BELLE FOURCHE PIPELINE CO — Warning Letter

520165010W_Warning Letter_12012016_text.pdf, page 1Official PDFWARNING LETTER CERTIFIED MAIL - RETURN RECEIPT REQUESTED December 1, 2016 Mr. Tad True Vice President Belle Fourche Pipeline Company PO Drawer 2360 Casper, WY 82602 CPF 5-2016-5010W Dear Mr. True: On June 28 through July 1, 2016, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code, inspected your records in Casper, WY. As a result of the inspection, it is alleged that you have committed a probable violation of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The item inspected and the probable violation is: 1. §195.452 Pipeline integrity management in high consequence areas. (h)(4)(i) Immediate repair conditions. An operator's evaluation and remediation schedule must provide for immediate repair conditions. To maintain safety, an operator must temporarily reduce the operating pressure or shut down the pipeline until the operator completes the repair of these conditions. An operator must calculate the temporary reduction in operating pressure using the formulas referenced in paragraph (h)(4)(i)(B) of this section. If no suitable remaining strength calculation method can be identified, an operator must implement a minimum 20 percent or greater operating pressure reduction, based on actual operating pressure for two months prior to the date of#

520165010W_Warning Letter_12012016_text.pdf, page 2inspection, until the anomaly is repaired. An operator must treat the following conditions as immediate repair conditions: (A) Metal loss greater than 80% of nominal wall regardless of dimensions. (B) A calculation of the remaining strength of the pipe shows a predicted burst pressure less than the established maximum operating pressure at the location of the anomaly. Suitable remaining strength calculation methods include, but are not limited to, ASME/ANSI B31G (incorporated by reference, see §195.3) and PRCI PR-3-805 (R- STRENG) (incorporated by reference, see §195.3). (C) A dent located on the top of the pipeline (above the 4 and 8 o'clock positions) that has any indication of metal loss, cracking or a stress riser. (D) A dent located on the top of the pipeline (above the 4 and 8 o'clock positions) with a depth greater than 6% of the nominal pipe diameter. Belle Fourche Pipeline Company (BFPC) did not respond correctly to an immediate repair condition as defined by 195.452(h)(4)(i). BFPC did not shut down or take the required pressure reduction of twenty (20) percent based on the actual operating pressure for the two months prior to the date of the inspection. On June 16, 2016, BFPC discovered the immediate anomaly on the six (6) inch pipeline between the Skunk Hill Pump Station to Dickinson; however, no pressure reduction was taken until June 30 when the PHMSA inspector brought that requirement to the operator’s attention. Therefore, the operator was out of compliance for 14 days. The operator did take prompt action within one hour once this fact was brought to their attention. Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $205,638 per violation per day the violation persists up to a maximum of $2,056,380 for a related series of violations. For violation occurring between January 4, 2012 to August 1, 2016, 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. For violations occurring prior to January 4, 2012, the maximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a related series of violations. 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 correct the item identified in this letter. Failure to do so will result in BFPC being subject to additional enforcement action. No reply to this letter is required. If you choose to reply, in your correspondence please refer to CPF 5-2016-5010W. 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 2#

520165010W_Warning Letter_12012016_text.pdf, page 3why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). Sincerely, Chris Hoidal Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 J. Gilliam 3#