{"operation":"document","citation":"CPF 12023025WL","title":"ATMOS ENERGY CORPORATION - KY/MID-STATES (KENTUCKY) — Warning Letter","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2023-03-23","effective_on":null,"summary":"CLOSED warning letter citing 192.12(b)(2), 192.12(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023025wl.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023025wl.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023025wl","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/12023025WL","body":"Warning Letter involving ATMOS ENERGY CORPORATION - KY/MID-STATES (KENTUCKY). PHMSA's enforcement data identifies the cited regulations as 192.12(b)(2),  192.12(c). The case was opened on 2023-03-23 and is reported as closed as of 2023-03-23. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n12023025WL_Warning Letter_03232023_(22-235030).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12023025WL/12023025WL_Warning%20Letter_03232023_(22-235030).pdf\n\n12023025WL_Warning Letter_03232023_(22-235030)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12023025WL/12023025WL_Warning%20Letter_03232023_(22-235030)_text.pdf\n\n12023025WL_Warning Letter_03232023_(22-235030)_text.pdf\n\nWARNING LETTER\nOVERNIGHT EXPRESS DELIVERY\nMarch 23, 2023\nMr. Kevin Dobbs\nPresident\nAtmos Energy Corporation\n810 Crescent Centre Drive\nFranklin, Tennessee 37067\nCPF 1-2023-025-WL\nDear Mr. Dobbs:\nFrom August 15 through August 18, 2022, representatives of the Pipeline and Hazardous Materials\nSafety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code (U.S.C.)\ninspected Atmos Energy Corporation’s (Atmos Energy) St. Charles Underground Natural Gas\nStorage (UNGS) and Kirkwood Springs UNGS fields in Hopkins County, Kentucky.\nAs a result of the inspection, it is alleged that you have committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected\nand the probable violations are:\n1. § 192.12 Underground natural gas storage facilities.\n(a) …\n(b) Depleted hydrocarbon and aquifer reservoir UNGSFs.\n(1) …\n(2) Each UNGSF that uses a depleted hydrocarbon reservoir or an\naquifer reservoir for natural gas storage and was constructed on or\nbefore July 18, 2017, must meet the provisions of API RP 1171\n(incorporated by reference, see §192.7), sections 8, 9, 10, and 11, and\nparagraph (c) of this section, by January 18, 2018, and must meet all\nprovisions of paragraph (d) of this section by March 13, 2021.\n\n\n\nAtmos Energy failed to meet the provisions of API RP 1171, Section 11 as required. Specifically,\nAtmos Energy failed to train operating personnel of changes made to the operating procedures\nprior to operation of storage wells in accordance with API RP 1171, Section 11.12.2.\nAPI RP 1171, Section 11.12.2 states, in part, “Whenever changes are made to the operating\nprocedures specified in 11.3, operating personnel shall be notified and trained as necessary in the\nchanges and training documented before operating storage wells and reservoirs.”\nDuring the inspection, Atmos Energy was not able to provide records showing that operating\npersonnel were trained on the changes to the operating procedures prior to its implementation.\nRecords reviewed showed that isolation tests utilizing Atmos Energy’s Storage Well Valve\nIsolation Testing Procedure (Kentucky), dated September 20, 2021, and labeled draft, were\nconducted at the St. Charles UNGS facility on September 22, 2021 and September 28, 2021, and\nat the Kirkwood Springs UNGS facility on March 15, 2022. However, Atmos Energy could not\nprovide any records demonstrating that its operating personnel were trained on this draft procedure\nprior to it being implemented.\nTherefore, Atmos Energy failed to comply with § 192.12(b)(2) by not meeting the provisions of\nAPI RP Section 11.\n2. § 192.12 Underground natural gas storage facilities.\n(a) …\n(b) Depleted hydrocarbon and aquifer reservoir UNGSFs.\n(1) …\n(2) Each UNGSF that uses a depleted hydrocarbon reservoir or an\naquifer reservoir for natural gas storage and was constructed on or\nbefore July 18, 2017, must meet the provisions of API RP 1171\n(incorporated by reference, see §192.7), sections 8, 9, 10, and 11, and\nparagraph (c) of this section, by January 18, 2018, and must meet all\nprovisions of paragraph (d) of this section by March 13, 2021.