CENTURION PIPELINE L.P. — Notice of Probable Violation

party submissionOfficial PDF420185013_Operator Response to the Notice_09242018.pdf#

420185013_Closure Letter_09092020_text.pdf, page 1Official PDFELECTRONIC MAIL - RETURN RECEIPT REQUESTED September 9, 2020 Mike Prince Chief Executive Officer Lotus Midstream, LLC 2150 Town Square Place Suite 395 Sugarland, Texas 77479 CPF 4-2018-5013 Dear Mr. Prince: On August 8, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Centurion Pipeline LP (Lotus Midstream, LLC), a Final Order in the above-referenced case that included a civil penalty and Compliance Order. PHMSA has received the payment of penalty and has reviewed the records submitted in response to the Order. The Southwest region has determined the installation of Cathodic Protection on Tank 6689 and Tank 1878 satisfies the terms of the Compliance 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. Sincerely, Mary. L. McDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#

420185013_Final Order_08082019_text.pdf, page 1Official PDFAugust 8, 2019 Mr. Mike Prince Chief Executive Officer Lotus Midstream, LLC 2150 Town Square Place Suite 395 Sugar Land, Texas 77479 Re: CPF No. 4-2018-5013 Dear Ms. Hollub: Enclosed please find the Final Order issued in the above-referenced case to your subsidiary, Centurion Pipeline, LP. It makes findings of violation, assesses a civil penalty of $40,300, and specifies actions that need to be taken 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 L. McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA Mr. Michael Morgan, GM Operations, Centurion Pipeline, LP CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420185013_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 ) Centurion Pipeline, LP, ) CPF No. 4-2018-5013 a subsidiary of Lotus Midstream, LLC, ) ) ) ) Respondent. ) __________________________________________) FINAL ORDER From May 1, 2017, through February 23, 2018, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of Centurion Pipeline, LP (Centurion or Respondent), in Houston and Midland, Texas. Centurion operates approximately 2,900 miles of pipeline extending from southeast New Mexico across the Permian Basin of west Texas to Cushing, Oklahoma.1 At the time of our pipeline safety inspection, Centurion was a wholly-owned subsidiary of Occidental Petroleum Corporation2 but is now a subsidiary of Lotus Midstream, LLC. As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated July 23 , 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 Centurion had committed three violations of 49 C.F.R. Part 195 and proposed assessing a civil penalty of $40,300 for one of the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. The warning items required no further action but warned Centurion to correct the probable violations or face possible future enforcement action. After requesting and receiving an extension of time to respond, Centurion responded to the Notice by letter dated September 24, 2018 (Response). The company contested several of the allegations of violation, provided an explanation of its actions, and requested that the proposed civil penalty be eliminated. The Southwest Region subsequently held an in-person meeting with Centurion on September 26, 2018, after which Respondent submitted a Supplemental Response 1 Centurion Pipeline, LP website, available at http://www.centurionpipeline.com/about/about-centurion- pipeline.aspx (last accessed March 7, 2019). 2 Pipeline Safety Violation Report (Violation Report) (July 23, 2018) (on file with PHMSA), at 1.#

420185013_Final Order_08082019_text.pdf, page 3CPF No. 4-2018-5013 Page 2 dated December 6, 2018, that corrected certain information contained in the initial Response and made additional arguments regarding the proposed compliance order. Respondent did not request a hearing and therefore has waived its right to one. FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 195, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.583(a), which states: § 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, as follows: If the pipeline is located: Then the frequency of inspection is: Onshore ……….......................... At least once every 3 calendar years, but with intervals not exceeding 39 months. Offshore …….............................. At least once each calendar year, but with intervals not exceeding 15 months. The Notice alleged that Respondent violated 49 C.F.R. § 195.583(a) by failing to inspect each onshore pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion at least once every 3 calendar years, but at intervals not exceeding 39 months. Specifically, the Notice alleged that Centurion failed, within the required timeframe, to inspect exposed portions of its pipeline between Bretch and El Reno, Oklahoma, for evidence of atmospheric corrosion. Centurion inspected this pipeline segment for atmospheric corrosion on April 1, 2013, but did not inspect it again until October 2017, exceeding the July 1, 2016 maximum interval date. 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. § 195.583(a) by failing to inspect each onshore pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion at least once every 3 calendar years, but at intervals not exceeding 39 months. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(l)(1)(ii), which states: § 195.452 Pipeline integrity management in high consequence areas. (a) . . . . (l) What records must an operator keep to demonstrate compliance? (1) An operator must maintain, for the useful life of the pipeline, records that demonstrate compliance with the requirements of this subpart. At a#

