FLORIDA GAS TRANSMISSION CO — Notice of Probable Violation

party submissionOfficial PDF220101004_operator response_03262010.pdf#

220101004_Final Order_06292011_text.pdf, page 1Official PDFJUN 29 2011 Mr. Thomas Stone Vice President, Chief Operations and Maintenance Officer Florida Gas Transmission Company, LLC 5444 Westheimer Road Houston, TX 77056 Re: CPF No. 2-2010-1004 Dear Mr. Stone: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation and assesses a civil penalty of $95,000. The penalty payment terms are set forth in the Final Order. This enforcement action closes automatically upon receipt of payment. 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 Mr. Louis P. Soldano, Vice President, General Counsel, Florida Gas Transmission Company, LLC CERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0075 9503]#

220101004_Final Order_06292011_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 ) ) Florida Gas Transmission Company, ) CPF No. 2-2010-1004 LLC ) ) Respondent. ) ____________________________________) FINAL ORDER Pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an investigation of a failure involving a pipeline system operated by Florida Gas Transmission Company, LLC (FGTC or Respondent) in Martin County, Florida. FGTC is the operator of a 5,000-mile natural gas pipeline system that originates in Texas and terminates in South Florida.1 The investigation arose out of a May 4, 2009 failure that occurred on FGTC’s 18-inch natural gas pipeline at Milepost 810.3 in southeast Florida. Specifically, the pipeline ruptured and the gas ignited ejecting a 113-foot section of pipe from the ground. The failure resulted in serious injuries including the hospitalization of three individuals and the temporary closure of the Florida Turnpike.2 As a result of the investigation, the Director, Southern Region, OPS (Director), issued to Respondent, by letter dated February 23, 2010, a Notice of Probable Violation and Proposed Civil Penalty (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that FGTC had committed various violations of 49 C.F.R. Part 192, and proposed assessing a civil penalty of $95,000 for the alleged violations. The Notice also included several warning items pursuant to 49 C.F.R. § 190.205. FGTC responded to the Notice by letter dated March 26, 2010 (Response). Respondent contested three of the allegations and requested a hearing. An informal hearing was subsequently held on July 15, 2010, in Atlanta, Georgia, with an attorney from the Office of Chief Counsel, PHMSA, presiding. At the hearing, FGTC was represented by counsel and 1 http://www.panhandleenergy.com/comp_fld.asp. 2 See In the Matter of Florida Gas Transmission Company, LLC, CPF No. 2-2009-1002H (May 7, 2009) (available at www.phmsa.dot.gov).#

220101004_Final Order_06292011_text.pdf, page 32 presented testimony from its Director of Pipelines and a Technical Consultant. After the hearing, Respondent provided a post-hearing statement for the record, by letter dated August 30, 2010 (Closing).3 FINDINGS OF VIOLATION The Notice alleged that Respondent violated 49 C.F.R. Part 192, as follows: Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 199.105, which states in relevant part: § 199.105 Drug tests required. Each operator shall conduct the following drug tests for the presence of a prohibited drug: (a) . . . . (b) Post-accident testing. As soon as possible but no later than 32 hours after an accident, an operator shall drug test each employee whose performance either contributed to the accident or cannot be completely discounted as a contributing factor to the accident. An operator may decide not to test under this paragraph but such a decision must be based on the best information available immediately after the accident that the employee's performance could not have contributed to the accident or that, because of the time between that performance and the accident, it is not likely that a drug test would reveal whether the performance was affected by drug use.4 The Notice alleged that Respondent violated 49 C.F.R. § 199.105(b) by failing to drug test each employee whose performance either contributed to the May 4, 2009 accident or could not be completely discounted as a contributing factor to the accident. In particular, the Notice stated that FGTC did not drug test two of the four pipeline controllers who were involved in operating the pipeline during the accident. 5 In its Response, at the hearing, and in its Closing, FGTC disputed this allegation. Respondent 3 On September 1, 2010, the presiding official informed Respondent that he had not received its post-hearing materials, which were due by August 30, 2010. He ordered counsel to show cause as to why the matter should not be decided in their absence. On September 3, 2010, FGTC responded by stating that those materials had been sent to the presiding official via certified mail on August 30, 2010, and later provided further information which verified their transmission on the date in question. The presiding eventually received Respondent’s Closing and confirmed that its receipt had been delayed for several days due to an internal mailing issue. For the reasons, FGTC’s Closing is deemed timely filed as of its mailing date for purposes of this proceeding. 4 In accordance with § 199.3, the term “accident” includes an incident reportable under part 191 involving a gas pipeline facility. 5 The Notice incorrectly stated that FGTC only had four pipeline controllers on duty on May 4, 2009. The actual number was five.#

