ALGONQUIN GAS TRANSMISSION, L.L.C. (SPECTRA ENERGY PARTNERS, LP) — Notice of Probable Violation

party submissionOfficial PDF120161002_Operator Response to Notice_02112016.pdf#

120161002_NOPV PCP PCO_01122016_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER OVERNIGHT EXPRESS DELIVERY January 12, 2016 J. Andrew Drake Vice President, Operations & EHS Algonquin Gas Transmission Co. (Spectra Energy Corp.) 5400 Westheimer Court Houston, TX 77056 CPF 1-2016-1002 Dear Mr. Drake: From October 16-28, 2015, an inspector from the Connecticut Department of Energy and Environmental Protection (CT DEEP) acting as Agent for the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code, inspected the Algonquin Gas Transmission Company’s (AGT) main construction work along the pipeline right-of-way west of Milestone Road in Danbury, Connecticut. On the basis of the inspection, it appears that you have committed a probable violation of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. PHMSA has identified the apparent inadequacies found within AGT’s plans or procedures, as described below: 1. §192.227 Qualification of welders and welding operators. (a) Except as provided in paragraph (b) of this section, each welder or welding operator must be qualified in accordance with section 6, section 12, or Appendix A of API Std 1104 (incorporated by reference, see §192.7), or section IX of ASME Boiler and Pressure Vessel Code (BPVC) (incorporated by reference, see §192.7). However, a welder or welding operator qualified under an earlier edition than the edition listed in §192.7 may weld but may not re-qualify under that earlier edition.#

120161002_NOPV PCP PCO_01122016_text.pdf, page 21-2016-1002 AGT failed to qualify welders on a section of the project (42 inch 0.938 inch wall pipe that was being welded using a mechanical welding process) in accordance with section 6, section 12, or Appendix A of API Standard 1104 (incorporated by reference, see §192.7), or section IX of ASME Boiler and Pressure Vessel Code (BPVC) (incorporated by reference, see §192.7). API 1104, section 12 (Mechanized Welding with Filler Metal Additions) applies to a welding process being used on the project. Section 12.6 states: “Each welding operator shall be qualified by producing an acceptable weld using the qualified welding procedure.” During the inspection on October 22, the CT DEEP inspector observed welders completing welds using procedure AIM-BMX-423.0 on pipe with a wall thickness of 0.938 inches. The welder qualification paperwork provided to support the welding was for a different welding procedure, AIM-BMX-422.0, which is for 0.720 inch wall pipe. The welders had not been qualified to weld using procedure AIM-BMX-423.0. AGT representatives stated that: 1. As of October 22, 2015, a total of 10 welds had been completed, and 4 more were in progress using welding procedure AIM-BMX-423.0. As of October 28, 2015, all 14 welds made using welding procedure AIM-BMX-423.0 had been cut out and discarded. As of October 28, 2015, the welders have been qualified to use welding procedure AIM- BMX-423.0. Evidence is based on personal observations and photographs taken by the CT DEEP inspector, and statements made by operator representatives. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000 per violation per day the violation persists, up to a maximum of $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. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation(s), and has recommended that you be preliminarily assessed a civil penalty of $26,200 as follows: 2. 3. Item number PENALTY 1 $26,200 Proposed Compliance Order 120161002_NOPV_PCP_PCO_01122016 Page 2 of 4#

120161002_NOPV PCP PCO_01122016_text.pdf, page 31-2016-1002 With respect to item 1 pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to AGT. 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 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). Not responding within 30 days of receipt of this Notice 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. Please submit all correspondence in this matter to Byron Coy, PE, Director, PHMSA Eastern Region, 820 Bear Tavern Road, Suite 103, W. Trenton, NJ 08628. Please refer to CPF 1-2016- 1002 on each document you submit, and please, whenever possible, provide a signed PDF copy in electronic format. Smaller files may be e-mailed to Byron.Coy@dot.gov. Larger files should be sent on a CD accompanied by the original paper copy to the Eastern Region Office. Additionally, if you choose to respond to this (or any other) case, please ensure that any response letter pertains solely to one CPF case number. Sincerely, Byron Coy, PE Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Cc: Karl Baker CT DEEP Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 120161002_NOPV_PCP_PCO_01122016 Page 3 of 4#

