FREEPORT LNG DEVELOPMENT, L.P. — Notice of Probable Violation

party submissionOfficial PDF420201002_Operator Response to Notice_02182020.pdf#

420201002_Final Order_07272020_text.pdf, page 1Official PDFJuly 27, 2020 VIA ELECTRONIC MAIL TO: scornelius@freeportlng.com Mr. Sigmund Cornelius President and Chief Operating Officer Freeport LNG Development, LP 333 Clay Street, Suite 5050 Houston, Texas 77002 Re: CPF No. 4-2020-1002 Dear Mr. Cornelius: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $22,800, and specifies actions that need to be taken by Freeport LNG Development, LP, to comply with the pipeline safety regulations. The penalty payment terms are set forth in the Final Order. When the civil penalty has been paid and the terms of the compliance order completed, as determined by the Director, Southwest Region, this enforcement action will be closed. Service of the Final Order by electronic mail is effective upon the date of transmission as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Ms. Mary McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA Mr. Mark W. Mallett, P.E., Vice President of Operations and Engineering, Freeport LNG Development, LP, mmallett@freeportlng.com Mr. Michael Stephenson, Regulatory Compliance Manager, Freeport LNG Development, LP, mstephenson@freeportlng.com CONFIRMATION OF RECEIPT REQUESTED#

420201002_Final Order_07272020_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 ) ) Freeport LNG Development, LP, ) CPF No. 4-2020-1002 ) Respondent. ) ____________________________________) FINAL ORDER From June 25, 2019, through September 26, 2019, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of Freeport LNG Development, LP (FLNG or Respondent) in Freeport, Texas. FLNG operates a 42-inch diameter natural gas transmission line located at the Freeport LNG facility in Freeport (Quintana), Texas.1 As a result of the inspection, the Director, Southwest Region, OPS (Director), issued to Respondent, by letter dated January 27, 2020, 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 FLNG had committed three violations of 49 C.F.R. Part 192 and proposed assessing a civil penalty of $22,800 for one of the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. The warning item required no further action, but warned the operator to correct the probable violation or face possible future enforcement action. FLNG responded to the Notice by letter dated February 18, 2020 (Response). The company contested one of the allegations of violation and requested that the proposed civil penalty be reduced. Respondent also submitted additional information regarding the proposed remedial measures set forth in 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 192, as follows: 1 Pipeline Safety Violation Report (Violation Report), at 1 (Jan. 28, 2020) (on file with PHMSA).#

420201002_Final Order_07272020_text.pdf, page 3CPF No. 4-2020-1002 Page 2 Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.605(b)(8), which states: § 192.605 Procedural manual for operations, maintenance, and emergencies. (a) General . . . (b) Maintenance and normal operations. The manual required by paragraph (a) of this section must include procedures for the following, if applicable, to provide safety during maintenance and operations. (1) . . . (8) Periodically reviewing the work done by operator personnel to determine the effectiveness, and adequacy of the procedures used in normal operation and maintenance and modifying the procedures when deficiencies are found. The Notice alleged that Respondent violated 49 C.F.R. § 192.605(b)(8) by failing to establish written procedures to periodically review work done by its personnel to determine the effectiveness and adequacy of the procedures used in normal operation and maintenance, and to modify the procedures when deficiencies are found. Specifically, the Notice alleged that FLNG’s Gas Pipeline Operations and Maintenance Manual (FLNG-GOM-100) did not include written procedures for the periodic review of the work performed by its personnel to evaluate the effectiveness and adequacy of its procedures. 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. § 192.605(b)(8) by failing to have written procedures for the periodic review of work performed by its personnel to determine the effectiveness and adequacy of the company’s procedures, and to modify them when deficiencies are found. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 192.614(c)(1), which states: § 192.614 Damage prevention program. (a) . . . (c) The damage prevention program required by paragraph (a) of this section must, at a minimum: (1) Include the identity, on a current basis, of persons who normally engage in excavation activities in the area in which the pipeline is located. The Notice alleged that Respondent violated 49 C.F.R. § 192.614(c)(1) by failing to have a damage prevention program that included the current identity of persons who normally engage in excavation activities in the area in which the pipeline is located. Specifically, the Notice alleged that FLNG did not include the names of contractors or excavators from its “Third-Party Activity Reports” into its damage prevention program.2 2 During the PHMSA inspection, it was noted that several excavators called in to locate tickets, but were not placed on the next mailing list to receive information about FLNG’s damage prevention program. Notice, at 3.#

