PHILLIPS 66 PIPELINE LLC — Safety Order

420185029S_Consent Agreement and Order_09042019_text.pdf, page 1Official PDFVIA EMAIL AND CERTIFIED MAIL: Todd Denton President Phillips 66 Pipeline LLC 2331 CityWest Blvd. Houston, Texas 77042 RE: In the Matter of Phillips 66 Pipeline LLC– CPF No. 4-2018-5029S Dear Mr. Denton: Enclosed please find the fully executed Consent Agreement and Order that resolves the issues underlying the Notice of Proposed Safety Order issued by PHMSA on December 11, 2018, in the above-referenced proceeding. Your receipt of this Consent Agreement and Order constitutes service, 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, OPS Ms. Linda Daugherty, Deputy Associate Administrator for Field Operations, Pipeline Safety, OPS Mr. Todd Tullio, Manager, Regulatory Compliance, Phillips 66 Pipeline LLC Mr. Van Williams, Senior Counsel, Phillips 66 Mr. Vince Murchison, Murchison Law Firm#

420185029S_Consent Agreement and Order_09042019_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 ) ) Phillips 66 Pipeline LLC, ) Respondent. ) ) ) CPF No. 4-2018-5029S CONSENT AGREEMENT AND ORDER On December 11, 2018, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Notice of Proposed Safety Order (Notice), to Phillips 66 Pipeline LLC (Phillips 66 or Respondent). The Notice alleged that conditions exist on the LO-01 Pipeline in Elk City, Oklahoma that poses a pipeline integrity risk to public safety, property or the environment. The Notice also made preliminary findings of fact and proposed certain corrective measures. On February 14, 2019, Phillips 66 responded to the Notice by submitting a timely written response and request for an informal consultation pursuant to 49 C.F.R. § 190.239(b)(2). An informal consultation was held, commencing on March 14, 2019, between representatives from Phillips 66 and PHMSA. By entering into this Consent Agreement, Phillips 66 agrees that no further administrative hearing will be provided for in this matter pursuant to 49 C.F.R. § 190.239(b)(2). Accordingly, upon consent and agreement of the Parties and in accordance with 49 C.F.R. § 190.219, PHMSA and Phillips 66 hereby agree to the terms and conditions set forth in this Consent Agreement and Order (Agreement and Order) to resolve the issues underlying the Notice. For the purposes of this Agreement and Order, the term “Affected Pipeline” means the entire 272-mile length of the LO-01 Pipeline. I. General Provisions 1. Respondent acknowledges that the LO-01 Pipeline in Elk City, Oklahoma is regulated by PHMSA, and therefore, as the operator, Phillips 66 is subject to the jurisdiction of the Federal pipeline safety laws, 49 U.S.C. 60101, et seq., and the#

420185029S_Consent Agreement and Order_09042019_text.pdf, page 3regulations and administrative orders issued thereunder. For purposes of this Agreement and Order, Respondent further acknowledges that it received proper notice of PHMSA’s action in this proceeding and that the Notice states claims upon which relief may be granted pursuant to 49 U.S.C. 60101, et seq., and the regulations and administrative orders issued thereunder. 2. Respondent neither admits nor denies any allegation or conclusion in the Notice but agrees, for the purposes of this Agreement and Order, that the risk condition identified in the Notice exists and agrees to address, pursuant to Respondent’s repair criteria, said condition and any other identified condition on the pipeline by completing the actions specified in Section II of this Agreement and Order (Corrective Measures), as well as to abide by the terms of this Agreement and Order. This Agreement and Order does not constitute a finding of violation of any Federal law or regulation and may not be used in any civil or administrative proceeding of any kind as evidence or proof of any fact, fault or liability, or as evidence of the violation of any law, rule, regulation or requirement, except in a proceeding to enforce the provisions of this Agreement and Order. 3. Respondent consents to the issuance of this Agreement and Order, and hereby waives any further procedural requirements with respect to its issuance. Subject to the rights granted by Section V hereof, Respondent waives all rights to contest the adequacy of notice, or the validity of this Agreement and Order, including all rights to administrative or judicial hearings, reviews, or appeals. 4. This Agreement and Order shall apply to, and be binding upon, PHMSA and Phillips 66, its officers, directors, and employees, and its successors, assigns, or other entities or persons otherwise bound by law. Respondent agrees to provide a copy of this Agreement and Order and any incorporated work plans and schedules to such of Phillips 66’s officers, employees, and agents whose duties might reasonably include compliance with this Agreement and Order. 5. For any transfer of ownership or operating responsibility of Phillips 66’s LO-01 Pipeline in Elk City, Oklahoma occurring during the term of this Agreement and Order, Respondent will provide a copy of this document to the prospective transferee at least 30 days prior to such transfer. Consistent with federal and state laws applicable to corporate disclosure obligations, Respondent shall provide written notice of the prospective transfer to the PHMSA Southwest Region Director (Director) at least 30 days prior to such transfer. 6. This Agreement and Order constitutes the final, complete and exclusive agreement and understanding between the Parties with respect to the settlement embodied herein. The Parties acknowledge that there are no representations, agreements, or understandings relating to settlement other than those expressly contained in this Agreement and Order.#

