SUNOCO PIPELINE L.P. — Notice of Probable Violation

party submissionOfficial PDF420195010_Operator Response to Notice_ 06032019.pdf#

420195010_NOPV PCP PCO_03182019_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED March 18, 2019 Gregory McIlwain Senior Vice President Operations Sunoco Pipeline L.P. 1300 Main Street Houston, Texas 77002 CPF 5-2019-5010 Dear Mr. McIlwain: From January 22, 2018 through December 05, 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 Sunoco Pipeline L.P.’s (Sunoco) Garden City Pipeline in Houston, Abilene, and Pearland, 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. §195.583 – 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: Onshore Offshore 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#

420195010_NOPV PCP PCO_03182019_text.pdf, page 2Sunoco failed to conduct an atmospheric corrosion inspection on the Bronte to Garden City 10” segment at station # 2260 + 00 and 2227 + 64 at the required frequency of at least once every 3 years, with intervals not exceeding 39 months. Records reviewed show that the most recent atmospheric corrosion inspection was carried out on September 9, 2013. Records further indicated an attempt was made to re-inspect the locations on November 30, 2016; however, Sunoco personnel were denied access (within the Fort Hood Army Base.) The reinspection of these segments was eventually carried out on March 28, 2018, resulting in a reinspection interval of 54 months rather than the required 39 month maximum. 2. §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) Conduct tests on the protected pipeline at least once each calendar year, but with intervals not exceeding 15 months. However, if tests at those intervals are impractical for separately protected short sections of bare or ineffectively coated pipelines, testing may be done at least once every 3 calendar years, but with intervals not exceeding 39 months. Sunoco failed to conduct annual cathodic protection surveys to determine its adequacy and compliance with §195.571 on the Temple to Evant Segment (Stations 1292 + 87 to 1717 +41) for two consecutive years (witin the Fort Hood Army Base.) A review of annual cathodic survey records provided at the time of the PHMSA inspection indicated that a survey was not completed for 2016, 2017 and continuing up to the time of this inspection in 2018. 3. §195.402 Procedural manual for operations, maintenance, and emergencies (a) General. Each operator shall prepare and follow for each pipeline system a manual of written procedures for conducting normal operations and maintenance activities and handling abnormal operations and emergencies. This manual shall be reviewed at intervals not exceeding 15 months, but at least once each calendar year, and appropriate changes made as necessary to insure that the manual is effective. This manual shall be prepared before initial operations of a pipeline system commence, and appropriate parts shall be kept at locations where operations and maintenance activities are conducted Sunoco’s Corrosion supervisors did not carry out the periodic review of the operating personnel’s work (inspection records) for atmospheric corrosion evaluations conducted. Sunoco’s written Operations and Maintenance manual section 195.583 entitled Monitoring for Atmospheric Corrosion – subsection 4(ii) requires that any remediation required be completed not later than one calendar year from the date of discovery. Atmospheric Corrosion Inspection records reviewed for multiple stations on the Evant – Zephyr 10” segment showed that while atmospheric inspections 2#

420195010_NOPV PCP PCO_03182019_text.pdf, page 34. were carried out on 7/28/2016 and 8/3/2016, the periodic review by the supervisor did not happen until 8/8/2017 which is more than one year after the inspection. §195.412 Inspection of rights-of-way and crossings under navigable waters. (a) Each operator shall, at intervals not exceeding 3 weeks, but at least 26 times each calendar year, inspect the surface conditions on or adjacent to each pipeline right-of- way. Methods of inspection include walking, driving, flying or other appropriate means of traversing the right-of-way. Sunoco failed to carry out the right of way inspection for the portion of the right of way within the U.S. Army’s Fort Hood base. Sunoco was unable to provide records to demonstrate that the right of way inspection was carried out as required by §195.412(a). Following the inspection, Sunoco provided information to confirm that the inspections of the right of way had not occurred in 2016 and 2017, but had resumed in July 2018 after Sunoco merged with Energy Transfer Partners. Proposed Civil Penalty Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed $213,268 per violation per day the violation persists, up to a maximum of $2,132,679 for a related series of violations. For violation occurring on or after November 2, 2015 and before November 27, 2018, the maximum penalty may not exceed $209,002 per violation per day, with a maximum penalty not to exceed $2,090,022. 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 $69,800 as follows: Item number PENALTY 2 $69,800 Warning Items With respect to items 1, 3, and 4 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 item 2 pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Sunoco Pipeline L.P. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. 3#

420195010_NOPV PCP PCO_03182019_text.pdf, page 4Response 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 4-2019-5010 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 4#

