KINDER MORGAN WINK PIPELINE LLC — Notice of Probable Violation

party submissionOfficial PDF420165026_Operator Response to Notice and Request for Hearing_09082016.pdf#

420165026_Closure Letter_08222018_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED August 22, 2018 Tom Martin President, Natural Gas Pipelines Group Kinder Morgan, Inc. 1001 Louisiana Street, Suite 1000 Houston, Texas 77002 Re: CPF 4-2016-5026 Dear Mr. Martin: On, November 30, 2017, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to your subsidiary, Kinder Morgan Wink Pipeline, LLC (KM Wink) a Final Order in the above-referenced case. This Final Order included a Compliance Order. Based on our review of the documentation provided, a subsequent meeting with Kinder Morgan officials to provide additional clarification on actions taken, and confirmation of payment of the civil penalty, it has been determined that KM Wink has 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, Mary L. McDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#

420165026_Final Order_11302017_text.pdf, page 1Official PDFNovember 30, 2017 Mr. Tom Martin President, Natural Gas Pipelines Group Kinder Morgan, Inc. 1001 Louisiana Street, Suite 1000 Houston, Texas 77002 Re: CPF No. 4-2016-5026 Dear Mr. Martin: Enclosed please find the Final Order issued in the above-referenced case to your subsidiary, Kinder Morgan Wink Pipeline, LLC. It makes findings of violations, assesses a civil penalty of $183,800, and specifies actions that need to be taken by Kinder Morgan Wink Pipeline, LLC, 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 Jessica Toll, Esquire, Assistant General Counsel, Kinder Morgan Wink Pipeline, LLC, 370 Van Gordon Street, Lakewood, CO 80228 Mr. Kenneth H. Havens, Jr., Vice President-Source and Transportation, Kinder Morgan Wink Pipeline, LLC, 1001 Louisiana Street, Suite 1000, Houston, TX 77002 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420165026_Final Order_11302017_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 ) Kinder Morgan Wink Pipeline, LLC, ) CPF No. 4-2016-5026 a subsidiary of Kinder Morgan, Inc., ) ) ) ) Respondent. ) ____________________________________) FINAL ORDER On multiple occasions between October 6, 2014, and February 18, 2015, 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 Kinder Morgan Wink Pipeline, LLC (KM Wink or Respondent), a subsidiary of Kinder Morgan, Inc., in Wink, Texas. KM Wink has 454 miles of crude oil pipelines and delivers approximately 145,000 barrels of oil per day.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated August 3, 2016, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice), which also included a warning pursuant to 49 C.F.R. § 195.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that KM Wink had committed four violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $183,800 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. KM Wink responded to the Notice by letter dated September 7, 2016 (Response). The company contested Item 2 only, provided an explanation of its actions, requested that the proposed civil penalty be reduced, and requested a hearing. By letter dated March 3, 2017, Respondent withdrew its challenge to Item 2 and waived its right to a hearing, but suggested that certain changes be made to the proposed Compliance Order. 1 Pipeline Safety Violation Report (Violation Report), (Aug. 3, 2016) (on file with PHMSA), at 1; (https://www kindermorgan.com/pages/business/co2/pipelines/wink.aspx (last accessed Aug. 11, 2017).#

