GULF SOUTH PIPELINE COMPANY, LLC — Notice of Probable Violation

party submissionOfficial PDF220091001_Operator_Response_Request_Hearing_03202009.pdf#

220091001_closure letter_10042011_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED October 4, 2011 Mr. David Goodwin Vice president, Compliance & Operations Services Gulf South Pipeline Company, L.P. 9 Greenway Plaza, Suite 2800 Houston, TX 77046 CPF 2-2009-1001 Dear Mr. Goodwin: On July 29, 2011, pursuant to 49 U.S.C. §60118(b) and 49 CFR §190.213, the Associate Administrator for Pipeline Safety, Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Final Order to Gulf South Pipeline Company, L.P (Gulf South). The Final Order found that Gulf South had committed a violation of the federal pipeline safety regulations and included a Compliance Order (CO), which required Gulf South to take certain actions to protect the public and the environment. The PHMSA Southern Region has reviewed your letter of September 28, 2011, in response to the final order and CO. This case is now closed. Please be advised that this letter refers only to CPF 2-2009-1001 and not to any other PHMSA pending cases. Also be advised that nothing herein states or implies that the Gulf South pipeline system meets the requirements of the federal pipeline safety laws or regulations. The pipeline system remains subject to inspection by PHMSA. Sincerely, Wayne T. Lemoi Director, Office of Pipeline Safety PHMSA Southern Region#

220091001_Final Order_07292011_text.pdf, page 1Official PDFJUL 29 2011 Mr. David Goodwin Vice President, Compliance and Operations Services Gulf South Pipeline Co., L.P. 9 Greenway Plaza, Suite 2800 Houston, TX 77046 Re: CPF No. 2-2009-1001 Dear Mr. Goodwin: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $100,000, and specifies actions that need to be taken by Gulf South Pipeline Co., L.P. to comply with the pipeline safety regulations. The penalty payment terms are set forth in the Final Order. When the civil penalty has been paid and the terms of the compliance order have been completed, as determined by the Director, Southern Region, this enforcement action will be closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, Pipeline Safety Mr. Wayne Lemoi, Director, Southern Region, PHMSA CERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0075 9695]#

220091001_Final Order_07292011_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 ) ) Gulf South Pipeline Co., L.P., ) CPF No. 2-2009-1001 ) Respondent. ) ____________________________________) FINAL ORDER On August 4, 2008, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), initiated an investigation of an incident involving the pipeline system of Gulf South Pipeline Co., L.P. (Gulf South or Respondent). Gulf South is an interstate natural gas pipeline system that operates approximately 7,700 miles of pipeline in Texas, Louisiana, Mississippi, Alabama, and Florida.1 The investigation arose out of an incident that occurred at a compressor station near Harrisville, Mississippi (Harrisville Compressor Station) on August 2, 2008. During repair of a faulty limit switch, a flash fire resulted from the ignition of natural gas from a fuel gas blow down. As a result of the incident, a Gulf South employee sustained burns to his arm, neck, and mouth area and was hospitalized. As a result of the inspection, the Director, Southern Region, OPS (Director), issued to Respondent, by letter dated January 15, 2009, 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 Gulf South violated 49 C.F.R. § 192.751 and proposed assessing a civil penalty of $100,000 for the alleged violation. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violation. hearing on the proposed civil penalty and compliance order. A hearing was subsequently held via telephone conference on June 3, 2009, with an attorney presiding from the Office of Chief Gulf South responded to the Notice by letter dated March 20, 2009 (Response)2 and requested a Counsel, PHMSA. At the hearing, Respondent was represented by in-house counsel. 1 See http://www.gulfsouthpl.com/AboutUsGS.aspx, last accessed June 24, 2011. 2 Gulf South also submitted a Pre-hearing Letter (May 23, 2009), in which it set forth three issues it planned to address in the hearing.#

