HOLLY ENERGY PARTNERS - OPERATING, L.P. — Notice of Probable Violation

party submissionOfficial PDF420185005_Operator Response to Notice and Request For Hearing _08292018.pdf#

420185005_NOPV PCP PCO_06202018_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED June 20, 2018 Mark Cunningham Senior Vice President, Engineering & Technical Services Holly Energy Partners-Operating, L.P. 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 CPF 4-2018-5005 Dear Mr. Cunningham: From November 28, 2016 through May 19, 2017, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected your Holly Energy Partners-Operating, L.P. (HEP) facilities in New Mexico, Oklahoma, and Texas. As a result of the inspection, it is alleged that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected and the probable violations are: 1. §195.403 Emergency Response Training. (b) At the intervals not exceeding 15 months, but at least once each calendar year, each operator shall:#

420185005_NOPV PCP PCO_06202018_text.pdf, page 2(1) Review with personnel their performance in meeting the objectives of the emergency response training program set forth in paragraph (a) of this section; and (2) Make appropriate changes to the emergency response training program as necessary to ensure that it is effective. HEP failed to review with personnel their performance in meeting the objectives of the emergency response training program and make appropriate changes to the emergency response training program as necessary to ensure that it is effective. During the inspection, PHMSA requested HEP to provide documentation for the review of emergency personnel performance for calendar years 2014, 2015, and 2016. HEP could not provide the requested documentation. Further, HEP did not comply with its own O&M manual, which requires yearly evaluations of emergency personnel performance pursuant to §195.403. The HEP O&M Procedure, Section 4.4 Emergency Response Training states: 4.4.1 “Yearly evaluations, not to exceed 15 months, are made to the training program to ensure that personnel and supervisors maintain a thorough knowledge of any updates or revisions in operations. Training records are maintained at the Artesia Operations office.” 4.4.3 “The company will, at intervals not exceeding 15 months, but at least once per year calendar year, conduct a meeting to review personnel performance in the meeting the objectives of the annual deployment drills, table top drills and the IBT training.” 2. § 195.446 Control Room Management. (h) Training. Each operator must establish a controller training program and review the training program content to identify potential improvements at least once each calendar year, but at intervals not to exceed 15 months. An operator's program must provide for training each controller to carry out the roles and responsibilities defined by the operator. In addition, the training program must include the following elements: (1) Responding to abnormal operating conditions likely to occur simultaneously or in sequence; HEP failed to provide controller training for responding to abnormal operating conditions likely to occur simultaneous or in sequence for calendar years 2014, 2015, and 2016 in accordance with their procedure 9.1 Rule Requirements and § 195.446. HEP’s Control Room Management Plan States: 9.1 Rule Requirements In accordance with the Rule, HEP must establish a training program that provides each Controller with the knowledge to carry out the roles and responsibilities defined 2#

420185005_NOPV PCP PCO_06202018_text.pdf, page 3by the Operator, to include the following: • Responding to abnormal operating conditions likely to occur simultaneously or in sequence; • Using a tabletop method for training Controllers to recognize AOC’s; • Communication responsibilities under the Operators emergency response procedures; • Working knowledge of the pipeline system, especially during the development of AOC’s; • Providing the opportunity for Controller to review procedures for infrequently used operating setups in advance of their application; • Review of the program content for potential improvements at least once each calendar year but not to exceed 15 months. HEP did not perform the required training. HEP could not provide any records regarding controller training except the list of OQ tasks for the controllers. 3. §195.452 Pipeline integrity management in high consequence areas. (j) What is a continual process of evaluation and assessment to maintain a pipeline's integrity? (1) General. After completing the baseline integrity assessment, an operator must continue to assess the line pipe at specified intervals and periodically evaluate the integrity of each pipeline segment that could affect a high consequence area. (2) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to assure pipeline integrity. An operator must base the frequency of evaluation on risk factors specific to its pipeline, including the factors specified in paragraph (e) of this section. The evaluation must consider the results of the baseline and periodic integrity assessments, information analysis (paragraph (g) of this section), and decisions about remediation, and preventive and mitigative actions (paragraphs (h) and (i) of this section). HEP failed to document the process for evaluating pipeline integrity to ensure all of the required risk factors are accounted for and to ensure the effectiveness of the continual evaluation process as required by §195.452 (j)(2) and HEP’s Integrity Management Program Manual. HEP’s IMP Manual states: Section 3.10.1-Post Integrity Assessment Evaluation: Following identification, evaluation and remediation of any conditions on covered pipeline segments, Company will integrate actual pipe condition data and determine the need for additional P&M Measures. The Company will consider the entire pipeline system’s information when determining risks associated with pipeline operation in covered pipeline segments, such as results of previous: 3#

