SI Group — Pipeline Safety Interpretation

Page 1U.S. Department ofTransportation Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Avenue SE Washington DC 20590 M AR 1 2 2018 Ms. Paulina Williams Baker Botts LLP 98 San Jacinto Blvd. Suite 1500 Austin, Texas 78701-4078 Dear Ms. Williams: In an August 29, 2017, letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA), you requested an interpretation of 49 CFR Part 195. Specifically, you requested for interpretation regarding the exemption in§ 195.l(b)(3)(ii). You provided the following information. We are writing on behalf of our client, SI Group-Baytown ("SI Group"), to request a written regulatory interpretation regarding application of an exception from Part 195 applicability. Specifically, SI Group seeks an interpretation from Pipeline and Hazardous Materials Safety Administration ("PHMSA") of the PHMSA pipeline safety regulation at 49 CFR 195.l(b)(3)(ii) as it applies to a 4-inch liquid propane pipeline SI Group now operates at a chemical manufacturing plant SI Group recently acquired in Baytown, Texas. This pipeline is less than one-mile long, does not cross any waterways, and it will be operated as a low stress pipeline. The pipeline transports propane from the plant a distance of approximately 1800 feet outside the plant boundary to a customer operated long-distance transportation line ... SI Group is requesting PHMSA guidance on whether the pipeline in question "serves" a manufacturing facility within the meaning of the[§ 195.l(b)(3)(ii)]. SI Group has reviewed the rule language and relevant guidance and believes that the outbound propane pipeline "serves" SI Group's manufacturing plant and, therefore, provided the other conditions of 49 CFR § 195.l(b)(3)(ii) are properly satisfied, the propane pipeline would not be subject to Part 195. Because the regulation does not contain a definition of what constitutes "serving" a manufacturing facility, however, SI Group is requesting confirmation from PHMSA of the appropriate interpretation in this fact situation. You also attached PHMSA rulemaking history and a February 1, 2001, interpretation on this exemption. The section 195.l(b)(3)(ii) exemption reads as follows: The Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 22 § 195 .1 Which pipelines are covered by this Part? (a) ... (b) Excepted This Part does not apply to any of the following: (3) Transportation of a hazardous liquid through any of the following low-stress pipelines: (ii) A pipeline that serves refining, manufacturing, or truck, rail, or vessel terminal facilities, if the pipeline is less than one mile long (measured outside facility grounds) anll does not cross- an offshore area or a waterway currently used fo1comrrr erctal navigation ... On September 2, 1998, PHMSA issued a final rule, "Low-Stress Hazardous Liquid Pipelines Serving Plants and Terminals," 63 FR 46692, whose purpose was to "exclude from [PHMSA's] safety standards for hazardous liquid ... low-stress pipelines less than 1 mile long that serve certain plants and transportation terminals without crossing an offshore area or a waterway currently used for commercial navigation." The rule stated that this definition included "interfacility transfer lines" that "move hazardous liquids for short distances between truck, rail, and vessel transportation terminals, manufacturing plants (including petrochemical plants), and oil refineries, or between these facilities and associated storage or long distance pipeline transportation." 63 FR 46692. The rule included the current regulatory language excluding a low-stress pipeline that "serves refining, manufacturing, or truck, rail, or vessel terminal facilities, ifthe pipeline is less than 1 mile long (measured outside facility grounds) and does not cross an offshore area or a waterway currently used for commercial navigation." Therefore, the word "serve" includes both receiving and delivering regulated products through pipeline transportation. In this case, the pipeline is 1800 feet (0.34 miles) long, does not cross any waterways, and it will be operated as a low stress pipeline. The pipeline transports propane a short distance between the plant and a customer operated long-distance transportation line. It therefore "serves" manufacturing facility within the meaning of the§ 195.l(b)(3)(ii)]. Under§ 195.l(b)(3)(ii), the line is therefore excluded from PHMSA's regulations. lfwe can be of further assistance, please contact Tewabe Asebe at 202-366-5523. Sincerely, Director, Office of Standards and Rulemaking The Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 398 SAN JACINTO BLVD. SUITE 1500 AUSTIN, TEXAS 78701-4078 TEL +1 512.322.2500 FAX +1 512.322.2501 BakerBotts.com AUSTIN BEIJING BRUSSELS DALLAS DUBAI HONG KONG HOUSTON LONDON MOSCOW NEW YORK PALO ALTO RIYADH SAN FRANCISCO WASHINGTON August 29, 2017 Paulina Williams TEL: 5123222543 FAX: 5123223643 paulina.williams@bakerbotts.com DOT/PHMSA/OPS Attn: Information Resource Manager informationresourcesmanager@dot.gov East Building, 2nd Floor PHP-20, E22-321 1200 New Jersey Avenue, SE Washington, DC 20590-0001 Re: SI Group—Baytown Part 195 Interpretation Request Dear Sir/Madam: We are writing on behalf of our client, SI Group–Baytown (“SI Group”), to request a written regulatory interpretation regarding application of an exception from Part 195 applicability. Specifically, SI Group seeks an interpretation from Pipeline and Hazardous Materials Safety Administration (“PHMSA”) of the PHMSA pipeline safety regulation at 49 C.F.R. § 195.1(b)(3)(ii) as it applies to a 4-inch liquid propane pipeline SI Group now operates at a chemical manufacturing plant SI Group recently acquired in Baytown, Texas. This pipeline is less than one-mile long, does not cross any waterways, and it will be operated as a low stress pipeline. The pipeline transports propane from the plant a distance of approximately 1800 feet outside the plant boundary to a customer operated long-distance transportation line. The relevant exception to Part 195 applicability set forth in 49 C.F.R. § 195.1(b) states: This Part does not apply to any of the following: … (3) Transportation of a hazardous liquid through any of the following low-stress pipelines:… (ii) A pipeline that serves refining, manufacturing, or truck, rail, or vessel terminal facilities, if the pipeline is less than one mile long (measured outside facility grounds) and does not cross an offshore area or a waterway currently used for commercial navigation SI Group is requesting PHMSA guidance on whether the pipeline in question “serves” a manufacturing facility within the meaning of the above provision. SI Group has reviewed the rule language and relevant guidance and believes that the outbound propane pipeline “serves” SI Group’s manufacturing plant and, therefore, provided the other conditions of 49 C.F.R. § 195.1(b)(3)(ii) are properly satisfied, the propane pipeline would not be subject to Part 195. Active 36110637.1#

Page 4DOT/PHMSA/OPS - 2 - August 29, 2017 Because the regulation does not contain a definition of what constitutes “serving” a manufacturing facility, however, SI Group is requesting confirmation from PHMSA of the appropriate interpretation in this fact situation. We have attached additional details and explanation in support of this request and relevant preambles and guidance for ease of reference. Please contact me at 512.322.2543 or paulina.williams@bakerbotts.com with any questions regarding this request for written interpretation. We appreciate your time and consideration. Very truly yours, Paulina Williams cc: Charles Gardner, SI Group Gary Crabtree, SI Group Active 36110637.1#

Page 5SI Group - Baytown W. Baker Rd. 4” Propane Pipeline Active 34784590.1 Connection to Energy Transfers’ Pipeline#

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