420185029S_Consent Agreement and Order_09042019_text.pdf, page 47. Nothing in this Agreement and Order affects or relieves Respondent of its responsibility to comply with all applicable requirements of the Federal pipeline safety laws, 49 U.S.C. § 60101, et seq., and the regulations and administrative orders issued thereunder. Nothing in this Agreement and Order alters PHMSA’s right of access, entry, inspection, and information gathering, or PHMSA’s authority to bring enforcement action(s) against Phillips 66 pursuant to the Federal pipeline safety laws, the regulations and orders issued thereunder, or any other provision of Federal or State law, including future enforcement action relating to Phillips 66’s LO-01 Pipeline. 8. This Agreement and Order does not waive or modify any Federal, State, or local law or regulation applicable to Respondent’s LO-01 Pipeline. This Agreement and Order is not a permit, or a modification of any permit, under any Federal, State, or local laws or regulations. Phillips 66 remains responsible for achieving and maintaining compliance with all applicable Federal, State, and local laws, regulations and permits. 9. This Agreement and Order does not create rights in, or grant any cause of action to, any third party not party to this Agreement and Order. U.S. Department of Transportation and PHMSA are not liable for any injuries or damages to persons or property arising from acts or omissions of Respondent or its officers, employees, or agents carrying out the work required by this Agreement and Order. Phillips 66 agrees to hold harmless U.S. Department of Transportation, PHMSA, its officers, employees, agents, and representatives from any and all causes of action arising from any acts or omissions of Respondent or its contractors in carrying out any work required by this Agreement and Order. 10. This Agreement and Order resolves the underlying issues in the Notice. This Agreement and Order makes no findings of violation. 11. Upon the issuance of this Agreement and Order, Phillips 66 agrees to perform the Corrective Measures set forth in Section II below. II. Corrective Measures 12. Pressure Restriction. On December 1, 2018, Respondent agreed to a pressure restriction of 80% of the operating pressure at the time of the accident on the entire Affected Pipeline. Respondent provided PHMSA information regarding nine segments of the Affected Pipeline and the associated pressure reductions to accomplish the 20% de-rate of the line pressure. Respondent shall maintain such pressure restriction until the Director approves the removal or modification of the pressure restriction pursuant to Paragraph 13 hereof. 13. Removal of Pressure Restriction. The Director may approve the removal or modification of the pressure restriction upon a written request from Respondent demonstrating that restoring the Affected Pipeline to its pre-failure operating pressure is#

420185029S_Consent Agreement and Order_09042019_text.pdf, page 5justified based on a reliable engineering analysis pursuant to Respondent’s applicable procedures showing that the pressure increase is safe considering the identified risk condition and all known defects, anomalies, and operating parameters of the pipeline. The Director may also consider a demonstration that temporary mitigative and preventive measures are implemented prior to and during the temporary removal or modification of the pressure restriction. The Director’s determination will be based upon the identified risk condition and evidence of the analyses and/or measures taken by Respondent. 14. Mechanical and Metallurgical Testing. In accordance with the Notice, on February 12, 2019, Respondent delivered to the Director a report of metallurgical testing of the pipe joint that failed, entitled Evaluation of an ERW Seam Failure from Phillips 66’s Line O 10-inch Pipeline, prepared by Kiefner and Associates, Inc., and dated February 11, 2019 (the Metallurgical Report). Prior to finalization of the Metallurgical Report, Respondent caused Kiefner and Associates to provide a draft of the report to PHMSA simultaneously with provision of the draft report to Respondent. Respondent maintained chain of custody documentation for transporting the pipe to the Kiefner and Associates laboratory, and the metallurgical analysis followed established PHMSA testing protocol. Arrangements were made to provide the opportunity for PHMSA representatives to observe the metallurgical testing. Respondent has caused its ILI tool vendor to examine data from a 2014 crack ILI tool run to identify the anomaly that failed (the Failure Anomaly) and to more precisely examine the characteristics of that anomaly as indicated by that ILI tool data. Respondent delivered to the Director a report of metallurgical examination of certain ILI tool indications on four pipe joints which were removed from the Affected Pipeline, entitled Evaluation of ILI Seam Anomalies from Phillips 66’s Line O 10-inch Pipeline, prepared by Kiefner and Associates, Inc. and dated June 17, 2019. Prior to finalization of the report, Respondent delivered a draft of the report, dated May 1, 2019, to PHMSA. 