\nAtmos Energy failed to meet the provisions of API RP 1171, Section 9, as required. Specifically,\nAtmos Energy failed to maintain, repair, or replace leaking isolation valves in accordance with\ntheir maintenance program, as specified under API RP 1171, Section 9.3.2.\nAPI RP 1171, Section 9.3.2 states, in part:\nThe operator shall test the operation of the master valve and wellhead pipeline isolation\nvalve at least annually for proper function and ability to isolate the well. The valves shall be\nmaintained, repaired, or replaced in accordance with the operator’s valve maintenance\nprogram for isolation valves.\nAtmos Energy’s procedure, Gas Storage Well Operating Procedure, Section 7.8.9, states if leaks\nor hard to operate valves are encountered, appropriate corrective action as determined by the\nStorage Supervisor or designated Company employee shall be implemented.\n\n\n\nDuring the inspection, PHMSA reviewed Atmos Energy’s St. Charles UNGS facility wellhead\nvalve isolation testing results conducted on September 22, 2021, and September 28, 2021. Per the\ndocuments reviewed, multiple wells had leaks from their isolation valve(s). Atmos Energy could\nnot provide records of appropriate corrective action, such as work orders, for the maintenance,\nrepair, or replacement of the leaking isolation valves.\nTherefore, Atmos Energy failed to comply with § 192.12(b)(2) by not meeting the provisions of\nAPI RP 1171 Section 9.\n3. § 192.12 Underground natural gas storage facilities.\n(a) …\n(c) Procedural manuals. Each operator of a UNGSF must prepare\nand follow for each facility one or more manuals of written procedures\nfor conducting operations, maintenance, and emergency preparedness\nand response activities under paragraphs (a) and (b) of this section.\nEach operator must keep records necessary to administer such\nprocedures and review and update these manuals at intervals not\nexceeding 15 months, but at least once each calendar year. Each\noperator must keep the appropriate parts of these manuals accessible\nat locations where UNGSF work is being performed. Each operator\nmust have written procedures in place before commencing operations\nor beginning an activity not yet implemented.\nAtmos Energy failed to follow its manual of written procedures for conducting activities under\n§ 192.12(b)(2). Specifically, Atmos Energy failed to follow the procedure in its Reservoir Storage\nIntegrity Management Plan (RSIMP) and Atmos Energy Plug And Abandonment Procedure,\nduring the Plug and Abandon of St. Charles UNGS well F1 on July 26, 2019.\nAtmos Energy’s RSIMP, Section 6.8, states in part, “Atmos Energy will incorporate safeguards to\nthe environment, safety, and health of workers and the public into well design and well\nconstruction, work-over, and remediation activities.” Atmos Energy’s Plug and Abandonment\nProcedure, Section 8, Part C states in part, “All fluids displaced from the well during the plugging\noperation shall be contained in a tank or pit.”\nAdditionally, RSIMP, Appendix 1 states in part:\nRecords related to permitting, procedures, personnel and equipment shall be retained\nfor a period that meets regulatory requirements, or where no regulatory requirements\nexist, a period of 6 years. These records shall include where applicable and available\nthe following:\n…\n2.2 Environmental, Health and Safety\nDuring the inspection, Atmos Energy was not able to provide adequate records demonstrating\nsafeguards to the environment, safety and health of workers and the public were used during the\nwell work activities pertaining to plug and abandon of St. Charles UNGS well F1. Additionally,\n\n\n\nAtmos Energy could not provide records of tank or pit installations for fluid containment, such as\ndaily reports, relating to the plug and abandon procedure for St. Charles UNGS well F1.\nTherefore, Atmos Energy failed to comply with § 192.12(c) by not following its written\nprocedures.\n4. § 192.12 Underground natural gas storage facilities.\n(a) …\n(c) Procedural manuals. Each operator of a UNGSF must prepare\nand follow for each facility one or more manuals of written procedures\nfor conducting operations, maintenance, and emergency preparedness\nand response activities under paragraphs (a) and (b) of this section.