PLAINS PIPELINE, L.P. — Notice of Probable Violation

party submissionOfficial PDF420165015_Operator Response to Notice_05312016.pdf#

420165015_NOPV PCP PCO_04282016_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 28, 2016 Mr. Troy Valenzuela VP, Environmental Health & Safety Plains Pipeline, L.P. 333 Clay Street, Suite 1600 Houston, TX 77002 CPF 4-2016-5015 Dear Mr. Valenzuela: On February 18, 2014 – August 29, 2014, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code inspected your procedures, records, and pipeline facilities in the States of Louisiana, Illinois, Oklahoma, New Mexico, and Texas. As a result of the inspection, it appears that you have committed § 195.412(a) of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are: 1. § 195.412 Inspection of rights-of-way and crossings under navigable waters. (a) Each operator shall, at intervals not exceeding 3 weeks, but at least 26 times each calendar year, inspect the surface conditions on or adjacent to each pipeline right-of-way. Methods of inspection include walking, driving, flying or other appropriate means of traversing the right-of-way.#

420165015_NOPV PCP PCO_04282016_text.pdf, page 2Based on ROW conditions observed during the field inspection at the inbound and outbound locations of the Tibbey pump station; operator had not maintained adequate surface conditions on the pipeline ROW. There was high overgrowth vegetation; large trees with canopies overhanging the ROW that obscure the surface conditions adjacent to the pipeline ROW from observation by aerial surveillance. In order to perform pipeline surveillance, the right of way must be maintained so that the ROW is clearly visible by the means of surveillance employed. Aerial surveillance is the primary method of pipeline patrolling used by Plains. Some areas are overgrown with deep brush and grass that should be cleared to allow visibility of pipeline markers. 2. § 195.420 Valve maintenance. (b) Each operator shall, at intervals not exceeding 71⁄2 months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. Valve maintenance records for the Mayson to Ellis (Red River) pipeline indicated that the valve on the south side of Deep Fork River 10” had not been adequately inspected to verify it was functioning properly. Valve inspection records indicate that the actuator for the valve has not had electricity from September 2011 to the present. Electricity to the actuator would allow the valve to be tested and operated remotely. However, since actuator is not functioning, the valve has to be tested manually, but test records show “N/A” for the manual operation of the valve. 3. § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks; (b) Ensure through evaluation that individuals performing covered tasks are qualified; (c) Allow individuals that are not qualified pursuant to this subpart to perform a covered task if directed and observed by an individual that is qualified; (d) Evaluate an individual if the operator has reason to believe that the individual's performance of a covered task contributed to an accident as defined in Part 195; (e) Evaluate an individual if the operator has reason to believe that the individual is no longer qualified to perform a covered task; (f) Communicate changes that affect covered tasks to individuals performing those covered tasks; and (g) Identify those covered tasks and the intervals at which evaluation of the individual's qualifications is needed. (h) After December 16, 2004, provide training, as appropriate, to ensure that individuals performing covered tasks have the necessary knowledge and skills to perform the tasks in a manner that ensures the safe operation of pipeline facilities; and 2#

420165015_NOPV PCP PCO_04282016_text.pdf, page 3(i) After December 16, 2004, notify the Administrator or a state agency participating under 49 U.S.C. Chapter 601 if the operator significantly modifies the program after the Administrator or state agency has verified that it complies with this section. While performing the covered task of operating a valve during a PHMSA field inspection of the Plains Operator Qualification program, a Plain’s field tech failed to follow the Plains procedure for operating a mainline valve as specified in the Plains O&M manual, “Valve Maintenance”, P-195.420. The Plains Pipeline’s Procedure, P-195.420, Item 9 states: “Note: On pipeline in service, the opening and closing of the valves shall be performed only with the coordination and consent of the control center.” From August 12, 2014 through August 14, 2014, PHMSA conducted a field inspection on the Red River Pipeline (north) section. On August 13, 2014, PHMSA selected a valve # 15, MP: 156+00, located between Healdton and Sherman pump station, TX. PHMSA requested field personnel to perform the covered task# 20 (Inspect Mainline Valves) to ensure that the individual performing the covered task has the necessary knowledge and skills as well as the procedural steps described in the O&M Procedure, P- 195.420. PHMSA observed that the field personnel operated the valve without the coordination and consent of the control center as required by the Plains’ procedures. 4. § 195.571 What criteria must I use to determine the adequacy of cathodic protection? Cathodic protection required by this Subpart must comply with one or more of the applicable criteria and other considerations for cathodic protection contained in paragraphs 6.2 and 6.3 of NACE SP 0169 (incorporated by reference, see § 195.3). Plains did not meet the specified cathodic criterion for several points on the Buffalo Pipeline system for at least two sequential annual surveys. Plains specified that the cathodic protection criterion for the points on the following table was negative 850 mV with cathodic protection applied. NACE SP 0169 specifies that “Voltage drops other than those across the structure-to-electrolyte boundary must be considered for valid interpretation of this voltage measurement.” The voltage measurement with consideration of IR drop is the IR free or instant off measurement that Plains made as part of the annual survey. The test stations that Plains’ records show did not meet the specified criterion include but are not limited to the following: 2013 Annual Survey 2014 Annual Survey No. Description Structure P/S Instant Off Structure P/S Instant Off 1 Empire Road MP 8.01 -1,038 mV -753 mV -1,018 mV -843 mV 2 Convict Hill Road MP 9.01 -922 mV -684 mV -909 mV -701 mV 3 E/W Blacktop MP 32.37 -898 mV -689 mV -875 mV -613 mV 4 E/W Blacktop MP 35.71 -934 mV -902 mV -956 mV -782 mV 5 Exposed Pipe MP 1.52 -1,019 mV No Measurement -984 mV -679 mV 6 Exposed Pipe MP 7.42 -993 mV No Measurement -916 mV -702 mV 7 New Valve MP 7.59 -1,177 mV No Measurement -1,155 mV -817 mV 3#

