SOUTH CAROLINA PIPELINE CORP — Notice of Probable Violation

party submissionOfficial PDF220071010_operator response and Request to cancel their previous hearing request _09212007.pdf#

220071010_ Final Order_07152010_text.pdf, page 1Official PDFJUL 15 2010 Mr. Samuel L. Dozier Vice President, Commercial & Operations Carolina Gas Transmission Corporation 105 New Way Road Columbia, SC 29224-2407 RE: CPF No. 2-2007-1010 Dear Mr. Dozier: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation and concludes that Carolina Gas Transmission Corporation has completed the actions specified in the Notice to comply with the pipeline safety regulations. Therefore, this case is now 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. Wayne Lemoi, Director, Southern Region, PHMSA CERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0039 0744]#

220071010_ Final Order_07152010_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 ) Carolina Gas Transmission Corporation, ) CPF No. 2-2007-1010 ) ) ) Respondent. ) _________________________________________ ) FINAL ORDER On October 2-5 and October 23-26, 2006, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of Carolina Gas Transmission Corporation’s (CGT or Respondent) gas integrity management program (IMP) at the company’s offices in Columbia, South Carolina. CGT is an interstate natural gas company that delivers natural gas throughout the Southeast. As a result of the inspection, the Director, Southern Region, OPS (Director), issued to Respondent, by letter dated May 22, 2007, a Notice of Probable Violation and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Respondent had committed certain violations of 49 C.F.R. Part 192 and proposed ordering Respondent to take measures to correct the alleged violations. The Notice also proposed finding that Respondent had committed certain other probable violations of 49 C.F.R. Part 192 and warning Respondent to take appropriate corrective action to address them or be subject to future enforcement action. By letter dated June 18, 2007, Respondent requested an extension of time to respond to the Notice. Respondent was granted an extension until December 31, 2007, and responded to the Notice by letter dated September 21, 2007 (Response). CGT did not contest the allegations of violation and expressed its intent to comply with the proposed corrective actions upon receipt of a final order. Respondent did not request a hearing and has therefore waived its right to one. FINDINGS OF VIOLATION In its Response, CGT did not contest the allegations in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 2A: The Notice alleged that Respondent violated 49 C.F.R. § 192.925(b), which states:#

220071010_ Final Order_07152010_text.pdf, page 32 § 192.925 What are the requirements for using External Corrosion Direct Assessment (ECDA)? (a) …. (b) General requirements. An operator that uses direct assessment to assess the threat of external corrosion must follow the requirements in this section, in [American Society of Mechanical Engineers]/[American National Standards Institute] B31.8S (incorporated by reference, see § 192.7), section 6.4, and in NACE RP 0502-2002 (incorporated by reference, see § 192.7). An operator must develop and implement a direct assessment plan that has procedures addressing preassessment, indirect examination, direct examination, and post-assessment. If the ECDA detects pipeline coating damage, the operator must also integrate the data from the ECDA with other information from the data integration (§ 192.917(b)) to evaluate the covered segment for the threat of third party damage, and to address the threat as required by § 192.917(e)(1). The Notice alleged that Respondent violated 49 C.F.R. § 192.925(b) by failing to develop and implement a direct assessment plan that adequately addressed indirect assessment, direct examination, and post-assessment procedures. Specifically, it alleged that Respondent’s procedures did not provide for integrating ECDA indirect inspection pipeline coating indication data with encroachment and foreign line crossing data to evaluate covered segments for the threat of third-party damage and did not address such threats, as required by § 192.917(e)(1). The Notice also alleged that CGT had failed to develop and implement a process for requiring indirect surveys of its lines that had been crossed during third-part excavation activities but where CGT personnel had not been present to witness such activities. The Notice alleged, for example, that third-party damage had occurred on Respondent’s pipeline because of the placement of a power pole by CGT’s sister company. Respondent did not contest this allegation of violation. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 192.925(b) by failing to develop and implement a direct assessment plan that adequately addressed indirect assessment, direct examination, and post-assessment procedures. Item 3A: The Notice alleged that Respondent violated 49 C.F.R. § 192.935(b), which states, in relevant part: § 192.935 What additional preventive and mitigative measures must an operator take? (a) …. (b) Third party damage and outside force damage— (1) Third party damage. An operator must enhance its damage prevention program, as required under § 192.614 of this part, with respect to a covered segment to prevent and minimize the consequences of a release due to third party damage. Enhanced measures to an existing damage prevention program include, at a minimum— . . .. (ii) Collecting in a central database information that is location specific#

