PHILLIPS 66 PIPELINE LLC — Notice of Probable Violation

party submissionOfficial PDF420125005_Operator Response to Notice_03282012.pdf#

420125005_Closure_01112013_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED January 11, 2013 Ms. Deborah Adams President, Transportation Phillips 66 Pipeline LLC 600 N. Dairy Ashford Houston, TX 77079 CPF 4-2012-5005 Dear Ms. Adams: On July 16, 2012, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to ConocoPhillips Pipe Line Company a Final Order in the above-referenced case. This Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation you provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of this Order. Accordingly, this case is now closed and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#

420125005_NOPV PCP PCO_03012012_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED March 1, 2012 Ms. Deborah Adams President, Transportation ConocoPhillips Pipe Line Company 600 N. Dairy Ashford Houston, TX 77079 CPF 4-2012-5005 Dear Ms. Adams: From March through August 2011, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your pipeline facilities in New Mexico, Texas, Oklahoma, and Louisiana. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violations are: 1. §195.208 Welding of supports and braces Supports or braces may not be welded directly to pipe that will be operated at a pressure of more than 100 p.s.i. (689 kPa) gage. During the onsite inspection it was observed that the main pump units at the Clifton Ridge Terminal had braces that were welded directly to the suction and discharge piping of both pumping units. The braces were connected to threaded adjustment rods used to#

420125005_NOPV PCP PCO_03012012_text.pdf, page 2line up the piping with the pump suction and discharge flanges. PHMSA inspectors were notified that the pumps and piping were upgraded to the current configuration in 1996. 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. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted. During the inspection it was noted that ConocoPhillips Pipe Line Company’s (ConocoPhillips) did not follow their procedures. Specifically, the valve maintenance required by §195.420 was not performed according to ConocoPhillips’ procedure MPR- 6005. The procedure, MPR-6005 Inspections and Testing – Block Valve Inspection requires that non-mainline isolation valves necessary for the safe operation of the DOT/PHMSA pipeline/pipeline facility are to be inspected at intervals not exceeding 7 ½ months, but at least twice each calendar year. The non-mainline valves are required to be visually inspected and do not need to be operationally checked. The non-mainline valves at ConocoPhillips Lake Charles Pipe Line Terminal were only inspected once during the calendar years of 2009 and 2010 according to records reviewed by PHMSA inspectors. 3. §195.581 Which pipelines must I protect against atmospheric corrosion and what coating material may I use? (a) You must clean and coat each pipeline or portion of pipeline that is exposed to the atmosphere, except pipelines under paragraph (c) of this section. ConocoPhillips did not adequately clean and coat portions of pipelines that were exposed to the atmosphere and at soil-to-air interfaces to protect against atmospheric corrosion. The following areas were observed during the field inspection of ConocoPhillips facilities and were found to be inadequate: • The piping and check valve flange connected to Pump 4 on the Pecan Grove line had coating failure and corrosion. • The 30-inch line from Clifton Ridge Terminal breakout tanks had coating failure and corrosion at the soil-to-air interface. 2#

420125005_NOPV PCP PCO_03012012_text.pdf, page 3• Valve 94490 attached to Tank 347 in the Lake Charles Refinery had coating failure and corrosion on the flange. 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 $19,800 for item 2. Proposed Compliance Order With respect to items 1 and 3, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to ConocoPhillips Pipe Line 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. In your correspondence on this matter, please refer to CPF 4-2012-5005 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R. M. Seeley Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order 3#

420125005_NOPV PCP PCO_03012012_text.pdf, page 4Response Options for Pipeline Operators in Compliance Proceedings PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to ConocoPhillips Pipe Line Company (ConocoPhillips) a Compliance Order incorporating the following remedial requirements to ensure the compliance of ConocoPhillips with the pipeline safety regulations: 1. In regard to Item Number 1 of the Notice pertaining to braces welded to the suction and discharge piping at the Clifton Ridge Terminal main pumps, ConocoPhillips must remove the adjustment rods connecting the braces to the steel supports. ConocoPhillips must survey their operating facilities for similar equipment and bring any facilities into compliance with 49 CFR Part 195. 2. In regard to Item Number 3 of the Notice pertaining to coating failure and onset of corrosion, ConocoPhillips must evaluate the piping surface to ensure that pipe integrity is suitable for the maximum operating pressure of the pipeline. The areas must then be cleaned and coated according to 49 CFR Part 195 and ConocoPhillips procedures. 3. ConocoPhillips should complete items 1 and 3 within 90 days of receipt of the Final Order. 4. It is requested (not mandated) that ConocoPhillips 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. 4#

420125005_Final Order_07162012_text.pdf, page 1Official PDFJuly 16, 2012 Ms. Deborah Adams President, Transportation ConocoPhillips Pipe Line Company 600 N. Dairy Ashford Houston, TX 77079 Re: CPF No. 4-2012-5005 Dear Ms. Adams: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $19,800, and specifies actions that need to be taken by ConocoPhillips Pipe Line 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. Roderick Seeley, Director, Southwest Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420125005_Final Order_07162012_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 ) ) ConocoPhillips Pipe Line Company, ) CPF No. 4-2012-5005 ) Respondent. ) ____________________________________) FINAL ORDER From March through August 2011, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted on-site pipeline safety inspections of the facilities and records of ConocoPhillips Pipe Line Company (CPPL or Respondent) in New Mexico, Texas, Oklahoma, and Louisiana. Respondent operates approximately 10,000 miles of pipeline that transport crude oil, refined petroleum products, liquefied petroleum gas, natural gas and chemicals within the United States. As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated March 1, 2012, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice both proposed finding that ConocoPhillips violated 49 C.F.R. §§ 195.208, 195.402 and 195.581 and assessing a civil penalty of $19,800 for the alleged violations. The Notice also proposed an order requiring Respondent to take certain measures to correct the alleged violations. CPPL responded to the Notice by letter dated March 28, 2012 (Response). The company did not contest the allegations of violation but provided information concerning corrective actions it took in response to the Notice. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION In its Response, ConocoPhillips did not contest the allegations in the Notice that it violated 49 C.F.R. Part 195, as follows:#