220091001_Final Order_07292011_text.pdf, page 32 FINDING OF VIOLATION At the hearing, Gulf South did not contest 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. § 192.751, which states: § 192.751 Prevention of accidental ignition. Each operator shall take steps to minimize the danger of accidental ignition of gas in any structure or area where the presence of gas constitutes a hazard of fire or explosion, including the following: (a) When a hazardous amount of gas is being vented into open air, each potential source of ignition must be removed from the area and a fire extinguisher must be provided. (b) Gas or electric welding or cutting may not be performed on pipe or on pipe components that contain a combustible mixture of gas and air in the area of work (c) Post warning signs, where appropriate. The Notice alleged that Respondent violated 49 C.F.R. § 192.751 by failing to minimize the danger of accidental ignition of gas in any structure or area where the presence of gas constitutes a hazard of fire or explosion. Specifically, the Notice alleged that Gulf South’s Operating and Maintenance (O & M) procedures required that “all necessary precautions [shall] be taken to prevent electrical arcing and static electricity charges in structures and restricted areas where there is a potential presence of gas.”3 The Notice further alleged that Respondent failed to exhaust gas from the fuel gas blow down to an area where the gas could be safely discharged and installed a non-insulated electrical component in the valve operator electrical pull box. As a result, when Gulf South’s employee attempted to repair a faulty limit switch, a flash fire resulted from the interaction of gas escaping from a faulty fuel gas block valve and the improperly hospitalization. insulated electrical component.4 Gulf South’s employee sustained minor burns that required Respondent did not contest this allegation of violation. Accordingly, based upon a review of all of the evidence, I find that Respondent violated 49 C.F.R. § 192.751 by failing to minimize the danger of accidental ignition of gas in any structure or area where the presence of gas constitutes a hazard of fire or explosion. 3 Section 3, Accidental Ignition Prevention, 3.2 Prevention, at 32. 4 Respondent’s Root Cause Investigation Report identified “the probably [sic] root cause of the flash fire [as] the vent line that exhaust[s] gas from the fuel gas blow down on Engine #3 did not extend to a location where gas may be discharged without hazard. Contributing factors were 1) electrical wiring installed that did not conform to the National Electrical Code, ANSI/NFPA 70, so far as that code is applicable, 2) faulty valve closure(s), and 3) non- conformance to existing procedures and job plan.”#

220091001_Final Order_07292011_text.pdf, page 43 ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $100,000 per violation for each day of the violation, up to a maximum of $1,000,000 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; the Respondent’s ability to pay the penalty 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 civil penalty of $100,000 for the violations cited above. Item 1: The Notice proposed a civil penalty of $100,000 for Respondent’s violation of 49 C.F.R. § 192.751, for failing to minimize the danger of accidental ignition of gas in any structure or area where the presence of gas constitutes a hazard of fire or explosion. In its response, Gulf South argues that the proposed penalty is excessive and warrants a reduction. First, Respondent argues that PHMSA did not appropriately assess the criteria outlined in 49 C.F.R. § 190.225(a). Gulf South argues that the incident occurred “only due to the confluence of four separate causes [and that] redundant safety procedures . . . minimize[d] the risk of such an occurrence.”5 However, the evidence shows that at least some of the causal factors that led to this incident were replicated in at least one other compressor station under Respondent’s control. poses a threat to Gulf South’s pipeline system. The faulty wiring that provided the ignition source for the flash fire are also within Respondent’s control and pose a systemic risk, if repeated elsewhere. I find Respondent’s characterization of this incident as isolated to be misleading and conclude that the nature, circumstances, and gravity of this violation are sufficient to support the penalty, as assessed. 6 The vent lines exhausting fuel gas are one example of a systemic design flaw that Second, Gulf South asserts that its safety history is devoid of incidents of this type and that its safety record favors a penalty reduction. In particular, Gulf South notes that it has never experienced a similar incident or “prior offense[s] of this nature. operator’s entire safety record for five years preceding issuance of the NOPV. ” 7 PHMSA weighs an Lastly, Gulf South reiterated the preventative and corrective actions undertaken since the incident to ensure system-wide safety. According to the Respondent, such actions “are and should be deemed good faith attempts to achieve complete compliance, both before and after the August 2, 2008 incident.”8 However, PHMSA considers only those efforts made prior to the 5 See July 6, 2009 Post-hearing Brief (Brief), at 2-3. 6 Gulf South indicates that remedial measures have been taken. 7 Brief, at 3. 8 Brief, at 3.#

