TEXAS EASTERN TRANSMISSION, LP (SPECTRA ENERGY PARTNERS, LP) — Notice of Probable Violation

party submissionOfficial PDF420121009_Operator Response to Notice_06282012.pdf#

420121009_Closure Letter_08232013_text.pdf, page 1Official PDFCERTIFIED MAIL – RETURN RECEIPT REQUESTED August 23, 2013 Mr. Andrew Drake, P.E. Vice President, Asset Integrity Spectra Energy Transmission, LLC 5400 Westheimer Ct. Houston, TX 77056 CPF 4-2012-1009 Dear Mr. Drake: On December 21, 2012, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Spectra Energy Corporation a Final Order in the above-referenced case. This Order included a Compliance Order and Civil Penalty assessment. Payment of the Civil Penalty was received on June 28, 2012. Based on our review of the documentation you provided, 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#

420121009_NOPV PCP PCO_05292012_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED May 29, 2012 Mr. Theopolis Holeman Group V.P. U.S. Operations Texas Eastern Transmission L.P. 5400 Westheimer Ct. Houston, TX 77056 CPF 4-2012-1009 Dear Mr. Holeman: From February 7 to December 15, 2011, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Texas Eastern Transmission L.P., Spectra Energy (TET) procedures, records, and pipeline facilities in the states of Texas, Louisiana, Arkansas, and the Gulf of Mexico. 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. §192.475 Internal corrosion control: General (a) Corrosive gas may not be transported by pipeline, unless the corrosive effect of the gas on the pipeline has been investigated and steps have been taken to minimize internal corrosion. At the Iowa Facility in the Lake Charles unit area, the PHMSA inspector noted that dead-ends had not been identified and monitored for several years. TET failed to take steps to minimize#

420121009_NOPV PCP PCO_05292012_text.pdf, page 2internal corrosion. Dead end piping that cannot be swept with gas pressure or cleaned by pigging need to be monitored in order to minimize any effects of internal corrosion. On August 29, 2000, PHMSA issued Advisory Bulletin ADB-00-02. The Advisory states that Gas transmission owners and operators should thoroughly review their internal corrosion management programs and operations. Additionally, special attention should be given to specific conditions, including flow characteristics, pipeline location (especially drips, dead legs, and sags, which are on-line segments that are not cleaned by pigging or other methods). 2. §192.475 Internal corrosion control: General. (b) Whenever any pipe is removed from a pipeline for any reason, the internal surface must be inspected for evidence for corrosion. If internal corrosion is found (1)The adjacent pipe must be investigated to determine the extent of internal corrosion; (2)Replacement must be made to the extent required by the applicable paragraphs of §§192.485, 192.487, or 192.489; and; (3)Steps must be taken to minimize the internal corrosion. During the review records at the Lake Charles area office, PHMSA inspectors found that there were two instances which indicate that the internal surface of the pipe was not inspected for evidence of corrosion. The Pipe & Coating Inspection Report #’s: 4-LC-033-08-12 and 4-LC- 033-08-11 both dated 7/30/2008; indicate that whereas the pipe was repaired by welding in two full circumference sections of pipe, the reports indicate that the pipes internal surface was not inspected for evidence of corrosion. Records reviewed during the field inspection demonstrate that TET violated § 192.475 by failing to inspect the internal surface for evidence of corrosion. 3. §192.479 Atmospheric corrosion control; General. (a) Each operator must clean and coat each pipeline or portion of pipeline that is exposed to the atmosphere, except pipelines under paragraph (c) of this section. During the field inspection of the Lake Charles area, PHMSA inspectors observed that Texas Eastern (Spectra) failed to clean and coat portions of their pipeline exposed to atmospheric corrosion at two (2) locations. PHMSA inspectors observed disbonded coating, atmospheric corrosion, and severe pitting in couple of locations. The locations were at Mainline Block Valve MP 49.64 and at Vermillion 265 offshore platform. 4. §192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for 2#