220101004_Final Order_06292011_text.pdf, page 43 explained that its pipeline controllers are staffed on 12-hour shifts, and that those shifts are scheduled daily from 5:30 a.m. to 5:30 p.m. (day shift) and 5:30 p.m. to 5:30 a.m. (night shift). FGTC stated that it drug tested the two night-shift pipeline controllers who were on duty at the time of the rupture, but that it did not drug test the three day-shift controllers who reported for duty shortly thereafter. Respondent argued that the best available information at that time of the accident showed that the performance of the day-shift controllers could not have been a contributing factor. Therefore, FGTC concluded that it did not need to drug test those three day shift employees. 6 At the hearing, the Director maintained that the company did not have sufficient information immediately available after the accident to “completely discount” the performance of the day- shift controllers as a contributing factor. The Director further noted that Respondent had not made or kept any contemporaneous records documenting the basis for its decision not to drug test those three employees. Section 199.5(b) states that “an operator shall drug test each employee whose performance either contributed to the accident or cannot be completely discounted as a contributing factor to the accident.” Like the other requirements in 49 C.F.R. Part 199, § 199.5(b) is designed to “place and structure of the regulation creates a strong presumption in favor of post-accident drug testing, i.e., an operator must drug test each employee whose performance either contributed to the accident or cannot be completely discounted as a contributing factor to the accident. significant constraints on an operator's discretion in conducting drug testing.”7 Indeed, the text In this case, the evidence indicates that FGTC’s pipeline ruptured at approximately 5:09 a.m. Eastern Daylight Savings Time (EDT). Two night-shift pipeline controllers were on duty at that time, with three day-shift pipeline controllers reporting for duty during the next 26 minutes, i.e., at 5:10 a.m., 5:34 a.m., and 5:35 a.m., respectively. The evidence also indicates that FGTC first learned of the failure when it received a telephone call from the Martin County Fire and Rescue Squad at 5:49 a.m., approximately 14 minutes after the last day-shift controller reported for duty and 1 minute before the last night-shift controller left the premises after completing his transition duties. The three day-shift controllers then spent the next several hours assisting FGTC in its efforts to respond to the failure. Finally, the evidence indicates that at 8:05 a.m. on the morning of the accident Respondent reported to the National Response Center (NRC) that the cause of the failure was “unknown” and that it had “limited information. ” FGTC still listed the cause of the accident as “unknown” and “under investigation” in the incident report it filed with PHMSA 34 days later, on June 8, 2009. Based on this evidence, I find that Respondent did not have sufficient information available immediately after the accident to conclude that the performance of the day-shift controllers could 6 In fact, FGTC argued that it did not have to drug test any of the pipeline controllers because the information available at the time showed that they could not have caused or contributed to the accident. 7 See Control of Drug Use In Natural Gas, Liquefied Natural Gas, and Hazardous Liquid Pipeline Operations, 53 Fed. Reg. 47084, 47086 (Nov. 21, 1988).#

220101004_Final Order_06292011_text.pdf, page 54 “be completely discounted as a contributing factor to the accident.” Accident scenarios play out over a period of time and the actions of employees who came on the scene in the minutes following the initiating event can impact the severity of spills and releases and the effectiveness of response actions. All three of these employees were on duty when FGTC first learned of the failure, and each had an active role in its response to the accident. Moreover, Respondent had not identified the cause of the failure in the NRC report filed on the morning of the accident, or in the incident report filed with PHMSA some 34 days later. That undermines FGTC’s assertion that it had a legitimate basis for concluding that the performance of the day-shift controllers could be completely discounted as a contributing factor, particularly in the immediate aftermath of the failure. 8 In summary, the day-shift controllers were on duty when events critical to the accident occurred, including the initial reporting and response to the failure, and Respondent lacked a sufficient, contemporaneous basis for concluding that those employees should not be drug tested. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 199.105 by failing to drug test each employee whose performance either contributed to the May 4, 2009 accident or could not be completely discounted as a contributing factor to that accident. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 199.225, which states in relevant part: § 199.225 Alcohol tests required. Each operator shall conduct the following types of alcohol tests for the presence of alcohol: (a) Post-accident. (1) As soon as practicable following an accident, each operator shall test each surviving covered employee for alcohol if that employee's performance of a covered function either contributed to the accident or cannot be completely discounted as a contributing factor to the accident. The decision not to administer a test under this section shall be based on the operator's determination, using the best available information at the time of the determination, that the covered employee's performance could not have contributed to the accident.9 The Notice alleged that Respondent violated 49 C.F.R. § 199.225(a)(1) by failing to test each covered employee for alcohol whose performance of a covered function either contributed to the 8 At the hearing and in its Closing, FGTC objected to the Director’s references to the absence of any documentation of its decision not to drug test the day-shift controllers, arguing that 49 C.F.R. Part 199 does not require an operator to make or keep such records. I note that the allegation of violation in the Notice is based solely on Respondent’s failure to drug test its employees after the accident, rather than any failure on its part to maintain adequate documentation. 9 As defined in 49 C.F.R. § 199.3, the term “covered employee” includes any person who performs an operations, maintenance, or emergency-response function regulated by 49 C.F.R. Part 192.#