420165015_NOPV PCP PCO_04282016_text.pdf, page 48 9 Katy Blacktop MP 30.5 Railroad Track MP 42.92 -1,143 mV -1,224 mV No Measurement -1,183 mV -917 mV -829 mV 10 Indian Trails Road MP 112.74 -928 mV No Measurement 12 11 Allen Road MP 113.54 -634 mV -943 mV -848 mV -866 mV -707 mV -813 mV -718 mV N/S Blacktop MP 114.24 -1,029 mV -799 mV -901 mV 13 Hilton Road MP 116.43 -919 mV -1,006 mV -826 mV 14 -939 mV -713 mV 16 15 Ridge Road MP 134.81 -636 mV -1,001 mV -834 mV Bond to NuStar MP 135.85 Joiner Road MP 135.25 -852 mV -626 mV -669 mV -956 mV -978 mV -792 mV -722 mV 17 -901 m -989 mV -697 mV Reck Road MP 137.59 Wildflower Road MP 140.32 -1,026 mV -851 mV -659 mV -2497 mV -1105 mV -719 mV -724 mV -1,112 mV -793 mV Creek Exposure MP 11.7* Bond To Seaway MP 141.87 -1,108 mV -763 mV -1,034 mV -714 mV -1,218 mV -1,220 mV -777 mV -1,280 mV -1,354 mV -1,181 mV Cty. Rd. 2675 MP 11.9* Energy Prod. PL MP 12.2* Sub. Prod. Salt Dome MP 12.4* -1,170 mV -771 mV -1,254 mV -1,105 mV -899 mV Lone Star 12" X-ing MP 14.5* -1,022 mV -1,034 mV -744 mV -781mV -1,219 mV -1,014 mV -794 mV -865 mV Cty. Rd. 3859 MP 15.8* -1,298 mV -711 mV -701 mV -1,300 mV -1,113 mV -643 mV -824 mV SND 6" X-ing MP 46.5 CR 1152 MP 8.87 -1,348 mV 28 FM 2653 MP 10.8* -918 mV -980 mV -715 mV -625 mV -1,058 mV -925 mV -723 mV 29 Fence MP 11.9** -830 mV -1,025 mV -781 mV -203 mV -698 mV -525 mV 31 30 CR 4120 MP 15.0 -1,009 mV 32 Hopkins CR #4133 MP 16.7 -904 mV -620 mV -1,069 mV -974 mV -767 mV -689 mV Fence MP 24.9 33 FM #2376 MP 26.6 -1,046 mV -844 mV -872 mV -601 mV -1,246 mV -946 mV -848 mV 34 35 CR #4202 MP 26.8 CR #4310 MP 28.1** -983 mV -627 mV -743 mV -1066 mV -839 mV -882 mV -766 mV 36 -1,243 mV Friendship Rd. MP 75.4 -925 mV -782 mV - 754 mV -709 mV -825 mV 38 37 Lone Star X-ing MP 79.3 -895 mV -615 mV -954 mV -657 mV Scarbough Road MP 93.1 -940 mV -708 mV -908 mV -818 mV 40 39 FM #10 MP 94.9 -900 mV -651 mV -862 mV -936 mV -739 mV 41 PL Exposed in Creek MP 98.0* -924 mV Loop 390 MP 29.3 -1216 ml -746 mV -603 mV -1131 mV -746 mV 42 Lake St. MP 29.7 -1386 mV -795 mV -1204 mV -717 mV -798 mV * 2012 structure-to-soil measurement was below specified criterion. ** 2012 and 2013 structure-to-soil measurements rather than 2013 and 2014. § 195.573 What must I do to monitor external corrosion control? (c) Rectifiers and other devices. You must electrically check for proper performance each device in the first column at the frequency stated in the second column. 4#

