TENNESSEE GAS PIPELINE COMPANY — Notice of Probable Violation

party submissionOfficial PDF120161011_Operator Response to Notice and Request for Hearing_12092016.pdf#

120161011_NOPV PCP PCO_11102016_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER OVERNIGHT EXPRESS DELIVERY November 10, 2016 Mr. Gary Buchler Chief Operating Officer, Natural Gas Pipelines Tennessee Gas Pipeline Company 1001 Louisiana Street, Suite 1000 Houston, TX 77002-5089 CPF 1-2016-1011 Dear Mr. Buchler: On September 1-4, 2015, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code, inspected Tennessee Gas Pipeline Company’s (TGP) (a subsidiary of Kinder Morgan Liquid Terminals, LLC) Compressor Station 323A in Hawley, Pennsylvania. 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. §192.605 Procedural Manual for Operations, Maintenance and Emergencies (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for emergency response. . . . (b) Maintenance and normal operations. The manual required by paragraph (a) of this section must include procedures for the following, if applicable, to provide safety during maintenance and operations.#

120161011_NOPV PCP PCO_11102016_text.pdf, page 21-2016-1011 (1) . . . (2) Controlling corrosion in accordance with the operations and maintenance requirements of Subpart I of this part. TGP’s procedure for monitoring atmospheric corrosion failed to provide specific guidance on giving particular attention to pipe under thermal insulation in accordance with §192.481(b). During the inspection on September 3, 2015, the PHMSA inspector reviewed Kinder Morgan O&M Procedure 918, Inspecting for Atmospheric Corrosion, revised 2013-06-01. Section 3.2, Atmospheric Corrosion Monitoring and Inspection Frequency, states in part that: “ . . . During inspection, give particular attention to the following components:  . . .  Pipe under thermal or noise abatement insulation  . . . Pipe that is not visually accessible (e.g. pipe under insulation, under clamps or supports, piping through walls or floors, etc.) and where evidence of atmospheric corrosion would not be apparent if present must be inspected visually by removing clamps, supporting the pipe while the pipe supports are removed, etc. [Numbering added] [1] In these cases a program may be developed where pipe is visually inspected in selected critical areas or using predetermined inspection locations (i.e. inspection ports) until a minimal risk level is determined. These programs must be reviewed and approved by the appropriate Division Corrosion Supervisor. [2] Alternately, jacketing or other obstructions may be removed and the total system visually inspected. [3] In lieu of visual inspection, an NDE method approved by the Manager, Corrosion Control that would detect the presence of atmospheric corrosion may be used. . . ” The procedure failed to provide: a. Details such as: i. ii. iii. Criteria for selecting the option. Individual(s) responsible for selecting the method. Documentation of the selected method. Details for determining probable areas of corrosion on pipe beneath the insulation, such as damaged insulation, low points on vertical runs, areas where pipe supports penetrate the insulation jacketing, or areas with caulking deterioration. c. Requirements for documenting atmospheric corrosion inspections on insulated piping. Proposed Civil Penalty 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 b. 120161011_NOPV PCP PCO_11102016 Page 2 of 4#

120161011_NOPV PCP PCO_11102016_text.pdf, page 31-2016-1011 violations. For violations 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 related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation, and has recommended that you be preliminarily assessed a civil penalty of $34,500 as follows: Item number PENALTY 1 $34,500 Proposed Compliance Order 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 TGP. 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). Failure to respond 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. In your correspondence on this matter, please refer to CPF 1-2016-1011 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 Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 120161011_NOPV PCP PCO_11102016 Page 3 of 4#

120161011_NOPV PCP PCO_11102016_text.pdf, page 41-2016-1011 PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Tennessee Gas Pipeline Company (TGP) a Compliance Order incorporating the following remedial requirements to ensure TGP’s compliance with the pipeline safety regulations: 1. 2. 3. 4. With regard to Item Number 1 of the Notice pertaining to TGP’s failure to provide specific guidance on how to give particular attention to pipe under thermal insulation in accordance with §192.481(b), TGP must update its procedures to provide guidance for performing atmospheric corrosion inspections on pipelines under thermal insulation. The procedures shall be revised within 60 days of receipt of the Final Order. TGP shall inspect the piping at pipe supports in the unit 75223 Coudersport District / Wellsboro-North Scranton – PA)(see map) in accordance with the revised procedures, within 12 months of issuance of the Final Order. All documentation demonstrating compliance with each of the items outlined in this proposed compliance order must be submitted to Byron Coy, PE, Director, Eastern Region, Pipeline and Hazardous Materials Safety Administration, Suite 103, Bear Tavern Road, West Trenton, NJ, within the time frames stated for each item. It is requested (not mandated) that TGP 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. 120161011_NOPV PCP PCO_11102016 Page 4 of 4#