220101004_Final Order_06292011_text.pdf, page 65 May 4, 2009 accident or could not be completely discounted as a contributing factor to that accident. In particular, the Notice stated that FGTC did not test two of the four pipeline controllers who were involved in operating the pipeline during the accident for the presence of alcohol.10 In its Response, at the hearing, and in its Closing, FGTC argued that it did not commit the alleged violation for the same reasons discussed in Item 2. The Director relied on his same response in maintaining that a violation occurred. 11 Neither party has argued that a material difference exists in the construction or application of § 199.105(b) and § 199.225(a)(1), and I find that there is no other basis in the record for doing so in this proceeding. Accordingly, for the reasons discussed in Item 2, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 199.225(a)(1) by failing to test each of the controllers for alcohol whose performance of a covered function could not be completely discounted as a contributing factor to that accident. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 192.709, which states in relevant part: § 192.709 Transmission lines: Record keeping. Each operator shall maintain the following records for transmission lines for the periods specified: (a) The date, location, and description of each repair made to pipe (including pipe-to-pipe connections) must be retained for as long as the pipe remains in service. The Notice alleged that FGTC had violated 49 C.F.R. § 192.709(a) by failing to retain a record of the date, location, and description of each repair made to the 18-inch pipeline that ruptured on May 4, 2009. In particular, the Notice stated that Respondent had replaced some of the original Polyken-tape-coated pipe with fusion-bond-epoxy-coated pipe after discovering external corrosion during a 2004 inline inspection. In its Response, at the hearing, and in its Closing, FGTC did not contest this allegation of violation, but noted it had recently taken steps to improve its recordkeeping system. Accordingly, after considering all of the evidence, I find that Respondent violated 49 C.F.R. § 192.709(a) by failing to retain a record of the date, location, and description of each repair made to the 18-inch pipeline that ruptured on May 4, 2009. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. 10 As with Item 2, the Notice incorrectly stated that FGTC had four pipeline controllers who were on duty on May 4, 2009. The actual number was five. 11 Although the Notice stated that Respondent had tested two of the pipeline controllers who were on duty on May 4, 2009, for the presence of alcohol, FGTC acknowledged at the hearing that it had not in fact tested any of those employees.#

220101004_Final Order_06292011_text.pdf, page 76 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 $95,000 for the violations in Items 2, 3, and 4, cited above. Item 2: The Notice proposed a civil penalty of $40,000 for Respondent’s violation of 49 C.F.R. § 199.105(b), for failing to drug test each employee whose performance either contributed to the May 4, 2009 accident or could not be completely discounted as a contributing factor. FGTC argues generally that the proposed penalty amount is excessive. Respondent further argues that the two night-shift pipeline controllers received drug tests immediately after the accident, and that its determination that the day shift controllers did not contribute to the accident was based on the best information available at the time thereby warranting a reduction in the proposed civil penalty. With regard to the gravity of this violation, FGTC failed to drug test all of the employees involved in a serious pipeline accident, i.e., one that occurred in a high consequence area and which led to the ejection of a 113-foot section of buried pipe, the hospitalization of three individuals, and the temporary closure of the Florida Turnpike. Moreover, as with all violations of the drug testing requirements, Respondent’s inaction also meant that the opportunity to drug test these employees in connection with this accident was forever lost. Moreover, at the time the Notice was prepared and issued, OPS believed, incorrectly, that FGTC had only failed to drug test two employees. The fact that Respondent actually failed to drug test three employees suggests that the proposed civil penalty is below the amount that should have been assessed for this violation, not that a reduction is warranted. The Notice also proposed identical civil penalty amounts for Respondent’s violation of both the drug and alcohol testing requirements. As these requirements serve the same purpose, and the allegations of violation are based on the same factual premise, i.e., that FGTC had failed to test all covered employees the proposed penalties for both violations are reasonable and consistent. Finally, Respondent has not presented any persuasive justification for its conduct, or contended that the proposed penalty would have an adverse effect on its ability to continue in business. Accordingly, FGTC’s contention that it should receive a reduction in the proposed civil penalty for failing to drug test all covered employees is unpersuasive. Accordingly, having reviewed the record and considered the assessment criteria, I assess FGTC a civil penalty of $40,000 for violation of 49 C.F.R. § 199.105(b).#

