Response at 5. 12 Notice at 3. 13 Response at 5.#

420115004_Final Order_06122012_text.pdf, page 65 had a formal agreement with the producers of the individual product streams or that it had received reports from them about the corrosiveness of their product. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.579(a) by failing to investigate the corrosive effect of the hazardous liquid on the pipeline. 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. 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. The Notice proposed a total civil penalty of $72,400 for the violations cited above. Item 1: The Notice proposed a civil penalty of $14,100 for Respondent’s violation of 49 C.F.R. § 195.428(a), for failing to inspect and test each pressure limiting device each calendar year. In its Response, Harvest requested a reduced penalty and noted several factors to warrant this reduction, including its good history of violations, good faith attempts to comply, and quick corrective actions after being notified of violations. Harvest did take action to make sure all 2010 inspections were in compliance, but corrective actions taken after the violation has been discovered do not warrant a reduction in penalty.14 Harvest’s lack of prior offenses and the fact that this offense did not result in an accident were factored into the proposed penalty. proper functioning of pressure limiting devices is necessary to prevent a pipeline failure due to overpressure, which could have serious consequences for people and the environment. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $14,100 for violation of 49 C.F.R. § 195.428(a). 15 The Item 3: The Notice proposed a civil penalty of $42,500 for Respondent’s violation of 49 C.F.R. § 195.505(b), for failing to ensure through evaluation that individuals performing covered tasks were qualified. In its Response, Harvest requested a reduced penalty and noted several factors to warrant this reduction, including its clean history of violations, good faith attempts to comply, and its quick corrective actions after being notified of violations. Corrective 14 See, e.g., In the Matter of MidWestern Gas Transmission Co., Final Order, CPF 3-2010-1004, 2011 (August 11, 2011) (available at www.phmsa.dot.gov/pipeline/enforcement). 15 Pipeline Safety Violation Report CPF 4-2011-5004 (Violation Report) (on file with PHMSA) at 4, 27.#

420115004_Final Order_06122012_text.pdf, page 76 actions taken after the violation has been discovered, such as Harvest’s post-inspection review of operator qualification to ensure that all employees are now up-to-date in their operator qualification, do not warrant a reduction in penalty. Upon review of the record, I find the proposed penalty is not reflective of the low gravity of the violation, which “had a minimal impact on pipeline integrity or safe operation of the pipeline and did not pose a significant threat to public safety or the environment.”16 I recognize, however, that the multiple instances of violation warrant a higher penalty than a single instance of violation would. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a reduced civil penalty of $15,200 for violation of 49 C.F.R. § 195.505(b). Item 4: The Notice proposed a civil penalty of $15,800 for Respondent’s violation of 49 C.F.R. § 195.573(a), for failing to conduct tests of the cathodic protection on the pipeline at least once each calendar year. In its Response, Harvest requested a reduced penalty and noted several factors to warrant this reduction, including its clean history of violations, good faith attempts to comply, and its quick corrective actions after being notified of violations. Harvest appears to have made a good faith attempt to ensure future compliance by updating its inspection calendar to include all devices at Southwest Pass 24 Oil Terminal, but corrective actions taken after the violation has been discovered do not warrant a reduction in penalty. Harvest’s lack of prior offenses and the fact that this offense did not result in an accident were factored into the proposed penalty. pipeline and for preventing the pipeline failures that can result from corrosion. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $15,800 for violation of 49 C.F.R. § 195.573(a). 17 Adequate cathodic protection is critical for controlling corrosion on a In summary, having reviewed the record and considered the assessment criteria for each of the Items cited above, I assess Respondent a total civil penalty of $45,100. Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire transfers should be directed to: Financial Operations Division (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial Operations Division telephone number is (405) 954-8893. Failure to pay the $45,100 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a district court of the United States. 16 Violation Report at 18. 17 Violation Report at 19, 27.#

420115004_Final Order_06122012_text.pdf, page 87 COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 2 and 5 in the Notice for violations of 49 C.F.R. §§ 195.436 and 195.579(a) respectively. 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. With regard to the proposed compliance order associated with Item 2, Harvest contended in its Response that it had already reviewed its security activities and determined that “the existing and improved components provide the appropriate security,” considering the remote location of the demonstrate that the facility is protected from vandalism and unauthorized entry. facility.18 However, as discussed above, the security measures taken do not adequately With regard to the proposed compliance order associated with Item 5, Harvest stated in its Response that it had taken steps to monitor corrosion and was in the process of updating its corrosion control program and procedures. an investigation of the corrosive effect of the product on its pipelines to the Director. 19 However, Harvest has not provided the results of 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 § 195.436 (Item 2), Respondent must provide the Southwest Pass 24 Oil Terminal with protection from vandalism and entry by unauthorized persons. Respondent must provide its plans, procedures, and records demonstrating that a process has been implemented or that barriers have been installed to the Director within 30 days of receipt of this Final Order. 2. With respect to the violation of § 195.579(a) (Item 5), Respondent must investigate the corrosive effect of the hazardous liquid on the pipeline, including on “dead legs,” low-flow lines, and infrequently used pump station lines. Respondent must survey all applicable segments of its pipeline facility and ensure that they are subject to inspection, testing, and monitoring for internal corrosion. Based on this inspection, review, and survey, Respondent must develop a plan for conducting internal corrosion surveys in a manner consistent with § 195.579(a) and must take appropriate steps to mitigate internal corrosion. Respondent must review all relevant procedures and amend them as needed. Respondent must demonstrate to the Director that this has been accomplished within 30 days of receipt of this Final Order. The Director may grant an extension of time to comply with any of the required items upon a 18 Response at 2. 19 Response at 5-6.#

420115004_Final Order_06122012_text.pdf, page 98 written request timely submitted by the Respondent and demonstrating good cause for an extension. Failure to comply with this Order may result in the 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. Under 49 C.F.R. § 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. 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, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address. PHMSA will accept petitions received no later than 20 days after receipt of service of this Final Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of any civil penalty assessed. Unless the Associate Administrator, upon request, grants a stay, all other 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#

420115004_Closure Letter_01222013.pdf, page 1Official PDFU.S. Department 8701 South Gessner, Suite 1110 of Transportation Houston, TX 77074 Pipeline and Administration Hazardous Materials Safety CERTIFIED MAIL - RETURN RECEIPT REQUESTED January 22, 2013 Mr. Steve Jacobs President Harvest Pipeline Company 1201 Louisiana Ste. 1400 Houston, Texas 77002 CPF 4-2011-5004 Dear Mr. Jacobs: On February 15, 2011 the Pipeline and Hazardous Materials Safety Administration issued to Harvest Pipeline Company (Harvest), a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order. Based on our review of the documentation you provided, it has been determined that you have complied with the terms of this Notice. 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#