420165015_NOPV PCP PCO_04282016_text.pdf, page 5Device Check frequency Rectifier At least six times each calendar year, but with intervals not exceeding 2 1/2 months. Reverse current switch Diode Interference bond whose failure would jeopardize structural protection Other interference bond At least once each calendar year, but with intervals not exceeding 15 months. Rectifier inspection records indicated that in 2013, Plains failed to check rectifiers at least six times with intervals not exceeding 2 ½ months for the Laverne to Stockholm facility (Facility IDs: BU-012 and BU- 013). The rectifiers were checked only five times in 2013. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a related series of violations. For violations occurring prior to January 4, 2012, the maximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a 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 $95,000 for item 4. Proposed Compliance Order With respect to item(s) 1, 2, 3, 4, and 5 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Plains Pipeline L.P. 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. All material you submit in response to this enforcement action may be 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 5#

420165015_NOPV PCP PCO_04282016_text.pdf, page 6Notice 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 4-2016-5015 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#

420165015_NOPV PCP PCO_04282016_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 Plains Pipeline, L.P. a Compliance Order incorporating the following remedial requirements to ensure the compliance of Plains Pipeline, L.P. with the pipeline safety regulations: 1. 2. 3. 4. 5. 6. 7. In regard to Item Number 1 of the Notice pertaining to Plains not maintaining adequate surface conditions on the ROW in the vicinity of the Tribbey pump station. Plains must clear all vegetation and tree canopies in the ROW inbound and outbound of the Tribbey pump station and provide PHMSA documentation that the work has been completed. In regard to Item Number 2 of the Notice pertaining to Plains’ valve maintenance records indicating valve on the south side of Deep Fork River 10-inch had not been adequately inspected to verify it was functioning properly according to the Plains procedures. Plains must operate the valve according to its inspection procedures, document the inspection in its valve maintenance records, and submit to PHMSA the records showing that the inspection has been completed. In regard to Item Number 3 of the Notice pertaining to Plains’ personnel not following company procedures by contacting the operations control center before operating a main line valve during an inspection. Plains must re-train personnel involved in inspecting main line valves in the Plains procedures, and verify through supervisory observation and OQ evaluations that they can properly perform the covered task. Plains must also submit to PHMSA documentation showing that the affected personnel have been re-trained and were able to properly perform the covered task according to the Plains’ procedures. In regard to Item Number 4 of the Notice pertaining to Plains’ cathodic protection not meeting applicable criteria at several locations on their pipeline system. Plains must remedy all cathodic protection deficiencies and provide PHMSA documentation showing that the structure-to-soil measurements meet the specified criterion of -850 mV with consideration of IR drop. In regard to Item Number 5 of the Notice pertaining to Plains’ maintenance records indicating that the rectifiers located at Laverne to Stockholm facility (Facility IDs: BU-012 and BU-013) were inspected only 5 times in 2013, Plains must provide records showing that the rectifiers were functioning properly throughout 2013 and were inspected in 2014 according to the requirements of §195.573. Plains shall complete all items within 30 days of receiving the final order. It is requested (not mandated) that Plains Pipeline L.P. 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#

420165015_Final Order_03072018_text.pdf, page 1Official PDFMarch 7, 2018 Mr. Harry N. Pefanis, President Plains Pipeline, LP 333 Clay Street, Suite 1600 Houston, TX 77002 Re: CPF No. 4-2016-5015 Dear Mr. Pefanis: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a reduced civil penalty of $90,700, and specifies actions that need to be taken by Plains Pipeline, LP, 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 effective upon the date of mailing, as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Director, Southwest Region, Office of Pipeline Safety, PHMSA Mr. Troy Valenzuela, VP, Environmental Health & Safety, Plains Pipeline, LP, 333 Clay Street, Suite 1600, Houston, TX 77002 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420165015_Final Order_03072018_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 ) Plains Pipeline, LP, ) CPF No. 4-2016-5015 ) ) ) Respondent. ) ____________________________________) FINAL ORDER On February 18, 2014, and August 29, 2014, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the procedures, facilities, and records of Plains Pipeline, LP (Plains or Respondent), in Louisiana, Illinois, Oklahoma, New Mexico, and Texas. The Plains pipeline system is composed of 19,200 miles of active crude oil and natural gas liquids pipelines and gathering systems, including 1,790 miles of pipe within the Southwest Region that transport crude oil from offshore and onshore facilities.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated April 28, 2016, 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 Plains had committed five violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $95,000 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. Respondent responded to the Notice by letter dated May 31, 2016 (Response). The company contested the allegations, offered additional information in response to the Notice, and requested that the proposed civil penalty be eliminated. 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. § 195.412(a), which states: 1 https://www.plainsallamerican.com/what-we-do/transportation; Pipeline Safety Violation Report (Violation Report), (Apr. 28, 2016) (on file with PHMSA), at 1.#

