KINDER MORGAN LIQUID TERMINALS, LLC — Notice of Amendment

party submissionOfficial PDF120105004M_Operator_Response_to_NOA-(with_response_attachments_A-_E)_08272010.pdf#

120105004M_Order Directing Amendment_03042011_text.pdf, page 1Official PDFMAR 04 2011 Mr. David C. Vattimo Regional Vice President for Terminals Kinder Morgan Liquids Terminals, LLC 8500 W. 68th Street Argo, IL 60501 Re: CPF No. 1-2010-5004M Dear Mr. Vattimo: Enclosed please find the Order Directing Amendment issued in the above-referenced case. It makes a finding of inadequate procedures, finds that Kinder Morgan Liquids Terminals, LLC has addressed some of the inadequacies in its procedures that were cited in the Notice of Amendment, and requires that Kinder Morgan Liquids Terminals, LLC make a certain amendment to its operator qualification program. When the amendment of procedure is completed, as determined by the Director, Eastern Region, this enforcement action will be closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Byron E. Coy, Director, Eastern Region, PHMSA CERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0041 3528]#

120105004M_Order Directing Amendment_03042011_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 ) Kinder Morgan Liquids Terminals, LLC, ) CPF No. 1-2010-5004M ) ) ) Respondent. ) ____________________________________) ORDER DIRECTING AMENDMENT On August 18-21, 2008, 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 Kinder Morgan Liquids Terminal, LLC (Kinder Morgan or Respondent)’s Operator Qualification (OQ) records and procedures in Perth Amboy, New Jersey. Kinder Morgan, a subsidiary of Kinder Morgan Energy Partners, L.P., operates more than 180 terminals with approximately 100 million barrels of capacity for petroleum products and chemicals.1 As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated April 7, 2010, a Notice of Amendment (NOA). The NOA alleged inadequacies in Respondent’s operator qualification (OQ) program, and proposed in accordance with 49 C.F.R. § 190.237, that Respondent amend its procedures. Kinder Morgan responded to the Notice by letters dated August 4, 2010, August 27, 2010, and September 29, 2010 (collectively, Response). offered additional information in response to the Notice, and requested additional guidance regarding this alleged inadequacy. Respondent also contested the allegations in Items 2, 3 and 4, but nonetheless provided information concerning the corrective actions it had taken and submitted copies of its revised procedures with respect to Items 2, 3 and 4. Respondent did not request a hearing and therefore has waived its right to one. 2 Respondent contested the allegation in Item 1, The Director has reviewed the amended procedures submitted by Respondent. Based on the result of the review, I find that Respondent’s amendments adequately address Items 2, 3, and 4 in the NOA. For the reasons below, I find that Respondent failed to address all of the inadequacies in Item 1 and that Kinder Morgan must amend its OQ program to address the specified tasks. The Notice alleged that Respondent violated 49 C.F.R. Part 195 as follows: 1 Kinder Morgan, http://www.kindermorgan.com (last visited January 7, 2011). 2 By letter dated August 11, 2010, PHMSA granted Respondent an extension until August 31, 2010 to respond.#

120105004M_Order Directing Amendment_03042011_text.pdf, page 32 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.505(h), which states: § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) …. (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 safe operation of pipeline facilities…. The NOA alleged that Respondent’s procedures were inadequate with respect to 49 C.F.R § 195.505(h) because the training material for some of Kinder Morgan’s covered tasks did not include task-specific abnormal operating conditions (AOCs). Kinder Morgan indicated in its Response that it found it difficult to address this alleged procedural inadequacy because OPS did not identify the specific covered tasks that lacked task- specific AOCs in the training material. Kinder Morgan requested additional guidance regarding this alleged inadequacy. However, Kinder Morgan noted that it was transitioning to a task list based on ASME B31Q (Pipeline Personnel Qualification Standard) in January 2011 that will explicitly state the task-specific AOCs. While there were some questions in the online test that related to AOCs, Respondent was not able to produce training materials that identified task-specific AOCs. Having reviewed the evidence, I find that on account of this inadequacy in the training materials, Kinder Morgan did not have an adequate OQ program at the time of the inspection. Accordingly, pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R § 190.237, Respondent is ordered to make the following revisions to its integrity management program procedures. Respondent must – 1. Modify its Covered Task 102.10 – Atmospheric Corrosion –Surface Preparation Evaluation Reference Manual to include identification of the task-specific AOCs and/or reactions to AOCs. 2. Modify its Covered Task 105.08 – Operations of Pipeline System – Start Pipeline Evaluation Reference Manual – to include identification of the task-specific AOCs and/or reactions to AOCs. 3. Modify its Covered Task 102.5 – Read Rectifier Evaluation Reference Manual – to include identification of the task-specific AOCs. 4. Submit the amended procedures from Items 1 through 3 above to the Director, Eastern Region, Office of Pipeline Safety, Pipeline and Hazardous Materials Safety Administration, 820 Bear Tavern Road, Suite 103, West Trenton, NJ 08628 within 30 days of receipt of this Order Directing Amendment.#

120105004M_Order Directing Amendment_03042011_text.pdf, page 43 5. Kinder Morgan must also provide a copy of the proposed revision to the OQ program procedure noted in Respondent’s August 27, 2010 letter (a task list based on B31Q that explicitly states the task-specific AOCs) within 30 days following receipt of this Order Directing Amendment. With respect to the submission of amended procedures, the Director may notify Respondent if any or all of the procedures have been amended satisfactorily. If further modification is necessary, the Director may require Respondent to modify the submission to cure the deficiencies. If the Director finds deficiencies and orders further modification, Respondent must proceed to take all action to correct its procedures to comply with the Director’s order. Respondent must correct all deficiencies within the time specified by the Director and resubmit the procedures for review. 6. If a resubmitted item is disapproved in whole or in part, the Director may again require Respondent to correct the deficiencies in accordance with the forgoing procedures, or the Director may otherwise proceed to enforce the terms of the 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. Failure to comply with this Order may result in administrative assessment of civil penalties not to exceed $100,000 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. The terms and conditions of this Order Directing Amendment are effective upon service in accordance with 49 C.F.R § 190.5. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