420185013_Final Order_08082019_text.pdf, page 4CPF No. 4-2018-5013 Page 3 minimum, an operator must maintain the following records for review during an inspection: (i) . . . (ii) Documents to support the decisions and analyses, including any modifications, justifications, deviations and determinations made, variances, and actions taken, to implement and evaluate each element of the integrity management program listed in paragraph (f) of this section. The Notice alleged that Respondent violated 49 C.F.R. § 195.452(l)(1)(ii) by failing to maintain, for the useful life of the pipeline, records demonstrating compliance with the requirements of § 195.452(f) and (g), Compliance would include, at a minimum, the maintenance of documents supporting the decisions and analyses, including any modifications, justifications, deviations and determinations made, variances, and actions taken, to implement and evaluate each element of an operator’s integrity management program, as listed in 49 C.F.R. § 195.452(f). Specifically, the Notice alleged that during the PHMSA inspection, Centurion was unable to produce records documenting that it had conducted the information analysis required by subparagraph (3) of § 195.452(f)3 and paragraph (g) to support the company’s pipeline integrity-evaluation decisions.4 Respondent contested this allegation of violation, arguing that § 195.452(l)(1)(ii) requires an operator to maintain “documents to support the decisions and analyses” made as part of its integrity-management program, but not records “documenting the information analysis” it had conducted under § 195.452(g). The company stated: “Although Centurion believes that its records satisfy both standards, Centurion believes that the plain regulatory language differs from the NOPV’s characterization of the requirement. The regulatory language requires records of supporting documentation, while the NOPV contemplates written documentation summarizing the analysis.” The company pointed to the various records5 it had provided during the PHMSA inspection that supported its decisions and analyses made under § 195.452(g) and argued that 3 Subparagraph (3) of § 195.452(f) states that operators must include “[a]n analysis that integrates all available information about the integrity of the entire pipeline and the consequences of a failure (see paragraph (g) of this section)…” 4 Paragraph 195.452(g) states: “(g) What is an information analysis? In periodically evaluating the integrity of each pipeline segment (paragraph (j) of this section), an operator must analyze all available information about the integrity of the entire pipeline and the consequences of a failure. This information includes: (1) Information critical to determining the potential for, and preventing, damage due to excavation, including current and planned damage prevention activities, and development or planned development along the pipeline segment; (2) Data gathered through the integrity assessment required under this section; (3) Data gathered in conjunction with other inspections, tests, surveillance and patrols required by this Part, including, corrosion control monitoring and cathodic protection surveys; and (4) Information about how a failure would affect the high consequence area, such as location of the water intake.” 5 Centurion stated that it had provided to PHMSA the following records: “(1) In-line inspection (“ILI”) results; (2) Threat analysis documents; (3) Select tool process to inspect threats on pipeline; (4) Process to review ILI results; (5) Calculate corrosion growth rate; (6) Documents showing categorization of needed repairs; (7) Repair plan; and (8) Work journal for the project.”#

420185013_Final Order_08082019_text.pdf, page 5CPF No. 4-2018-5013 Page 4 these documents satisfied the record-keeping requirement under § 195.452(l)(1)(ii).6 I disagree. Subpart F of Part 195 requires all operators to develop and implement a comprehensive integrity-management program that provides an extra measure of safety and environmental protection for “High Consequence Areas” (HCAs)7 and neighboring “could- affect” areas along the routes of their hazardous liquid pipelines. This program includes the general record-keeping requirement in § 195.452(l), under which operators must keep records specifically documenting how it made all “decisions and analyses, including any modifications, justifications, deviations and determinations made, variances, and actions taken, to implement and evaluate each element” of their integrity management program. One of the most important elements of an integrity-management program is the “information analysis” required under § 195.452(g), which involves an engineering analysis that periodically evaluates the integrity of each pipeline segment and analyzes “all available information about the integrity of the entire pipeline and the consequences of a failure.” Such an analysis must include at least four sets of risk data, including the prevention of damage from excavation, ILI data, information gathered through other inspections, tests, surveillance, corrosion control and corrosion-control surveys, and information related to the potential consequences of a pipeline failure on the operator’s HCAs. This analysis then forms the basis for addressing anomalies on the pipeline and developing preventive and mitigative measures to reduce the likelihood and consequences of potential releases. In many ways, this “information analysis” lies at the heart of integrity management because it not merely compiles various risk data, but actually analyzes and integrates all available information to identify and address the unique risks affecting the integrity of each pipeline segment. In this case, Respondent could not produce records showing that this sort of integrative information analysis had actually taken place. For example, Respondent had in-inline inspection results, threat-analysis documents, corrosion-rate calculations, and other data, but there was no record explaining and summarizing how Centurion had actually taken this data to reach certain conclusions about risk and how the company had gone about implementing an effective integrity-management strategy. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.452(l)(1)(ii) by failing to maintain, for the useful life of the pipeline, records that demonstrate compliance with the requirements of § 195.452(f) and (g). Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.563, which states, in relevant part: § 195.563 Which pipelines must have cathodic protection? (a) Each buried or submerged pipeline that is constructed, relocated, replaced, or otherwise changed after the applicable date in § 195.401(c) must have cathodic protection. The cathodic protection must be in 6 Response, at 1-2. 7 See 49 C.F.R. § 194.450 for the definition of “High Consequence Area.”#