15. Root Cause Failure Analysis. In accordance with the Notice, Respondent performed a Root Cause Failure Analysis (RCFA), and a report of the RCFA was provided to the Director on March 13, 2019. The RCFA documented a timeline of events relating to the accident and included a pipeline history, a seam integrity assessment history, a failure history, results from the Metallurgical Report conclusions, contributing factors, and action items. 16. Remedial Work Plan. Within 45 days after this Agreement and Order is issued, Respondent will submit to the Director for approval, a written remedial work plan (RWP) that includes corrective measures. Once approved, the RWP shall automatically become incorporated into this Order. The RWP must include provisions to: a. Include procedural, process or other engineering solutions to manage the pressure cycling regime of the Affected Pipeline. b. Re-evaluate data collected from crack ILI tool runs performed on#

420185029S_Consent Agreement and Order_09042019_text.pdf, page 6the Affected Pipeline, to identify tool indications of anomalies that bear characteristics similar to the Failure Anomaly (the Similar Indications). c. Perform calibration digs of the Similar Indications. Upon excavation of each Similar Indication, Respondent shall perform non-destructive examination (NDE) of the Similar Indication and determine whether or not the subject Similar Indication meets repair criteria. To the extent the characteristics of a given Similar Indication meets repair criteria, Respondent shall repair that Similar Indication. d. Respondent shall implement any procedural revisions for the continuing long-term periodic testing and integrity verification measures to ensure the ongoing safe operation of the Affected Pipeline as identified in 49 CFR 195.452 considering the results of the analyses, inspections, evaluations, and corrective measures undertaken pursuant to this safety order. Respondent will submit to the Director any procedural revisions. 17. Schedule. The RWP must include a proposed timeline for completion of the Corrective Measures required in Paragraph 16. 18. Documentation. Respondent shall retain on file documentation of compliance with the RWP. Respondent shall provide copies of such documentation to the Director upon written request. 19. Quarterly Reporting. Respondent must submit quarterly reports to the Director, due not more than 30 days following the end of each calendar quarter, which (1) include available data and results of the testing and evaluation required by the Agreement and Order, and (2) describe the progress of the repairs and other corrective measures being undertaken. 20. Appeals. Respondent may appeal any decision of the Director to the Associate Administrator for Pipeline Safety. Decisions of the Associate Administrator shall be final. 21. Documentation of Costs. It is requested (not mandated) that Respondent maintain documentation of the safety improvement costs associated with fulfilling this Safety 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.#

420185029S_Consent Agreement and Order_09042019_text.pdf, page 7III. Approvals 22. With respect to the submissions under this Agreement and Order requiring the approval of the Director, the Director shall act promptly to: (a) approve, in whole or part, the submission; (b) approve the submission on specific conditions; (c) disapprove, in whole or in part, the submission, directing that Phillips 66 modify the submission; or (d) any combination of the above. In the event of approval or approval upon conditions, Respondent will proceed to take all action required by the submission, as approved or conditioned by the Director, subject to Respondent’s right to invoke the dispute resolution procedures in Section V with respect to any conditions specified by Director. If the Director conditions or disapproves all or any portion of a submission, the Director shall in writing state with specificity the basis for the decision and Respondent will resubmit it to address the stated issues. If a resubmitted item is disapproved in whole or in part, the Director may again require Respondent to address the stated issues in accordance with the foregoing procedure, or the Parties may proceed to dispute resolution pursuant to Section V below. IV. Extensions of Time 23. The Director may grant an extension of time for