420165015_Final Order_03072018_text.pdf, page 3CPF No. 4-2016-5015 Page 2 § 195.412 Inspection of rights-of-way and crossings under navigable waters. (a) Each operator shall, at intervals not exceeding 3 weeks, but at least 26 times each calendar year, inspect the surface conditions on or adjacent to each pipeline right-of-way. Methods of inspection include walking, driving, flying or other appropriate means of traversing the right-of-way. The Notice alleged that Respondent violated 49 C.F.R. § 195.412(a) by failing to inspect the surface conditions on or adjacent to its Red River Pipeline right-of-way (ROW). Specifically, the Notice alleged that Respondent performed ROW inspections primarily using aerial surveillance, but based on ROW conditions observed during the PHMSA field inspection at the inbound and outbound locations of the Tribbey pump station, Respondent had not maintained adequate surface conditions on the pipeline ROW to enable effective aerial surveillance. The Notice alleged that there was high overgrowth vegetation and large trees with canopies overhanging the ROW that obscured from observation by aerial surveillance the surface conditions adjacent to the pipeline ROW. In its Response, Plains contested this alleged violation and argued that the ROW around Tribbey Station at the time of the 2014 PHMSA field audit was clear of tree canopy and did not obscure the surface conditions adjacent to Red River Pipeline from observation by aerial surveillance. It stated that a Plains district manager for this pipeline and station was present during the 2014 PHMSA field inspection and explained that a small grove of trees that appeared to be overhanging the pipeline southwest of the station did not actually overhang the pipeline ROW because the pipeline skirted to the west of the grove of trees. Plains then provided an aerial photograph of Tribbey Station dated March 9, 2014, about five months prior to the PHMSA field inspection.2 Plains stated that the photograph “clearly shows: (1) red river pipeline alignment, (2) no tree canopy over hanging the pipeline, and (3) that the pipeline could be inspected by aerial surveillance.”3 Analysis Section 195.412(a) requires each operator to inspect the surface conditions on or adjacent to each pipeline right-of-way at regular intervals. Methods of inspection include walking, driving, flying or other appropriate means of traversing the right-of-way. The purpose of this regulation is to “ensure that operators regularly inspect the surface conditions of their pipeline rights-of-way, by appropriate means, in order to detect encroachments and various other threats to the integrity of their facilities.”4 If an operator cannot view surface conditions using aerial patrols, then flying is not a method that achieves compliance with the regulation. In this case, the inspector observed that “[t]here was high overgrowth vegetation; large trees with canopies overhanging the ROW that obscure the surface conditions adjacent to the pipeline 2 Response, Enclosure 2. 3 Response, at 1. 4 In The Matter of Nustar Energy, LP, CPF No. 3-2007-5002, Final Order, at 11 (issued Feb. 5, 2009).#

420165015_Final Order_03072018_text.pdf, page 4CPF No. 4-2016-5015 Page 3 ROW from observation by aerial surveillance.”5 Though Plains stated that the tree canopy did not overhang the pipeline ROW because the pipeline skirted to the west of the small grove of trees, the evidence does not support this statement. Respondent used aerial patrols for this ROW as the sole method of inspection, but Respondent’s ROW in this location was covered in dense overgrowth in both directions, as shown in the photographs attached to the Violation Report.6 The coordinates of the photographs, as well as the location of the mainline valve shown indicates that the photos were taken directly adjacent to the ROW.7 Such overgrowth prevented Respondent from observing surface conditions and encroachments to its ROW.8 Therefore, Respondent did not inspect the surface conditions as required by the regulation. While Respondent’s aerial photograph provides a helpful view of Tribbey Station and its ROWs, the photograph was taken five months before the inspection. The photograph submitted by Plains is an aerial photo taken from Google Maps and is not indicative of the conditions of the ROW at the time of the inspection.9 The photographs provided in the Violation Report were more current and clearly show that there was overgrowth on the ROW. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.412(a) by failing to inspect the surface conditions on or adjacent to its Red River Pipeline ROW. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.420(b), which states: § 195.420 Valve maintenance. (a) … (b) Each operator shall, at intervals not exceeding 7 1/2 months, but at least twice each calendar year, inspect each mainline valve to determine that it is functioning properly. The Notice alleged that Respondent violated 49 C.F.R. § 195.420(b) by failing to adequately inspect each mainline valve to determine that it was functioning properly. Specifically, the Notice alleged that valve-maintenance records for the Mayson to Ellis (Red River) pipeline indicated that the valve on the south side of Deep Fork River had not been adequately inspected to verify that it was functioning properly.10 Valve-inspection records indicated that the actuator for the valve had not had electricity from September 2011 to the time of the 2014 PHMSA field inspection. Electricity to the actuator allows the valve to be tested and operated remotely. Since 5 Violation Report, at 4. 6 Violation Report, at 43-44. 7 Violation Report, at 43-44. 8 Nustar, CPF No. 3-2007-5002, at 2. 9 Region Recommendation (Jan. 12, 2017) (on file with PHMSA), at 2. 10 The Notice referred to this as the 10-inch pipeline.#