420195010_NOPV PCP PCO_03182019_text.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Sunoco Pipeline L.P. a Compliance Order incorporating the following remedial requirements to ensure the compliance of Sunoco Pipeline L.P. with the pipeline safety regulations: 1. 2. In regards to Item Number 2 of the Notice pertaining to conducting tests on the protected pipeline segment from Temple to Evant at least once every year with intervals not exceeding 15 months to determine the adequacy of the cathodic protection, Sunoco Pipeline shall arrange to have the cathodic protection tests performed on the Temple to Evant Segment within 60 days of the issuance of the Final order provide records if a survey has been completed. It is requested (not mandated) that Sunoco 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. 5#

420195010_Final Order_02112020_text.pdf, page 1Official PDFFebruary 11, 2020 Mr. Kelcy L. Warren Chief Executive Officer Energy Transfer, LP 8111 Westchester Drive Dallas, Texas 75225 Re: CPF No. 4-2019-5010 Dear Mr. Warren: Enclosed please find the Final Order issued in the above-referenced case to your subsidiary, Sunoco Pipeline, LP. It makes a finding of violation, assesses a civil penalty of $69,800, and specifies actions that need to be taken by Sunoco to comply with the pipeline safety regulations. When the civil penalty has been paid and the terms of the compliance order completed, 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 (Final Order) cc: Ms. Mary McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA Mr. Eric Amundsen, Senior Vice President – Operations, Energy Transfer, LP Mr. Mark Milliken, Senior Vice President – Technical Services, Energy Transfer, LP Mr. Danny Nichols, Senior Director – Regulatory Compliance, Energy Transfer, LP Mr. Chris Lason, Vice President – Asset Integrity, Energy Transfer, LP Mr. Delyn Houder, Senior Manager – Corrosion Services, Energy Transfer, LP Mr. Todd Nardozzi, Senior Manager – Regulatory Compliance, Energy Transfer, LP CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

420195010_Final Order_02112020_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 ) Sunoco Pipeline, LP, ) CPF No. 4-2019-5010 a subsidiary of Energy Transfer, LP, ) ) ) ) Respondent. ) ____________________________________) FINAL ORDER From January 22, 2018, through December 05, 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 on-site pipeline safety inspections of the facilities and records of Sunoco Pipeline, LP’s (Sunoco or Respondent) Garden City pipeline in Houston, Abilene, and Pearland, Texas. Sunoco Pipeline, LP, is a subsidiary of Energy Transfer, LP, one of the largest energy companies in the United States.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated March 18, 2019, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice), which also included warnings pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Sunoco had violated 49 C.F.R. § 195.573(a)(1) and proposed assessing a civil penalty of $69,800 for the alleged violation. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violation. The warning items required no further action but warned the operator to correct the probable violations or face possible future enforcement action. Sunoco responded to the Notice by letter dated June 3, 2019 (Response). The company did not contest the Notice, but provided additional information and requested a modification to the proposed compliance order terms. Respondent did not request a hearing and therefore has waived its right to one. In its Response, Sunoco did not contest the allegation in the Notice that it violated 49 C.F.R. Part 195, as follows: Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1), which states: FINDING OF VIOLATION 1 Energy Transfer, LP website, available at https://www.energytransfer.com/ownership-structure/ (last accessed December 18, 2019).#

420195010_Final Order_02112020_text.pdf, page 3CPF 4-2019-5010 Page 2 § 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) Conduct tests on the protected pipeline at least once each calendar year, but with intervals not exceeding 15 months. However, if tests at those intervals are impractical for separately protected short sections of bare or ineffectively coated pipelines, testing may be done at least once every 3 calendar years, but with intervals not exceeding 39 months. The Notice alleged that Respondent violated 49 C.F.R. § 195.573(a)(1) by failing to conduct a test on its Temple to Evant Segment (located within the Fort Hood Army base) at least once each calendar year, but with intervals not exceeding 15 months, to determine the adequacy of its cathodic protection and compliance with § 195.571. Specifically, the Notice alleged that Sunoco failed to conduct an annual cathodic protection survey in 2016, 2017, and continuing up to the time of the inspection in 2018. Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 195.573(a)(1) by failing to conduct a test on its Temple to Evant Segment (located within the Fort Hood Army base) once each calendar year, but with intervals not exceeding 15 months, to determine the adequacy of its cathodic protection and compliance with § 195.571. This finding of violation will be considered a prior offense 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 $69,800 for the violation cited above. Item 2: The Notice proposed a civil penalty of $69,800 for Respondent’s violation of 49 C.F.R. § 195.573(a)(1), for failing to conduct a test on its Temple to Evant Segment (located within the Fort Hood Army base) once each calendar year, but with intervals not exceeding 15 months, to 2 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.#