compliance with any of the terms of this Agreement and Order upon a written request submitted at least 15 calendar days prior to a stated deadline, demonstrating good cause for an extension. The Director shall respond within a reasonable time to any request for extension of time. V. Dispute Resolution 24. The Director and Phillips 66 will attempt to resolve informally any disputes arising under this Agreement and Order, including but not limited to any decision of the Director. The Director and Phillips 66 will first confer in an effort to resolve any dispute. If the Director and Phillips 66 are unable to resolve informally the dispute within 15 business days of notice by Respondent, Phillips 66 may request in writing, within 10 business days of the end of said 15-day period, a written determination resolving the dispute by the Associate Administrator for Pipeline Safety, PHMSA. Along with its request, Phillips 66 will provide the Associate Administrator with all information Phillips 66 believes is relevant to the dispute. If the request is submitted as provided herein, the Associate Administrator will promptly issue a written determination that shall be final. Decisions of the Associate Administrator will constitute final agency action, and are subject to judicial appeal. The existence of a dispute and PHMSA’s consideration of matters placed in dispute shall not excuse, toll, or suspend any term or timeframe for completion of any Corrective Measures to be performed under this Agreement and Order during the pendency of the dispute resolution process, except as agreed by the Director or the Associate Administrator in writing.#

420185029S_Consent Agreement and Order_09042019_text.pdf, page 8VI. Enforcement 25. Respondent’s obligations pursuant to this Agreement and Order may be enforced by PHMSA pursuant to enforcement authorities available to the PHMSA under 49 U.S.C. § 60101, et seq., and 49 C.F.R. Part 190. All deadlines set forth or referenced in this Agreement and Order will be automatically incorporated into this Agreement and Order and, subject to Respondent’s right to request an extension of time under Section IV and modify this Agreement under Section IX, are enforceable in the same manner. VII. Recordkeeping and Information Disclosure 26. Except as otherwise provided herein, Phillips 66 agrees to maintain records demonstrating compliance with all requirements of this Agreement and Order for a period of five years following notice by Respondent of the completion of all work to be performed. 27. For any reports, plans, or other deliverables required to be submitted to PHMSA pursuant to this Agreement and Order, Respondent may assert a claim of business confidentiality or other protections applicable to the release of information by PHMSA, covering part or all of the information required to be submitted to PHMSA pursuant to this Agreement and Order in accordance with 49 C.F.R. Part 7 and 49 C.F.R. § 190.343. Respondent must mark the claim of confidentiality in writing on each page, and include a statement specifying the grounds for each claim of confidentially. PHMSA will determine the release of any information submitted pursuant to this Agreement and Order in accordance with 49 C.F.R. Part 7, the Freedom of Information Act, 5 U.S.C. § 552, DOT and PHMSA policies, and other applicable statutes, regulations and Executive Orders. VIII. Effective Date 28. The term “Effective Date,” as used herein, is the later date on which this Agreement and Order is fully executed by each of the Parties. Unless specified to the contrary, all deadlines for actions required by this Agreement and Order run from the Effective Date. IX. Modification 29. The terms of this Agreement and Order may be modified by mutual agreement of the Parties. Such modifications must be in writing and signed by both Parties. X. Termination 30. This Agreement and Order terminates upon completion of the Corrective#

420185029S_Consent Agreement and Order_09042019_text.pdf, page 9Measures and other actions within Section II, as determined by the Director. Phillips 66 may request written confirmation from PHMSA when this Agreement and Order is terminated and the Director will provide such confirmation within a reasonable time. Nothing in this Agreement and Order prevents Respondent from completing any of the obligations earlier than the deadlines provided for in this Agreement and Order. XI. Ratification 31. The Parties’ undersigned representatives certify that they are fully authorized to enter into the terms and conditions of this Agreement and Order and to execute and legally bind such party to this document. 