420121009_NOPV PCP PCO_05292012_text.pdf, page 3emergency response. For transmission lines, the manual must also include procedures for handling abnormal operations. This manual must be reviewed and updated by the operator at intervals not exceeding 15 months, but at least once each calendar year. This manual must be prepared before operations of a pipeline system commence. Appropriate parts of the manual must be kept at locations where operations and maintenance activities are conducted. §192.481 Atmospheric corrosion control: Monitoring. (b) During inspections the operator must give particular attention to pipe at soil-to- air interfaces, under thermal insulation, under disbonded coatings, at pipe supports, in splash zones, at deck penetrations, and in spans over water. At the Atlanta Compressor Station field inspection, PHMSA inspectors observed that TET has failed give particular attention to pipe station pipe coating under thermal insulation. The TET procedure 2-5000, Atmospheric Pipe Inspection has a note specifying where the ports should be located for monitoring. The insulated section of piping at the Atlanta compressor station has only one 2-inch capped area at the 12 o’clock position on the pipe with which to examine the pipes coating. The PHMSA inspector observed that a more effective means of monitoring for atmospheric corrosion must be implemented. TET has failed to meet the requirements of §192.481 by failing to inspect with particular attention under its thermally insulated pipe and TET failed to follow procedure 2-5000 which notes that inspection ports should be located at the low points on the piping where water is more likely to accumulate in the annular space between the outside of pipe and insulation. 5. §192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for emergency response. For transmission lines, the manual must also include procedures for handling abnormal operations. This manual must be reviewed and updated by the operator at intervals not exceeding 15 months, but at least once each calendar year. This manual must be prepared before operations of a pipeline system commence. Appropriate parts of the manual must be kept at locations where operations and maintenance activities are conducted. §192.745 Valve maintenance: Transmission lines. (a) Each transmission line valve that might be required during any emergency must be inspected and partially operated at intervals not exceeding 15 months, but at least once each calendar year. TET did not partially operate each transmission line valve that might be required during any emergency as required by §192.745 and by TET Standard Operating procedure 5-5010. During 3#

420121009_NOPV PCP PCO_05292012_text.pdf, page 4the valve maintenance records inspection of the TET facilities in the states of Texas, Louisiana and Arkansas, TET provided records documenting the valve inspections. The records showed the inspections as having occurred for the years between 2008 and 2011; however they failed to perform the partial operation of more than 32, 2-inch valves; more than 6, 3-inch valves; more than 7, 4-inch valves; more than 4, 6-inch valves; more than 5, 8-inch valves; more than 7, 10- inch valves; more than 2, 14-inch valves; more than 2, 16-inch valves; more than 3, 24-inch valves; and more than 7, 30-inch valves for at least one calendar year interval between 2008 and 2011. Spectra Energy Standard Operating Procedures, Volume 5 – Emergency Response and Common Procedures, Procedure 5-5010 Valve Inspection and Maintenance states on page 1 of 10, “Perform inspection and maintenance of all pipeline, meter station and compressor station valves in gas service 2” and Larger in accordance with the valve manufacturers’ guidelines and the requirements of this procedure, once each calendar year, not to exceed 15 months.” On page 6 of 10 it states, “If it is not possible to stroke a valve 100% due to gas flow conditions, operate the valve partially to validate the inspection.” On page 8 of 10 it states, “For valves within or adjacent to compressor stations, or other facilities where hazardous conditions would result or where the operation of the station would be in jeopardy from a fully open or completely closed valve operation, operate partially.” TET does not maintain a list valves that might be required during any emergency, but instead they inspect and partially operate all valves as stated in their procedure. TET failed to follow its procedure as written in its Standard Operating Procedures manual thereby failing to meet the requirements of §192.605(a) and TET failed to demonstrate that valves that might be required during any emergency were partially operated as required by §192.745(a). While the TET completed the maintenance portion of the inspections within the maximum 15 month period, they failed to perform the partial operation of several valves between the calendar years of 2008 and 2011. 6. §192.705 Transmission lines: Patrolling. (a) Each operator shall have a patrol program to observe surface conditions on and adjacent to the transmission line right-of-way for indications of leaks, construction activity, and other factors affecting safety and operation. At the Longview area field inspection, the PHMSA inspector noted several occasions of Right- of-Way overgrowth and of debris on the ROW. The areas were on Line 11 at MP 229; 306.57 and Line 13 at MP 23; 24.24; and MP 44. The overgrowth and debris noted in these areas were such that it would hamper the patrolling of these areas for indications of leaks, construction activity, and other factors affecting safety and operation. TET has failed to meet the requirements of §192.705(a) by failing to maintain the Right-of-Way in a condition that would not impede the performance of their patrolling. 7. §192.707 Line markers for mains and transmission lines. 4#