420185005_NOPV PCP PCO_06202018_text.pdf, page 4• Reconstruction; • Integrity assessments; • Direct examinations; • Remediation actions; • ROW condition surveys; • Risk assessments; and, • P&M Measures”. PHMSA requested HEP to provide the records of the continual evaluation of their pipeline’s integrity for calendar years 2014, 2015, and 2016. Upon review, PHMSA noted the content of the spreadsheet reflected the pipe segments, pipeline assessment methods, last and next inspection dates for ILI, identified anomalies and their prioritized repair schedule, etc. These items are only a part of the requirements of the continual process of evaluation and assessment to maintain a pipeline's integrity. HEP’s continual evaluation spreadsheet, however, did not include consideration of other factors as required including the results of previous integrity assessment risk results and/or risk ranking; review new data; identified integrity threats specific to that line segment, and any new information which may suggest additional actions are warranted must be included in the continual evaluation process in order to measure the overall effectiveness of the company’s integrity management program. 4. §195.573 What must I do to monitor external corrosion control: (a) Protected pipelines. You must do the following to determine whether cathodic protection required by this subpart complies with § 195.571: (2) Identify not more than 2 years after cathodic protection is installed, the circumstances in which a close-interval survey or comparable technology is practicable and necessary to accomplish the objectives of paragraph 10.1.1.3 of NACE SP 0169 (incorporated by reference, see § 195.3). HEP failed to identify the circumstances in which a close interval survey (CIS) or comparable technology is necessary to evaluate the adequacy of cathodic protection at the pipe to soil interface within two years of the installation of their pipeline. HEP O&M Procedure, 195.573 (a) (2) CIS or other technology states: If after cathodic protection is installed on a new or existing pipeline system, the Corrosion Supervisor will identify, within two years following installation, the circumstances in which a close-interval survey or comparable technology is practicable and necessary. The Corrosion Supervisor will consider the need for a close interval survey or other comparable technology by evaluating the following: • Baseline test point survey • Native Pipe to Soil potentials (if obtained) • Soil Conditions 4#

420185005_NOPV PCP PCO_06202018_text.pdf, page 5• Foreign crossings, specifically those with cathodic protection • Close proximity Parallel pipelines and or High Voltage Power lines The Corrosion Supervisor will submit findings to the Integrity Specialist for integration in the Risk Assessment, Integrity Analysis and Assessment Plans for each pipeline. HEP has approximately 195 miles of HCA out of 755 miles of pipeline. HEP did not follow its O&M Procedure mentioned above. The Corrosion Supervisor failed to provide Close Interval Survey (CIS) data along with the evaluation reports/findings to the integrity specialist for integration in the risk assessment, integrity analysis and assessment plans for each pipeline. HEP could not show it identified the circumstances in which a CIS or comparable technology is practicable and necessary to accomplish the objectives of paragraph 10.1.1.3 of NACE SP 0169 not more than 2 years after cathodic protection was installed, as required by 195.573. 5. §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 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. HEP did not inspect each cathodic protection system used to control corrosion on the bottom of its aboveground breakout tanks to ensure that operation and maintenance of the systems are in accordance with API RP 651. HEP failed to consider IR drop during the annual tank to soil potential surveys as required by §195.573(d) for all of the breakout tanks within the terminal,. HEP records indicated that even though the “ON” readings satisfy the -850 mV criteria, they failed to establish a valid interpretation of the voltage measurements without consideration of IR drop. PHMSA reviewed records for 2014, 2015, and 2016 and HEP could not provide documentation to demonstrate the IR drop considerations of all the breakout tanks to ensure that operation and maintenance of the system is in accordance with API Recommended Practice 651. 6. §195.577 What must I do to alleviate interference currents (a) For pipelines exposed to stray currents, you must have a program to identify, test for, and minimize the detrimental effects of such currents. 5#

420185005_NOPV PCP PCO_06202018_text.pdf, page 6HEP failed to identify, test and minimize the detrimental effects of the interference current in sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures does not exist, as required by § 195.577. During the records review of annual cathodic protection surveys, PHMSA noted that the HEP documents the HVAC interference current readings along with the annual pipe to soil potential readings. When asked about the threshold limit of interference for current readings that trigger further investigation, HEP did not know if the cathodic protection measurements encountered interference currents or not. HEP simply answered that the AC readings are used for their records only. This was confirmed during the PHMSA field inspection at ORLA pump station. PHMSA witnessed pipe soil potential measurements performed as 3.15Vdc. The technician’s response to the high CP reading was to point out the approximate 2 miles of overhead AC transmission line along the pipeline ROW. In addition, Kinder Morgan and Enterprise also share the same ROW which may also contribute to more interference activities. HEP did not provide evidence of any program or measure that mitigates the detrimental effects of the stray currents detected. 7. §195.583 What must I do to monitor atmospheric corrosion control? (b) During inspections you must give particular attention to pipe at soil-to-air interfaces, under thermal insulation, under disbonded coatings, at pipe supports, in splash zones, at deck penetrations, and in spans over water. (c) If you find atmospheric corrosion during an inspection, you must provide protection against the corrosion as required by § 195.581. HEP failed to monitor and protect against the atmospheric corrosion of the station piping and the breakout tank terminal. During the field inspection of the Wichita Falls Tank Terminal, PHMSA identified severe atmospheric corrosion in the tank farm and pump station piping. In the Wichita Falls Tank Terminal, PHMSA randomly conducted the visual inspection around the tanks. PHMSA identified severe atmospheric corrosion issues in the tank shell, tank bottom and the dike areas. PHMSA observed pitted corrosion at lower part of the shell, paint peeled off, tank bottom/foundation completely covered by soil, vegetation round the tank bottom/foundation, chime completely/partially disappeared and/or corroded, irregular grading of the dike area. HEP did not identify atmospheric corrosion during inspections and did not protect against atmospheric corrosion as required by § 195.583 and § 195.581. 6#