32. The Parties hereby agree to all conditions and terms of this Agreement and Order. For Phillips 66 Pipeline LLC (Respondent): ___________________________________ Todd Denton President ________________________ Date For PHMSA: ___________________________________ Alan K. Mayberry Associate Administrator for Pipeline Safety Pipeline and Hazardous Materials Safety Administration U.S. Department of Transportation ________________________ Date#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED December 11, 2018 Todd Denton President Phillips 66 Pipeline, LLC 2331 City West Blvd. Houston, Texas 77042 CPF 4-2018-5029S Dear Mr. Denton: Enclosed is a Notice of Proposed Safety Order (Notice) issued in the above-referenced case. The Notice proposes that you take certain measures with respect to Phillips 66 Pipeline, LLC’s, LO-01, “Line-O,” Pipeline to ensure pipeline safety. Your options for responding are set forth in the Notice. Your receipt of the Notice constitutes service of that document under 49 C.F.R. § 190.5. We look forward to a successful resolution to ensure pipeline safety. Please direct any questions on this matter to me at (713) 272-2847. Sincerely, Mary McDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration Enclosure: Notice of Proposed Safety Order Cc: Mr. Alan K. Mayberry, Associate Administrator for Pipeline Safety, OPS Ms. Linda Daugherty, Deputy Associate Administrator for Field Operations, OPS Mr. Jeff Blatchford, DOT Coordinator, Phillips 66 Pipeline, LLC#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 22 DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY Southwest Region 8701 S. Gessner Road Houston, Texas 77074 ____________________________________ In the Matter of ) Phillips 66 Pipeline, LLC, ) CPF No. 4-2018-5029S ) ) ) Respondent ) ____________________________________) NOTICE OF PROPOSED SAFETY ORDER Background and Purpose Pursuant to Chapter 601 of title 49, United States Code, the Pipeline and Hazardous Materials Safety Administration (PHMSA) has initiated an investigation of the safety of Phillips 66 Pipeline, LLC’s (Phillips 66 or Respondent), LO-01 or “Line-O,” Pipeline in Elk, City, Oklahoma. As a result of the investigation, it appears that a condition exists on your pipeline facility that poses a pipeline integrity risk to public safety, property or the environment. Pursuant to 49 U.S.C. § 60117(l), PHMSA issues this Notice of Proposed Safety Order, notifying you of the preliminary findings of the investigation, and proposing that you take measures to ensure that the public, property, and the environment are protected from the potential risk. For the purposes of this Notice, the term “affected pipeline” means the entire 272-mile length of the LO-01 Pipeline. Preliminary Findings • The LO-01, or “Line-O,” Pipeline is a 10-inch, steel pipeline that extends 272 miles, beginning in Cushing, Oklahoma and ending in Borger, Texas. • The LO-01 Pipeline was manufactured in 1951 and has a low-frequency, electric resistance welded (LF-ERW), longitudinal pipe seam along the entire pipeline.#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 33 • Pipelines manufactured before 1971 with LF-ERW, longitudinal seams are susceptible to failure due to multiple deficiencies created by the welding process including, cold- weld, hook cracks that are enlarged by fatigue, other manufacturing defects enlarged by fatigue, selective seam weld corrosion, hydrogen stress cracking, sulfide stress cracking, and stress corrosion cracking. The in-service failure of the LF-ERW, longitudinal seam on the LO-01 Pipeline indicates there is a condition posing a pipeline integrity risk to public safety, property and the environment. • On November 29, 2018, at 6:53pm CT, Phillips 66 notified the National Response Center (NRC) of a release of crude oil from its LO-01 Pipeline in Elk City, Oklahoma.1 The release occurred on the segment of the LO-01 Pipeline that begins in Elk City and ends at the Oklahoma State line. PHMSA deployed two investigators to the scene of the accident and PHMSA personnel were on-site from November 30, 2018 through December 2, 2018. • The apparent cause of the release was a failure of the LF-ERW, longitudinal seam. The rupture of the seam was approximately 28.5 inches in length and 1.5-inches wide at the widest point.2 It is estimated that approximately 672 barrels of crude oil were released as a result of the seam failure. • The LO-01 Pipeline transports crude oil and is operated on a continuous basis. The maximum operating pressure (MOP) of the Elk City to State line segment of the LO-01 Pipeline is approximately 1125 psig. • The LO-01 Pipeline has a coal tar coating. • The LO-01 Pipeline passes through mostly rural areas land, but does closely pass the Oklahoma cities of Guthrie, Cashion, Clinton and Elk City, as well as the Texas cities of Wheeler, Pampa and Borger. There are ten pump stations located along the LO-01 Pipeline. The area where the accident occurred in Elk City, Oklahoma is an agricultural area that is slightly sloped with a terraced field. • The accident site is not located in an Unusually Sensitive Area (USA), but the accident occurred on a segment that could affect high consequence area (HCA). • The nearest HCA is located approximately 0.38 miles away at the city limit of Elk City, Oklahoma. Phillips 66 has reported that 127.41 miles of the LO-01 Pipeline are located within an HCA. • The entire LO-01 Pipeline has the pre-1970, LF-ERW, longitudinal seam. This condition could impair the serviceability of the entire pipeline if left unaddressed. 