420201002_Final Order_07272020_text.pdf, page 4CPF No. 4-2020-1002 Page 3 In its Response, FLNG correctly noted that operators may comply with any of the requirements of § 192.614(c) through participation in a public service program, such as a one-call system.3 Such participation, however, does not relieve the operator of responsibility to comply with § 192.614 requirements.4 Therefore, although FLNG participates in the Texas 811 program, a qualified one-call system, this does not relieve the company of its obligation under § 192.614(c)(1) to identify persons who normally engage in excavation activities near its line in its damage prevention program. FLNG further stated in its Response that one of the excavators who was not identified in its damage prevention program was also not identified by Texas 811 or its third-party public awareness contractor.5 Therefore, the company argued, this excavator may not be normally engaged in excavation activities in the area in which the pipeline is located. I disagree. All excavators perform critical safety work that carries the inherent risk of physical damage to underground facilities. A single dig, performed in an unsafe manner, could result in property damage, personal injury, or even loss of life. Therefore, any time an individual is identified as engaging in excavation activity, it is imperative that operators include them in their damage prevention programs so that they can learn important safety information about excavation damage and prevention. There is no threshold or minimum number of digs that excavators must meet in order to be considered “normally engage[d] in excavation activities” under § 192.614(c)(1). If excavators call in to locate dig tickets, like they did in this case, these individuals are normally engaged in excavation activities near the pipeline for purposes of the regulation. Furthermore, FLNG did not provide any evidence showing that the excavator in question was not normally engaged in excavation activities in the area. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.614(c)(1) by failing to have a damage prevention program that included the current identities of all persons who normally engage in excavation activities near the pipeline. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 192.805(b), which states: § 192.805 Qualification program. Each operator should have and follow a written qualification program. The program shall include provisions to: (a)… (b) Ensure through evaluation that individuals performing covered tasks are qualified. The Notice alleged that Respondent violated 49 C.F.R. § 192.805(b) by failing to have a written qualification program to ensure through evaluation that individuals performing covered tasks are qualified. Specifically, the Notice alleged that FLNG’s written qualification program failed to ensure through evaluation that employees were qualified to perform valve inspections. During 3 See Response, at 3 (citing § 192.614(b)). 4 Id. 5 Id.#

420201002_Final Order_07272020_text.pdf, page 5CPF No. 4-2020-1002 Page 4 the inspection, PHMSA discovered two FLNG employees with expired qualifications performed valve inspections on regulated valves (BV-116, V20A08, and XV4345) a total of eight times from 2018-2019.6 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. § 192.805(b) by failing to have a written qualification program to ensure through evaluation that individuals performing covered tasks are qualified. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.7 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 $22,800 for the violations cited above. Item 4: The Notice proposed a civil penalty of $22,800 for Respondent’s violation of 49 C.F.R. § 192.805(b), for failing to have a written qualification program to ensure through evaluation that individuals performing covered tasks are qualified. In its Response, FLNG noted that it promptly rectified the violation after it was discovered by PHMSA. Although this may be true, the company’s post-inspection remedial measures do not negate the underlying violation and do not serve as a basis to reduce a penalty under the Violation Report. Therefore, I see no reason to reduce the civil penalty amount based on the corrective measures FLNG enacted after the PHMSA inspection. The company also stated that this was the first offense of this nature, and therefore the penalty should be reduced. Again, the company’s enforcement record has already been taken into consideration in calculating the proposed penalty. The Pipeline Safety Violation Report, which was relied upon in this case to calculate the proposed civil penalty, accounts for enforcement history, and accurately noted that FLNG had no prior enforcement history over the past five 6 The Notice alleged that FLNG failed to produce qualification records for these individuals. Notice, at 4. 7 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223.#