120161002_NOPV PCP PCO_01122016_text.pdf, page 41-2016-1002 PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Algonquin Gas Transmission Company (AGT) (Spectra Energy Corp) (Spectra) a Compliance Order incorporating the following remedial requirements to ensure the compliance of AGT with the pipeline safety regulations: 1. 2. 3. In regard to Item Number 1 of the Notice pertaining to AGT’s failure to qualify welders in the AIM-BMX-423.0 welding procedure for the welding being done in Connecticut, AGT must provide evidence that the welders have been qualified for the AIM-BMX-423.0 welding procedure, and that the 14 welds started or completed before October 28, 2015, using welding procedure AIM-BMX-423.0 have been cut out and discarded. AGT shall submit documentation for the welder qualification and 14 welds referenced in item 1 to the PHMSA Eastern Region within 30 days receipt of the Final Order. It is requested (not mandated) that AGT maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Byron Coy, PE, Director, Eastern 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. 120161002_NOPV_PCP_PCO_01122016 Page 4 of 4#

120161002_Final Order_04292016_text.pdf, page 1Official PDFApril 29, 2016 Mr. George L. Ebel Chairman, President, and Chief Executive Officer Algonquin Gas Transmission, LLC Spectra Energy Partners, LP 5400 Westheimer Court Houston, Texas 77056 Re: CPF No. 1-2016-1002 Dear Mr. Ebel: Enclosed please find the Final Order issued in the above-referenced case. It makes one finding of violation and assesses a civil penalty of $26,200. It further finds that Algonquin Gas Transmission, LLC, a wholly-owned subsidiary of Spectra Energy Partners, LP, has completed the actions specified in the Notice to comply with the pipeline safety regulations. When the civil penalty has been paid, 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 Coy, P.E., Director, Eastern Region, OPS Mr. Rick Kivela, Director, Operational Compliance, Spectra Energy Partners, LP, 5400 Westheimer Court, Houston, TX 77056 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

120161002_Final Order_04292016_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 ) Algonquin Gas Transmission, LLC ) CPF No. 1-2016-1002 a subsidiary of Spectra Energy Partners, LP, ) Respondent. ) ) ) ) ) FINAL ORDER From October 16-28, 2015, pursuant to 49 U.S.C. § 60117, an inspector from the Connecticut Department of Energy and Environmental Protection (CT DEEP), acting as an agent for 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 Algonquin Gas Transmission, LLC’s (AGT or Respondent) main construction work along the pipeline right- of-way west of Milestone Road in Danbury, Connecticut. AGT, which is owned and operated by Spectra Energy Partners, LP, transports 2.74 billion cubic feet per day of natural gas through 1,129 miles of pipeline, located primarily in New England.1 As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by letter dated January 12, 2016, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that AGT had violated 49 C.F.R. § 192.227 and proposed assessing a civil penalty of $26,200 for the alleged violation. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violation. AGT responded to the Notice by letter dated February 11, 2016 (Response). Respondent did not contest the allegations of violation but provided an explanation of its actions and requested that the proposed civil penalty be reduced. Respondent did not request a hearing and therefore has waived its right to one. FINDING OF VIOLATION In its Response, AGT did not contest the allegation in the Notice that it violated 49 C.F.R. Part 192, as follows: 1 Pipeline Safety Violation Report (Violation Report), (January 12, 2016) (on file with PHMSA), at 1.#