420165015_Final Order_03072018_text.pdf, page 5CPF No. 4-2016-5015 Page 4 the actuator was not functioning, the valve needed to be tested manually, but test records show “Not applicable” for the manual operation of the valve. In its Response, Plains contested this alleged violation on the ground that its employee had indeed manually operated the valve, even though the form was improperly completed and did not clearly indicate manual operation. Plains stated that immediately following the PHMSA field inspection, Plains interviewed the employee responsible for inspecting this valve and found that for the period in question, he had properly inspected the valve and operated it using the actuator hand wheel, which is a manual operation. The employee said that he was confused on how this unique situation should be reflected on the forms, and he thought checking “unsatisfactory” for actuator motor operation would indicate that (1) he had manually operated the valve using the actuator hand wheel, and (2) there also was an unsatisfactory condition with the actuator electrical connection, which he had described in another item on the form. Therefore, the employee confirmed he had manually operated this valve during each inspection for the period addressed in the Notice. To prevent future inspection-form errors for this unique situation, the employee received instruction on how to properly fill out the form prior to the next scheduled inspection, which was completed September 8, 2014.11 Analysis Section 195.420(b) requires each operator to regularly inspect each mainline valve to determine that it is functioning properly. In this case, Respondent’s records that were provided to PHMSA at the time of the inspection did not show that the valve had been properly operated. By marking “NA” for manual operation, the record did not indicate that the valve had been inspected in compliance with the requirements of the regulations and Respondent’s procedures. Plains provided an additional inspection record, but it was created after the OPS inspection had identified the violation. The employee’s statement that he had inspected the valves manually is likewise not supported by evidence in the record.12 Valve inspection records that Respondent had made contemporaneously were insufficient evidence to prove that such testing occurred. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.420(b) by failing to adequately inspect each mainline valve to determine that it was functioning properly. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.505, which states: § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks; (b) Ensure through evaluation that individuals performing covered tasks are qualified; (c) Allow individuals that are not qualified pursuant to this subpart to 11 Plains provided the properly completed form for the September 8, 2014 inspection of the valve on the south side of the Deep Fork River 10-inch as Enclosure 3 to its Response. 12 Operators must keep records of inspections under §195.404(c).#

420165015_Final Order_03072018_text.pdf, page 6CPF No. 4-2016-5015 Page 5 perform a covered task if directed and observed by an individual that is qualified; (d) Evaluate an individual if the operator has reason to believe that the individual’s performance of a covered task contributed to an accident as defined in Part 195; (e) Evaluate an individual if the operator has reason to believe that the individual is no longer qualified to perform a covered task; (f) Communicate changes that affect covered tasks to individuals performing those covered tasks; and (g) Identify those covered tasks and the intervals at which evaluation of the individual’s qualifications is needed. (h) After December 16, 2004, provide training, as appropriate, to ensure that individuals performing covered tasks have the necessary knowledge and skills to perform the tasks in a manner that ensures the safe operation of pipeline facilities; and (i) After December 16, 2004, notify the Administrator or a state agency participating under 49 U.S.C. Chapter 601 if the operator significantly modifies the program after the Administrator or state agency has verified that it complies with this section. The Notice alleged that Respondent violated 49 C.F.R. § 195.505 by failing to have and follow a written qualification program to ensure individuals performing covered tasks are qualified. Specifically, the Notice alleged that during its 2014 field inspection on the Red River Pipeline (north) section, OPS selected valve #15, MP: 156+00, located between Healdton and Sherman pump station, Texas. OPS requested a Plains field technician to perform the covered task #20 (Inspect Mainline Valves) to ensure that the individual performing covered task had the necessary skills and knowledge of the procedural steps described in the Plains Operations and Maintenance (O&M) Manual procedure, Valve Maintenance, P-195.420 P-195.420). OPS observed that the field personnel operated the valve without the coordination and consent of the control center, as required by Plains’ written procedure. That procedure is specified in Item 9 of P-195.420, which states: “Note: On pipeline in service, the opening and closing of the valves shall be performed only with the coordination and consent of the control center.” 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. § 195.505 by failing to have and follow a written qualification program to ensure individuals performing covered tasks are qualified. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.571, which states: § 195.571 What criteria must I use to determine the adequacy of cathodic protection? Cathodic protection required by this subpart must comply with one or more of the applicable criteria and other considerations for cathodic protection contained in paragraphs 6.2 and 6.3 of NACE SP 0169#