220071010_ Final Order_07152010_text.pdf, page 43 on excavation damage that occurs in covered and non covered segments in the transmission system and the root cause analysis to support identification of targeted additional preventative and mitigative measures in the high consequence areas. This information must include recognized damage that is not required to be reported as an incident under part 191. . . . 1 The Notice alleged that Respondent violated 49 C.F.R. § 192.935(b) by failing to include enhanced measures in its damage prevention program for collecting, in a central database, location-specific information on excavation damage that had occurred in covered and non- covered pipeline segments. Additionally, it alleged that CGT did not have a root cause analysis to support the identification of targeted additional preventive and mitigative (P&M) measures in High Consequence Areas (HCAs). Respondent did not contest this allegation of violation. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 192.935(b) by failing to include enhanced measures in its damage prevention program for collecting information on excavation damage that had occurred along its pipeline. Item 3B: The Notice alleged that Respondent violated 49 C.F.R. § 192.935(a), which states: § 192.935 What additional preventive and mitigative measures must an operator take? (a) General requirements. An operator must take additional measures beyond those already required by Part 192 to prevent a pipeline failure and to mitigate the consequences of a pipeline failure in a high consequence area. An operator must base the additional measures on the threats the operator has identified to each pipeline segment. (See § 192.917). An operator must conduct, in accordance with one of the risk assessment approaches in ASME/ANSI B31.8S (incorporated by reference, see § 192.7), section 5, a risk analysis of its pipeline to identify additional measures to protect the high consequence area and enhance public safety. Such additional measures include, but are not limited to, installing Automatic Shut-off Valves or Remote Control Valves, installing computerized monitoring and leak detection systems, replacing pipe segments with pipe of heavier wall thickness, providing additional training to personnel on response procedures, conducting drills with local emergency responders and implementing additional inspection and maintenance programs. The Notice alleged that Respondent violated 49 C.F.R. § 192.935(a) by failing to take additional measures, beyond those already required by Part 192, to prevent pipeline failures and to mitigate their consequences in HCAs. Specifically, it alleged that CGT’s IMP did not include an evaluation of threats, a spectrum of P&M alternatives, and the potential impact of identified risks, as outlined in § 192.917. The Notice also alleged that the determination of P&M measures did not include appropriate factors of likelihood and consequence. Respondent did not contest this allegation of violation. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 192.935(a) by failing to take the additional P&M measures discussed above to prevent pipeline failures and mitigate their consequences in HCAs. 1 Item 3A of the Notice correctly quoted § 192.935(b)(1)(ii) but then incorrectly referred to subparagraph (b)(2) as the alleged violation.#

220071010_ Final Order_07152010_text.pdf, page 54 Item 4A: The Notice alleged that Respondent violated 49 C.F.R. § 192.911(m), which states: § 192.911 What are the elements of an integrity management program? An operator's initial integrity management program begins with a framework (see § 192.907) and evolves into a more detailed and comprehensive integrity management program, as information is gained and incorporated into the program. An operator must make continual improvements to its program. The initial program framework and subsequent program must, at minimum, contain the following elements. (When indicated, refer to ASME/ANSI B31.8S (incorporated by reference, see § 192.7) for more detailed information on the listed element.) . . . (m) A communication plan that includes the elements of ASME/ANSI B31.8S, section 10, and that includes procedures for addressing safety concerns raised by— (1) OPS; and (2) A State or local pipeline safety authority when a covered segment is located in a State where OPS has an interstate agent agreement. The Notice alleged that Respondent violated 49 C.F.R. § 192.911(m) by failing to develop and implement an IMP that included a communications plan with procedures on how safety concerns that had been raised by OPS or State authorities were to be documented, tracked, and addressed. CGT did not contest this allegation of violation. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 192.911(m) by failing to have a communications plan with procedures for addressing safety concerns raised by OPS or State authorities. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. COMPLIANCE ORDER The Notice proposed a Compliance Order with regards to Items 2(A), 3(A), 3(B), and 4(A) in the Notice for violations of 49 C.F.R. Part 192. 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 has indicated that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to the violation of § 192.925(b) (Item 2A), CGT has developed a process and procedures for integrating ECDA indirect inspection indications with encroachment and foreign line crossing data to evaluate the covered segments for the threat of third- party damage. These process and procedures require the following: a) Actions to ensure the integrity of CGT’s pipelines when operator personnel are not present during third-party excavation and construction activities that cross CGT pipelines;#