220101004_Final Order_06292011_text.pdf, page 87 Item 3: The Notice proposed a civil penalty of $40,000 for Respondent’s violation of 49 C.F.R. § 199.225(a)(1), for failing to test each covered employee for alcohol whose performance of a covered function either contributed to the May 4, 2009 accident or could not be completely discounted as a contributing factor to that accident. FGTC argues that the proposed penalty amount is excessive. For the reasons stated in Item 2, I do not find these arguments persuasive.12 Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $40,000 for violation of 49 C.F.R. § 199.105(b). Item 4: The Notice proposed a civil penalty of $15,000 for Respondent’s violation of 49 C.F.R. § 192.709(a), for failing to retain a record of the date, location, and description of each repair made to the 18-inch pipeline that ruptured on May 4, 2009. FGTC notes that it has recently taken steps to improve this aspect of its recordkeeping system. Respondent failed to properly document repairs that it made to a pipeline that later experienced a failure. If readily available, those records could have assisted in determining its potential cause and the likelihood of a similar incident occurring in another location. Respondent has not presented any persuasive justification for its conduct, or argued that the proposed penalty would have an adverse effect on its ability to continue in business. Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of $15,000 for violation of 49 C.F.R. § 192.709(a). 13 Accordingly, having reviewed the record and considered the assessment criteria, I assess Respondent a total civil penalty of $95,000. 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 $95,000 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. 12 The Notice stated that FGTC had tested two of the pipeline controllers for alcohol, but Respondent admitted at the hearing that it had not tested on any of its five pipeline controllers. As OPS has not asked to issue an amendment based on that admission, the civil penalty is based solely on the allegation made in the Notice, i.e., that FGTC failed to perform the required alcohol test on two employees. 13 See In the Matter of Columbia Gas Transmission, LLC, CPF No. 1-2007-1004, 2009 WL 5538656 (Dec. 17, 2009) (assessing $11,000 civil penalty for violation of recordkeeping requirement in 49 C.F.R. § 192.709).#

220101004_Final Order_06292011_text.pdf, page 98 WARNING ITEMS With respect to Items 1, 5, and 6, the Notice alleged probable violations of Part 192 and specifically considered these to be warning items. The warnings were for: 49 C.F.R. § 192.5(b)(3) (Item 1) ─ Respondent’s alleged failure to determine the proper class location unit for the pipeline that ruptured on May 4, 2009. Specifically, the Notice stated that this segment lies within 100 yards of South Fork High School’s 4H agriculture facilities, and that those facilities are occupied by 20 or more persons on at least 5 days a week for 10 weeks in any 12-month period and that FGTC should have identified it as being within a Class 3 location; 49 C.F.R. §§ 192.615(a)(3)(iii) and (a)(6) (Item 5) ─ Respondent’s alleged failure to have and follow procedures for prompt and effective response to each type of emergency, including an explosion that occurs near or directly involves a pipeline facility and for initiating an emergency shutdown and pressure reduction in any section of its pipeline system that is necessary to minimize hazards to life or property. In particular, the Notice stated that FGTC’s 18-inch natural gas pipeline ruptured at 5:09 a.m. EST on May 4, 2009, but that Respondent did not recognize that event until it received a phone call from the Martin County Fire and Rescue Squad 5:49 a.m. EST. The Notice also stated that a mainline valve downstream from the rupture point failed to automatically close at the time of the accident, and that natural gas from a parallel 30-inch line continued to flow back into and vent out of the 18-inch line until FGTC manually closed that valve two hours later. Finally, the Notice stated that Respondent’s emergency response was not prompt, and that its Supervisory Control and Data Acquisition System failed to recognize the rupture at the time of the accident; and 49 C.F.R. §§ 192.903 and 192.905(b) (Item 6) ─ Respondent’s alleged failure to identify South Fork High School’s 4-H agricultural facilities as an identified site within the potential impact radius (PIR) of its 18-inch line. In particular, the Notice alleged that South Fork High School students use those facilities five days per week, that they are within the 365-foot PIR for FGTC’s 18-inch line, and that Respondent is in the process of designating the affected pipeline segments as a High Consequence Area (HCA). FGTC presented information in its Response showing that it had taken certain actions to address the cited items. In the event that OPS finds a violation of these provisions in a subsequent inspection, Respondent may be subject to future enforcement action. Under 49 C.F.R. § 190.215, Respondent has the 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 the Final Order by the Respondent, provided they contain a brief statement of the issue(s) and meet all other#