\nEach operator must keep records necessary to administer such\nprocedures and review and update these manuals at intervals not\nexceeding 15 months, but at least once each calendar year. Each\noperator must keep the appropriate parts of these manuals accessible\nat locations where UNGSF work is being performed. Each operator\nmust have written procedures in place before commencing operations\nor beginning an activity not yet implemented.\nAtmos Energy failed to follow its manual of written procedures for conducting activities under\n§ 192.12(b)(2). Specifically, Atmos Energy failed to follow its Reservoir Storage Integrity\nManagement Plan (RSIMP), Appendix 1, Section 2.3 during the Plug and Abandon of St. Charles\nUNGS well F1 on July 26, 2019.\nAtmos Energy’s RSIMP, Appendix 1 states in part:\nRecords related to permitting, procedures, personnel and equipment shall be retained for a\nperiod that meets regulatory requirements, or where no regulatory requirements exist, a\nperiod of 6 years. These records shall include where applicable and available the\nfollowing:\n…\n2.3 Monitoring of Construction Activities\n• Supervisor Qualifications\n• Contractor Personnel Qualifications\nDuring the inspection, Atmos Energy was not able to provide records of supervisor qualifications\nand contractor personnel qualifications used during the well work activities pertaining to plug and\nabandon of St. Charles UNGS well F1. Atmos Energy stated to the inspectors that they used\nvendors that they had previously worked with to perform the work on well F1.\nTherefore, Atmos Energy failed to comply with § 192.12(c) by not following its written\nprocedures.\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed\n$257,664 per violation per day the violation persists, up to a maximum of $2,576,627 for a related\nseries of violations. For violation occurring on or after March 21, 2022, and before January 6,\n\n\n\n2023, the maximum penalty may not exceed $239,142 per violation per day the violation persists,\nup to a maximum of $2,391,142 for a related series of violations. For violation occurring on or\nafter May 3, 2021, and before March 21, 2022, the maximum penalty may not exceed $225,134\nper violation per day the violation persists, up to a maximum of $2,251,334 for a related series of\nviolations. For violation occurring on or after January 11, 2021, and before May 3, 2021, the\nmaximum penalty may not exceed $222,504 per violation per day the violation persists, up to a\nmaximum of $2,225,034 for a related series of violations. For violation occurring on or after July\n31, 2019, and before January 11, 2021, the maximum penalty may not exceed $218,647 per\nviolation per day the violation persists, up to a maximum of $2,186,465 for a related series of\nviolations. For violation occurring on or after November 27, 2018, and before July 31, 2019, the\nmaximum penalty may not exceed $213,268 per violation per day, with a maximum penalty not to\nexceed $2,132,679. For violation occurring on or after November 2, 2015, and before November\n27, 2018, the maximum penalty may not exceed $209,002 per violation per day, with a maximum\npenalty not to exceed $2,090,022.\nWe have reviewed the circumstances and supporting documents involved in this case, and have\ndecided not to conduct additional enforcement action or penalty assessment proceedings at this\ntime. We advise you to correct the item(s) identified in this letter. Failure to do so will result in\nAtmos Energy Corporation being subject to additional enforcement action.\nNo reply to this letter is required. If you choose to reply, in your correspondence please refer to\nCPF 1-2023-025-WL. Be advised that all material you submit in response to this enforcement\naction is subject to being made publicly available. If you believe that any portion of your\nresponsive material qualifies for confidential treatment under 5 U.S.C. § 552(b), along with the\ncomplete original document you must provide a second copy of the document with the portions\nyou believe qualify for confidential treatment redacted and an explanation of why you believe the\nredacted information qualifies for confidential treatment under 5 U.S.C. § 552(b).\nSincerely,\nP.P.\nRobert Burrough\nDirector, Eastern Region, Office of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration","truncated":false,"body_characters":12483}