220091001_Final Order_07292011_text.pdf, page 54 discovery of an offense as a good faith measure. While Gulf South has undertaken a number of costly remedial measures, operators are charged with the lawful and safe operation of their systems. Where, as here, an injury occurred due to a violation of the pipeline safety regulations, operators are not charged with good faith for ex post facto actions. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $100,000 for violation of 49 C.F.R. § 192.751. 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 (AMZ-341), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial Operations Division telephone number is (405) 954-8893. Failure to pay the $100,000 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 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. § 192.751. At the hearing, Respondent argued that the proposed compliance order was overly broad, as it required a system-wide review of all operational pull boxes and vent lines. Gulf South reasoned that the system-wide review should be limited to stations constructed in the Respondent proposed to review a representative sampling. The Director, Southern Region, has last five years, as the faulty designs is limited to those facilities.9 As for its older stations, determined that a system-wide review must be conducted for all stations constructed in the last five years; for all other stations, a representative sampling will suffice. 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. Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with the pipeline safety regulations applicable to its operations. Respondent shall: 1. With respect to the violation of § 192.751 (Item 1), Respondent must review the vents and electric boxes at all compressor stations built within five years from the date of this order, including those stations built by Respondent’s affiliates (Gulf 9 Gulf South conducted a “high level review of its system-wide facilities and determined that these two design conditions do not exist within Gulf South’s vintage compressor stations.” March 20, 2009 Letter, at 2.#

220091001_Final Order_07292011_text.pdf, page 65 Crossing Pipeline Company and Texas Gas Transmission). In addition, Respondent must conduct a representative sampling of all Gulf South’s compressor stations that were built more than five years ago. 2. Gulf South Pipeline Company has 60 days after the receipt of the Final Order to complete the above item. 3. It is requested that Gulf South Pipeline Company maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Wayne Lemoi, Director, Southern Region, Pipeline and Hazardous Materials Safety Administration. It is further requested that costs be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses; and 2) total costs associated with replacements, additions, and other changes to pipeline infrastructure. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent and demonstrating good cause for an extension. Failure to comply with this Order may result in the administrative assessment of civil penalties not to exceed $100,000 for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. Under 49 C.F.R. § 190.215, 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. § 190.215. 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#

220091001_nopv notice_01152009_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED January 15, 2009 Mr. David Goodwin Vice President Compliance & Operations Gulf South Pipeline Company, LP 9 Greenway Plaza, Suite 2800 Houston, Texas 77046 CPF No. 2-2009-1001 Dear Mr. Goodwin: On August 4, 2008, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code, conducted an investigation of the incident (NRC#879372) at the Gulf South Pipeline (GSP) compressor station in Harrisville, Mississippi. The incident occurred on August 2, 2008 in which an employee received minor burns and was hospitalized overnight. As a result of the investigation, it appears that you have committed probable violations as noted below of pipeline safety regulations, Title 49, Code of Federal Regulations, Part 192. The item reviewed and the probable violation is: §192.751 Prevention of accidental ignition. Each operator shall take steps to minimize the danger of accidental ignition of gas in any structure or area where the presence of gas constitutes a hazard of fire or explosion. The Gulf South Procedures, (OM, Section 3 Accidental Ignition Prevention, 3.2 Prevention Requirements), requires the following: • All necessary precautions shall be taken to prevent electrical arcing and static electricity charges in structures and restricted areas where there is a potential presence of gas. Gulf South Pipeline Company did not prevent the accidental ignition of gas by installing a non-insulated electrical component in the pull box. The company’s root#

220091001_nopv notice_01152009_text.pdf, page 2cause investigation also determined that the vent line that exhaust gas from the fuel gas blow down on Engine #3 did not extend to a location where the gas could be discharged without hazard. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any 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 $100,000. Proposed Compliance Order With respect to the above item pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Gulf South Pipeline Company, LP. 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. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 2-2009-1001 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Linda Daugherty Director, Southern Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 2#

220091001_nopv notice_01152009_text.pdf, page 3PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue Gulf South Pipeline Company a Compliance Order incorporating the following remedial requirements to ensure the compliance of Gulf South Pipeline Company with the pipeline safety regulations: 1. In regard to the item in the Notice pertaining to prevention of accidental ignition required by §192.751, perform a system-wide review of pull boxes in operation, and identify any improperly insulated electrical component. For a vent line that exhaust gas from the fuel gas blow down, perform a system-wide review and identify locations where the discharge of gas may be a potential hazard. Develop a written plan and a schedule to remedy these deficiencies. Provide the plan to the PHMSA Southern Region office as indicated in Item 3 below. 2. Gulf South Pipeline Company has 60 days after the receipt of the Final Order to complete the above item. 3. Gulf South Pipeline Company shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Linda Daugherty, Director, Southern Region, Pipeline and Hazardous Materials Safety Administration. Costs shall 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. 3#