220101004_Final Order_06292011_text.pdf, page 109 requirements of 49 C.F.R. § 190.215. The filing of a petition automatically stays the payment of any civil penalty assessed. If Respondent submits payment of the civil penalty, the Final Order becomes the final administrative decision and the right to petition for reconsideration is waived. The 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#

220101004_Decision on the Petition for Reconsideration_12142011_text.pdf, page 1Official PDFDEC 1 4 2011 Mr. Thomas Stone Vice President, Chief Operations and Maintenance Officer Florida Gas Transmission Company, LLC 5051 Westheimer Road Houston, TX 77056 Re: CPF No. 2-2010-1004 Dear Mr. Stone: Enclosed please find the Decision on Reconsideration issued in the above-referenced case. It denies your Petition for Reconsideration. Service of the Decision 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 Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, Pipeline Safety, PHMSA Mr. Louis Soldano, Vice President and General Counsel, Florida Gas Transmission Company, LLC CERTIFIED MAIL – RETURN RECEIPT REQUESTED [71791000164202950824]#

220101004_Decision on the Petition for Reconsideration_12142011_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 ) Florida Gas Transmission ) CPF No. 2-2010-1004 Company, LLC, ) ) ) ) Petitioner. ) ______________________________) DECISION ON RECONSIDERATION In a June 29, 2011 Final Order, I found that Florida Gas Transmission Company, LLC (FGTC) had violated the drug and alcohol testing requirements in 49 C.F.R. §§ 199.105(b) and 199.225(a)(1) and the gas transmission line recordkeeping requirements in 49 C.F.R. § 192.709(a), based on the results of the Office of Pipeline Safety’s (OPS) investigation of a May 2009 pipeline accident in Southeast Florida. I assessed FGTC a civil penalty of $95,000 for those violations and issued the company a warning item for several other probable violations. On July 15, 2011, FGTC submitted a Petition for Reconsideration (Petition) of the Final Order. The Petition stated that the findings of violation related to the drug and alcohol testing requirements were arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law. The Petition requested that those portions of the Final Order be withdrawn. Because the evidence of record supports the findings in question, I am denying this Petition and affirming the Final Order without modification. Background On May 4, 2009, FGTC’s 18-inch natural gas pipeline ruptured at Milepost (MP) 810.3 in Martin County, Florida. 1 The rupture caused the ejection of a 113-foot section of the pipeline, the hospitalization of three individuals, and the closure of the Florida Turnpike. 1 See In the Matter of Florida Gas Transmission Company, LLC, CPF No. 2-2009-1002H (May 7, 2009) (available at www.phmsa.dot.gov). FGTC is the operator of a 5,000-mile natural gas pipeline system that runs from Texas to South Florida. http://www.panhandleenergy.com/comp_fld.asp.#