420165026_Final Order_11302017_text.pdf, page 3CPF No. 4-2016-5026 Page 2 FINDINGS OF VIOLATION KM Wink did not contest the allegations in the Notice that it violated 49 C.F.R. Part 195, as follows: Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.406(a)(3), which states: § 195.406 Maximum operating pressure. (a) Except for surge pressures and other variations from normal operations, no operator may operate a pipeline at a pressure that exceeds any of the following: . . . (1) … (3) Eighty percent of the test pressure for any part of the pipeline which has been pressure tested under subpart E of this part. The Notice alleged that Respondent violated 49 C.F.R. § 195.406(a)(3) by operating its pipeline at a pressure that exceeded eighty percent (80%) of the test pressure for any part of the pipeline that had been pressure tested under subpart E of Part 195. Specifically, the Notice alleged that for 25 pipeline segments, the stated maximum operating pressure (MOP) exceeded what should have been the actual MOP under § 195.406(a)(3). It further alleged that KM Wink exceeded the appropriate MOP because the company failed to correctly calculate the MOP using the lowest test pressure seen during the test and failed to correctly adjust the pressure for elevation. Following the inspection, KM Wink recalculated the MOP for the pipelines (Wink to El Paso, Snyder to Wink, and McCamey to Wink) using the lowest pressure recorded during the first four hours of the test, but these new results still allegedly showed several segments with an incorrect MOP. In its Response, Respondent contested this allegation of violation and requested a hearing regarding this Item. The company subsequently withdrew its objection based on KM Wink’s understanding that PHMSA would be issuing a modified compliance order. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.406(a)(3) by operating its pipeline at a pressure that exceeded 80% of the test pressure for any part of the pipeline that had been pressure tested under subpart E of Part 195. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.432(b), which states: § 195.432 Inspection of in-service breakout tanks. (a) … (b) Each operator must inspect the physical integrity of in-service atmospheric and low-pressure steel above-ground breakout tanks according to API Std 653 (except section 6.4.3, Alternative Internal Inspection Interval) (incorporated by reference, see § 195.3). However, if structural conditions prevent access to the tank bottom, its integrity may be assessed according to a plan included in the operations and maintenance manual under § 195.402(c)(3). The risk-based internal inspection procedures in API Std 653, section 6.4.3 cannot be used to determine the internal inspection interval.#

420165026_Final Order_11302017_text.pdf, page 4CPF No. 4-2016-5026 Page 3 The Notice alleged that Respondent violated 49 C.F.R. § 195.432(b) by failing to inspect the physical integrity of in-service low-pressure above-ground breakout tanks at the required intervals according to American Petroleum Institute (API) Standard 653. Specifically, the Notice alleged that KM Wink failed to comply with the required interval of five years for performing External In-Service and Ultrasonic Thickness Inspections for six low-pressure breakout tanks. The Notice alleged that Tank Nos. 3, 7, 8, 27, 28, and 29 did not receive such inspections at the required five-year intervals. 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. § 195.432(b) by failing to inspect the physical integrity of six in-service low-pressure above-ground breakout tanks at the required intervals according to API Standard 653. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(d), which states: § 195.573 What must I do to monitor external corrosion control? (a) … (d) Breakout tanks. You must inspect each cathodic protection system used to control corrosion on the bottom of an aboveground breakout tank to ensure that operation and maintenance of the system are in accordance with API RP 651 (incorporated by reference, see § 195.3). However, this inspection is not required if you note in the corrosion control procedures established under § 195.402(c)(3) why complying with all or certain operation and maintenance provisions of API RP 651 is not necessary for the safety of the tank. The Notice alleged that Respondent violated 49 C.F.R. § 195.573(d) by failing to inspect each cathodic protection system used to control corrosion on the bottom of an above-ground breakout tank to ensure operation and maintenance of the system are in accordance with API Recommended Practice (RP) 651. Specifically, the Notice alleged that KM Wink failed to inspect numerous cathodic protection test points for breakout tanks 7, 8, 27, 28, and 29 over the period 2012-2014. Additionally, there were test points with readings below the -850 mV criteria specified in API RP 651 for adequate cathodic protection at breakout tanks 3, 8, and 29 over the period 2012-2014. 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. § 195.573(d) by failing to inspect each cathodic protection system used to control corrosion on the bottom of an above-ground breakout tank to ensure operation and maintenance of the systems are in accordance with API RP 651. Item 5: 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#

420165026_Final Order_11302017_text.pdf, page 5CPF No. 4-2016-5026 Page 4 protection contained [in] paragraphs 6.2.2, 6.2.3, 6.2.4, 6.2.5 and 6.3 in NACE SP 0169 (incorporated by reference, see § 195.3). The Notice alleged that Respondent violated 49 C.F.R. § 195.571 by failing to have adequate cathodic protection levels to meet the criteria required by NACE SP 0169, paragraphs 6.2 or 6.3, on the El Paso to Wink pipeline. Specifically, the Notice alleged that for three consecutive years (2012 through 2014), at the same five locations, the 100 mV criteria was not attained. In addition, the native/static values were more negative than the IR free (current-off) values for 11 occasions in the 2012 data, for seven occasions in the 2013 data, and for eight occasions in the 2014 data. 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. § 195.571 by failing to have adequate cathodic protection levels on the El Paso to Wink pipeline. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.2 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 $183,800 for the violations cited above. Item 2: The Notice proposed a civil penalty of $65,800 for Respondent’s violation of 49 C.F.R. § 195.406(a)(3). As discussed above, I found that Respondent operated its pipeline at a pressure that exceeded 80% of the test pressure for any part of the pipeline that had been pressure-tested under subpart E of Part 195. KM withdrew its request for a hearing on this Item and no longer contests the proposed penalty. I find the record supports the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $65,800 for violation of 49 C.F.R. § 195.406(a)(3). Item 3: The Notice proposed a civil penalty of $37,800 for Respondent’s violation of 49 C.F.R. § 195.432(b). As discussed above, I found that Respondent failed to inspect the physical integrity of six in-service low-pressure above-ground breakout tanks at the required intervals 2 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).#