120161011_Final Order_11292018_text.pdf, page 1Official PDFNovember 29, 2018 Mr. Gary Buchler Chief Operating Officer, Natural Gas Pipelines Tennessee Gas Pipeline Company 1001 Louisiana Street, Suite 1000 Houston, TX 77002 Re: CPF No. 1-2016-1011; 1-2016-1012 Dear Mr. Buchler: Enclosed please find the Final Order issued in the above-referenced cases. It withdraws the allegations of violation for both Notices, the associated civil penalties, and compliance orders. These cases are now closed. Service of the Final Order by certified mail is effective upon the date of mailing as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Mr. Robert Burrough, Director, Eastern Region, Office of Pipeline Safety, PHMSA Ms. Jessica Toll, Esq., Assistant General Counsel, Kinder Morgan, 370 Van Gordon Street, Lakewood, CO 80228 Ms. Catherine D. Little, Esq., Bank of America Plaza, Suite 4100, 600 Peachtree Street, N.E., Atlanta, GA 30308 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

120161011_Final Order_11292018_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 ) Tennessee Gas Pipeline Company, ) CPF No. 1-2016-1011; 1-2016-1012 ) ) ) Respondent. ) ____________________________________) FINAL ORDER From August - October 2015, 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 the facilities and records of Tennessee Gas Pipeline Company (Tennessee Gas or Respondent). Tennessee Gas operates approximately 13,900 miles of pipeline from the Gulf coast in Texas and Louisiana through Arkansas, Mississippi, Alabama, Tennessee, Kentucky, Ohio, and Pennsylvania. As a result of the inspection, the Director, Eastern Region, OPS (Director), issued to Respondent, by letters dated November 10, 2016, and November 21, 2016, two Notices of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notices). In accordance with 49 C.F.R. § 190.207, each Notice proposed finding that Tennessee Gas violated 49 C.F.R. §192.605 and proposed assessing a civil penalty of $34,500 for the alleged violation. The Notices also proposed ordering Respondent to take certain measures to correct the alleged violations. Tennessee Gas responded to the Notice by letter dated December 9, 2016 (Response). The company contested the allegations and requested a hearing. A hearing was subsequently held on April 26, 2017, in West Trenton, New Jersey. At the hearing, Respondent was represented by counsel. WITHDRAWAL OF ALLEGATION- 1-2016-1011 At the hearing, Tennessee Gas contested the allegation in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.605, which states: § 192.605 Procedural manual for operations, maintenance, and emergencies.#

120161011_Final Order_11292018_text.pdf, page 3CPF No. 1-2016-1011; 1-2016-1012 Page 2 (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for emergency response. . . (b) Maintenance and normal operations. The manual required by paragraph (a) of this section must include procedures for the following, if applicable, to provide safety during maintenance and operations. (1) Operating, maintaining, and repairing the pipeline in accordance with each of the requirements of this subpart and subpart M of this part. (2) Controlling corrosion in accordance with the operations and maintenance requirements of subpart I of this part. § 192.481 Atmospheric corrosion control: General. (a) Each operator must inspect each pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion, as follows…. (b) During inspections the operator must give particular attention to pipe at soil-to-air interfaces, under thermal insulation, under disbanded coatings, at pipe supports, in splash zones, at deck penetrations, and in spans over water. (c) If atmospheric corrosion is found during an inspection, the operator must provide protection against the corrosion as required by §192.479. The Notice alleged that Respondent violated 49 C.F.R. § 192.605 by failing to prepare and follow for each pipeline, a manual of written procedures for operating, maintaining, and repairing the pipeline to control corrosion in accordance with the requirements of § 192.481(b). Specifically, the Notice alleged that the Tennessee Gas procedure for monitoring atmospheric corrosion, O&M Procedure 918, failed to provide specific guidance on how to give particular attention to pipe under thermal insulation. OPS argued that the Respondent’s procedure failed to give sufficient detail such that a corrosion technician could adequately detect the presence of atmospheric corrosion during an inspection. In the Notice, OPS stated that the procedure “failed to provide . . . details such as … i. Criteria for selecting the option. ii. Individual(s) responsible for selecting the method. iii. Documentation of the selected method…..”1 Tennessee Gas strongly objected to OPS’ decision to issue an NOPV based on the circumstances presented by this case. The Respondent referred to OPS’ Part 192 Corrosion Enforcement Guidance. Tennessee Gas argued that, while not legally enforceable, PHMSA guidance does not support either (1) the use of a Notice of Probable Violation to address the level of detail in existing procedures; or (2) enforcement actions that allege two offenses for a single violation that is based on the same evidence.2 Additionally, Tennessee Gas refuted OPS’ allegation that its 1 Notice of Probable Violation 1-2016-1011 (Notice), (November 10, 2016) (on file with PHMSA), at 1. 2 “Based on PHMSA procedural Part 190 rules, internal Agency enforcement procedures, and prior Agency enforcement, PHMSA should have issued a single NOA in this instance.” Tennessee Gas Post- Hearing Brief, at 7.#