220071010_ Final Order_07152010_text.pdf, page 65 b) Indirect surveys of CGT pipelines crossed, to ensure safety and that construction activity has not damaged its pipeline; and c) Documenting these actions and incorporating them into CGT’s IMP, including actions to ensure that CGT’s sister companies are aware of these requirements and to prevent inadvertent damage to the pipelines when power poles are installed. 2. With respect to the violation of § 192.935(b) (Item 3A), CGT has developed procedures for collecting, in a central database, location-specific information on excavation damage that has occurred in covered and non-covered segments. 3. With respect to the violation of § 192.935(a) (Item 3B), CGT has fully developed a threat evaluation process and a spectrum of preventative and mitigative alternatives with appropriate risk factors, including the likelihood of failure and consequences. 4. With respect to the violation of § 192.911(m) (Item 4A), CGT has developed procedures on how safety concerns raised by PHMSA or State authorities are to be documented, tracked, and addressed. Accordingly, since compliance has been achieved with respect to these violations, the compliance terms are not included in this Order. WARNING ITEMS With respect to Item 1A, the Notice alleged a probable violation of Part 192 but did not propose a civil penalty or compliance order for the item. Therefore, this is considered to be a warning item. The warning was for: 49 C.F.R. § 192.905(a) (Item 1A) ─ Respondent’s alleged failure to identify the HCAs along its pipeline, in accordance with method (1) or (2) from the definition of HCA in Part 192. CGT presented information in its Response showing that it had taken certain actions to address the cited item. Accordingly, having considered such information, I find, pursuant to 49 C.F.R. § 190.205, that a probable violation of 49 C.F.R. § 192.905 (Notice Item 1A) has occurred and Respondent is hereby advised to correct such condition. In the event that OPS finds a violation of this provision in a subsequent inspection, Respondent may be subject to future enforcement action. The terms and conditions of this Final Order are effective upon receipt. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

220071010_Oper Resp to notice and req for exten_06182007.pdf, page 1Official PDFFROM (MON) JUN 18 2007 14 /ST. 14:58/No. 6802438935 P 2 Sormol L Dozier Commerciol & Field Operations Vice President TRANSMISSION +* CAROLINA GAS sdozier@scana.com A SCANA COMPANY June 18, 2007 VIA OVERNIGHT DELIVERY AND FACSIMILE Director, Southern Region Ms. Linda Daugherty Pipeline and Hazardous Material Safety Administration 233 Peachtree Street, Suite 600 U.S. Department of Transportation Atlanta, GA 30303 Re: Carolina Gas Transmission Corporation, CPF 2-2007-1010 Request For Hearing and Statement of Issues Dear Ms. Daugherty: robable Violation and Proposed Compliance Order ('Notice") dated May 22, 2007, issued | n May 22, 2007, Carolina Gas Transmission Corporation ("CGT") received a Notice Materials Safety Administration ("PHMSA"). In the Notice, based on its review of CGT' he Southern Region of the Department of Transportation's Office of Pipeline and Hazardou Integrity Management Program ("IMP") conducted in Columbia, South Carolina, during the weeks of October 2-5 and 23-26, 2006, PHMSA states that it appears that CGT has committed probable violations of the IMP provisions of the pipeline safety regulations. 4 within 90 days of the final notice. In addition, CGT will track and submit to the Regional CGT will comply with the warning iter and Proposed Compliance Order Items 1, 2, and additional Lime to comply with Proposed Compliance Order Item 3, which states that, in regard Director all costs associated with fulfilling this Compliance Order. However, CGT requests alternatives with all appropriate factors included into the evaluation, specially the likelihood to Item Number 3B of the Notice, CGT must "fully develop a threat evaluation and P&M process." and consequence factors. The risk process should also be appropriately linked to the P&M extension of time to December 31, 2007. This extension is needed so that CT can (1) obtain In order to comply fully with Proposed Compliance Order Itcm 3, CGT requests an from the vendor a new version of the risk ranking model; (2) populate the risk ranking model management procedures to document the nature and operation of the new risk ranking model. with the necessary data, including data regarding P&M measures; and (3) revise CGT's integrity Order Item 3 is derried, CGT hereby requests a hearing pursuant to 49 C.F.R. § 190.211(a) and To the extent this request for an extension of time to respond to Proposed Compliance the Notice's instructions. The purpose of the hearing would be to discuss the scope and nature of Carolina Gos Transmisson | P. O. Box 102407 - Columbia, South Corolina - 29224-2407. T (803) 217.6457 - F (803) 933.7460#