420165026_Final Order_11302017_text.pdf, page 6CPF No. 4-2016-5026 Page 5 according to API Standard 653. KM Wink did not contest the allegations of violation but requested that the penalty be mitigated because it had identified the overdue tank inspections and taken action “to coordinate and expedite the scheduling of those inspections” prior to the OPS inspection. 3 Respondent explained the compliance actions it had taken to ensure that the violation would not be repeated, including the implementation of new compliance-management software and appropriate action plans. Although KM Wink may have identified and expedited the overdue tank inspections prior to the 2014-15 PHMSA inspection, I find the information presented by Respondent insufficient to justify mitigation of the proposed penalty. First, by the time KM Wink identified the late inspections, they were long overdue, in some cases by as much as two years, and thus could not be re-done or corrected. Second, the company has not presented any documentation or other evidence showing when it discovered the non-compliances or how the cause of the non- compliances was subsequently corrected. While it is commendable that KM Wink discovered the violation and took action to prevent a recurrence in the future, the fact remains that safety was compromised by the company’s failure to conduct timely inspections. I therefore find no justification to reduce the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $37,800 for violation of 49 C.F.R. § 195.432(b). Item 4: The Notice proposed a civil penalty of $37,800 for Respondent’s violation of 49 C.F.R. § 195.573(d). As discussed above, I found that Respondent failed to inspect each cathodic protection system used to control corrosion on the bottom of above-ground breakout tanks. KM Wink did not contest these allegations of violation but requested that the penalty be mitigated based on compliance actions it had taken since the PHMSA inspection. I do not find that such actions justify a civil penalty reduction, because any prudent operator is expected to take appropriate corrective actions once a violation has been discovered during the course of a PHMSA inspection.4 Respondent failed to take appropriate action to comply with a requirement that was clearly applicable, and as a result, pipeline integrity was compromised. This violation was discovered by PHMSA. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $37,800 for violation of 49 C.F.R. § 195.573(d). Item 5: The Notice proposed a civil penalty of $42,400 for Respondent’s violation of 49 C.F.R. § 195.571, for failing to have adequate cathodic protection levels to meet the criteria required by NACE SP 0169, paragraphs 6.2 or 6.3, on the El Paso to Wink pipeline. KM Wink did not contest this allegation of violation but requested that the penalty be mitigated based on compliance actions it had taken since the PHMSA inspection. As stated above, I do not find that such actions justify a civil penalty reduction, because any prudent operator is expected to take appropriate corrective actions once a violation has been discovered during the course of a PHMSA inspection. Respondent failed to take appropriate action to comply with a requirement 3 Response at 3. 4 See, e.g., Citgo Pipeline Co., Final Order, CPF No. 4-2005-5012, at 3 (July 14, 2005) (stating that corrective action taken after the OPS inspection did not justify reducing the proposed penalty).#

420165026_Final Order_11302017_text.pdf, page 7CPF No. 4-2016-5026 Page 6 that was clearly applicable, and as a result, pipeline integrity was compromised. This violation was discovered by PHMSA. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $42,400 for 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 $183,800. 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 $183,800 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 2, 4, and 5 in the Notice for violations of 49 C.F.R. §§ 195.406(a)(3), 195.573(d), and 195.571, 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 § 195.406(a)(3) (Item 2), Respondent must calculate the MOP of each pipeline segment as required by § 195.406 and establish the proper MOP for each line segment. KM Wink must reset all over-pressure protection along each line segment. KM Wink has determined the MOP for each line segment according to the procedure and calculations discussed and agreed upon with the Region in the February 15, 2017 meeting held between the parties. KM Wink must reset all affected over-pressure protection within 90 days following the receipt of this Final Order. 2. With respect to the violation of § 195.573(d) (Item 4), Respondent must remediate low and missing reads for each cathodic protection system used to control corrosion on the bottom of each aboveground breakout tank in accordance with API RP 651. This requirement refers to breakout tanks 3, 7, 8, 27, 28, and 29. KM Wink must#