120161002_Final Order_04292016_text.pdf, page 3CPF No. 1-2016-1002 2 Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.227(a), which states: § 192.227 Qualification of welders. (a) Except as provided in paragraph (b) of this section, each welder must be qualified in accordance with section 6, section 12, or Appendix A of API Std 1104 (incorporated by reference, see § 192.7) or section IX of the ASME Boiler and Pressure Vessel Code (incorporated by reference, see § 192.7). However, a welder or welding operator qualified under an earlier edition than the edition listed in § 192.7 may weld but may not re-qualify under that earlier edition. The Notice alleged that Respondent violated 49 C.F.R. § 192.227(a) by failing to qualify welders on a section of the main construction project in accordance with section 6, section 12, or Appendix A of API Std 1104 (incorporated by reference, see § 192.7), or section IX of the ASME Boiler and Pressure Vessel Code (incorporated by reference, see § 192.7).2 Section 12 of API Std 1104, Mechanized Welding with Filler Metal Additions, applies to the welding process used on AGT’s project. In particular, section 12.6 states: “Each welding operator shall be qualified by producing an acceptable weld using the qualified welding procedure.” Specifically, the Notice alleged that during the inspection, the CT DEEP inspector observed welders completing welds using procedure AIM-BMX-423.0 on pipe with a wall thickness of 0.938 inches. However, the welder qualification paperwork provided to the inspector to support the welding was for AIM-BMX-422.0, which is for a 0.720-inch wall pipe. As such, the inspector noted that the welders were qualified for a different welding procedure, and had not been qualified to weld using AIM-BMX-423.0, the qualified welding procedure. Respondent did not contest this allegation of violation. In fact, AGT acknowledged that it failed to qualify welders on a 42-inch diameter, 0.938-inch wall pipe section in accordance with section 12 of API Std 1104. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.227(a) by failing to qualify welders on a section of the 42- inch diameter, 0.938-inch wall pipe project that was welded using a mechanical welding process, in accordance with section 12 of API Std 1104. This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. 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. 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; and any effect ASSESSMENT OF PENALTY 2 This section of the project was composed of a 42-inch diameter, 0.938-inch wall pipe that was welded using a mechanical welding process.#

120161002_Final Order_04292016_text.pdf, page 4CPF No. 1-2016-1002 3 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 $26,200 for the violation cited above. Item 1: The Notice proposed a civil penalty of $26,200 for Respondent’s violation of 49 C.F.R. § 192.227(a), for failing to qualify welders on a section of AGT’s construction project; specifically, a 42-inch diameter, 0.938-inch wall pipe that was welded using a mechanical welding process, in accordance with section 12 of API Std 1104. Although AGT did not contest the alleged violation, it did request that PHMSA eliminate the civil penalty, as well as reduce the probable violation to a warning item. In its Response, AGT stated that, upon discovery and in anticipation of potential concerns from PHMSA, AGT proactively cut out and discarded 14 welds on the 42-inch diameter, 0.938-inch wall pipe made without welder qualifications in accordance with welding procedure AIM-BMX- 423.0. AGT provided documentation indicating the removal of these welds. In addition, AGT reportedly qualified its welders to use welding procedure AIM-BMX-423.0. AGT argued that because the 14 welds were proactively cut out and discarded before being placed into service, the welds did not compromise pipeline safety. Furthermore, AGT stated that the total costs associated with the preparation and revision of the procedure, as well as the replacement of the 14 welds, was $130,000. As such, AGT argues that it received no economic benefit from its actions. I acknowledge that AGT willingly took immediate corrective actions following the discovery of the violation. However, these actions do not negate AGT’s failure to comply with § 197.227(a), a requirement that was clearly applicable. In addition, AGT did not make a reasonable interpretation of § 197.227(a) when it did not properly qualify its welders. Finally, the CT DEEP inspector, not AGT, discovered the violation. As such, it is reasonable to conclude that AGT would have continued to be in violation of § 197.227(a) had the inspector not made the discovery. In summary, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $26,200 for violation of 49 C.F.R. § 192.227(a) for the Item cited above. Furthermore, given the assessment of the civil penalty, the violation is not reduced to a warning item. 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, 6500 S MacArthur Blvd., Oklahoma City, Oklahoma 79169. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the $26,200 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#

120161002_Final Order_04292016_text.pdf, page 5CPF No. 1-2016-1002 4 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 Item 1 in the Notice for violation of 49 C.F.R. § 192.227(a). 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. The Director indicates that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to the violation of § 197.227(a) (Item 1), Respondent has qualified welders in the AIM-BMX-423.0 welding procedure for the welding completed in Connecticut. Additionally, the 14 welds started on or completed before October 28, 2015, using welding procedure AIM-BMX-423.0, have been cut out and discarded. 2. Respondent has submitted documentation for the welder qualification and the 14 welds referenced in Item 1 to PHMSA Eastern Region. 3. Respondent has maintained the requested documentation reflecting the safety improvement costs associated with the fulfilment of this Compliance Order, and provided said documentation to the Director, Eastern Region, PHMSA. Accordingly, I find that compliance has been achieved with respect to this violation. Therefore, the compliance terms proposed in the Notice are not included in this Order. Under 49 C.F.R. § 190.243, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be sent to: 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. PHMSA will accept petitions received no later than 20 days after receipt of service of this Final Order by the Respondent, provided they contain a brief 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. Unless the Associate Administrator, upon request, grants a stay, all other terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. ________________________________ _________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

