E6-2349. Authorizing Valero Logistics Operations L.P. to Construct, Connect, Operate, and Maintain a Pipeline Crossing the International Boundary Between the United States and Mexico

By virtue of the authority vested in me as Under Secretary of State for Economic, Business, and Agricultural Affairs under Executive Order 13337, 69 FR 25299 (2004), and Department of State Delegation of Authority No. 118-2 of January 26, 2006; having considered the environmental effects of the proposed action in accordance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f) and other statutes related to environmental concerns; having considered the proposed action in accordance with Section 470f of the National Historic Preservation Act (16 U.S.C. 470-470a-2); and having requested and received views of various Federal and State agencies and other interested persons; I hereby grant permission, subject to the conditions herein set forth, to Valero Logistics Operations L.P., a corporation formed under the laws of the state of Delaware, with its principal place of business in San Antonio Texas (hereinafter “the permittee” or “Valero”), to construct, connect, operate and maintain a pipeline crossing the international boundary in the vicinity of Hidalgo, Texas. The pipeline will be used to transport light naphtha (“naphtha”) across the border from Mexico to the Valero Terminal in Hidalgo County, Texas, crossing the Rio Grande River. The proposed pipeline would connect the Valero terminal in Edinburg, Texas, with the Petroleos Mexicanos (PEMEX) Burgos gas plant near Reynoso in the state of Tamaulipas, Mexico.

The term “facilities” as used in this permit means the pipeline and any land, structures, installations or equipment appurtenant thereto.

The term “United States facilities” as used in this permit means those parts of the facilities located in the United States.

As stated in permittee's application of June 22, 2005 for a permit pursuant to Executive Order 13337, the United States facilities of the pipeline project will consist of the following major components:

• The U.S. portion of the project consists of approximately 34 miles of new pipeline from a location on the Rio Grande southeast of Penitas, to the Valero terminal approximately 6 miles north of downtown Edinburg.
• An above-ground metering station for tariff purposes that will be located 1.2 miles north of the Rio Grande crossing.
• At the Valero Edinburg Terminal, naphtha would be stored in a new dedicated 80,000 barrel naphtha storage tank. Naphtha would be pumped from this tank through a new pipeline currently being built by Valero to link its Edinburg and Harlingen terminals, and to link its Harlingen terminal with the Port of Brownsville.

This permit is subject to the following conditions:

Article 1. The United States facilities and operations herein described shall be subject to all the conditions, provisions, and requirements of this permit and any amendment thereof; further that this permit may be terminated at the will of the Secretary of State of the United States or the Secretary's delegate or may be amended by the Secretary of State of the United States or the Secretary's delegate at will or upon proper application therefore; further that the permittee shall make no substantial change in the location of the United States facilities in the immediate vicinity of the international boundary line or in the operation authorized by this permit until such changes have been approved by the Secretary of State of the United States or the Secretary's delegate.

Article 2. The operation and maintenance of the facilities shall be in all material respects as described in permittee's application for a Presidential permit under Executive Order 13337 filed on June 22, 2005 (the “Application”), as amended by any comments received from federal and state agencies, the response to those comments, the Final Environmental Assessment and the Finding of No Significant Impact (FONSI) to be published in the Federal Register.

Article 3. The standards for, and the manner of, construction, connection, operation, and maintenance of the United States facilities shall be subject to inspection and approval by the representatives of any Federal or State agency concerned. The permittee shall allow duly authorized officers and employees of such agencies free and unrestricted access to said facilities in the performance of their official duties.

Article 4. The permittee shall comply with all applicable Federal and State laws and regulations regarding the construction, connection, operation, and maintenance of the United States facilities and with all applicable industrial codes. The permittee shall obtain requisite permits from Mexican authorities, as well as the relevant state and local governmental entities, and relevant federal agencies.

Article 5. Upon the termination, revocation, or surrender of this permit, and unless otherwise agreed by the Secretary of State or the Secretary's delegate, the United States facilities in the immediate vicinity of the international boundary line shall be removed by, and at the expense of, the permittee within such time as the Secretary of State of the United States or the Secretary's delegate may specify, and upon failure of the permittee to remove, or to take such other appropriate action with respect to, this portion of the United States facilities as ordered, the Secretary of State or the Secretary's delegate may direct that possession of such facilities be taken and that they be removed or other appropriate action taken, at the expense of the permittee; and the permittee shall have no claim for damages by reason of such possession, removal, or other action.