120161011_Final Order_11292018_text.pdf, page 4CPF No. 1-2016-1011; 1-2016-1012 Page 3 procedure failed to provide sufficient detail for a corrosion technician to perform an inspection. Respondent argued that O&M Procedure 918 allows for a corrosion technician to elect between visually inspecting pipes by removing insulation or clamps or developing a program whereby visual inspections occur in select critical areas or predetermined inspection locations (emphasis added). The Respondent argued that this flexibility is allowed by the regulation, and comports with the requirement that its O&M Manual include procedures that mandate particular attention be paid to pipe under thermal insulation. In its post-hearing brief, Tennessee Gas ascribed particular significance to the fact that the Notice only alleged a deficiency in its procedures, and not the actual inspections conducted pursuant to those procedures. At the hearing, OPS conceded this point, and stated that it was not alleging that Tennessee Gas either failed to conduct the required corrosion control inspections or that corrosion was found during inspections conducted pursuant to the allegedly deficient procedures. Therefore, the only question required for decision is whether Tennessee Gas’ actual procedure is so lacking in detail as to violate § 192.605 or § 192.481. In reading the plain language of these regulations, I find that TGP’s procedure comports with these regulations. Tennessee Gas’ procedure states “during the inspection, give particular attention to the following components. . . pipe under thermal or noise abatement insulation…pipe that is not visually accessible.” The procedure further explicates how to inspect pipes that are not visually accessible. From a plain reading of the regulation, O&M Procedure 918 meets the threshold set by the regulation. At the hearing, OPS conceded that it cannot require the operator to have any particular language in its procedural manual – that is left to the discretion of the operator, within the confines of the regulatory language. There is no language in this regulation that requires the operator to provide the level of detail in its procedures cited in this Notice. Accordingly, based upon a review of the evidence, I find that Respondent did not violate 49 C.F.R. § 192.605, as alleged in the Notice, and therefore withdraw Item 1. WITHDRAWAL OF ALLEGATION- 1-2016-1012 At the hearing, Tennessee Gas contested the allegation in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 192.605, which states: § 192.605 Procedural manual for operations, maintenance, and emergencies. (a) General. Each operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities and for emergency response. . . PHMSA Pipeline Safety Enforcement Procedures Section 4, p. 25, 27 (Mar. 23, 2016) (inspectors should “use caution before citing the same code or subsection for more than one Item in a NOPV letter because if the items are based on the same evidence, it may result in a single violation being inappropriately alleged as multiple violations”)#

120161011_Final Order_11292018_text.pdf, page 5CPF No. 1-2016-1011; 1-2016-1012 Page 4 (b) Maintenance and normal operations. The manual required by paragraph (a) of this section must include procedures for the following, if applicable, to provide safety during maintenance and operations. (1) Operating, maintaining, and repairing the pipeline in accordance with each of the requirements of this subpart and subpart M of this part. (2) Controlling corrosion in accordance with the operations and maintenance requirements of subpart I of this part. § 192.481 Atmospheric corrosion control: General. (a) Each operator must inspect each pipeline or portion of pipeline that is exposed to the atmosphere for evidence of atmospheric corrosion, as follows…. (b) During inspections the operator must give particular attention to pipe at soil-to-air interfaces, under thermal insulation, under disbanded coatings, at pipe supports, in splash zones, at deck penetrations, and in spans over water. (c) If atmospheric corrosion is found during an inspection, the operator must provide protection against the corrosion as required by §192.479. The Notice alleged that Respondent violated 49 C.F.R. § 192.605 by failing to prepare and follow for each pipeline, a manual of written procedures for operating, maintaining, and repairing the pipeline. Specifically, the Notice alleged that Tennessee Gas’ procedure for monitoring atmospheric corrosion, O&M Procedure 918, failed to provide specific guidance on how to give particular attention to pipe at pipe supports in accordance with §192.481(b). Respondent contested this allegation of violation. I am adopting the arguments set forth in my consideration of the violation in 1-2016-1011. Accordingly, based upon a review of all of the evidence, I find that Respondent did not violate 49 C.F.R. § 192.605, as alleged in the Notice, and therefore withdraw Item I. ASSESSMENT OF PENALTY 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.3 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 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 3 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).#

120161011_Final Order_11292018_text.pdf, page 6CPF No. 1-2016-1011; 1-2016-1012 Page 5 civil penalty of $69,000 for the violations cited in 1-2016-1011 and 1-2016-1012. 1-2016-1011 Item 1: The Notice proposed a civil penalty of $34,500 for Respondent’s violation of 49 C.F.R. § 192.605, for failing to prepare and follow for each pipeline, a manual of written procedures for operating, maintaining, and repairing the pipeline. For the reasons discussed above, I find that the Respondent did not violate this regulation. Accordingly, having reviewed the record, I withdraw the civil penalty of $34,500. 1-2016-1012 Item 1: The Notice proposed a civil penalty of $34,500 for Respondent’s violation of 49 C.F.R. § 192.605, for failing to prepare and follow for each pipeline, a manual of written procedures for operating, maintaining, and repairing the pipeline. For the reasons discussed above, I find that the Respondent did not violate this regulation. Accordingly, having reviewed the record, I withdraw the civil penalty of $34,500. COMPLIANCE ORDER The Notice proposed compliance orders with respect to Item 1 in Notice 1-2016-1011 and Item 1 in Notice 1-2016-1012 for violation of 49 C.F.R. §§ 192.605. As stated above, I am withdrawing both Notices. Therefore, the compliance terms proposed in the Notice are also withdrawn. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. November 29, 2018 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#