1 National Response Center Report, No. 1231662, November 29, 2018. 2 See Exhibit 1.#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 44 • Phillips 66 performed a hydrostatic test on the section of the LO-01 Pipeline from the Elk City Station to the Oklahoma State line on June 18, 2006. That test revealed no leak indications or ruptures at a minimum test pressure of 1499 psig. On June 13, 2014, Phillips 66 ran a Rosen UT-C, in-line inspection tool on the LO-01 Pipeline starting in Clinton, Oklahoma and ending at the Oklahoma State line. That test found 82 anomalies that were designated as immediate repair conditions. Of the 82 anomalies, 80 were identified as cracks with a calculated burst pressure that was less than the Pipeline segment’s 1125 psig MOP. The two remaining anomalies were cracks with no upper bound, meaning the size crack could not be accurately determined beyond a certain dimension. Phillips 66 reported that all anomalies were repaired in accordance Phillips 66’s repair procedures. Finally, on July 1, 2016, Phillips 66 ran a T.D. Williamson combination magnetic flux leakage/deformation tool on the same section of pipe tested in June 2014. That test found five topside dents with metal loss, which were identified as immediate repair conditions. The test also found two 180-day conditions, one dent associated with the longitudinal seam and one top-side dent greater than 2% wall loss. Phillips 66 reported that these anomalies were repaired in accordance Phillips 66’s repair procedures. • On December 1, 2018, Phillips 66 repaired the pipe segment that ruptured on November 29th. Three joints of pipe were cold cut and removed. Three new joints of pre-tested pipe were then welded in place. Phillips 66 conducted a two-hour standup test on December 2, 2018. Phillips 66 also provided PHMSA with a repair plan with associated procedures to address the repairs performed along with a restart plan. The line returned to service on December 2nd at reduced pressure levels on each segment to coincide with a 20% total pressure reduction on the LO-01 Pipeline. Proposed Issuance of Safety Order Section 60117(l) of Title 49, United States Code, provides for the issuance of a safety order, after reasonable notice and the opportunity for a hearing, requiring corrective measures, which may include physical inspection, testing, repair, or other action, as appropriate. The basis for making the determination that a pipeline facility has a condition or conditions that pose a pipeline integrity risk to public safety, property, or the environment is set forth both in the above-referenced statute and 49 C.F.R. § 190.239, a copy of which is enclosed. After evaluating the foregoing preliminary findings of fact and considering the age of the pipe involved, the manufacturer, the hazardous nature of the product transported and the pressure required for transporting such product, the characteristics of the geographical areas where the pipeline facility is located, and the likelihood that the conditions could worsen or develop on other areas of the pipeline and potentially impact its serviceability, it appears that the continued operation of the affected pipeline without corrective measures would pose a pipeline integrity risk to public safety, property, or the environment. Accordingly, PHMSA issues this Notice of Proposed Safety Order to notify Respondent of the proposed issuance of a safety order and to propose that Respondent take measures specified herein to address the potential risk.#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 55 Response to this Notice In accordance with § 190.239, you have 30 days following receipt of this Notice to submit a written response to the official who issued the Notice. If you do not respond within 30 days, this constitutes a waiver of your right to contest 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 Safety Order. In your response, you may notify that official that you intend to comply with the terms of the Notice as proposed, or you may request that an informal consultation be scheduled (you will also have the opportunity to request an administrative hearing before a safety order is issued). Informal consultation provides you with the opportunity to explain the circumstances associated with the risk conditions alleged in the notice and, as appropriate, to present a proposal for a work plan or other remedial measures, without prejudice to your position in any subsequent hearing. If you and PHMSA agree within 30 days of informal consultation on a plan and schedule for you to address each identified risk condition, we may enter into a written consent agreement (PHMSA would then issue an administrative consent order incorporating the terms of the agreement). If a consent agreement is not reached, or if you have elected not to request informal consultation, you may request an administrative hearing in writing within 30 days following receipt of the Notice or within 10 days following the conclusion of an informal