120161002_Final Order_04292016_text.pdf, page 6Payment Instructions Civil Penalty Payments of Less Than $10,000 Payment of a civil penalty of less than $10,000 proposed or assessed, under Subpart B of Part 190 of the Pipeline Safety Regulations can be made by certified check, money order or wire transfer. Payment by certified check or money order (containing the CPF Number for this case) should be made payable to the "Department of Transportation" and should be sent to: Federal Aviation Administration Financial Operations Division (AMK-325) ATTN: Shelby Jones 6500 S MacArthur Blvd., Oklahoma City, OK 79169 Wire transfer payments of less than $10,000 may be made through the Federal Reserve Communications System (Fedwire) to the account of the U.S. Treasury. Detailed instructions are provided below. Questions concerning wire transfer should be directed to the Financial Operations Division at (405) 954-8845, or at the above address. Civil Penalty Payments of $10,000 or more Payment of a civil penalty of $10,000 or more proposed or assessed under Subpart B of Part 190 of the Pipeline Safety Regulations must be made wire transfer (49 C.F.R. § 89.21 (b)(3)), through the Federal Reserve Communications System (Fedwire) to the account of the U.S. Treasury. Detailed instructions are provided below. Questions concerning wire transfers should be directed to the Financial Operations Division at (405) 954-8845, or at the above address.#

120161002_Final Order_04292016_text.pdf, page 7INSTRUCTIONS FOR ELECTRONIC FUND TRANSFERS (1) RECEIVER ABA NO. 021030004 (2) TYPE/SUB-TYPE (Provided by sending bank) (3) SENDING BANK ABA NO. (Provided by sending bank) (4) SENDING BANK REF NO. (Provided by sending bank) (5) AMOUNT (6) SENDING BANK NAME (Provided by sending bank) (7) RECEIVER NAME TREAS NYC (8) PRODUCT CODE (Normally CTR, or as provided by sending bank) (9) BENEFICIAL (BNF) = AGENCY LOCATION CODE BNF = /ALC-69-14-0001 (10) REASONS FOR PAYMENT Example: PHMSA - CPF # / Ticket Number/Pipeline Assessment number INSTRUCTIONS: You, as sender of the wire transfer, must provide the sending bank with the information for blocks (1), (5), (7), (9), and (10). The information provided in Blocks (1), (7), and (9) are constant and remain the same for all wire transfers to the Pipeline and Hazardous Materials Safety Administration, Department of Transportation. Block #1 - RECEIVER ABA NO. - "021030004". Ensure the sending bank enters this 9-digit identification number; it represents the routing symbol for the U.S. Treasury at the Federal Reserve Bank in New York. Block #5 - AMOUNT - You as the sender provide the amount of the transfer. Please be sure the transfer amount is punctuated with commas and a decimal point. EXAMPLE: $10,000.00 Block #7 - RECEIVER NAME - "TREAS NYC". Ensure the sending bank enters this abbreviation. It must be used for all wire transfers to the Treasury Department. Block #9 - BENEFICIAL - AGENCY LOCATION CODE - "BNF=/ALC-69-14-0001". Ensure the sending bank enters this information. This is the Agency Location Code for the Pipeline and Hazardous Materials Safety Administration, Department of Transportation. Block #10 - REASON FOR PAYMENT - “AC-payment for PHMSA Case # / To ensure your wire transfer is credited properly, enter the case number/ticket number or Pipeline Assessment number, and country.” NOTE: A wire transfer must comply with the format and instructions or the Department cannot accept the wire transfer. You as the sender can assist this process by notifying the Financial Operations Division (405) 954-8845 at the time you send the wire transfer.#