420121009_NOPV PCP PCO_05292012_text.pdf, page 5(a) Buried pipelines. Except as provided in paragraph (b) of this section, a line marker must be placed and maintained as close as practical over each buried main and transmission line: (1) At each crossing of a public road and railroad; and (2) Wherever necessary to identify the location of the transmission line or main to reduce the possibility of damage or interference. During the Arkansas area field inspection, the PHMSA inspector noted where line markers were not placed and maintained as close as practical over each buried main and transmission. In Arkansas the areas were at MP 85.12, downstream from the valve in the open field area and at MP 339.09, upstream and downstream from mainline valve 1-496. Additionally, while inspecting the Portland south unit in Texas, the PHMSA inspector noted a similar issue. There were no line markers on the rear fence at the Measuring Station 73258/59, at MP 23.25, where the line enters the fenced area. 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 violations and has recommended that you be preliminarily assessed a civil penalty of $134,500.00 as follows: Item number PENALTY 2 $29,600.00 4 $28,700.00 5 $76,200.00 Warning Items With respect to items 1, 3, 6, and 7, 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 items. Be advised that failure to do so may result in TET being subject to additional enforcement action. Proposed Compliance Order With respect to item 4 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Texas Eastern Transmission L.P., Spectra Energy. 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 5#

420121009_NOPV PCP PCO_05292012_text.pdf, page 6advised 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 4-2012-1009 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 6#

420121009_NOPV PCP PCO_05292012_text.pdf, page 7PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Texas Eastern Transmission L.P., Spectra Energy (TET) a Compliance Order incorporating the following remedial requirement to ensure the compliance of TET with the pipeline safety regulations: 1. In regards to Item Number 4 of the Notice pertaining to failure to give particular attention to pipe coating under thermal insulation, TET must review procedure 2-5000 Atmospheric Pipe Inspection to ensure that the location of inspection ports are in the proper location to monitor the coating under thermal insulation. TET must survey all applicable insulated segments of its pipeline facilities throughout its pipeline system and ensure that they are protected from atmospheric corrosion under the thermal insulation. Based on this review and survey, the respondent must develop a plan, process and follow their procedure to ensure that the inspection, testing, and monitoring of pipe coating under thermal insulation is performed in a manner consistent with the requirements of §195.481(b). TET must provide this office its plans, procedures and records that demonstrate that a process has been implemented and demonstrate compliance with 49 CFR §195.481(b). 2. Aforementioned to be accomplished within 30 days following receipt of the Final Order. 3. It is requested (not mandated) that TET 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. 7#

420121009_Final Order_12212012_text.pdf, page 1Official PDFDECEMBER 21, 2012 Mr. Gregory L. Ebel President and Chief Executive Officer Spectra Energy Corporation 5400 Westheimer Court Houston, TX 77056 Re: CPF No. 4-2012-1009 Dear Mr. Ebel: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $134,500, and specifies actions that need to be taken by Texas Eastern Transmission, LP, to comply with the pipeline safety regulations. This letter acknowledges receipt of payment of the full penalty amount, by wire transfer dated June 28, 2012. 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. Rodrick Seeley, Director, Southwest Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS Mr. J. Andrew Drake, P.E., Vice President, Asset Integrity, Texas Eastern Transmission, LP CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420121009_Final Order_12212012_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 ) ) Texas Eastern Transmission, LP, ) CPF No. 4-2012-1009 ) Respondent. ) ____________________________________) FINAL ORDER From February 7 to December 15, 2011, 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 facilities and records of Texas Eastern Transmission, LP (Texas Eastern or Respondent), a subsidiary of Spectra Energy Corporation, in Texas, Louisiana, Arkansas, and the Gulf of Mexico. These facilities are part of the Texas Eastern Transmission pipeline, which transports natural gas through a 9,200-mile pipeline system extending from Texas and the Gulf Coast to the northeastern United States.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated May 29, 2012, 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 Texas Eastern had committed various violations of 49 C.F.R. Part 192 and proposed assessing a civil penalty of $134,500 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. The warning item required no further action but warned the operator to correct the probable violation or face possible enforcement action. Texas Eastern responded to the Notice by letter dated June 28, 2012 (Response). The company did not contest the allegations of violation and paid the proposed civil penalty of $134,500, as provided in 49 C.F.R. § 190.227. The company also provided information concerning the corrective actions it planned to take within 30 days of the issuance of this Final Order. Payment of the penalty serves to close these items with prejudice to the Respondent. 1 http://www.spectraenergy.com/Operations/North-America-Transmission/Assets/Texas-Eastern-Transmission/ (last accessed on November 30, 2012).#