220071010_Oper Resp to notice and req for exten_06182007.pdf, page 2FROM (MON) JUN 18 2007 14 /ST. 14:58/No. 6802438935 P • Ms. Linda Daugherty Page 2 June 18, 2007 Proposed Compliance Order Item 3, and to explain the steps CGT believes are necessary to bring COT into compliance with the IMP regulations. Pursuant to 49 C.F.R. § 190.211 (e), CGT equests that the materials in the agency's case files be provided to CGT at least 30 days befor ny hearing date. During the hearing process, CGT will be represented by counse requcst for a hearing be directed to the following: CGT respectfully requests that any correspondence and communications regarding this Laura A. Comstock Supervisor, Safety and Compliance 105 New Way Road Carolina Gas Transmission Corporation Columbia, South Carolina 29224-2407 Sufa Samuel L. Dozier Vice President, Commercial and Field Operations cc: Craig Collin Wayne Vermulle#

220071010_notice letter_05222007_text.pdf, page 1Official PDFU 5 Department of Transportation Pipeline and Hazardous Materials Safety Administration 233 Peachtree Street Ste 600 Atlanta, GA 30303 NOTICE OF PROBABLE VIOLATION And PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT RE UESTED May 22, 2007 Mr Samuel L Dozier Vice President and Commercial Field Operations Carohna Gas Transmission (CGT) 105 New Way Road Columbia, South Carohna 29224-2407 CPF 2-2007-1010 Dear Mr Dozier On October 2-5 aud October 23-26, 2006, representatives of the Pipehne and Hazardous Matenals Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code inspected your Gas integrity Management Program at your office in Columbia, South Carohna As a result of the inspection, it appears that you have committed probable violations of the Pipelme Safety Regulations, Tttle 49, Code of Federal Regulations The items inspected and the probable violations are 1. High Consequence Area (HCA) Identification I)192. 905 How does an operator identify a high consequence area (HCA)? (a) General. To determine whtch segments of an operator's transmission pipehne system are covered by this subpart, an operator must identify the high consequence areas. An operator must use method (1) or (2) from the definition in tt 192. 903 to idenhfy a high consequence area.#

220071010_notice letter_05222007_text.pdf, page 2$192. 903 What definitions apply to this subparto High consequence area means an area estabhshed by one of the methods described m paragraphs (I) or (2) as follows. (1) An area defined as— (i) A Class 3 location under $192. 5; or (u) A Class 4 location under (]192. 5, or (ni) Any area m a Class I or Class 2 location where the potential impact radius is greater than 660 feet (200 meters), and the area withm a potential impact circle contains 20 or more buddings intended for human occupancy; or (iv) Any area m a Class I or Class 2 location where the potenhal impact circle contams an identified site. (2) The area within a potenhal impact circle (PIC) containing— (i) 20 or more buddings mtended for human occupancy, unless the exception in paragraph (4) applies; or (n) An identified site (3) Where a potential impact circle is calculated under either method (I) or (2) to estabhsh a high consequence area, the length of the high consequence area extends axially along the length of the pipeline from the outermost edge of the first potential impact circle that contains either an identified site or 20 or more buddmgs intended for human occupancy to the outermost edge of the last contiguous potential impact circle that contains either an identified site or 20 or more buddmgs mtended for human occupancy. (See Figure E. I. A. in appendix E. ) (4) If in identifying a high consequence area under paragraph (1)(ni) of this definition or paragraph (2)(i) of this definition, the radius of the potential impact circle is greater than 660 feet (200 meters), the operator may identify a high consequence area based on a prorated number of buddings intended for human occupancy within a distance 660 feet (200 meters) from the centerhne of the pipelme untd December 17, 2006. If an operator chooses this approach, the operator must prorate the number of buddings intended for human occupancy based on the ratio of an area with a radius of 660 feet (200 meters) to the area of the potential impact circle (i. e. , the prorated number of buildings mtended for human occupancy is equal to [20 x (660 feet [or 200 meters]/ potential impact radius in feet [or meters])**2]) Identified site means each of the following areas. (a) An outside area or open structure that is occupied by twenty (20) or more persons on at least 50 days in any twelve (12)-month period (The days need not be#