420165015_Final Order_03072018_text.pdf, page 7CPF No. 4-2016-5015 Page 6 (incorporated by reference, see § 195.3).13 The Notice alleged that Respondent violated 49 C.F.R. § 195.571 by failing to ensure that cathodic protection (CP) at several points on the Red River Pipeline14 complied with one or more of the applicable criteria and other considerations for cathodic protection contained in paragraphs 6.2 and 6.3 of NACE SP 0169, for at least two sequential annual surveys. Specifically, the Notice alleged that Plains indicated it used the CP criterion of -850 mV with CP applied. NACE SP 0169 specifies that “Voltage drops other than those across the structure-to-electrolyte boundary must be considered for valid interpretation of this voltage measurement.”15 The voltage measurement with consideration of IR drop is the IR free or “instant off” measurement that Plains made as part of the annual survey.16 The Notice alleged that Respondent’s records showed at least 42 test stations that did not meet the specified criterion. In its Response, Plains contested this alleged violation on the ground that it had indeed provided adequate CP at each test station listed. It stated that although the -850 mV instant-off criterion was not met for these test stations, OPS failed to evaluate whether the test stations met the second CP criterion allowed in NACE SP 0169-2007, which is incorporated by reference in 49 CFR § 195.571. This second CP criterion is a minimum negative polarization voltage (pipe-to- soil) shift of 100 mV (-100 mV criterion). Plains argued that “[T]he -100 mV criterion is determined by measuring the polarization decay, which is calculated by subtracting the native voltage potential measurement from the instant-off measurement.”17 The company provided an excerpt from its O&M Manual that addressed the -100 mV criterion,18 as well as a table showing the 100 mV criterion measurements for each test station listed in the Notice from the 2013 and 2014 CP annual surveys.19 Plains alleged that the table shows that the -100 mV criterion for all of the at-issue test stations either was (1) met for both years, or (2) brought under adequate CP within the allowable timeframe. As shown in Enclosure 5 of the Response, the allowable timeframe to correct low pipe-to-soil potentials is prior to completion of the next annual CP survey.20 13 49 C.F.R. § 195.571 was updated on March 11, 2015. Because the inspection date was before this regulatory change, the previous version of the regulation is quoted here. 14 The Notice and Violation Report mistakenly indicated that this alleged occurred on the Buffalo Pipeline system, rather than the Red River Pipeline. Plains noted the mistake in its Response and provided information relevant to the Red River Pipeline. See Response, at 3. 15 National Association of Corrosion Engineers (NACE), Standard Practice, Control of External Corrosion on Underground or Submerged Metallic Piping, paragraph 6.2.2.1.1 (2007). 16 The term “IR drop” refers to the difference between the voltage at the top of the pipe and the voltage at the surface of the earth caused by the electrical resistance of the soil in which the pipeline is buried. 17 Response, at 3. 18 Response, Enclosure 5. 19 Response, Enclosure 6. 20 Response, Enclosure 5.#