420195010_Final Order_02112020_text.pdf, page 4CPF 4-2019-5010 Page 3 determine the adequacy of its cathodic protection and compliance with § 195.571. Sunoco neither contested the allegation nor presented any evidence or argument justifying a reduction in or elimination of the proposed penalty. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $69,800 for violation of 49 C.F.R. § 69,800. Failure to pay the $69,800 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a district court of the United States. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 2 in the Notice for violation of 49 C.F.R. § 195.573(a)(1). 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. Concerning the violation of § 195.573(a)(1) (Item 2), Respondent stated that due to the nature of activities conducted at Fort Hood, the U.S. Army has limited and restricted Sunoco’s access to certain areas of the company’s right-of-way (ROW). Respondent stated that it is engaged in discussions with the Army about Sunoco’s need to access the ROW and is taking steps to facilitate the relocation of the pipeline. The company stated that it would be unable to fully comply with the conditions of the proposed compliance order until the Army either permits access sufficient for Respondent to satisfy its obligations under Part 195, and/or the pipeline is relocated. In the meantime, Respondent proposed the following alternative activities to ensure continued pipeline integrity: 1) 2) 3) 4) 5) Continued efforts by Sunoco to negotiate access with the Army; Weekly aerial patrols (weather permitting); Annual in-line inspections (ILI) with a Def/MFL tool; Analysis of ILI resultant data sets against past data sets; and Identification of any corrosion growth rate levels that would impact the calculated time to critical wall loss. Respondent proposed to perform these alternative activities until such time that it is able to gain full access to the pipeline or the pipeline is relocated, whichever occurs first. Respondent also stated that it would communicate with the Director, and take all appropriate action, consistent with 49 C.F.R. Part 195, should the monitoring and analysis identify actionable anomalies on the pipe. In consideration of the Respondent’s inability to access certain areas of the ROW, the Director found the alternative activities acceptable but only for a limited amount of time. The Director has recommended that a time limit of one year be imposed, along with a requirement for#

420195010_Final Order_02112020_text.pdf, page 5CPF 4-2019-5010 Page 4 Respondent to provide periodic progress reports on its discussions with the U.S. Army every three months. Respondent cannot comply with the PCO as written in the Notice; however, allowing the Respondent to perform alternative actions indefinitely would exceed the scope of a compliance order and enter the realm of a special permit. Therefore, I find that a reasonable time limit of one year, with an opportunity to extend with approval from the Director, should be included in the order. I also find that requiring updates of the Respondent’s discussions with the U.S. Army is critical for the ability of the Director to evaluate Respondent’s progress toward resolving the issue of access to the ROW. Having considered all the facts discussed above, I find that the compliance order should be modified as set forth below. 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, for a period of one year from the date of this Final Order, with an opportunity to extend the compliance period for two additional one-year periods with the approval of the Director, to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 195.573(a)(1) (Item 2), Respondent must: a. b. c. d. e. f. Continue its efforts to negotiate access to its pipeline with the U.S. Army; Conduct weekly aerial patrols (weather permitting); Conduct annual ILIs with a Def/MFL tool; Analyze the ILI resultant data sets against past data sets; Identify any corrosion growth rate levels that would impact the calculated time to critical wall loss; and Provide progress reports on discussion efforts for access to the pipeline segments within the U.S. Army base at Fort Hood and the conditional status of the pipeline to the Director every three months from the date of issuance of the final order. At the end of the one-year time period, or as extended by the Director for up to three years, this Compliance Order will expire and Respondent must either come into full compliance with § 195.573(a)(1), seek and obtain a special permit from PHMSA, or face potential enforcement action. Within such limitations, 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#

420195010_Final Order_02112020_text.pdf, page 6CPF 4-2019-5010 Page 5 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 1, 3, and 4, 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. § 195.583(a) (Item 1) ─ Respondent’s alleged failure to conduct an atmospheric corrosion inspection on the Bronte to Garden City 10” segment at station # 2260+00 and 2227+64 at the required frequency of at least once every 3 years, with intervals not exceeding 39 months; 49 C.F.R. § 195.402(a) (Item 3) ─ Respondent’s alleged failure to have Corrosion Supervisors carry out periodic reviews of their operating personnel’s work (inspection records) for atmospheric corrosion evaluations; and 49 C.F.R. § 195.412(a) (Item 4) ─ Respondent’s alleged failure to carry out right- of-way inspections for that portion of the company’s ROW within the U.S. Army’s Fort Hood base, at intervals not exceeding 3 weeks but at least 26 times each calendar year. 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. February 11, 2020 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#