220101004_Decision on the Petition for Reconsideration_12142011_text.pdf, page 32 The Director, Southern Region, OPS (Director), initiated an investigation of the accident and subsequently issued Petitioner a Notice of Probable Violation and Proposed Civil Penalty (Notice). The Notice, dated February 23, 2010, proposed finding that FGTC had violated 49 C.F.R. §§ 192.709(a), 199.105(b), and 199.225(a)(1) and assessing a civil penalty of $95,000 for the alleged violations. The Notice also included several warning items pursuant to 49 C.F.R. § 190.205. FGTC responded to the Notice, by letter dated March 26, 2010, and requested a hearing. That hearing was held on July 15, 2010, in Atlanta, Georgia. By letter dated August 30, 2010, Petitioner provided a post-hearing statement for the record. On June 29, 2011, I issued a Final Order that sustained all of the findings of violation proposed in the Notice. Specifically, I found that FGTC had an obligation to administer drug and alcohol tests to the three day-shift pipeline control room employees who reported for duty on May 4, 2009, because the company did not have sufficient information available immediately after the accident to conclude that the conduct of those employees could be completely discounted as a contributing factor. I further found that FGTC had failed to retain a record of the date, location, and description of certain repairs made to the ruptured section of the pipeline. Accordingly, I concluded that Petitioner had violated §§ 199.105(b), 199.225(a)(1), and 192.709(a) as alleged in the Notice and assessed the proposed civil penalty amount of $95,000 for those violations. On July 15, 2011, FGTC submitted this Petition requesting reconsideration of those portions of the Final Order that concerned the drug and alcohol testing requirements of 49 C.F.R. Part 199. Petitioner argued that the best information available at the time of the accident did not show that the conduct of the three day-shift pipeline controllers caused or contributed to the May 4, 2009 accident; therefore, FGTC had no obligation to test those employees for the presence of drugs or alcohol. Petitioner further argued that the Final Order relied on inadequate evidence and an erroneous interpretation of §§ 199.105(b) and 199.225(a)(1) to sustain the violations alleged in the Notice. Standard of Review A respondent is afforded the right to petition the Associate Administrator for reconsideration of a final order. However, that right is not an appeal or an opportunity to seek a de novo review of not previously available or requesting that any errors in the final order be corrected. Requests for consideration of additional facts or arguments must be supported by a statement of reasons as the record.2 It is a venue for presenting the Associate Administrator with information that was to why those facts or arguments were not presented prior to the issuance of the final order. Repetitious information or arguments will not be considered. Analysis Sections 199.105(b) and 199.255(a)(1) require an operator to administer a drug and alcohol test for each employee whose performance either contributed to an accident or cannot be completely 2 49 C.F.R. § 190.215(a)-(e).#

220101004_Decision on the Petition for Reconsideration_12142011_text.pdf, page 43 discounted as a contributing factor to an accident. Those regulations further state that an operator’s decision not to administer a drug or alcohol test must be based on the best available information at the time. In its Petition, FGTC argues that the best information available at the time showed that the conduct of the three day-shift pipeline controllers did not cause or contribute to the May 4, 2009 rupture. Petitioner further argues that the Final Order relied on inadequate evidence (i.e., the fact that FGTC listed the cause of the rupture as unknown in several reports submitted after the accident, and that the company failed to maintain any documentation of its decision not to subject the day-shift controllers to drug or alcohol testing) and an erroneous interpretation of §§ 199.105(b) and 199.225(a)(1) to sustain the allegations of violation. As I explained in the Final Order, the pipeline in question ruptured at approximately 5:09 a.m. Eastern Daylight Savings Time (EDT) on May 4, 2009. At that time, FGTC had two night-shift pipeline controllers on duty. However, the company’s three day-shift pipeline controllers all reported for duty within the next 30 minutes (i.e., at 5:10 a.m., 5:34 a.m., and 5:35 a.m., respectively). At 5:49 a.m., Petitioner first learned of the rupture at MP 810.3, when the company received a telephone call from the Martin County Fire and Rescue Squad. The three day-shift controllers spent the next several hours assisting Petitioner’s accident response efforts. At 8:05 a.m., FGTC informed the National Response Center (NRC) that the cause of the failure was unknown, a position the company continued to maintain in an incident report filed with PHMSA on June 8, 2009. Citing these facts, I reached the following conclusions in the Final Order as to whether FGTC had an obligation to administer a drug test to the three day-shift controllers: Respondent did not have sufficient information available immediately after the accident to conclude that the performance of the day-shift controllers could “be completely discounted as a contributing factor to the accident.” Accident scenarios play out over a period of time and the actions of employees who came on the scene in the minutes following the initiating event can impact the severity of . . . releases and the effectiveness of response actions. All three of these employees were on duty when FGTC first learned of the failure, and each had an active role in its response to the accident. Moreover, Respondent had not identified the cause of the failure in the NRC report filed on the morning of the accident, or in the incident report filed with PHMSA some 34 days later. That undermines FGTC's assertion that it had a legitimate basis for concluding that the performance of the day-shift controllers could be completely discounted as a contributing factor, particularly in the immediate aftermath of the failure. In summary, the day-shift controllers were on duty when events critical to the accident occurred, including the initial reporting and response to the failure, and Respondent lacked a sufficient, contemporaneous basis for concluding that those employees should not be drug tested.#