420165015_Final Order_03072018_text.pdf, page 8CPF No. 4-2016-5015 Page 7 Analysis Section 195.571 requires pipeline operators to ensure that cathodic protection complies with one or more of the applicable criteria and other considerations for cathodic protection contained in NACE SP 0169 (incorporated by reference, see § 195.3). One of the criteria described in paragraph 6.2 of NACE SP 0169 is as follows: A negative (cathodic) potential of at least 850 mV with the CP applied . . . . Voltage drops other than those across the structure-to-electrolyte boundary must be considered for valid interpretation of this voltage measurement. This is commonly known as the -850 mV “on” criterion. Under this criterion, operators must consider the voltage (IR) drop to accurately determine if cathodic protection meets the standard. If IR drop is not properly considered, cathodic protection may appear to meet the -850 mV criterion when, in fact, it does not. One method of considering IR drop is to measure or calculate the drop by interrupting the current and taking an “instant-off” reading.21 Another criterion described in paragraph 6.2 of NACE SP 0169 is as follows: A minimum of 100 mV of cathodic polarization between the structure surface and a stable reference electrode contacting the electrolyte. This is commonly known as the -100 mV criterion. The fact that Respondent did not meet the -850 mV criterion is not in dispute. Having reviewed the record, I also find that Respondent failed to meet the -100 mV criterion. NACE 0169-2007, Section 6.2.2.1.3 describes this criterion as “[a] minimum of 100mV of cathodic polarization between the structure surface and a stable reference electrode contacting the electrolyte. The formation or decay of polarization can be measured to satisfy this criterion.” In order to meet the -100mV criterion, there must be at least 100 mV potential decay from the “Off Cycle” potential to the “Depolarized” potential. “Native” potential volts cannot be used when using the -100mV criteria for polarization readings. The table of cathodic protection readings provided by Respondent in Enclosure 6 purports to show that Respondent met the 100mV criterion, however, it only shows the difference between the “Native (volts)” column and the “2013 or 2014 Instant Off” columns. For the “Native (volts)” column to truly show a “native” reading or “depolarized” reading, there would need to be readings for each year’s on-off survey. The table does not contain information on the “Depolarized” potential as required by NACE 0169-2007, Section 6.2, for each on-off survey conducted in 2013, 2014, and 2015. It also gives no indication about when or how the native voltages were measured. Native potential values must be obtained when the pipeline is first constructed and before activation of cathodic protection. These values would not be used in establishing compliance with the 100 mV polarization criteria. As required by Plains’ own procedure, all sources of current, including those from foreign pipelines, must be shut off to 21 Panhandle Energy, CPF No. 3-2010-1006M, Item 19, 2012 WL 7177132 (Dec. 31, 2012).#

420165015_Final Order_03072018_text.pdf, page 9CPF No. 4-2016-5015 Page 8 obtain depolarized potential measurements. However, there was no evidence submitted by Plains to show that such a procedure was followed. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.571 by failing to ensure that cathodic protection at several points on the Red River Pipeline complied with one or more of the applicable criteria and other considerations for cathodic protection contained in paragraphs 6.2 and 6.3 of NACE SP 0169, for at least two sequential annual surveys. Item 5: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(c), which states: § 195.573 What must I do to monitor external corrosion control? (a)… (c) Rectifiers and other devices. You must electrically check for proper performance each device in the first column at the frequency stated in the second column. Device Check frequency Rectifier……………………………… At least six times each calendar year, but with intervals not exceeding 2 1/2 months. Reverse current switch Diode Interference bond whose failure would jeopardize structural protection Other interference bond …………….. At least once each calendar year, but with intervals not exceeding 15 months. The Notice alleged that Respondent violated 49 C.F.R. § 195.573(c) by failing to check rectifiers at least six times each calendar year, but with intervals not exceeding 2½ months, for the Laverne to Stockholm facility. Specifically, the Notice alleged that rectifier-inspection records indicated that Plains checked two rectifiers, BU-012 and BU-013, only five times in 2013. In its Response, Plains contested this alleged violation because it claimed that rectifiers BU-012 and BU-013 were inspected as required during 2013. Plains provided inspection records purporting to show that Plains inspected rectifiers BU-012 and BU-013 six times with intervals not exceeding 2½ months.22 Analysis Section 195.573(c) requires pipeline operators to electrically check each rectifier for proper performance at least six times each calendar year with intervals not exceeding 2½ months. The 22 Response, Enclosure 7.#

420165015_Final Order_03072018_text.pdf, page 10CPF No. 4-2016-5015 Page 9 evidence in this case includes two records showing Respondent’s rectifier inspection dates. One was provided to the OPS inspector at the time of the PHMSA inspection on August 5, 2014 (2014 record);23 the other was provided in the Response and dated May 4, 2016 (2016 record).24 The 2014 record shows only five inspections in 2013 for each of the two rectifiers at issue, while the 2016 record shows six inspections for each rectifier. Respondent provided no explanation as to why the data in the two records did not match or why the sixth inspection dates were missing from the 2014 record. In weighing the evidence, I am persuaded by the 2014 record, which was provided contemporaneously with the 2014 PHMSA field inspection, and is a record of Respondent’s rectifier stations and inspection dates. Respondent has not explained why the 2016 record was unavailable at the time of the PHMSA inspection. For these reasons, I find the 2014 record more persuasive as an accurate record of the inspections of the rectifier stations. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(c) by failing to check rectifiers at least six times each calendar year, but with intervals not exceeding 2½ months, for the Laverne to Stockholm facility. 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 $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.25 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 $95,000 for the violation in Item 4 cited above. Item 4: The Notice proposed a civil penalty of $95,000 for Respondent’s violation of 49 C.F.R. § 195.571, for failing to meet the specified cathodic criterion for several points on the Red River Pipeline system for at least two sequential annual surveys. Plains requested that the penalty for Item 4 be withdrawn because it claimed that it did not violate § 195.571. Since I already found 23 Violation Report, at 82. 24 Response, Enclosure 7. 25 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).#