420165026_Final Order_11302017_text.pdf, page 8CPF No. 4-2016-5026 Page 7 complete the remediation work within 180 days from receipt of this Final Order. 3. With respect to the violation of § 195.571 (Item 5), Respondent must remediate the cathodic protection system along the El Paso to Wink pipeline to meet adequate CP levels and achieve the criteria established by NACE SP 0169, sections 6.2 to 6.3. KM Wink must complete the remediation work on the El Paso to Wink pipeline CP system to meet adequate CP levels within one year from receipt of this Final Order. It is requested (not mandated) that KM Wink 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. WARNING ITEM With respect to Item 1, the Notice alleged a probable violation of Part 195 but did not propose a civil penalty or compliance order for this item. Therefore, this is considered to be a warning item. The warning was for: 49 C.F.R. § 195.404(c)(1) (Item 1) ─ Respondent’s alleged failure to have records documenting the date, location, and description of pipeline repairs from previous years. Specifically, the Notice alleged that from October 2013 through June 2014, KM Wink conducted seven dig-inspections on identified anomalies called by current ILI runs, only to discover that the anomalies had been previously repaired with composite or Type B sleeves. KM Liquid O&M Manual Procedure L-O&M 213, Section 5 “Documentation, 5.1 Per requirements of DOT and NEB (OPR Section 41 and CSA Z662 Section 10.3.3), 5.1.1” requires that employees “[p]roperly document all leaks and pipe repairs on L- OM200-02 Pipeline Inspection/Repair Report.” KM Wink presented information in its Response showing that it had taken certain actions to address this cited item. If OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject to future enforcement action. 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#

420165026_Final Order_11302017_text.pdf, page 9CPF No. 4-2016-5026 Page 8 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. November 30, 2017 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

420165026_NOPV PCP PCO_08032016_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED August 3, 2016 Mr. Charles Fox Kinder Morgan - Wink Pipeline LP 500 Dallas, Suite 1000 Houston, TX 77002 CPF 4-2016-5026 Dear Charles Fox: On multiple occasions between October 6, 2014 through February 18, 2015, representatives 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 Wink Pipeline system in Wink, Texas. As a result of the inspection, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are: 1. § 195.404 Maps and records. (c) Each operator shall maintain the following records for the periods specified: (1) The date, location, and description of each repair made to pipe shall be maintained for the useful life of the pipe.#

420165026_NOPV PCP PCO_08032016_text.pdf, page 22. KM Wink failed to have records documenting the date, location, and description of pipeline repairs from previous years. KM Liquid O&M Manual Procedure L-O&M 213 section 5 Documentation, 5.1 Per requirements of DOT and NEB (OPR Section 41 and CSA Z662 Section 10.3.3), 5.1.1 states, “Properly document all leaks and pipe repairs on L-OM200-02 Pipeline Inspection/Repair Report” From October 2013 through June 2014, KM has conducted seven (7) dig-inspections on identified anomalies called by current ILI runs only to discover that the anomalies have been previously repaired with composite or Type B sleeves. § 195.406 Maximum operating pressure. (a) Except for surge pressures and other variations from normal operations, no operator may operate a pipeline at a pressure that exceeds any of the following (3) Eighty percent of the test pressure for any part of the pipeline which has been pressure tested under subpart E of this part. Kinder Morgan Wink failed to correctly determine the MOPs for multiple pipeline systems. These pipelines were buried when the pressure tests were conducted. Section 195.304 Test Pressure states, “The test pressure for each pressure test conducted under this subpart must be maintained throughout the part of the system being tested for at least 4 continuous hours at a pressure equal to 125 percent, or more, of the maximum operating pressure and, in the case of a pipeline that is not visually inspected for leakage during the test, for at least an additional 4 continuous hours at a pressure equal to 110 percent, or more, of the maximum operating pressure.” KM Liquids O&M Procedure L-O&M 201 Maximum Operating Pressure (MOP) Determination, section 4.2 Determining Maximum Operating and Control Pressures, paragraphs 4.2.1 and 4.2.1.3 state, “4.2.1. Except for surge pressures and other variations from normal operations, steel pipeline MOP shall not exceed any of the following: 4.2.1.3. 80% of the test pressure for pipeline, (including facility piping, as applicable) tested in accordance with DOT 195 Subpart E - Hydrostatic Testing...” KM Liquids O&M Procedure L-O&M 1600 Strength and Leak Testing, section 4.2.4 Conducting the Post-Installation Test, 3rd bullet states, “Adjust test pressures for elevation by considering grade profiles and deadweight elevation. Do not allow the pressure at the lowest elevation to exceed the maximum allowable test pressure or allow the pressure at 2#