420185005_NOPV PCP PCO_06202018_text.pdf, page 7Proposed Civil Penalty Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed $209,002 per violation per day the violation persists up to a maximum of $2,090,022 for a related series of violations. For violations occurring prior to November 2, 2015, the maximum penalty may not exceed $200,000 per violation per day, with a maximum penalty not to exceed $2,000,000 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 $227,200 as follows: Item number PENALTY 1 $67,000 2 $67,000 4 $55,200 6 $38,000 Warning Items With respect to Items # 3 and # 5, we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these items. Failure to do so may result in additional enforcement action. Proposed Compliance Order With respect to Item# 7 pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Holly Energy Partners-Operating, 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). Following the receipt of this Notice, you have 30 days to submit written comments, or request a hearing under 49 CFR § 190.211. If you do not respond within 30 days of receipt of this Notice, 7#

420185005_NOPV PCP PCO_06202018_text.pdf, page 8this 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. If you are responding to this Notice, we propose that you submit your correspondence to my office within 30 days from receipt of this Notice. This period may be extended by written request for good cause. In your correspondence on this matter, please refer to CPF 4-2018-5005 and, for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Mary L. McDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 8#

420185005_NOPV PCP PCO_06202018_text.pdf, page 9PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Holly Energy Partners-Operating, L.P. a Compliance Order incorporating the following remedial requirements to ensure the compliance of Holly Energy Partners-Operating, L.P. with the pipeline safety regulations: 1. In regard to Item Number # 7 of the Notice pertaining to HEP failing to monitor and protect the pipeline from atmospheric corrosion at the Wichita Falls Tank Terminal, HEP must conduct inspections to comply with the code requirements of §195.583 in accordance with their procedures, and must provide protection against the corrosion as required by § 195.581 to include external corrosion on tanks, tank bottoms/concrete foundations. 2. HEP must complete the above item within 180 days following receipt of the Final Order and submit to PHMSA Southwest Region office. 3. It is requested (not mandated) that Holly Energy Partners-Operating L.P. maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Mary McDaniel, 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. 9#

420185005_NOPV PCP PCO-06202018.pdf, page 1Official PDFof Transportation U.S. Department Houston, TX 77074 8701 S. Gessner, Suite 630 Pipeline and Hazardous Materials Safety Administration NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED June 20, 2018 Mark Cunningham Senior Vice President, Engineering & Technical Services Holly Energy Partners-Operating, L.P. 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 CPF 4-2018-5005 Dear Mr. Cunningham: From November 28, 2016 through May 19, 2017, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected your Holly Energy Partners-Operating, L.P. (HEP) facilities in New Mexico, Oklahoma, and Texas. As a result of the inspection, it is alleged that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected and the probable violations are: 1. §195.403 Emergency Response Training. (b) At the intervals not exceeding 15 months, but at least once each calendar year, each operator shall:#

420185005_NOPV PCP PCO-06202018.pdf, page 2(1) Review with personnel their performance in meeting the objectives of the emergency response training program set forth in paragraph (a) of this section; and (2) Make appropriate changes to the emergency response training program as necessary to ensure that it is effective. HEP failed to review with personnel their performance in meeting the objectives of the emergency response training program and make appropriate changes to the emergency response training program as necessary to ensure that it is effective. During the inspection, PHMSA requested HEP to provide documentation for the review of emergency personnel performance for calendar years 2014, 2015, and 2016. HEP could not provide the requested documentation. Further, HEP did not comply with its own O&M manual, which requires yearly evaluations of emergency personnel performance pursuant to §195.403. The HEP O&M Procedure, Section 4.4 Emergency Response Training states: 4.4.1 "Yearly evaluations, not to exceed 15 months, are made to the training program to ensure that personnel and supervisors maintain a thorough knowledge of any updates or revisions in operations. Training records are maintained at the Artesia Operations office." 4.4.3 "The company will, at intervals not exceeding 15 months, but at least once per year calendar year, conduct a meeting to review personnel performance in the meeting the objectives of the annual deployment drills, table top drills and the IBT training." 2. § 195.446 Control Room Management. (h) Training. Each operator must establish a controller training program and review the training program content to identify potential improvements at least once each calendar year, but at intervals not to exceed 15 months. An operator's program must provide for training each controller to carry out the roles and responsibilities defined by the operator. In addition, the training program must include the following elements: (1) Responding to abnormal operating conditions likely to occur simultaneously or in sequence; HEP failed to provide controller training for responding to abnormal operating conditions likely to occur simultaneous or in sequence for calendar years 2014, 2015, and 2016 in accordance with their procedure 9.1 Rule Requirements and § 195.446. HEP's Control Room Management Plan States: 9.1 Rule Requirements In accordance with the Rule, HEP must establish a training program that provides each Controller with the knowledge to carry out the roles and responsibilities defined 2#