consultation that did not result in a consent agreement, as applicable. Following a hearing, if the Associate Administrator finds the facility to have a condition that poses a pipeline integrity risk to the public, property, or the environment in accordance with § 190.239, the Associate Administrator may issue a safety order Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). In your correspondence on this matter, please refer to CPF 4-2018-5029S and for each document you submit, please provide a copy in electronic format whenever possible. Proposed Corrective Measures Pursuant to 49 U.S.C. § 60117(l) and 49 C.F.R. § 190.239, PHMSA proposes to issue to Phillips 66 a safety order incorporating the following remedial requirements with respect to the LO-01 Pipeline: 1. Pressure Restriction. On December 1, 2018, Phillips 66 agreed to a pressure restriction of 80% of the operating pressure at the time of the accident on the entire LO-01 Pipeline. Phillips 66 provided PHMSA information regarding nine segments of the LO-01 Pipeline and the associated pressure reductions to accomplish the 20% de-rate of the line pressure.#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 66 2. 3. 4. 5. Removal of Pressure Restriction. The Director may allow the removal or modification of the pressure restriction upon a written request from Respondent demonstrating that restoring the pipeline to its pre-failure operating pressure is justified based on a reliable engineering analysis showing that the pressure increase is safe considering all known defects, anomalies, and operating parameters of the pipeline. The Director may also consider a demonstration that temporary mitigative and preventive measures are implemented prior to and during the temporary removal or modification of the pressure restriction. The Director’s determination will be based on the cause of the failure and evidence of the analyses and measures taken. Mechanical and Metallurgical Testing. Within 60 days of receipt of this safety order, Respondent must complete mechanical and metallurgical testing and failure analysis of the failed pipe and the two joints removed from the pipeline, including an analysis of soil samples and any foreign materials. Testing and analysis requirements are as follows: a. Document the chain-of-custody when handling and transporting the failed pipe section and other evidence from the failure site. b. c. Utilize the testing protocol provided by PHMSA. Prior to beginning the mechanical and metallurgical testing, provide the Director with the scheduled date, time, and location of the testing to allow for an OPS representative to witness the testing. d. Ensure the testing laboratory distributes all reports whether draft or final in their entirety to the Director at the same time they are made available to Respondent. Root Cause Failure Analysis. Within 120 days following receipt of this safety order, complete a root cause failure analysis (RCFA) and submit a final report of this RCFA to the Director. The RCFA must document the decision making process and all factors contributing to the failure. The final report must include findings and lessons learned. The RCFA must also include a discussion of whether the findings and lessons learned are applicable to other locations within Phillip 66’s pipeline system. Remedial Work Plan. Within 45 days following receipt of the final report from the metallurgical testing laboratory, Respondent must submit a Remedial Work Plan (RWP) to the Director for approval. The Director may approve the RWP incrementally without approving the entire RWP. Once approved by the Director, the RWP will be incorporated by reference in this safety order. a. The RWP must specify the tests, inspections, assessments, evaluations, and remedial measures Respondent will use to verify the integrity of the LO-01 Pipeline. It must address all known or suspected factors and causes of the failure. Respondent should consider both the risk and consequence of another failure to develop a prioritized schedule for RWP related work along the entire 272-mile pipeline. b. The RWP must include a procedure or process to: i. Gather all data necessary to review the failure history (in-service and pressure test failures) of the LO-01 Pipeline and to prepare a written summary containing all the available information such as the locations, dates, and causes of leaks and failures.