220101004_Decision on the Petition for Reconsideration_12142011_text.pdf, page 54 In a subsequent portion of the Final Order, I noted that the same reasoning applied in determining whether FGTC had an obligation to test the three day-shift controllers for the presence of alcohol. Petitioner has not presented any persuasive basis for reconsidering these findings. The evidence in the record does not show that FGTC had sufficient information available immediately after the accident to conclude that the performance of the day-shift controllers could “be completely discounted as a contributing factor to the accident.” Those employees were on duty during critical phases of the accident, and the record does not show that Petitioner had enough information about the cause of the failure to determine that they should not be subject to a drug or alcohol test. That conclusion is supported by a reasonable construction of the text, structure, and purpose of the applicable regulations, which create a strong presumption in favor of post- accident drug and alcohol testing. For these reasons, I am rejecting Petitioner’s request for reconsideration of the findings that FGTC violated 49 C.F.R. §§ 199.105(a) and 199.225(a)(1) by failing to perform a drug and alcohol test of each employee whose performance either contributed to the May 4, 2009 accident or could not be completely discounted as a contributing factor to that accident. RELIEF DENIED Based on the information provided in the Petition, a review of the relevant portions of the record, and for the reasons stated above, I am affirming the Final Order without modification. This Decision is the final administrative action in this proceeding. _____________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

220101004_notice letter_02232010_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION And PROPOSED CIVIL PENALTY CERTIFIED MAIL - RETURN RECEIPT REQUESTED February 23, 2010 Mr. Jeryl Mohn Senior Vice President, Operations and Engineering Florida Gas Transmission Company, LLC 5444 Westheimer Road Houston, TX 77056 CPF 2-2010-1004 Dear Mr. Mohn: As a result of the May 4, 2009 pipeline accident on the Florida Gas Transmission (FGT) 18 inch pipeline in Martin County, Florida, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code investigated the accident and inspected FGT pipeline facilities and records involved in the accident. It appears that you have committed probable violations of the pipeline safety regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violations are: 1. §192.5 Class Locations. …(b) Except as provided in paragraph (c) of this section, pipeline locations are classified as follows: (3) A Class 3 location is: (ii) An area where the pipeline lies within 100 yards (91 meters) of either a building or a small, well-defined outside area (such as a playground, recreation area, outdoor theater, or other place of public assembly) that is occupied by 20 or more persons on at least 5 days a week for 10 weeks in any 12-month period. (The days and weeks need not be consecutive.)#

220101004_notice letter_02232010_text.pdf, page 2FGT failed to identify the Class 3 locations on pipelines at the location of the May 4, 2009 pipeline rupture in Martin County, Florida. The South Fork High School’s 4-H agricultural facilities are within 100 yards of the FGT pipelines. South Fork High School has 20 or more persons on at least 5 days a week for 10 weeks in any 12-month period in the 4-H agricultural area. 2. §199.105 Drug tests required. Each operator shall conduct the following drug tests for the presence of a prohibited drug: …(b) Post-accident testing. As soon as possible but no later than 32 hours after an accident, an operator shall drug test each employee whose performance either contributed to the accident or cannot be completely discounted as a contributing factor to the accident Procedural manual for operations, maintenance, and emergencies. FGT did not test all pipeline controllers involved in the pipeline accident that occurred on May 4, 2009. FGT tested two of the four controllers that were involved in the pipeline accident. 3. §199.225 Alcohol tests required. Each operator shall conduct the following types of alcohol tests for the presence of alcohol: (a) Post-accident. (1) As soon as practicable following an accident, each operator shall test each surviving covered employee for alcohol if that employee's performance of a covered function either contributed to the accident or cannot be completely discounted as a contributing factor to the accident. FGT did not perform alcohol test on all four controllers that were involved in the pipeline accident. FGT tested two of the four controllers that were involved in the pipeline accident. 4. §192.709 Transmission lines: Record keeping. Each operator shall maintain the following records for transmission lines for the periods specified: (a) The date, location, and description of each repair made to pipe (including pipe- to-pipe connections) must be retained for as long as the pipe remains in service. FGT did not maintain records as required of §192.709(a). FGT initially believed that no repairs had been made to the 18 inch polyken tape coated pipeline in the area of the rupture. It was later discovered that the ruptured pipeline had polyken tape coated pipe (original coating) and fusion bond epoxy (FBE) coated pipe. The repair records for the 18 inch FBE coated pipe were not available. FGT believes that the FBE coated pipe 2#