420185005_NOPV PCP PCO-06202018.pdf, page 3by the Operator, to include the following: • Responding to abnormal operating conditions likely to occur simultaneously or in sequence; • Using a tabletop method for training Controllers to recognize AOC's; • Communication responsibilities under the Operators emergency response procedures; • Working knowledge of the pipeline system, especially during the development of AOC's; • Providing the opportunity for Controller to review procedures for infrequently used operating setups in advance of their application; • Review of the program content for potential improvements at least once each calendar year but not to exceed 15 months. HEP did not perform the required training. HEP could not provide any records regarding controller training except the list of OQ tasks for the controllers. 3. 8195.452 Pipeline integrity management in high consequence areas. (i) What is a continual process of evaluation and assessment to maintain a pipeline's integrity? (1) General. After completing the baseline integrity assessment, an operator must continue to assess the line pipe at specified intervals and periodically evaluate the integrity of each pipeline segment that could affect a high consequence area. (2) Evaluation. An operator must conduct a periodic evaluation as frequently as needed to assure pipeline integrity. An operator must base the frequency of evaluation on risk factors specific to its pipeline, including the factors specified in paragraph (e) of this section. The evaluation must consider the results of the baseline and periodic integrity assessments, information analysis (paragraph (g) of this section), and decisions about remediation, and preventive and mitigative actions (paragraphs (h) and (i) of this section). HEP failed to document the process for evaluating pipeline integrity to ensure all of the required risk factors are accounted for and to ensure the effectiveness of the continual evaluation process as required by §195.452 (i)(2) and HEP's Integrity Management Program Manual. HEP's IMP Manual states: Section 3.10.1-Post Integrity Assessment Evaluation: Following identification, evaluation and remediation of any conditions on covered pipeline segments, Company will integrate actual pipe condition data and determine the need for additional P&M Measures. The Company will consider the entire pipeline system's information when determining risks associated with pipeline operation in covered pipeline segments, such as results of previous: 3#

420185005_NOPV PCP PCO-06202018.pdf, page 4• Reconstruction; • Integrity assessments; Direct examinations; Remediation actions; ROW condition surveys; Risk assessments; and, P&M Measures". PHMSA requested HEP to provide the records of the continual evaluation of their pipeline's integrity for calendar years 2014, 2015, and 2016. Upon review, PHMSA noted the content of the spreadsheet reflected the pipe segments, pipeline assessment methods, last and next inspection dates for ILI, identified anomalies and their prioritized repair schedule, etc. These items are only a part of the requirements of the continual process of evaluation and assessment to maintain a pipeline's integrity. HEP's continual evaluation spreadsheet, however, did not include consideration of other factors as required including the results of previous integrity assessment risk results and/or risk ranking; review new data; identified integrity threats specific to that line segment, and any new information which may suggest additional actions are warranted must be included in the continual evaluation process in order to measure the overall effectiveness of the company's integrity management program. 4. §195.573 What must I do to monitor external corrosion control: (a) Protected pipelines. You must do the following to determine whether cathodic protection required by this subpart complies with § 195.571: (2) Identify not more than 2 years after cathodic protection is installed, the circumstances in which a close-interval survey or comparable technology is practicable and necessary to accomplish the objectives of paragraph 10.1.1.3 of NACE SP 0169 (incorporated by reference, see § 195.3). HEP failed to identify the circumstances in which a close interval survey (CIS) or comparable technology is necessary to evaluate the adequacy of cathodic protection at the pipe to soil interface within two years of the installation of their pipeline. HEP O&M Procedure, 195.573 (a) (2) CIS or other technology states: If after cathodic protection is installed on a new or existing pipeline system, the Corrosion Supervisor will identify, within two years following installation, the circumstances in which a close-interval survey or comparable technology is practicable and necessary. The Corrosion Supervisor will consider the need for a close interval survey or other comparable technology by evaluating the following: • Baseline test point survey • Native Pipe to Soil potentials (if obtained) • Soil Conditions 4#

420185005_NOPV PCP PCO-06202018.pdf, page 5• Foreign crossings, specifically those with cathodic protection • Close proximity Parallel pipelines and or High Voltage Power lines The Corrosion Supervisor will submit findings to the Integrity Specialist for integration in the Risk Assessment, Integrity Analysis and Assessment Plans for each pipeline. HEP has approximately 195 miles of HCA out of 755 miles of pipeline. HEP did not follow its O&M Procedure mentioned above. The Corrosion Supervisor failed to provide Close Interval Survey (CIS) data along with the evaluation reports/findings to the integrity specialist for integration in the risk assessment, integrity analysis and assessment plans for each pipeline. HEP could not show it identified the circumstances in which a CIS or comparable technology is practicable and necessary to accomplish the objectives of paragraph 10.1.1.3 of NACE SP 0169 not more than 2 years after cathodic protection was installed, as required by 195.573. 5. §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 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. HEP did not inspect each cathodic protection system used to control corrosion on the bottom of its aboveground breakout tanks to ensure that operation and maintenance of the systems are in accordance with API RP 651. HEP failed to consider IR drop during the annual tank to soil potential surveys as required by §195.573(d) for all of the breakout tanks within the terminal,. HEP records indicated that even though the "ON" readings satisfy the -850 mV criteria, they failed to establish a valid interpretation of the voltage measurements without consideration of IR drop. PHMSA reviewed records for 2014, 2015, and 2016 and HEP could not provide documentation to demonstrate the IR drop considerations of all the breakout tanks to ensure that operation and maintenance of the system is in accordance with API Recommended Practice 651. 6. §195.577 What must I do to alleviate interference currents (a) For pipelines exposed to stray currents, you must have a program to identify, test for, and minimize the detrimental effects of such currents.#