#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 77 6. ii. Integrate the results of the metallurgical testing, root cause failure analysis, and other corrective actions required by the safety order with all relevant pre-existing operational and assessment data for the LO-01 Pipeline. Pre- existing operational data includes, but is not limited to, construction, operations, maintenance, testing, repairs, and prior metallurgical analyses. Pre-existing assessment data includes, but is not limited to, in-line inspection (ILI) tool runs, hydrostatic pressure testing, direct assessments, close interval surveys, and DCVG/ACVG surveys. iii. Determine if conditions similar to those contributing to the failure are likely to exist elsewhere on the pipeline. iv. Conduct additional field tests, inspections, assessments, and/or evaluations to determine whether, and to what extent, the conditions associated with the failure, and other failures from the failure history, or any other integrity threats are present elsewhere the LO-01 Pipeline. At a minimum, this process must consider all failure causes and specify the use of one or more of the following: 1. Inline inspection tools that are technically appropriate for assessing the pipeline system based on the cause of the failure and that can reliably detect and identify anomalies, 2. Hydrostatic pressure testing, 3. Close-interval surveys, 4. Cathodic protection surveys, to include interference surveys in coordination with other utilities (e.g. underground utilities, overhead power lines, etc.) in the area, 5. Coating surveys, 6. Stress corrosion cracking surveys, 7. Selective seam corrosion surveys; and, 8. Other tests, inspections, assessments, and evaluations appropriate for the failure causes. c. Describe the inspection and repair criteria Respondent will use to prioritize, excavate, evaluate, and repair anomalies, imperfections, and other identified integrity threats. Include a description of how any defects will be graded and a schedule for repairs or replacement. d. Based on the known history and condition of the pipeline, describe the methods Respondent will use to repair, replace, or take other corrective measures to remediate the conditions associated with the failure, and to address other known integrity threats. e. Implement continuing long-term periodic testing and integrity verification measures to ensure the ongoing safe operation of the LO-01 Pipeline considering the results of the analyses, inspections, evaluations, and corrective measures undertaken pursuant to this safety order. f. Include a proposed schedule for completion of the RWP. Revise the remedial work plan as necessary to incorporate new information obtained during the failure investigation, evaluations and associated remedial activities to#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 88 7. 8. 9. 10. incorporate results of actions undertaken pursuant to the safety order. Submit any such plan revisions to the Director for prior approval. Submit quarterly reports to the Director that: (1) include available data and results of the testing and evaluations required by the safety order; and (2) describe the progress of the repairs and other remedial actions being undertaken. The Director may grant an extension of time for compliance with any of the terms of the safety order upon a written request timely submitted demonstrating good cause for an extension. Respondent may appeal any decision of the Director to the Associate Administrator for Pipeline Safety. Decisions of the Associate Administrator shall be final. It is requested (not mandated) that Respondent maintain documentation of the safety improvement costs associated with fulfilling this Safety Order and submit the total to Mary McDaniel, Director, Southwest, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. The actions proposed by this Notice of Proposed Safety Order are in addition to and do not waive any requirements that apply to Respondent’s pipeline system under 49 C.F.R. Parts 190 through 199, under any other order issued to Respondent under authority of 49 U.S.C. § 60101 et seq., or under any other provision of Federal or state law. After receiving and analyzing additional data in the course of this proceeding and implementation of the work plan, PHMSA may identify other safety measures that need to be taken. In that event, Respondent will be notified of any proposed additional measures and, if necessary, amendments to the work plan or safety order. ___________________________________ __________________ Mary McDaniel, P.E. Date issued Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 96 Exhibit 1#

420185029S_Notice of Proposed Safety Order_12112018_text.pdf, page 1010#

420185029S_Closure Letter_01142021_(18-163704S)_text.pdf, page 1Official PDFELECTRONIC MAIL January 14, 2021 Todd Denton President Phillips 66 Pipeline, LLC 2331 City West Boulevard Houston, Texas 77042 CPF 4-2018-5029S Dear Mr. Denton: On December 17, 2020, Phillips 66 Pipeline, LLC (Phillips 66) submitted to the Pipeline and Hazardous Materials Safety Administration (PHMSA) a White Paper demonstrating a review of the causes and the corrective actions implemented to reduce the pressure cycles on LO-01. PHMSA has reviewed the White Paper and has no objections to the findings and results. On January 12, 2021, Phillips 66 requested the operating pressure restriction be removed, the operating pressure at the time of the rupture be restored, and that the case be closed. PHMSA has no objections to removal of the pressure restriction and return to normal operating pressure. 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 cc: Doug Sauer, Manager, Pipeline Regulatory Affairs, Phillips 66, doug.b.sauer@p66.com#