420185013_Final Order_08082019_text.pdf, page 6CPF No. 4-2018-5013 Page 5 operation no later than 1 year after the pipeline is constructed, relocated, replaced, or otherwise changed, as applicable. (b) . . . . (d) Bare pipelines, breakout tank areas, and buried pumping station piping must have cathodic protection in places where regulations in effect before January 28, 2002 required cathodic protection as a result of electrical inspections. . . . The Notice alleged that Respondent violated 49 C.F.R. § 195.563 by failing to have cathodic protection (CP) on five of its breakout tanks. Specifically, the Notice alleged that Centurion installed vapor corrosion inhibitors (VCIs) with electric resistance (ER) probes for monitoring the corrosion rate between the floors of five breakout tanks (Tank Nos. 6689, 7264, 7265, 6719, and 1878). The Notice alleged that while Centurion had CP on the old tank floors, the use of VCI with ER probes could not serve as a substitute for CP on the new tank floors. In its Response, Centurion contested the allegation of violation only with respect to one of its tanks, No. 6719. The company argued that this particular tank was a single-bottom tank that already had CP in place. Subsequently, during a September 26, 2018 in-person meeting with the Region, Centurion demonstrated that Tank Nos. 7264 and 7265 were reconstructed as single- bottom tanks with CP already in place. Respondent did not contest the allegation of violation with respect to Tank Nos. 6689 and 1878, but “[sought] to clarify the proposed compliance order” as discussed below.8 Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.563 by failing to have CP on two breakout tanks (Tank Nos. 6689 and 1878), but withdraw the allegation of violation with regard to the remaining three tanks (Tank Nos. 6719, 7264, and 7265). The above 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.9 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 8 Response, at 2. 9 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).#

420185013_Final Order_08082019_text.pdf, page 7CPF No. 4-2018-5013 Page 6 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 $40,300 for the violation cited in Item 1 above.10 Item 1: The Notice proposed a civil penalty of $40,300 for Respondent’s violation of 49 C.F.R. § 195.583(a), for failing to inspect each onshore pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion at least once every 3 calendar years, but with intervals not exceeding 39 months. In its Response, Centurion noted it had entered annual atmospheric corrosion inspections into its Maximo electronic work-scheduling system that goes beyond the regulatory requirement. In consideration of this corrective action, Centurion requested full mitigation of the proposed penalty. I find that elimination of the penalty for this item is not appropriate because Respondent failed to comply with the regulatory requirement as of the date of the PHMSA inspection and did not come into compliance until after PHMSA had discovered the violation. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $40,300 for violation of 49 C.F.R. § 195.583(a). 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 $40,300 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 3 and 4 in the Notice for violations of 49 C.F.R. §§ 195.452(l)(1)(ii) and 195.563, 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. With regard to the violation of § 195.452(l)(1)(ii) (Item 3), the Director has indicated that 10 Although the Notice inadvertently failed to specify that the proposed civil penalty applied to the alleged violation of § 195.583(a) (Item 1) and no other, the Violation Report shows that the penalty was applicable solely to Item 1. (Violation Report, at 6).#