420201002_Final Order_07272020_text.pdf, page 6CPF No. 4-2020-1002 Page 5 years, nor had it previously violated this particular regulation during the same time period.8 Therefore, based upon all of the relevant circumstances, I find no reason to reduce the penalty based on the fact that this is Respondent’s first violation. Based upon the foregoing, I assess Respondent a civil penalty of $22,800 for violation of 49 C.F.R. § 192.805(b). 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 $22,800 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a district court of the United States. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 2 and 3 in the Notice for violations of 49 C.F.R. §§ 192.805(b) and 192.614(c), respectively. Under 49 U.S.C. § 60118(a), each person who engages in the transportation of gas 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 § 192.805(b) (Item 2), Respondent submitted revised procedures for the periodic review of work performed by its personnel to determine the effectiveness and adequacy of its procedures, and to modify them when deficiencies are found.9 In her Region Recommendation, the Director noted that FLNG would only initiate an effectiveness review if an employee’s performance did not meet expectations. The requirement for periodic reviews, however, does not condition the review on employee performance. Therefore, I find that FLNG’s revised procedures do not sufficiently follow the requirements set forth in § 192.805(b). 8 Violation Report, at 3, 29. PHMSA’s statute of limitations is five years pursuant to 28 U.S.C. § 2462. 9 See Response, at 2-3 (including proposed revised procedures that state: “Work done by FLNG personnel shall be monitored on a ‘management-by-exception’ basis by supervisors to confirm the effectiveness and adequacy of the procedures used in normal operation and maintenance. ‘Management-by-exception’ means that if an employee’s performance does not meet expectations, the underlying procedures should be evaluated as a possible cause of substandard employee performance. Procedures shall be modified when deficiencies are found. Such changes shall be documented using the Management of Change (MOC) process.”).#

420201002_Final Order_07272020_text.pdf, page 7CPF No. 4-2020-1002 Page 6 With regard to the violation of § 192.614(c) (Item 3), Respondent submitted additional information to PHMSA regarding actions it had taken to correct the noncompliance.10 The company, however, did not submit revised procedures as set forth in the Proposed Compliance Order. For the above reasons, the Compliance Order is not 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 to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 192.805(b) (Item 2), Respondent must develop a written procedure for periodic review that is not conditioned upon employee performance and submit the revised procedure to the Director within 60 days of issuance of the Final Order; and 2. With respect to the violation of § 192.614(c) (Item 3), Respondent must develop a written procedure to ensure that the current identity of persons who normally engage in excavation activities in the area in which its pipeline is located are identified as required and submit that procedure to the Director within 60 days of 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 Respondent maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the Director. It is requested that these costs be reported in two categories: (1) total cost associated with preparation/revision of plans, procedures, studies and analyses; and (2) total cost associated with replacements, additions and other changes to pipeline infrastructure. Failure to comply with this Order may result in the administrative assessment of civil penalties not to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. WARNING ITEM With respect to Item 1, the Notice alleged a probable violation of Part 192, but identified it as a warning item pursuant to § 190.205. The warning was for: 10 See Response, at 3 (noting that FLNG provided its third-party public awareness contractor with excavator name(s) and requested that it review the last three calendar years of dig tickets and perform a cross-check of identified entities to identify any potential gaps).#