420121009_Final Order_12212012_text.pdf, page 32 FINDINGS OF VIOLATION In its Response, Texas Eastern did not contest the allegations in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.475(b), which states: § 192.475 Internal corrosion control: General. (a) . . . (b) Whenever any pipe is removed from a pipeline for any reason, the internal surface must be inspected for evidence of corrosion. If internal corrosion is found— (1) The adjacent pipe must be investigated to determine the extent of internal corrosion; (2) Replacement must be made to the extent required by the applicable paragraphs of §§ 192.485, 192.487, or 192.489; and (3) Steps must be taken to minimize the internal corrosion. The Notice alleged that Respondent violated 49 C.F.R. § 192.475(b) by failing, in two instances, to inspect the internal surface of removed sections of pipe for evidence of corrosion. Specifically, the Notice alleged that inspection reports indicated Respondent failed to inspect the internal surface of certain pipe sections for evidence of corrosion, even though they had been repaired by welding in two full circumference sections of pipe. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.475(b) by failing, in two instances, to inspect the internal surface of removed sections of pipe for evidence of corrosion. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 192.605(a), which states: § 192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for emergency response. For transmission lines, the manual must also include procedures for handling abnormal operations. This manual must be reviewed and updated by the operator at intervals not exceeding 15 months, but at least once each calendar year. This manual must be prepared before operations of a pipeline system commence. Appropriate parts of the manual must be kept at locations where operations and maintenance activities are conducted. The Notice alleged that Respondent violated 49 C.F.R. § 192.605(a) by failing to follow its own written procedures implementing the substantive requirements of 49 C.F.R. § 192.481(b).2 2 49 C.F.R. § 192.481(b) states: “During inspections the operator must give particular attention to pipe at soil-to- air interfaces, under thermal insulation, under disbanded coatings, at pipe supports, in splash zones, at deck penetrations, and in spans over water.”#

420121009_Final Order_12212012_text.pdf, page 43 Specifically, the Notice alleged that Texas Eastern failed to follow its own Standard Operating Procedure (SOP) 2-5000, Atmospheric Pipe Inspection, which states that inspection ports should be located at low points on the piping where water is more likely to accumulate in the annular space between the outside of the pipe and the insulation.3 The Notice alleged that the insulated section of piping at the Atlanta compressor station had only one two-inch capped area at the 12 o’clock position on the pipe with which to examine the pipe’s coating, in violation of the company’s own SOP 2-5000. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.605(a) by failing to follow its own written procedure, SOP 2-5000, Atmospheric Pipe Inspection. Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 192.605(a), as quoted above, by failing to follow its own written procedures implementing the substantive requirements of 49 C.F.R. § 192.745(a).4 Specifically, the Notice alleged that Texas Eastern failed to follow its own SOP 5-5010, Valve Inspection and Maintenance, which required annual valve inspections, but at least at intervals not exceeding 15 months, for valves that might be required during an emergency. Under the company’s procedure, such inspections had to include the full or partial operation of each valve.5 The Notice alleged that between 2008 and 2011, multiple valves at Texas Eastern’s facilities in Texas, Louisiana, and Arkansas had not been partially operated as part of the annual inspections. Respondent did not contest this allegation of violation, but stated in its Response that the violation resulted from the use of a single database used to document the maintenance of all valves, both emergency and non-emergency. While SOP 5-5010 required partial operation only for valves that might be required during an emergency, the Texas Eastern database failed to separately identify non-emergency valves that did not require partial operation during inspections. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.605(a) by failing to follow its own procedure, SOP 5-5010, Valve Inspection and Maintenance. ASSESSMENT OF PENALTY 3 Violation Report at Exhibit D. 4 49 C.F.R. § 192.745(a) states: “Each transmission line valve that might be required during any emergency must be inspected and partially operated at intervals not exceeding 15 months, but at least once each calendar year.” 5 Violation Report at Exhibit E. 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,#