420185013_Final Order_08082019_text.pdf, page 8CPF No. 4-2018-5013 Page 7 Respondent has taken action to satisfy the terms of the proposed compliance order. Therefore, it is unnecessary to include the terms of the proposed compliance order associated with this Item in this Order. With regard to the violation of § 195.563 (Item 4), Respondent argued that the compliance terms should be withdrawn with respect to Tank Nos. 6719, 7264, and 7265 because they are single- bottom tanks with cathodic protection in place. For the reasons stated above, I withdraw the compliance terms associated with these three tanks. Additionally, Respondent argued that the remaining compliance terms should be modified to allow Centurion to take periodic CP readings directly around Tank Nos. 6689 and 1878 and not to apply CP directly to the bottom of the tanks. Respondent noted that although many of the CP readings taken on the tanks are below the standard -0.850 volt criteria, they are at least 100 mv more negative than the native reading, demonstrating the safety of the tanks. Respondent also stated that additional CP for these two tanks is unnecessary for the safety of the tanks because of the presence of a vapor corrosion inhibitor (VCI) on the second bottom of the tanks and the deep well anodes in the area of the tanks. Having considered Respondent’s proposal, I find that it must be rejected. These two tanks have double bottoms, with the old bottom forming a shield that prevents CP from reaching the new bottom to protect against corrosion. CP measurements taken around the tanks, as proposed by Respondent, would measure the CP on the old tank bottoms. However, the new tank bottoms are not protected using CP and the presence of the VCI system does not substitute for a sacrificial anode as it is unassociated with the CP system, which is absent on the new bottoms. 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 § 195.563 (Item 4), Respondent must submit a plan to bring Tank Nos. 6689 and 1878 into compliance within 30 days of receipt of the Final Order; and 2. With respect to the violation of § 195.563 (Item 4), Respondent must submit to the Director, Southwest Region, records demonstrating compliance with § 195.563 no later than six months from the issuance 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 Centurion 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.#

420185013_Final Order_08082019_text.pdf, page 9CPF No. 4-2018-5013 Page 8 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 2 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. § 195.61 (Item 2) ─ Respondent’s alleged failure to submit geospatial data to PHMSA for the 2015 and 2016 calendar years, on or before June 15, representing assets as of December 31, of the previous year; and 49 C.F.R. § 195.505 (Item 5) ─ Respondent’s alleged failure to follow its own written operator-qualification program. Centurion presented information in its Response showing that it had taken certain actions to address the cited items. If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be subject to future enforcement action. 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#

420185013_NOPV PCP PCO_07232018_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED July 23, 2018 Michael Morgan GM Operations Centurion Pipeline L.P. 5 Greenway Plaza, Suite 110 Houston, TX, 77046 CPF 4-2018-5013 Dear Mr. Morgan: On May 1, 2017 through February 23, 2018, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected your procedures for operations and maintenance in Houston and Midland 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 violation(s) are: 1. §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, as follows:#

420185013_NOPV PCP PCO_07232018_text.pdf, page 2If the pipeline is located: Onshore Offshore 2. 3. Then the frequency of inspection is: At least once every 3 calendar years, but with intervals not exceeding 39 months At least once each calendar year, but with intervals not exceeding 15 months Centurion Pipeline failed to inspect the exposed portions of its pipeline between Bretch and El Reno, Oklahoma for evidence of atmospheric corrosion as required by 49 CFR §195.583. Atmospheric corrosion inspections are required at least once every 3 calendar years not to exceed 39 months, and the last atmospheric corrosion inspection on the Bretch to El Reno portion of the pipeline was performed in April 1, 2013. Based on the last inspection date, the maximum interval for the next inspection would have been July 1, 2016. The atmospheric inspection was not performed until October 2017 following the PHMSA inspection of the pipeline system. §195.61 – National Pipeline Mapping system (a) Each operator of a hazardous liquid pipeline facility must provide the following geospatial data to PHMSA for that facility. (b) This information must be submitted each year, on or before June 15, representing assets as of December 31, of the previous year. If no changes have occurred since the previous year’s submission, the operator must refer to the information provided in the NPMS Operator Standards manual available at www.npms.phmsa.dot.gov or contact the PHMSA Geographic Information Systems Manager at (202)366-4595. Centurion failed to submit NPMS data on or before June 15th for both the 2015 and 2016 calendar year data submittals. Letters acknowledging receipt of the NPMS data submitted by Centurion’s personnel to PHMSA in 2016 and 2017 indicates that the submission dates were June 21, 2016 for CY2015 and June 30, 2017 for CY2016. §195.452(l)(1)(ii) –What records must an operator keep to demonstrate compliance? (1) An operator must maintain, for the useful life of the pipeline, records that demonstrate compliance with the requirements of this subpart. At a minimum, an operator must maintain the following records for review during an inspection: 2#