220071010_notice letter_05222007_text.pdf, page 3consecutive. ) Examples include but are not hmited to, beaches, playgrounds, recreational facihties, camping grounds, outdoor theaters, stadiums, recreational areas near a body of water, or areas outside a rural budding such as a rehgious facdity; or (b) A budding that is occupied by twenty (20) or more persons on at least five (5) days a week for ten (10) weeks in any twelve (12)- month period. (The days and weeks need not be consecutive. ) Examples include, but are not limited to, rehgious facilities, office buildmgs, community centers, general stores, 4-H facihties, or roller skating rinks; or (c) A facdity occupied by persons who are confined, are of impaired mobdity, or would be difficult to evacuate. Examples include but are not hmited to hospitals, prisons, schools, day-care facihties, retirement facihties or assisted-living facdities. ~ Item 1A: t'1 192. 905(a) During a records review of HCAs, it was determined that the HCA identification process had not appropnately identified a school playgrouncUathletic field as an HCA pipehne segment on Rhame Road in Columbia, South Carohna 2. Direct Assessment (DA) Plan $ 192. 925 What are the requirements for using External Corrosion Direct Assessment (ECDA)? (b) General reqrrrremenrs. An operator that uses direct assessment to assess the threat of external corrosion must follow the requirements in this section, in ASME/ANSI B31 SS (ibr, see (1 192. 7), sechon 6. 4, and in NACE RP 0502 — 2002 (ibr, see t'1 192. 7). An operator must develop and implement a direct assessment plan that has procedures addressmg pre-assessment, indirect examination, direct exammation, and post-assessment. If the ECDA detects pipeline coatuig damage, the operator must also integrate the data from the ECDA with other mformation from the data mtegration (1'1 192. 917(b)) to evaluate the covered segment for the threat of third party damage, and to address the threat as required by t'1 192. 917(e)(1). ~ Item 2A. g 192. 925(b) CGT's ECDA procedures do not provide for integrating ECDA indirect mspection pipeline coating indkcanon data with encroachment and foreign hne crossing data to evaluate the covered segment for the threat of tlurd party damage, and to address this threat as required by (192 917(e)(1) Further, a process is not in place to require an indirect survey of CGT's lines crossed when operator personnel are not present dunng third party construction activities As an additional note, it was learned that third party#

220071010_notice letter_05222007_text.pdf, page 4damage occurred on the CGT pipehne as a result of power pole placement by CGT's sister company, indicating lack of appropriate controls 3 Preventive and Mitigative Measures t'l 192. 935 What additional preventive and mihgative measures must an operator take" (a) General requirements An operator must take additional measures beyond those already required by Part 192 to prevent a pipehne fadure and to mitigate the consequences of a pipehne failure in a high consequence area. An operator must base the additional measures on the threats the operator has idenhfied to each pipehne segment. (See g 192. 917) An operator must conduct, in accordance with one of the risk assessment approaches m ASME/ANSI B31. 8S (ibr, see g 192. 7), section 5, a risk analysis of its pipeline to idenhfy additional measures to protect the high consequence area and enhance public safety. Such additional measures include, but are not hmited to, instalhng Automatic Shut-off Valves or Remote Control Valves, mstalhng computeriaed monitoring and leak detection systems, replacing pipe segments with pipe of heavier wall thickness, providing additional training to personnel on response procedures, conducting drills with local emergency responders and unplementing additional inspechon and maintenance programs. (b) Third party damage and outside force damage — (1) Third party damage. An operator must enhance its damage prevention program, as required under ('l 192. 614 of this part, with respect to a covered segment to prevent and mmimue the consequences of a release due to third party damage. Enhanced measures to an exishng damage prevention program include, at a mmimum— (u) Collecting in a central database information that is location specific on excavation damage that occurs in covered and non covered segments in the transmission system and the root cause analysis to support identification of targeted additional preventative and mihgative measures in the high consequence areas. This information must include recognued damage that is not required to be reported as an mcident under part 191. ~ Item 3A: t'l 192. 935(b)(2) There are no procedures for collecting, in a cental database, location-specific information on excavation damage that occurs in covered and non-covered segments and the root cause analysis to support identification of targeted additional preventative and mitigative measures in HCAs ~ Item 3B tl 192. 935(a)#