Article 6. If, in the future, it should appear to the Secretaries of the Army or Homeland Security (or either Secretary's delegate) or the United States Coast Guard that any facilities or operations permitted hereunder cause unreasonable obstructions to the free navigation of any of the navigable waters of the United States, the permittee may be required, upon notice from the Secretary of the Army or the Secretary of Homeland Security (or either Secretary's Delegate) or the United States Coast Guard, to remove or alter such of the facilities as are owned by it so as to render navigation through such waters free and unobstructed.

Article 7. This permit is subject to the limitations, terms, and conditions contained in any orders or regulations issued by any competent agency of the United States Government with respect to the United States facilities. This permit shall continue in force and effect only so long as the permittee shall continue the operations hereby authorized in accordance with such limitations, terms, and conditions.

Article 8. When, in the opinion of the President of the United States, the national security of the United States demands it, due notice being given to the permittee by the Secretary of State of the United States or the Secretary's delegate, the United States shall have the right to enter upon and take possession of any of the United States facilities or parts thereof; to retain possession, management, and control thereof for such length of time as may appear to the President to be necessary to accomplish said purposes; and thereafter to restore possession and control to the permittee. In the event that the United States shall exercise such right, it shall pay to the permittee just and fair compensation for the use of such United States facilities upon the basis of a reasonable profit in normal conditions, and the cost of restoring said facilities to as good conditions as existed at the time of entering and taking over the same, less the reasonable value of any improvements that may have been made by the United States.

Article 9. In the event of transfer of ownership or control of the United States facilities or any part thereof, this permit shall continue in effect temporarily for a reasonable time pending submission of a proper application by the transferee for a new and permanent permit, provided that notice of such transfer is given promptly in writing to the Department of State accompanied by a statement by the transferee under oath that the United States facilities and the operation and maintenance thereof authorized by this permit will remain substantially the same as before the transfer pending issuance to the transferee of a new and permanent permit.

Article 10. (1) The permittee shall maintain the United States facilities and every part thereof in a condition of good repair for their safe operation.

(2) The permittee shall save harmless and indemnify the United States from any and all claims or adjudged liability arising out of the construction, connection, operation, or maintenance of the facilities, including but not limited to environmental contamination from the release or threatened release or discharge of hazardous substances and hazardous waste.

Article 11. The permittee shall acquire such right-of-way grants, easements, permits, and other authorizations as may become necessary and appropriate, including those required by the International Boundary and Water Commission.

Article 12. The permittee shall file with the appropriate agencies of the Government of the United States such statements or reports under oath with respect to the United States facilities, and/or permittee's activities and operations in connection therewith, as are now or as may hereafter be required under any laws or regulations of the Government of the United States or its agencies.

Article 13. The permittee shall take all appropriate measures to prevent or mitigate adverse environmental impacts or disruption of significant archeological resources in connection with the construction, operation and maintenance of the United States facilities, including those proposed to be performed by it in the Final Environmental Assessment dated September 2004 and the FONSI dated September 22, 2004. Construction of the facilities shall be performed in conformity with the proposed outline of work contained in the Application and the Final Environmental Assessment.

Article 14. The permittee shall notify the Department of State if before or during construction historic or archeological properties are located and, to the extent construction has already started, will cease construction immediately. The permittee acknowledges that historic and archeological properties are protected under 49 U.S.C. Section 303 (formerly Section 4(f)), and the permittee shall prepare a Section 4(f) statement if the United States facilities will have an effect on any historic or archeological properties.

Article 15. The permittee shall comply with all agreed actions and obligations undertaken to be performed in its Application for a Presidential permit dated June 22, 2005, in the Final Environmental Assessment and in the FONSI issued by the Department of State and to be published in the Federal Register. The Final Environmental Assessment includes the Draft Environmental Assessment, dated May, 2005, all comments submitted by federal and state agencies on that document, the responses to those comments and all correspondence between agencies and the permittee addressing agency concerns.

Article 16. The permittee shall not begin construction until it has obtained authorization for such construction from the Governments of the United States and Mexico through the exchange of diplomatic notes. The permittee shall provide written notice to the Department of State at such time as the construction authorized by this permit is begun and again at such time as construction is completed, interrupted or discontinued.

Article 17. This permit shall issue fifteen days after the date of the determination by the Under Secretary of Economic, Business and Agricultural Affairs that issuance of this permit would serve the national interest, provided that the Department of State does not otherwise notify the permittee that the permit shall not issue.

IN WITNESS WHEREOF, I, Josette Shiner, Under Secretary of State for Economic, Business, and Agricultural Affairs, have hereunto set my hand this 7th day of February, 2006 in Washington, DC.

Josette Shiner,

Under Secretary of State for Economic, Business, and Agricultural Affairs, Department of State.