420185005_NOPV PCP PCO-06202018.pdf, page 6HEP failed to identify, test and minimize the detrimental effects of the interference current in sufficient detail to demonstrate the adequacy of corrosion control measures or that corrosion requiring control measures does not exist, as required by § 195.577. During the records review of annual cathodic protection surveys, PHMSA noted that the HEP documents the HVAC interference current readings along with the annual pipe to soil potential readings. When asked about the threshold limit of interference for current readings that trigger further investigation, HEP did not know if the cathodic protection measurements encountered interference currents or not. HEP simply answered that the AC readings are used for their records only. This was confirmed during the PHMSA field inspection at ORLA pump station. PHMSA witnessed pipe soil potential measurements performed as 3.15Vdc. The technician's response to the high CP reading was to point out the approximate 2 miles of overhead AC transmission line along the pipeline ROW. In addition, Kinder Morgan and Enterprise also share the same ROW which may also contribute to more interference activities. HEP did not provide evidence of any program or measure that mitigates the detrimental effects of the stray currents detected. 7. §195.583 What must I do to monitor atmospheric corrosion control? (b) During inspections you must give particular attention to pipe at soil-to-air interfaces, under thermal insulation, under disbonded coatings, at pipe supports, in splash zones, at deck penetrations, and in spans over water. (c) If you find atmospheric corrosion during an inspection, you must provide protection against the corrosion as required by § 195.581. HEP failed to monitor and protect against the atmospheric corrosion of the station piping and the breakout tank terminal. During the field inspection of the Wichita Falls Tank Terminal, PHMSA identified severe atmospheric corrosion in the tank farm and pump station piping. In the Wichita Falls Tank Terminal, PHMSA randomly conducted the visual inspection around the tanks. PHMSA identified severe atmospheric corrosion issues in the tank shell, tank bottom and the dike areas. PHMSA observed pitted corrosion at lower part of the shell, paint peeled off, tank bottom/foundation completely covered by soil, vegetation round the tank bottom/foundation, chime completely/partially disappeared and/or corroded, irregular grading of the dike area. HEP did not identify atmospheric corrosion during inspections and did not protect against atmospheric corrosion as required by § 195.583 and § 195.581.#

420185005_NOPV PCP PCO-06202018.pdf, page 7Proposed Civil Penalty Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed $209,002 per violation per day the violation persists up to a maximum of $2,090,022 for a related series of violations. For violations occurring prior to November 2, 2015, the maximum penalty may not exceed $200,000 per violation per day, with a maximum penalty not to exceed $2,000,000 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 $227,200 as follows: Item number PENALTY 1 $67,000 2 $67,000 4 $55,200 6 $38,000 Warning Items With respect to Items # 3 and # 5, we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these items. Failure to do so may result in additional enforcement action. Proposed Compliance Order With respect to Item# 7 pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Holly Energy Partners-Operating, 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). Following the receipt of this Notice, you have 30 days to submit written comments, or request a hearing under 49 CFR § 190.211. If you do not respond within 30 days of receipt of this Notice, 7#

420185005_NOPV PCP PCO-06202018.pdf, page 8this 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. If you are responding to this Notice, we propose that you submit your correspondence to my office within 30 days from receipt of this Notice. This period may be extended by written request for good cause. In your correspondence on this matter, please refer to CPF 4-2018-5005 and, for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Mary L. MeDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings#

420185005_NOPV PCP PCO-06202018.pdf, page 9PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes • to issue to Holly Energy Partners-Operating, L.P. a Compliance Order incorporating the following remedial requirements to ensure the compliance of Holly Energy Partners-Operating, L.P. with the pipeline safety regulations: 1. In regard to Item Number # 7 of the Notice pertaining to HEP failing to monitor and protect the pipeline from atmospheric corrosion at the Wichita Falls Tank Terminal, HEP must conduct inspections to comply with the code requirements of §195.583 in accordance with their procedures, and must provide protection against the corrosion as required by § 195.581 to include external corrosion on tanks, tank bottoms/concrete foundations. 2. HEP must complete the above item within 180 days following receipt of the Final Order and submit to PHMSA Southwest Region office. documentation of the safety improvement costs associated with fulfilling this Compliance Order 3. It is requested (not mandated) that Holly Energy Partners-Operating L.P. maintain Materials Safety Administration. It is requested that these costs be reported in two categories: 1) and submit the total to Mary McDaniel, Director, Southwest Region, Pipeline and Hazardous 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.#