220101004_notice letter_02232010_text.pdf, page 3was installed into the pipeline as a repair for external corrosion discovered by a 2004 smart pig run. No specific information on the date and location of the repair was available. FGT was able to produce pressure test documentation for the FBE pipe. 5. §192.615 Emergency plans (a) Each operator shall establish written procedures to minimize the hazard resulting from a gas pipeline emergency. At a minimum, the procedures must provide for the following: ………. (3) Prompt and effective response to a notice of each type of emergency, including the following: ………. (iii) Explosion occurring near or directly involving a pipeline facility. ………. (6) Emergency shutdown and pressure reduction in any section of the operator's pipeline system necessary to minimize hazards to life or property. The May 4, 2009 FGT pipeline accident in Martin County Florida occurred at approximately 5:09 am EST. FGT was initially unaware of the pipeline explosion until Martin County Fire and Rescue contacted FGT’s Houston Control room at 5:49 EST. The Florida Highway Patrol log indicated that at 5:17 am the patrolman advised he smelled gas – possible gas leak. The upstream main line break valve 20-1 closed as a result of the rupture, but the down stream main line break valve 20-2 did not close, which allowed gas to back flow into the rupture, feeding from the parallel 30 inch pipeline for roughly two hours until FGT manually close the down stream main line break valve 20-2. The Florida Turnpike and Interstate 95 was shut down for several hours as a result of this accident. FGT’s emergency response was not prompt as a result of this time delay in rupture discovery. FGT’s Supervisory Control and Data Acquisition (SCADA) system did not recognize the failure. 6. §192.905 How does an operator identify a high consequence area? (a) General. To determine which segments of an operator's transmission pipeline 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 § 192.903 to identify a high consequence area. An operator may apply one method to its entire pipeline system, or an operator may apply one method to individual portions of the pipeline system. An operator must describe in its integrity management program which method it is applying to each portion of the operator's pipeline system. The description must include the potential impact 3#

220101004_notice letter_02232010_text.pdf, page 4radius when utilized to establish a high consequence area. (See appendix E.I. for guidance on identifying high consequence areas.) (b)(1) Identified sites. An operator must identify an identified site, for purposes of this subpart, from information the operator has obtained from routine operation and maintenance activities and from public officials with safety or emergency response or planning responsibilities who indicate to the operator that they know of locations that meet the identified site criteria. These public officials could include officials on a local emergency planning commission or relevant Native American tribal officials. (2) If a public official with safety or emergency response or planning responsibilities informs an operator that it does not have the information to identify an identified site, the operator must use one of the following sources, as appropriate, to identify these sites. (i) Visible marking (e.g., a sign); or (ii) The site is licensed or registered by a Federal, State, or local government agency; or (iii) The site is on a list (including a list on an internet web site) or map maintained by or available from a Federal, State, or local government agency and available to the general public. ………. §192.903 What definitions apply to this subpart? 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 consecutive.) Examples include but are not limited to, beaches, playgrounds, recreational facilities, camping grounds, outdoor theaters, stadiums, recreational areas near a body of water, or areas outside a rural building such as a religious facility; or (b) A building 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, religious facilities, office buildings, community centers, general stores, 4-H facilities, or roller skating rinks; or FGT failed to identify the High Consequence Areas (HCA) located at the May 4, 2009 rupture location in Martin County, FL adjacent to the South Fork High School’s 4-H agricultural facilities. The potential impact radius (PIR) for the 18 inch FGT pipeline is 365 feet. The 4-H agricultural facility is located within the PIR of the FGT pipelines and has students in the area five days a week. FGT is in the process of extending the HCA segments to include these pipeline segments. 4#

220101004_notice letter_02232010_text.pdf, page 5Proposed 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 violations and has recommended that you be preliminarily assessed a civil penalty of $95,000 as follows: Item number PENALTY 2 $ 40,000 3 $ 40,000 4 $ 15,000 Warning Items With respect to items: 1, 5 and 6, 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 these items. Be advised that failure to do so may result in Florida Gas Transmission being subject to additional enforcement action. 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. 5#

220101004_notice letter_02232010_text.pdf, page 6In your correspondence on this matter, please refer to CPF 2-2010-1004 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Linda Daugherty Director, Southern Region Pipeline and Hazardous Materials Safety Administration Enclosure: Response Options for Pipeline Operators in Compliance Proceedings cc: Mr. David Shellhouse, Vice President Operations-Southeast Division, FGT 6#