420201002_Final Order_07272020_text.pdf, page 8CPF No. 4-2020-1002 Page 7 49 C.F.R. § 192.605(b) (Item 1) ─ Respondent’s alleged failure to conduct annual reviews of its manual as required by FLNG’s Gas Pipeline Operations and Maintenance Manual (FLNG-GOM-100). FLNG presented information in its Response showing it had complied with the requirement, as well as information showing that it had taken certain actions to address the cited item. Under § 190.205, PHMSA does not adjudicate warning items to determine whether a probable violation occurred. If OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject to future enforcement action. Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final Order to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey 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. July 27, 2020 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

420201002_NOPV PCP PCO_01272020_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED January 27, 2020 Michael S. Smith Chairman & CEO Freeport LNG Development, L.P. 333 Clay Street, Suite 5050 Houston, Texas 77002 CPF 4-2020-1002 Dear Mr. Smith: From June 25 through September 26, 2019, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected Freeport LNG Development, L.P.’s (FLNG) pipeline system procedures, records, and facilities located in Freeport, 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. § 192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for#

420201002_NOPV PCP PCO_01272020_text.pdf, page 2emergency response. For transmission lines, the manual must also include procedures for handling abnormal operations. This manual must be reviewed and updated by the operator at intervals not exceeding 15 months, but at least once each calendar year. This manual must be prepared before operations of a pipeline system commence. Appropriate parts of the manual must be kept at locations where operations and maintenance activities are conducted. FLNG failed to follow, for each pipeline, a manual of written procedures for conducting operations and maintenance activities, and for emergency response. FLNG failed to provide documentation showing that annual reviews of its gas transmission pipeline system as required by FLNG-GOM-100, Gas Pipeline Operations and Maintenance Manual were performed. FLNG-GOM-100, Gas Pipeline Operations and Maintenance Manual, requires annual reviews. According to FLNG, it conducted its reviews annually for the past three years; however, no documentation was provided during the inspection to document the annual review. FLNG failed to use the log referred to in the procedure to document that there were no changes to the manual when the annual review was conducted. The last review date listed on the manual was 12/10/2018 is shown on each page. 2. §192.605 Procedural manual for operations, maintenance, and emergencies. (b) Maintenance and normal operations. The manual required by paragraph (a) of this section must include procedures for the following, if applicable, to provide safety during maintenance and operations. (8) Periodically reviewing the work done by operator personnel to determine the effectiveness, and adequacy of the procedures used in normal operation and maintenance and modifying the procedures when deficiencies are found. FLNG failed to establish written procedures for the periodic review of the work done by operator personnel to determine the effectiveness, and adequacy of the procedures used in normal operation and maintenance in accordance with § 192.605(b)(8). PHMSA reviewed FLNG’s FLNG-GOM-100, Gas Pipeline Operations and Maintenance Manual, and noted that the manual did not include procedures for the periodic review of the work performed by operator personnel. Because it did not conduct the periodic reviews, FLNG could not use those reviews to evaluate the effectiveness and adequacy of its procedures. 3. § 192.614 Damage prevention program. 2#

420201002_NOPV PCP PCO_01272020_text.pdf, page 3(c) The damage prevention program required by paragraph (a) of this section must, at a minimum: (1) Include the identity, on a current basis, of persons who normally engage in excavation activities in the area in which the pipeline is located. FLNG’s damage prevention program did not include the identity, on a current basis, of persons who normally engage in excavation activities in the area in which its pipeline is located as required by §192.614(c)(1). Specifically, FLNG does not incorporate the names of associated contractors or excavators from its Third-Party Activity reports into its damage prevention program so that the names are included in the mail-outs and communications with excavators along the system. During the PHMSA inspection, it was noted that several excavators had called into locate tickets, but were not put on the next mailing list to receive communication from the operator. One example is the excavator, Primoris Pipeline Services (Ticket No. 1884060433). The date of ticket was December 8, 2018, and this excavator was not found on the 2019 mailing list. 4. §192.805 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks; (b) Ensure through evaluation that individuals performing covered tasks are qualified; (c) Allow individuals that are not qualified pursuant to this subpart to perform a covered task if directed and observed by an individual that is qualified; (d) Evaluate an individual if the operator has reason to believe that the individual's performance of a covered task contributed to an incident as defined in Part 191; (e) Evaluate an individual if the operator has reason to believe that the individual is no longer qualified to perform a covered task; (f) Communicate changes that affect covered tasks to individuals performing those covered tasks; (g) Identify those covered tasks and the intervals at which evaluation of the individual's qualifications is needed; (h) After December 16, 2004, provide training, as appropriate, to ensure that individuals performing covered tasks have the necessary knowledge and skills to perform the tasks in a manner that ensures the safe operation of pipeline facilities… FLNG failed to ensure through evaluation that employees were qualified to perform valve 3#