420185005_Final Order_08082019_text.pdf, page 1Official PDFAugust 8, 2019 Mr. George J. Damiris Chief Executive Officer Holly Energy Partners, LP 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 Re: CPF No. 4-2018-5005 Dear Mr. Damiris: Enclosed please find the Final Order issued in the above-referenced case. It withdraws three of the allegations of violation, makes other findings of violation, assesses a reduced civil penalty of $55,200, and specifies actions that need to be taken by Holly Energy Partners Operating, LP, a subsidiary of Holly Energy Partners, 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: Ms. Mary McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA Mr. Mark Cunningham, P.E., Senior Vice President – Operations and Engineering, Holly Energy Partners Operating, LP, Mark.Cunningham@hollyenergy.com CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420185005_Final Order_08082019_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 ) Holly Energy Partners Operating, LP, ) CPF No. 4-2018-5005 a subsidiary of Holly Energy Partners, LP, ) ) ) ) Respondent. ) __________________________________________) FINAL ORDER From November 28, 2016, through May 19, 2017, 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 Holly Energy Partners Operating, LP, a subsidiary of Holly Energy Partners, LP (HEP or Respondent), in New Mexico, Oklahoma, and Texas. The facilities inspected consisted of the following units: (1) Unit #2634 - 156 miles of 6-inch refined products pipeline from Artesia, New Mexico, to El Paso, Texas; (2) Unit #2334 – River & Trust Pipeline; (3) Unit #2644, 8-inch and 12-inch product pipeline originating in Artesia, New Mexico; and (4) Unit #73518 – Roadrunner Pipeline.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated June 20, 2018, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice), which also included a warning pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that HEP had committed five violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $227,200 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct one of the alleged violations. The warning items required no further action, but warned the operator to correct the probable violations or face possible future enforcement action. After requesting and receiving an extension of time to respond, HEP responded to the Notice by letter dated August 29, 2018 (Response). HEP contested the allegations and requested a hearing. In its Response, HEP also requested an informal meeting to provide additional documentation and discuss the Notice with the Director prior to a hearing being conducted. On October 4, 2018, PHMSA and HEP met informally to discuss the Notice (Informal Meeting). On October 19, 2018, HEP submitted additional documentation to PHMSA regarding the allegations in the 1 Pipeline Safety Violation Report (Violation Report), (June 20, 2018) (on file with PHMSA), at 1-2.#

420185005_Final Order_08082019_text.pdf, page 3CPF No. 4-2018-5005 Page 2 Notice. This additional documentation was not available to, or reviewed by, PHMSA inspectors at the time of the on-site pipeline safety inspection. By letter dated December 5, 2018, Respondent withdrew its request for a hearing and thereby authorized the entry of this Final Order without further notice (Withdrawal Letter). Respondent also submitted an additional letter on January 17, 2019 detailing its additional safety actions regarding Item 4 below. 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. § 195.403(b), which states: § 195.403 Emergency response training. (a) …. (b) At the intervals not exceeding 15 months, but at least once each calendar year, each operator shall: (1) Review with personnel their performance in meeting the objectives of the emergency response training program set forth in paragraph (a) of this section; and (2) Make appropriate changes to the emergency response training program as necessary to ensure that it is effective. The Notice alleged that Respondent violated 49 C.F.R. § 195.403(b) by failing to review with personnel their performance in meeting the objectives of the emergency response training program and to make appropriate changes to the emergency response training program as necessary to ensure that it is effective. Specifically, the Notice alleged that HEP failed to provide documentation for the review of emergency personnel performance for calendar years 2014-2016, and failed to comply with its own operations and maintenance (O&M) manual, which required yearly evaluations of emergency personnel. During the Informal Meeting, HEP submitted additional documentation to PHMSA consisting of 18 exhibits related to emergency response training for the years 2014-2016. The exhibits consist of table-top exercises, questions to evaluate personnel following emergency response training, emergency response scenarios, lessons-learned training, emergency response critiques, recommendations, and other related training documents. The exhibits contained examples of performance reviews and feedback to emergency response personnel to demonstrate the effectiveness of the training. Accordingly, after considering all of the evidence, I find no violation of § 195.403(b) as alleged in the Notice. Based upon the foregoing, I hereby order that Item 1 of the Notice be withdrawn. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.446(h)(1), which states:#