420121009_Final Order_12212012_text.pdf, page 54 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 $134,500 for the violations cited above. Item 2: The Notice proposed a civil penalty of $29,600 for Respondent’s violation of 49 C.F.R. § 192.475(b), for failing, in two instances, to inspect the internal surface of removed pipe for evidence of corrosion. The removal of a section of pipe provides a valuable opportunity to visually inspect pipe for signs of internal corrosion. By failing to inspect removed pipe, an operator can easily miss visible signs of corrosion that could result in a pipeline failure. Texas Eastern paid the proposed penalty for the alleged violation, which serves to close this Item with prejudice. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $29,600 for violation of 49 C.F.R. § 192.475(b). Item 4: The Notice proposed a civil penalty of $28,700 for Respondent’s violation of 49 C.F.R. § 192.605(a), for failing to follow its own procedure, SOP 2-5000, Atmospheric Pipe Inspection. An operator that fails to follow its own procedures for atmospheric corrosion inspections increases the risk of preventable pipeline accidents. Texas Eastern paid the proposed penalty for the alleged violation, which serves to close this Item with prejudice. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $28,700 for violation of 49 C.F.R. § 192.605(a). Item 5: The Notice proposed a civil penalty of $76,200 for Respondent’s violation of 49 C.F.R. § 192.605(a), for failing to follow its own procedure, SOP 5-5010, Valve Inspection and Maintenance. Respondent indicated in its Response that since the time of the inspection it had appropriately identified emergency valves within its database, and would revise SOP 5-5010 to more accurately reflect the requirements of 49 C.F.R. § 192.745(a). Respondent, however, conceded that at the time of the inspection SOP 5-5010 required inspection and partial operation of all valves, both emergency and non-emergency, and that it had not complied with this procedure. An operator that fails to follow its own procedures for valve inspections increases the risk of preventable pipeline accidents. Texas Eastern paid the proposed penalty for the alleged violation, which serves to close this Item with prejudice. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $76,200 for violation of 49 C.F.R. § 192.605(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 $134,500. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 4 in the Notice for violation of 49 C.F.R. § 192.605(a). Under 49 U.S.C. § 60118(a), each person who engages in the transportation of gas or who owns or operates a pipeline facility is required to comply with the#

420121009_Final Order_12212012_text.pdf, page 65 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: 1. 2. 3. With respect to the violation of § 192.605(a) (Item 4), Respondent must: a. Review SOP 2-5000, Atmospheric Pipe Inspection, to ensure that the locations of inspection ports are appropriate for monitoring the coating under thermal insulation. b. Survey all applicable insulated segments of its pipeline facilities throughout its pipeline system to ensure they are protected from atmospheric corrosion under thermal insulation. Based on this review and survey, develop and follow a plan, process, and procedure to ensure that the inspection, testing, and monitoring of pipe coating under thermal insulation are performed in a manner consistent with 49 C.F.R. § 195.481(b). Within 30 days following receipt of this Final Order, Respondent must submit to the Region Director, Southwest Region, Pipeline and Hazardous Materials Safety Administration, 8701 South Gessner Drive, Suite 1110, Houston, Texas 77074, its plans, procedures, and records that demonstrate compliance with 49 C.F.R. § 195.481(b) and this compliance order. The Regional Director will determine the adequacy of Respondent’s submission and indicate any required changes. Respondent is requested to maintain documentation of the safety improvement and compliance 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 physical changes to the pipeline infrastructure. 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 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. WARNING ITEMS With respect to Items 1, 3, 6, and 7, the Notice alleged probable violations of Part 192 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:#

420121009_Final Order_12212012_text.pdf, page 76 49 C.F.R. § 192.475(a) (Item 1) ─ Respondent’s alleged failure to investigate the effect of corrosive gas on its pipeline and take steps to minimize internal corrosion. Specifically, the Notice alleged that Texas Eastern failed to identify and monitor dead- end sections of pipe at the Iowa Facility in the Lake Charles, Louisiana, unit area; 49 C.F.R. § 192.479(a) (Item 3) ─ Respondent’s alleged failure to clean and coat portions of its pipeline exposed to atmospheric corrosion at two locations in the Lake Charles, Louisiana area. Specifically, the Notice alleged that at Mainline Block Valve MP 49.64 and at the Vermillion 265 offshore platform, PHMSA investigators observed disbonded coating, atmospheric corrosion, and severe pitting in some locations; 49 C.F.R. § 192.705(a) (Item 6) ─ Respondent’s alleged failure to maintain an effective patrol program to observe surface conditions on and adjacent to the transmission pipeline right-of-way. Specifically, the Notice alleged that Texas Eastern failed to remove overgrowth and debris on its Longview, Texas rights-of-way at MP 229 and 306.57 on Line 11, and MP 23, 24.24, and 44 on Line 13, which hampered patrolling of these areas; and 49 C.F.R. § 192.707(a) (Item 7) ─ Respondent’s alleged failure to place and maintain line markers as close as practical over each buried transmission line and main. Specifically, the Notice alleged that in the Little Rock, Arkansas area, Texas Eastern did not place markers as close as practical at MP 85.12, downstream from a valve in an open field area, and at MP 339.09, upstream and downstream from mainline valve 1-496. The Notice further alleged that, in the Portland south unit in Texas, Texas Eastern did not place markers as close as practical at MP 23.25, on the rear fence at Measuring Station 73258/59, where the line enters a fenced area. Texas Eastern presented information in its Response showing that it had taken certain actions to address the cited items. If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. 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#