420165026_NOPV PCP PCO_08032016_text.pdf, page 33. the highest elevation to drop below the minimum allowable test pressure. Eliminate air from the test section. Allow an adequate period of time for temperature stabilization.” Records demonstrate that for 25 segments the stated MOP exceeds what should be the actual MOP. KM failed to correctly use the lowest test pressure seen during the test and incorrectly adjusted the pressure for elevation. Following the inspection, KM Wink recalculated the MOPs for the pipelines (Wink to El Paso, Snyder to Wink, and McCamey to Wink) using the lowest pressure recorded during the first 4 hours of the test. These new results still show several segments with incorrect MOP’s. § 195.432 Inspection of in-service breakout tanks. (b) Each operator must inspect the physical integrity of in-service atmospheric and low-pressure steel aboveground breakout tanks according to API Standard 653 (incorporated by reference, see § 195.3). However, if structural conditions prevent access to the tank bottom, the bottom integrity may be assessed according to a plan included in the operations and maintenance manual under § 195.402(c)(3). KM Wink failed to inspect the physical integrity of in-service atmospheric and low- pressure aboveground breakout tanks at the required intervals according to API Standard 653. The operator failed to comply with the required interval of 5 years for the External In-Service inspection and the Ultrasonic Thickness inspection. Six KM Wink low pressure breakout tanks have not received external and ultrasonic thickness inspections at the required interval pursuant to API 653. Specifically, tanks 3, 7, 8, 27, 28, and 29 have not received external inspections at the required five-year interval pursuant to API 653. The details are as follows:  Tank No. 3: Reviewed December 7, 2012 Report for EC/UT In-service Inspection, and the previous inspection was on February 3, 2005. Thus, Tank No. 3 exceeded the 5-year inspection period required by API 653.  Tank No. 27: Reviewed Out-of-Service inspection report dated July 7, 2009, documentation that an inspection was required in July 2014. Tank No. 27 was inspected on November 11, 2014, which exceeded the 5-year inspection period required by API 653.  Tank No. 7: The tank was last inspected on December 4, 2012, external only, and was previously inspection on April 24, 2006. Thus, Tank No. 7 exceeded the 5-year inspection period required by API 653.  Tank No. 8: The In-Service EC/UT inspection report dated December 4, 2012 was reviewed. The prior inspection was done on October 9, 2006. Thus, Tank 8 exceeded the 5-year inspection period required by API 653. 3#

420165026_NOPV PCP PCO_08032016_text.pdf, page 44.  Tank 28: An Out-of-Service inspection was done on January 1 - February 3, 2012. The prior inspection was done on August 12, 2005. Thus, Tank 28 exceeded the 5- year inspection period required by API 653.  Tank 29: An Out-of-Service inspection was done on April 5-6, 2011. The prior In- Service inspection was done on August 12, 2005. Thus, Tank 29 exceeded the 5-year inspection period required by API 653. § 195.573 What must I do to monitor external corrosion control? (d) Breakout tanks. You must inspect each cathodic protection system used to control corrosion on the bottom of an aboveground breakout tank to ensure that operation and maintenance of the system are in accordance with API Recommended Practice 651. However, this inspection is not required if you note in the corrosion control procedures established under § 195.402(c)(3) why compliance with all or certain operation and maintenance provisions of API Recommended Practice 651 is not necessary for the safety of the tank. KM Wink failed to ensure through inspection that the operations and maintenance of each cathodic protection system used to control corrosion on the bottom of an aboveground breakout tank is in accordance with API Recommended Practice 651. During the inspection, PHMSA inspectors noted that KM Wink failed to inspect numerous test points for breakout tanks 7, 8, 27, 28, and 29 over the period 2012-2014. Additionally, there are test points below the -850 mV criteria for breakout tanks 3, 8, and 29 over the period 2012-2014. PHMSA reviewed the cathodic protection records and found the following results:  Tank 3 - 2012 CP read - center of tank floor below criteria from 4/28/2012 until 4/12/2014  Tank 7 - 2012 CP reads - missing the center and mid-center reads from 4/28/2012 until 4/5/2014  Tank 8 - 2012 CP reads - the center and mid-center reads below criteria from 4/28/2012 and missing on 5/8/2013 & 4/12/2014  Tank 27 - 2012 CP reads - the center, mid-center, NE, NW, SE, & SW reads are missing from 4/28/2012 forward.  Tank 28 - 2012 CP reads - all reads missing for year 2012; the center, mid-center, NE, NW, SE, & SW reads are missing from 5/08/2013 forward.  Tank 29 - 2012 CP reads - the center and mid-center reads below criteria from 4/28/2012, and the NE, NW, SE, & SW reads are missing from 4/28/2012 forward. 4#