120105004M_Closure Letter_04122011_text.pdf, page 1Official PDFU.S. Department 820 Bear Tavern Road, Suite 103 Of Transportation West Trenton, NJ 08628 Pipeline and 609.989.2171 Hazardous Materials Safety Administration OVERNIGHT EXPRESS MAIL April 12, 2011 Kinder Morgan Liquids Terminals LLC Mr. David Vattimo, Regional Vice President for Terminal 8500 West 68th Street Argo, IL 60501-0409 CPF 1-2010-5004M Dear Mr. Vattimo: On August 18-21, 2008, a representative from the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to chapter 601 of 49 United States Code, inspected Kinder Morgan Liquids Terminals LLC (KM) Operator Qualification (OQ) records and procedures in Perth Amboy, New Jersey. As a result of the inspection, KM was issued a Notice of Amendment on April 7, 2010, which proposed amendment of your procedures. Kinder Morgan submitted its amended procedures on April 8, 2011. My staff reviewed the amended procedures, and it appears that the inadequacies outlined in this Notice of Amendment have been corrected. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Byron Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration#

120105004M_Notice of Amendment_04072010_text.pdf, page 1Official PDFU.S. Department 820 Bear Tavern Road, Suite 306 Of Transportation West Trenton, NJ 08628 Pipeline and 609.989.2171 Hazardous Materials Safety Administration NOTICE OF AMENDMENT EXPRESS OVERNIGHT DELIVERY April 7, 2010 Kinder Morgan Liquids Terminals LLC Mr. David Vattimo, Regional Vice President for Terminals 8500 West 68th Street Argo, IL 60501-0409 CPF 1-2010-5004M Dear Mr. Vattimo: On August 18-21, 2008, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected Kinder Morgan Liquids Terminals LLC (KM) Operator Qualification (OQ) records and procedures in Perth Amboy, New Jersey. On the basis of the inspection, PHMSA has identified the apparent inadequacies found within KM’s OQ Program, as described below: 1. § 195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (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; Training material on task-specific abnormal operating conditions (AOCs) for KM’s covered tasks are not provided for all covered tasks.#

120105004M_Notice of Amendment_04072010_text.pdf, page 2CPF 1-2010-5004M KM uses multiple sources of training material to train operator personnel. This includes new employee orientation, computer based training, O&M Procedures, Performance Evaluation Study Guides, Evaluation Reference Manuals, Skill Checklists, and Knowledge Tests, to train operator personnel. This material was reviewed for selected covered tasks. Some covered tasks had no task specific AOCs identified in the training material, nor did KM have documentation showing that these covered tasks were evaluated for potential task specific AOCs. 2. §195.505 Qualification program §195.505 (b) Each operator shall have and follow a written qualification program. The program shall include provisions to: (b) Ensure through evaluation that individuals performing covered tasks are qualified. The OQ Program does not identify a level of performance criteria for passing written evaluations. While the operator states that 80% is used for passing an evaluation, this is not identified in the OQ Program. 3. §195.505 Qualification program §195.505(g) Each operator shall have and follow a written qualification program. The program shall include provisions to: (g) Identify those covered tasks and the intervals at which evaluation of the individual’s qualifications is needed. The reevaluation intervals identified for the covered tasks noted below, and referenced in the KM OQ Program, are inconsistent with actual practice. • “welding on existing pipeline systems” (KM covered task 104.21) and • “general pipeline repair – Clock Spring” (KM covered task 104.12) KM follows API 1104 and ASME Section 9 for determining the reevaluation interval for welding qualifications, which both require annual requalification. The KM OQ Program specifies a requalification interval of every 3 years for “welding on existing pipeline systems” (KM covered task 104.21). KM follows the Clock Spring manufacturer’s recommended requalification interval of 1 year for personnel performing this task. The KM OQ Plan specifies a requalification interval of every 3 years for “general pipeline repair – Clock Spring” (KM covered task 104.12). 4. §195.505 Qualification program §195.505(g) Each operator shall have and follow a written qualification program. The program shall include provisions to: (g) Identify those covered tasks and the intervals at which evaluation of the individual’s qualifications is needed. 120105004M_Notice of Amendment_04072010 2 of 3#

120105004M_Notice of Amendment_04072010_text.pdf, page 3CPF 1-2010-5004M The OQ Program does not specify the number of times an individual will be allowed to attempt to pass the evaluation process before a qualification is revoked. Response to this Notice This Notice is provided pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R. § 190.237. 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. 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 why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). 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, after opportunity for a hearing, your plans or procedures are found inadequate as alleged in this Notice, you may be ordered to amend your plans or procedures to correct the inadequacies (49 C.F.R. § 190.237). If you are not contesting this Notice, we propose that you submit your amended procedures to my office within 60 days of receipt of this Notice. This period may be extended by written request for good cause. Once the inadequacies identified herein have been addressed in your amended procedures, this enforcement action will be closed. In correspondence concerning this matter, please refer to CPF 1-2010-5004M and, for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Byron Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Enclosure: Response Options for Pipeline Operators in Compliance Proceedings 120105004M_Notice of Amendment_04072010 3 of 3#