420125005_Final Order_07162012_text.pdf, page 32 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.208, which states: § 195.208 Welding of supports and braces. Supports or braces may not be welded directly to pipe that will be operated at a pressure of more than 100 p.s.i. (689 kPa) gage. The Notice alleged that Respondent violated 49 C.F.R. § 195.208 by welding braces directly to pipe that was then operated at a pressure exceeding 100 p.s.i. (689 kPa) gage. Specifically, the Notice alleged that braces on the main pump units at CPPL’s Clifton Ridge Terminal were welded directly onto the suction and discharge piping of both pumping units. CPPL assembled the pumps and piping so that the braces connected to threaded adjustment rods that lined up the pipeline with the pump suction and discharge flanges. CPPL upgraded its system into this configuration in 1996.1 Respondent did not contest this allegation of violation but stated that it identified only one such configuration in need of remediation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.208 by welding braces directly to pipe that operated at a pressure exceeding 100 p.s.i. (689 kPa) gage. Item 2: 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. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline system commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted. The Notice alleged that Respondent violated 49 C.F.R. § 195.402(a) by failing to prepare and follow for its pipeline system a manual of written procedures for conducting normal operations and maintenance activities. Specifically, the Notice alleged that CPPL failed to follow its procedure “MPR-6005 Inspections and Testing – Block Valve Inspection,” requiring the inspection of non-mainline isolation valves at intervals not to exceed 7½ months but at least twice each calendar year. After reviewing the 2009 and 2010 valve inspection records for its Lake Charles Pipe Line Terminal, PHMSA inspectors found that the non-mainline valves were inspected only once during that two-year period. Respondent did not contest this allegation of violation. 1 Pipeline Safety Violation Report, (March 1, 2012) (Violation Report) (on file with PHMSA), at 2.#

420125005_Final Order_07162012_text.pdf, page 43 automated its field reminder system to prevent missed inspections, during calendar years 2009 By its own admission, CPPL identified this issue during a 2010 pre-audit.2 While CPPL has now and 2010, CPPL failed to abide by “MPR-6005 Inspections and Testing.” Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.402(a) by failing to prepare and follow for its pipeline system a manual of written procedures for conducting normal operations and maintenance activities. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.581(a), which states: § 195.581 Which pipelines must I protect against atmospheric corrosion and what coating material may I use? (a) You must clean and coat each pipeline or portion of pipeline that is exposed to the atmosphere, except pipelines under paragraph (c) of this section. The Notice alleged that Respondent violated 49 C.F.R. § 195.581(a) by failing to protect certain pipelines against atmospheric corrosion by cleaning and coating each pipeline or portion of pipeline exposed to the atmosphere. 3 Specifically, the Notice alleged that CPPL failed to protect three portions of its pipeline system from atmospheric corrosion.4 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. § 195.581(a) by failing to protect each pipeline or portion of pipeline against atmospheric corrosion through cleaning and coating. 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 2 Response, at 2. 3 None of the exceptions outlined in 195.581(c) apply in this case. 4 Failed coating and the onset of corrosion were observed in the following areas: (1) the piping and check valve flange connected to Pump 4 on the Pecan Grove line; (2) a 30-inch line air/soil interface from the Clifton Ridge Terminal breakout tanks; and (3) Valve 94490, attached to Tank 347 in the Lake Charles Refinery. Violation Report, at 14.#

420125005_Final Order_07162012_text.pdf, page 54 related series of violations.5 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; 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 $19,800 for the violations cited above. Item 2: The Notice proposed a civil penalty of $19,800 for Respondent’s violation of 49 C.F.R. § 195.402(a), for failing to follow its manual of written procedures, which required Respondent to inspect non-mainline isolation valves at intervals not to exceed 7½ months, but at least twice each calendar year. CPPL neither contested the allegation nor presented any evidence or argument justifying elimination of the proposed penalty. The importance of performing timely and accurate inspections is clear. Routine testing diminishes the probability and gravity of potential accidents. Since the time of the missed inspection, CPPL claims that it has automated its inspection system to prevent similar omissions. Notwithstanding these post-inspection actions, CPPL failed to satisfy the twice-yearly inspection requirement for two consecutive years. The proposed penalty in this case accurately reflects the potential consequences of such an omission. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $19,800 for violation of 49 C.F.R. § 195.402(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 $19,800. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1 and 3 in the Notice for violations of 49 C.F.R. §§ 195.208 and 195.581(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. 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 § 195.208 (Item 1), Respondent must remove the adjustment rods connecting the braces to the steel supports, survey its operating facilities for similar violations of § 195.208, and bring all facilities into compliance. 5 The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, Pub. L. No. 112-90, § 2(a)(1), 125 Stat. 1904, January 3, 2012, increased the civil penalty liability for violating a pipeline safety standard to $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.#

420125005_Final Order_07162012_text.pdf, page 65 2. With respect to the violation of § 195.581(a) (Item 3), Respondent must evaluate the piping surface to ensure that pipe integrity is suitable for the maximum operating pressure of the pipeline and then clean and coat all the areas noted in Item 3, according to 49 C.F.R. Part 196 and CPPL’s procedures. 3. Items 1 and 3 must be completed within 90 days of receipt of the Final Order. 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. 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#