220071010_notice letter_05222007_text.pdf, page 5The CGT IMP does not include an evaluation of threats, a spectrum of preventive and nutigative (PkM) alternatives, and the potential impact on the identified risks for HCA segments Specifically, the determination of appropnate P&M measures does not include appropnatc factors of hkchhood and consequence 4. Communications Plan g 192. 911 What are the elements of an integrity management program" An operator's initial mtegrity management program begms with a framework (see g 192. 907) and evolves mto a more detailed and comprehensive integrity management program, as information is gained and incorporated into the program. An operator must make continual improvements to its program The initial program framework and subsequent program must, at mmimum, contam the following elements. (When indicated, refer to ASME/ANSI B31. 8S (ibr, see tl 192 7) for more detailed information on the hsted element. ) (m) A communication plan that mcludes the elements of ASME/ANSI B31. 8S, section 10, and that includes procedures for addressing safety concerns raised by— (I) OPS; and (2) A State or local pipehne safety authority when a covered segment is located in a State where OPS has an interstate agent agreement ~ Item 4A: I'I 192. 911(m) The CGT IMP includes no procedures on how safety concerns raised by PHMSA or State authonues are to be documented, tracked, and addressed Pro osed Com bunce Order Pursuant to 49 Umted States Code $ 60118, the Pipehne and Hazardous Materials Safety Administration proposes to issue a Comphance Order to Carohna Gas Transmission Please refer to the Proposed Complmnce Order that is enclosed and made a part of tlus Notice WWW It With respect to item number lA, we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time We advise you to promptly correct tlus item Be advised that failure to do so may result in Carohna Gas Transmission being sublect to additional enforcement action#

220071010_notice letter_05222007_text.pdf, page 6Res onse to this Notice Enclosed as part of tlus Notice is a document entitled Response Options for Pipelme Operators in Compliance Proceedmgs Please refer to this document and note the response options Be advised that all matenal you submit in response to this enforcement action is sublect to bemg made pubhcly available If you believe that any portion of your responsive matenal quahfies 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 beheve quahfy 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, tlus constitutes a waiver of your nght to contest the allegations in this Notice and authorizes the Associate Administrator for Pipelme Safety to find facts as alleged in tlus Notice without further notice to you and to issue a Final Order In your correspondence on tins matter, please refer to CPF 2-2007-1010 and for each document you submit, please provide a copy in electronic format whenever possible Linda Daugherty Director, Southern Region Pipelme and Hazardous Materials Safety Administration Enclosures Proposed Compliance Order Response Options for Pipeline Operators m Compfiance Proceedmgs#

220071010_notice letter_05222007_text.pdf, page 7PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code $ 60118, the Pipehne and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Carohna Gas Transmission (CGT) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Carohna Gas Transnussion with the pipeline safety regulations In regard to Item Number 2A of the Notice pertaining to CGT's ECDA procedures not providing for integrating ECDA indirect inspection pipelme coating indication data with encroachment and foreign line crossing data to evaluate the covered segment for the threat of third party damage A process and procedures must be developed for integrating ECDA indirect inspection indications with encroachment and foreign lme crossing data to evaluate the covered segments for the threat of third party damage Additionally, CGT must require action to ensure the integrity of CGT pipehnes when operator personnel are not present dunng third party construction activities that cross CGT pipelmes An indirect survey of the CGT pipeline crossed could be performed to ensure safety and that the construction activity dtd not damage the CGT pipehne CGT has taken steps to ensure that the sister companies are aware of these reqmrements to prevent inadvertent damage to the pipehnes when power poles are installed in the future CGT must document these actions and incorporate into the CGT integnty management program In regard to Item Number 3A of the Notice pertaining to CGT IMP having no procedures for collecting, m a central database, location-specific information on excavation damage that occurs in covered and non-covered segments and the root cause analysis to support identification of targeted additional preventative and mitigative (P&M) measures in HCAs CGT must develop procedures for collecting location — specific information on excavation damage that occurs in covered and non-covered segments Root cause analysis requirements should be developed and mtegrated into CGT procedures In regard to Item Number 3B of the Notice pertaiiung to CGT IMP not including an evaluation of threats, a spectrum of preventive and mitigative (PkM) alternatives, and the potential impact on the identified nsks for HCA segments CGT must fully develop a threat evaluation and PkM alternatives with all appropnate factors included mto the evaluation, especially likelihood and consequence factors The nsk process should also be appropnately hnked to the PkM process In regard to Item Number 4A of the Notice pertauung to CGT IMP having no procedures on how safety concerns raised by PHMSA or State authorities are to be documented, hacked, and addressed CGT must develop procedures on how all safety concerns are to be documented, tracked and addressed Carohna Gas Transmission has 90 days after the receipt of the Final Order to complete the above items Carohna Gas Transmission shall maintain documentation of the safety unprovement costs associated with fulfilhng this Comphance Order and submit the total to Linda Daugherty, Director, Southern Region, Pipeline and Hazardous Matenals Safety Administration Costs shall be reported in two categones 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 pipehne infrastructure#