420165015_Final Order_03072018_text.pdf, page 11CPF No. 4-2016-5015 Page 10 Respondent violated the regulation as alleged, this argument is rejected. With regard to nature, circumstance, and gravity, I find that the civil penalty assessment factors applied in this case support the proposed civil penalty. As operator of the pipeline facility, Respondent is fully responsible for this violation of the pipeline safety regulations. One of the factors upon which the proposed penalty is based is an operator’s history of prior violations. In this case, although Plains did not raise the issue in its Response, I have reviewed all of the penalty criteria, including the company’s enforcement history, which recognizes adjudications of violations that have occurred within five years preceding the date of the Notice.26 I would note that in this case, the Violation Report contains a prior offense that predates the timeframe for counting prior violations. The proposed penalty inadvertently included consideration of a finding of violation made more than five years before the date of the Notice, or April 28, 2016. Based on this error, I find justification for reducing the proposed civil penalty. Accordingly, I assess Respondent a reduced civil penalty of $90,700 for the violation of 49 C.F.R. § 195.571. 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 $90,700. 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 (AMK-325), Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 S MacArthur Blvd, Oklahoma City, Oklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the $90,700 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. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 1, 2, 3, 4, and 5 in the Notice for violations of 49 C.F.R. Part 195 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 26 See Gulf South Pipeline Co., CPF No. 2-2009-1001, Final Order, at 3, 2011 WL 4351589, at *2 (issued July 29, 2011); Enbridge Energy, L.P., CPF No. 3-2012-5018, Final Order, at 4, 2013 WL 5883399, at *3 (issued Aug. 22, 2013); Colonial Pipeline Co., CPF No. 4-2011-5001, Final Order, at 3, 2011 WL 6008833, at *2 (Sept. 23, 2011).#

420165015_Final Order_03072018_text.pdf, page 12CPF No. 4-2016-5015 Page 11 operations: 1. With respect to the violation of § 195.412(a) (Item 1), Respondent must clear all vegetation and tree canopies in the ROW inbound and outbound of the Tribbey pump station and provide PHMSA documentation that the work has been completed. 2. With respect to the violation of § 195.420(b) (Item 2), Respondent must operate the valve on the south side of Deep Fork River according to its inspection procedures, document the inspection in its valve maintenance records, and submit to PHMSA the records showing that the inspection has been completed. 3. With respect to the violation of § 195.505 (Item 3), Respondent must re-train personnel involved in inspecting main line valves on Plains’ procedures and verify, through supervisory observation and operator-qualification evaluations, that they can properly perform the covered task. Plains must also submit to PHMSA documentation showing that the affected personnel have been re-trained and were able to properly perform the covered task according to Plains' procedures. 4. With respect to the violation of § 195.571 (Item 4), Respondent must remedy all cathodic protection deficiencies and provide PHMSA with documentation showing that the structure-to-soil measurements meet the specified criteria in the regulation with consideration of IR drop. 5. With respect to the violation of § 195.573(c) (Item 5), Respondent must provide the most recent records showing that the rectifiers were checked and found to be functioning properly according to the requirements of § 195.573. Plains shall complete all items and submit documentation to the Director demonstrating the completion within 30 days of receiving the final order. It is requested (not mandated) that Plains Pipeline L.P. maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to 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 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 $200,000, as adjusted for inflation (49 C.F.R. § 190.223), 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. § 190.243, Respondent may submit a Petition for Reconsideration of this Final Order to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey#

420165015_Final Order_03072018_text.pdf, page 13CPF No. 4-2016-5015 Page 12 Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address, no later than 20 days after receipt of service of this Final Order by Respondent. Any petition submitted must contain a statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays the payment of any civil penalty assessed. The other terms of the order, including corrective action, remain in effect unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. March 7, 2018 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

420165015_Closure Letter_07102019_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED July 10, 2019 Troy Valenzuela VP, Environmental Health & Safety Plains Pipeline, L.P. 333 Clay Street, Suite 1600 Houston, TX 77002 CPF 4-2016-5015 Dear Mr. Valenzuela: On March 7, 2018, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Plains Pipeline, L.P. (Plains) a Final Order in the above-referenced case. This Final Order included a Compliance Order, that required the respondent to complete all items and to submit documentation to the Southwest Region Director demonstrating the completion within 30 days of receiving the Final Order. On May 23, 2018, Plains provided documentation addressing completion of all items referenced in the Compliance Order. Based on our review of the documentation provided, it has been determined that you have complied with the terms the Compliance Order and that this case is now considered closed. Thank you for your cooperation in this matter. Sincerely, Mary L. McDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#