420185013_NOPV PCP PCO_07232018_text.pdf, page 34. (ii) Documents to support the decisions and analyses, including any modifications, justifications, deviations and determinations made, variances, and actions taken, to implement and evaluate each element of the integrity management program listed in paragraph (f) of this section. Centurion Pipeline failed to maintain records documenting the information analysis required by 49 CFR §195.452(g). While the data required under 195.452(g) for the analysis was gathered and entered into the mapping system, there is no record to document an analysis carried out by the Subject Matter Expert (SME.) Centurion was unable to provide records for review during the inspection of the information analysis carried out to support the pipeline integrity evaluation decisions. §195.563 – Which pipelines must have cathodic protection? (a) Each buried or submerged pipeline that is constructed, relocated, replaced, or otherwise changed after the applicable date in §195.401(c) must have cathodic protection. The cathodic protection must be in operation no later than 1 year after the pipeline is constructed, relocated, replaced, or otherwise changed, as applicable. (d) Bare pipelines, breakout tank areas, and buried pumping station piping must have cathodic protection in places where regulations in effect before January 28, 2002 required cathodic protection as a result of electrical inspections. Centurion Pipeline failed to provide cathodic protection to protect 5 breakout tanks in accordance with §195.563 where new tank bottoms were installed. The tanks include: Tank # 6689 Slaughter Station Tanks #7264 and 7265 Artesia Station Tank #6719 Wasson Station Tank #1878 Seminole Station. Centurion installed vapor corrosion inhibitors (VCI) with electric resistance (ER) probes for monitoring the corrosion rates between the tank floors. The use of VCI with ER probes for corrosion control and monitoring is a not considered cathodic protection as required by §195.563(d) and 195.565(section 7.2.4.3 of ANSI/API RP 651). §195.563 and §195.565 require cathodic protection and its installation and does not permit the use of VCI as a substitute for cathodic proection. In each of these tanks, Centurion has cathodic protection on the old tank floor but does not have cathodic protection on the new tank floors. 3#

420185013_NOPV PCP PCO_07232018_text.pdf, page 45. §195.505 – Qualification Program Each operator shall have and follow a written qualification program. The program shall include provisions: (a) Identify covered tasks Centurion Pipeline, L.P failed to follow section 2.2 of their written operator qualification plan that prescribes the four-part test components as described in §195.501. Centurion failed to determine if personnel performing tasks needed to be evaluated and if the task should have been classified as a covered task. Conditions 1,2,3 and 4 in section 2.2 of the OQ plan required that any construction type activities to be carried out on a facility used in the transportation of hazardous liquids needs to be classified as a covered task and the individuals carrying out this task need to be evaluated prior to performing the task. Centurion did not identify the installation, inspection and maintenance of the Vapor Corrosion Inhibitor systems on 5 of it’s regulated breakout tanks prior to the installation and monitoring of the VCI systems on the breakout tanks. Proposed 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 $40,300. Warning Items With respect to items 2 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 this item. Failure to do so may result in additional enforcement action. Proposed Compliance Order With respect to items 3 and 4 pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Centurion Pipeline L.P. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. 4#

420185013_NOPV PCP PCO_07232018_text.pdf, page 5Response 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, 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. 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 4-2018-5013 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 5#

420185013_NOPV PCP PCO_07232018_text.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Centurion Pipeline, L.P a Compliance Order incorporating the following remedial requirements to ensure the compliance of Centurion Pipeline, L.P with the pipeline safety regulations: 1. 2. 3. 4. In regard to Item Number 3 of the Notice pertaining to maintenance of records for each analysis carried out during the information analysis activity as required under the regulation cited, Centurion Pipeline, L.P shall ensure that records of all analysis carried out as part of the information analysis under the integrity management program are maintained and made available for review during the next scheduled PHMSA inspection. In regard to item number 4 of the notice pertaining to providing cathodic protection to the new floors of the breakout tanks for corrosion control. Centurion Pipeline, L.P shall submit a plan to bring the affected tanks into compliance within 30 days from the receipt of the final order. Records showing compliance with Item 4 shall be submitted to PHMSA no later than 6 months from the issuance of the Final Order in this case. It is requested (not mandated) that Centurion Pipeline, 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. 6#