420185005_Final Order_08082019_text.pdf, page 4CPF No. 4-2018-5005 Page 3 § 195.446 Control room management. (a) …. (h) Training. Each operator must establish a controller training program and review the training program content to identify improvements at least once each calendar year, but at intervals not to exceed 15 months. An operator’s program must provide for training each controller to carry out the roles and responsibilities defined by the operator. In addition, the training program must include the following elements: (1) Responding to abnormal operating conditions likely to occur simultaneously or in sequence; The Notice alleged that Respondent violated 49 C.F.R. § 195.446(h)(1) by failing to provide controller training for responding to abnormal operating conditions likely to occur simultaneously or in sequence, for calendar years 2014, 2015, and 2016. Specifically, the Notice alleged that HEP could not provide any records regarding controller training except the list of operator qualification (OQ) tasks for the controllers. During the Informal Meeting, HEP submitted additional documentation to PHMSA consisting of 16 exhibits related to controller training for the years 2014-2016. The exhibits submitted consisted of table top scenarios and questions posed to controllers on abnormal operating conditions (AOCs), annual internet-based AOC trainings, PowerPoint presentations reflecting simultaneously or sequentially occurring AOCs, and other related training documents. Accordingly, after considering all of the evidence, I find no violation of § 195.446(h)(1) as alleged in the Notice. Based upon the foregoing, I hereby order that Item 2 of the Notice be withdrawn. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(2), which states: § 195.573 What must I do to monitor external corrosion control? (a) Protected pipelines. You must do the following to determine whether cathodic protection required by this subpart complies with § 195.571: (1) …. (2) Identify not more than 2 years after cathodic protection is installed, the circumstances in which a close-interval survey or comparable technology is practicable and necessary to accomplish the objectives of paragraph 10.1.1.3 of NACE SP 0169 (incorporated by reference, see § 195.3). The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(2) by failing to identify the circumstances in which a close interval survey (CIS) or comparable technology is necessary to evaluate the adequacy of cathodic protection at the pipe-to-soil interface within two years of the installation of its pipeline. Specifically, the Notice alleged that HEP’s Corrosion Supervisor failed to provide CIS data along with the evaluation reports and findings to the integrity specialist for integration in the risk assessment, integrity analysis and assessment plans for each#

420185005_Final Order_08082019_text.pdf, page 5CPF No. 4-2018-5005 Page 4 pipeline. HEP could not show that it had identified the circumstances in which a CIS or comparable technology is practicable and necessary to accomplish the objectives of paragraph 10.1.1.3 of NACE SP 0169 not more than 2 years after cathodic protection was installed, as required by § 195.573. In its Withdrawal Letter, HEP stated that it no longer contested this Item. In January 2019, HEP also submitted information documenting its subsequent (post-PHMSA inspection) program improvements regarding CIS. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(a)(2) by failing to identify the circumstances in which CIS or comparable technology is necessary to evaluate the adequacy of cathodic protection at the pipe-to-soil interface within two years of the installation of each pipeline. Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.577(a), which states: § 195.577 What must I do to alleviate interference currents? (a) For pipelines exposed to stray currents, you must have a program to identify, test for, and minimize the detrimental effects of such currents. The Notice alleged that Respondent violated 49 C.F.R. § 195.577(a) by failing to identify, test for, and minimize the detrimental effects of interference current in sufficient detail to demonstrate the adequacy of corrosion-control measures or that corrosion requiring control measures does not exist. Specifically, the Notice alleged that although HEP’s records of annual cathodic-protection surveys document interference current readings along with the annual pipe- to-soil potential readings, HEP personnel were unable to identify the threshold limit of interference for current readings that would trigger further investigation, and did not know if the cathodic-protection measurements encountered interference currents. During the Informal Meeting, HEP submitted additional documentation to PHMSA consisting of seven exhibits related to HEP’s program to mitigate interference currents. The exhibits consisted of AC coupon listings for all of the units inspected, as well as procedures for interference and protection, interference maintenance and mitigation, and electrical isolation monitoring and maintenance. HEP also submitted interference current and AC threat assessment studies on the Texas and New Mexico pipeline systems. These studies were completed prior to the commencement of PHMSA’s inspection. Accordingly, after considering all of the evidence, I find no violation of § 195.577(a) as alleged in the Notice. Based upon the foregoing, I hereby order that Item 6 of the Notice be withdrawn. Item 7: The Notice alleged that Respondent violated 49 C.F.R. § 195.583(b)-(c), which state: § 195.583 What must I do to monitor atmospheric corrosion control? (a) You must inspect each pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion …. (b) During inspections you must give particular attention to pipe at soil-#

420185005_Final Order_08082019_text.pdf, page 6CPF No. 4-2018-5005 Page 5 to-air interfaces, under thermal insulation, under disbonded coatings, at pipe supports, in splash zones, at deck penetrations, and in spans over water. (c) If you find atmospheric corrosion during an inspection, you must provide protection against the corrosion as required by § 195.581. The Notice alleged that Respondent violated 49 C.F.R. § 195.583(b)-(c), by failing to give particular attention to certain areas during atmospheric corrosion inspections and protecting against the atmospheric corrosion of the station piping and the breakout tank terminal. Specifically, the Notice alleged that HEP’s Wichita Falls Tank Terminal showed visual evidence of severe atmospheric corrosion in the tank farm and pump station piping, and in the tank shell, tank bottom and dike areas. PHMSA also observed the following: pitted corrosion at the lower part of the shell; paint that had peeled off; a tank bottom and foundation that was completely covered in soil; vegetation that surrounded the tank bottom and foundation; a chime that had completely or partially disappeared or corroded; and irregular grading of the dike area. In its Withdrawal Letter, HEP stated that it does not contest this Item. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 195.583(b)-(c) by failing to give particular attention to certain areas during atmospheric corrosion inspections and protecting against the atmospheric corrosion of the station piping and the breakout tank terminal. 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; 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 $227,200 for the violations cited above. Item 1: The Notice proposed a civil penalty of $67,000 for Respondent’s violation of 49 C.F.R. § 195.403(b), for failing to review with personnel their performance in meeting the objectives of the emergency response training program and to make appropriate changes to the emergency 2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223; Revisions to Civil Penalty Amounts, 83 Fed. Reg. 60732, 60744 (Nov. 27, 2018).#