420165026_NOPV PCP PCO_08032016_text.pdf, page 55. §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 paragraphs 6.2.2, 6.2.3, 6.2.4, 6.2.5 and 6.3 in NACE SP 0169 (incorporated by reference, see § 195.3). KM Wink records do not demonstrate the operator achieved adequate cathodic protection levels to meet the criteria required by NACE SP 0169 paragraphs 6.2 or 6.3 on the El Paso to Wink pipeline. The data was reviewed covered the three year period (2012-2014). Records for the El Paso to Wink, Wink to McCamie, and the Wink to Snyder pipeline segments in the CPDM system were reviewed. An -0.850 mV cathodic protection applied criteria and a 100 mV cathodic polarization criteria are identified for each test point. Records for 2012 through 2014 on the El Paso to Wink pipeline identify numerous locations that did not meet the stated 100 mV polarization criteria. For three consecutive years (2012 through 2014), at the same 5 locations, the 100 mV criteria was not attained. Still further, the native/static values were more negative than the IR free (current-off) values for 11 occasions in the 2012 data, for 7 occasions in the 2013 data, and for 8 occasions in the 2014 data. 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 $183,800 as follows: Item number PENALTY 2 $65,800 3 $37,800 4 $37,800 5 $42,400 Warning Items With respect to item 1, we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment 5#

420165026_NOPV PCP PCO_08032016_text.pdf, page 6proceedings at this time. result in additional enforcement action. We advise you to promptly correct these item(s). Failure to do so may Proposed Compliance Order With respect to items 2, 4, and 5, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Wink Pipeline LP. 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 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 4-2016-5026 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, R.M. Seeley Director, SW Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 6#

420165026_NOPV PCP PCO_08032016_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 Wink Pipeline LP a Compliance Order incorporating the following remedial requirements to ensure the compliance of Wink Pipeline LP with the pipeline safety regulations: 1. 2. 3. 4. In regard to Item Number 2 of the Notice pertaining to the failure of KM Wink to correctly determine the MOPs of the pipeline system and therefore operate pipelines at pressures that exceed the requirements of §195.406(a)(3), KM Wink must calculate the MOP of each pipeline segment as required by §195.406 and establish the proper MOP for each line segment. KM Wink must reset all over- pressure protection along each line segment. KM Wink must correctly determine and establish the MOP for each line segment and reset all affected over-pressure protection within 90 days following the receipt of the Final Order. In regard to Item Number 4 of the Notice pertaining to the failure of KM Wink to ensure through inspection the operation and maintenance of each cathodic protection system used to control corrosion on the bottom of an aboveground breakout tank is in accordance with API RP 651, KM Wink must remediate low and missing reads for each cathodic protection system used to control corrosion on the bottom of each aboveground breakout tank in accordance with API RP 651. This requirement refers to breakout tanks 3, 7, 8, 27, 28, and 29. KM must complete the remediation work within 180 days from receipt of the Final Order. In regard to Item Number 5 of the Notice pertaining to the failure of KM Wink to achieve adequate cathodic protection levels to meet criteria required by NACE SP 0169 sections 6.2 to 6.3 at various locations along the El Paso to Wink pipeline, KM Wink must remediate the cathodic protection system along the El Paso to Wink pipeline to meet adequate CP levels and achieve the criteria established by NACE SP 0169 sections 6.2 to 6.3. KM Wink must complete the remediation work on the El Paso to Wink pipeline CP system to meet adequate CP levels within 1 year from receipt of the Final Order. It is requested (not mandated) that Wink Pipeline LP maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to R. M. Seeley, Director, SW 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#