420201002_NOPV PCP PCO_01272020_text.pdf, page 4inspections on eight separate occasions in 2018 and 2019. During the inspection, FLNG operator qualification records of employees performing valve inspections were reviewed. Valve Inspection records showed that two FLNG employees with expired qualifications performed valve inspections on regulated valves (BV-116, V20A08, and XV4345) on its 42-inch pipeline on eight separate occasions in 2018 and 2019. At the time of the inspection, FLNG failed to provide documentation indicating these two individuals were qualified while performing the covered tasks. Proposed Civil Penalty Under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed $218,647 per violation per day the violation persists, up to a maximum of $2,186,465 for a related series of violations. For violation occurring on or after November 27, 2018 and before July 31, 2019, the maximum penalty may not exceed $213,268 per violation per day, with a maximum penalty not to exceed $2,132,679. 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 and has recommended that you be preliminarily assessed a civil penalty of $22,800 as follows: Item number PENALTY 4 $ 22,800 Warning Items With respect to Item 1 we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment 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 2 and 3 pursuant to 49 U.S.C. § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Freeport LNG Development, L. P. (FLNG). Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. All material you submit in response to this enforcement action may be made publicly available. If you 4#

420201002_NOPV PCP PCO_01272020_text.pdf, page 5believe 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 4-2020-1002 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 cc: Mark Mallett, Vice President of Operations & Engineering, Freeport LNG Development, L.P., 333 Clay Street, Suite 5050, Houston, Texas 77002 Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 5#

420201002_NOPV PCP PCO_01272020_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 Freeport LNG Development, L.P., (FLNG) a Compliance Order incorporating the following remedial requirements to ensure the compliance of FLNG with the pipeline safety regulations: 1. 2. In regard to Item Number 2 of the Notice pertaining to establishing written procedures for the periodic review of the work done by operator personnel to determine the effectiveness, and adequacy of the processes used in normal operations and maintenance and modifying the processes when deficiencies are found, FLNG must develop written procedures and complete the periodic review and submit documentation to PHMSA’s Southwest Region Director within 60 days of issuance of the Final Order. In regard to Item Number 3 of the Notice pertaining to failing to ensure that the identity of persons who normally engage in excavation are identified as required FLNG must develop a written procedure and submit that procedure to PHMSA’s Southwest Region Director within 60 days of issuance of the Final Order. It is requested (not mandated) that Freeport LNG Development, L. P. maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the 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#

420201002_Closure Letter_10142020_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED October 14, 2020 Michael S. Smith Chairman & CEO Freeport LNG Development, L.P. 333 Clay Street, Suite 5050 Houston, Texas 77002 CPF 4-2020-1002 Dear Mr. Smith: On July 27, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Freeport LNG Development, L.P. (FLNG) a Final Order in the above-referenced case. This Final Order included a Compliance Order and a Civil Penalty assessment. Based on our review of the documentation provided and confirmation of payment of the Civil Penalty, it has been determined that you have complied with the terms of this Order. Accordingly, this case is now closed and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, Mary L. McDaniel, P.E. Director, Southwest Region Pipeline and Hazardous Materials Safety Administration#