420185005_Final Order_08082019_text.pdf, page 7CPF No. 4-2018-5005 Page 6 response training program as necessary to ensure that it is effective. As discussed above, I have withdrawn this alleged violation. Therefore, the proposed penalty is withdrawn. Item 2: The Notice proposed a civil penalty of $67,000 for Respondent’s violation of 49 C.F.R. § 195.446(h)(1), for failing to provide controller training for responding to abnormal operating conditions likely to occur simultaneous or in sequence, for calendar years 2014, 2015, and 2016. As discussed above, I have withdrawn this alleged violation. Therefore, the proposed penalty is withdrawn. Item 4: The Notice proposed a civil penalty of $55,200 for Respondent’s violation of 49 C.F.R. § 195.573(a)(2), for failing to identify the circumstances in which CIS or comparable technology is necessary to evaluate the adequacy of cathodic protection at the pipe-to-soil interface within two years of the installation of each pipeline. On January 17, 2019, HEP submitted a letter to PHMSA stating that it did not contest the proposed civil penalty for this item. Although HEP did not contest the alleged violation or associated proposed civil penalty, it did provide PHMSA with additional information regarding program improvements to its practices for CIS. Although not a mitigating factor in assessing a civil penalty for a violation of the pipeline safety regulations, I note that HEP has improved its CIS program to address the violation detailed in Item 4. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $55,200 for violation of 49 C.F.R. § 195.573(a)(2). Item 6: The Notice proposed a civil penalty of $38,000 for Respondent’s violation of 49 C.F.R. § 195.577(a), for failing to identify, test for, and minimize the detrimental effects of the interference current in sufficient detail to demonstrate the adequacy of corrosion-control measures or that corrosion requiring control measures does not exist. As discussed above, I have withdrawn this alleged violation. Therefore, the proposed penalty is withdrawn. In summary, having reviewed the record and considered the assessment criteria for each of the Items cited above, I assess Respondent a total reduced civil penalty of $55,200. 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 $55,200 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.#

420185005_Final Order_08082019_text.pdf, page 8CPF No. 4-2018-5005 Page 7 COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 7 in the Notice for a violation of 49 C.F.R. § 195.583(b) and (c). 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 § 195.583(b)-(c) (Item 7), Respondent must conduct inspections to comply with the code requirements of § 195.583 in accordance with its procedures, and must provide protection against the corrosion as required by § 195.581 to include external corrosion on tanks, tank bottoms and concrete foundations. 2. Respondent must submit documentation evidencing completion of paragraph 1 of this Compliance Order to the Director, Southwest Region. 3. Respondent must complete the requirements of paragraphs 1 and 2 of this Compliance Order within 180 days following receipt of the Final Order. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent and demonstrating good cause for an extension. It is requested (not mandated) that Respondent maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the Director. 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. 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 ITEMS With respect to Items 3 and 5, the Notice alleged probable violations of Part 195 but did not propose a civil penalty or compliance order for these items. Therefore, these are considered to be warning items. The warnings were for: 49 C.F.R. § 195.452(j)(2) (Item 3) ─ Respondent’s alleged failure to document the process for evaluating pipeline integrity to ensure all of the required risk#

420185005_Final Order_08082019_text.pdf, page 9CPF No. 4-2018-5005 Page 8 factors are accounted for and to ensure the effectiveness of the continual evaluation process; and 49 C.F.R. § 195.573(d) (Item 5) ─ Respondent’s alleged failure to inspect each cathodic protection system used to control corrosion on the bottom of its above-ground breakout tanks to ensure that operation and maintenance of the systems are in accordance with API RP 651 (incorporated by reference, see § 195.3). Under § 190.205, PHMSA does not adjudicate warning items to determine whether a probable violation occurred. I note for the record, however, that with regard to Item 3, HEP submitted additional documentation including risk analysis reports and annual integrity management comparisons from 2014 through 2016, which the Director found acceptable. If OPS finds a violation of any of these items 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 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. August 8, 2019 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

420185005_Closure Letter_07082020_text.pdf, page 1Official PDFJuly 8, 2020 George J. Damiris Chief Executive Officer Holly Energy Partners, LP 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 CPF 4-2018-5005 Dear Mr. Damiris: On August 8, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Holly Energy Partners, L.P. (HEP) a Final Order in the above-referenced case to include a Compliance Order and Civil Penalty. Based on our review of the documentation provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of this Order. Accordingly, this case is now closed and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, Mary L. McDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#