ENMARK ENERGY, INC — Notice of Amendment

party submissionOfficial PDF220136012M_Operator Response to Notice_01302014.pdf#

220136012M_closure letter_04082014_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED April 8, 2014 Mr. Connell R. Rader President Enmark Energy, Inc. 104 First Choice Drive, Suite A Madison, MS 39110 CPF 2-2013-6012M Dear Mr. Rader: On August 12-15, and August 27, 2013, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Southern Region, Office of Pipeline Safety (OPS) inspected the Enmark Energy, Inc. (Enmark) Sandhill and Air Liquide Carbon Dioxide (CO2) pipelines in Madison, Mississippi, pursuant to Chapter 601 of 49 United States Code. As a result of the inspection, OPS issued a Notice of Amendment (NOA) on December 6, 2013. The OPS Southern Region received, reviewed, and responded to Enmark’s January 30, 2014, submittal of revised procedures. That is, in a letter dated March 6, 2014, the OPS Southern Region explained the deficiencies in the revised procedures and asked you to resubmit. The OPS Southern Region received and reviewed Enmark’s second written response to the NOA dated March 28, 2014, and find Enmark’s amended procedures adequate. This letter is to inform you that Enmark has complied with the terms of the NOA and that no further action is necessary with regards to the NOA. This case is now closed. Please be advised that this letter refers only to the NOA (CPF 2-2013-6012M) and not to any other PHMSA pending cases. Also be advised that nothing herein states or implies that the Enmark Integrity Management (IM) Program and Operator Qualification (OQ) Program meet the requirements of the federal pipeline safety regulations or that the IM and OQ Programs are approved. The pipeline system and the IM and OQ Programs remain subject to inspection by PHMSA. Sincerely, Wayne T. Lemoi Director, Office of Pipeline Safety PHMSA Southern Region#

220136012M_notice of amendment_12062013_text.pdf, page 1Official PDFNOTICE OF AMENDMENT CERTIFIED MAIL - RETURN RECEIPT REQUESTED December 6, 2013 Mr. Connell R. Rader President Enmark Energy, Inc. 104 First Choice Drive, Suite A Madison, MS 39110 CPF 2-2013-6012M Dear Mr. Rader: On August 12-15, and August 27, 2013, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Southern Region, Office of Pipeline Safety (OPS) inspected the Enmark Energy, Inc. (Enmark) Sandhill and Air Liquide Carbon Dioxide (CO2) pipelines in Madison, Mississippi, pursuant to Chapter 601 of 49 United States Code. On the basis of the inspection, PHMSA has identified apparent inadequacies within Enmark’s Integrity Management Program (IMP) and its Operator Qualification Program (OQP) as described below: 1. §195.452 Pipeline integrity management in high consequence areas. ... (d) When must operators complete baseline assessments? Operators must complete baseline assessments as follows: ... (3) Newly-identified areas. (i) When information is available from the information analysis (see paragraph (g) of this section), or from Census Bureau maps, that the population density around a pipeline segment has changed so as to fall within the definition in §195.450 of a high population area or other populated area, the operator must incorporate the area into its baseline assessment plan as a high consequence area within one year from the date the area is identified. An operator must complete the baseline assessment of any line pipe that could affect the newly-identified high consequence area within five years from the date the area is identified. Enmark's Integrity Management Program (IMP) procedures did not address the use of all the information that should be available from the Information Analysis required by the IMP regulations in §195.452(g). This information would include, but not be limited to,#

220136012M_notice of amendment_12062013_text.pdf, page 2development or planned development along the pipeline, as well as data gathered through assessments, inspections, tests, surveillance, patrols, and other maintenance activities. This information is used to help identify new high population areas or other populated areas that could be newly-identified high consequence areas (HCAs). That is, while Enmark’s IMP Section 8.2 Integration of Inspection Data addressed incorporating information from changes to the pipeline system itself, it did not address information concerning changes in the population density around the pipeline. Similarly, IMP Sections 4.0 Identifying Pipeline Segments with Potential HCA Impact and 8.3 Procedure for Determination of Integrity Assessment Intervals addressed the use of data from the National Pipeline Mapping System (NPMS) to determine HCAs, but did not address the use of information on population density changes identified through the Information Analysis required by §195.452(g). 2. §195.452 Pipeline integrity management in high consequence areas. ... (d) When must operators complete baseline assessments? Operators must complete baseline assessments as follows: ... (3) Newly-identified areas. (i) When information is available from the information analysis (see paragraph (g) of this section), or from Census Bureau maps, that the population density around a pipeline segment has changed so as to fall within the definition in §195.450 of a high population area or other populated area, the operator must incorporate the area into its baseline assessment plan as a high consequence area within one year from the date the area is identified. An operator must complete the baseline assessment of any line pipe that could affect the newly-identified high consequence area within five years from the date the area is identified. (ii) An operator must incorporate a new unusually sensitive area into its baseline assessment plan within one year from the date the area is identified. An operator must complete the baseline assessment of any line pipe that could affect the newly- identified high consequence area within five years from the date the area is identified. While Enmark's IMP Section 6.9 Summary / Recommended Baseline Assessment required newly identified HCAs to be incorporated into its IMP within one year of their discovery, it incorrectly required the baseline assessment for these newly identified HCAs to be completed within five years of their being incorporated into the IMP. The baseline assessment of a newly identified HCA must be completed within five years from the date the HCA is identified, not within five years after being incorporated into the Enmark IMP. 3. §195.452 Pipeline integrity management in high consequence areas. ... (h) What actions must an operator take to address integrity issues? ... (2) Discovery of condition. Discovery of a condition occurs when an operator has adequate information about the condition to determine that the condition presents a potential threat to the integrity of the pipeline. An operator must promptly, but no later than 180 days after an integrity assessment, obtain sufficient information about a condition to make that determination, unless the operator can demonstrate that the 180-day period is impracticable. 2#

220136012M_notice of amendment_12062013_text.pdf, page 3Enmark's IMP Section 7.0 Pipeline Repair Strategy did not fully address all the relevant information that may lead to the “discovery of condition” requiring remediation. Sections 7.1 Introduction and 7.5 Other Conditions That Warrant Evaluation and/or Repair discuss evaluating baseline and subsequent integrity assessment results and the repair of conditions warranting repairs; however, the procedures did not address other information Enmark should be obtaining during maintenance activities and pipeline operations to determine if a condition requiring remediation exists. 4. §195.452 Pipeline integrity management in high consequence areas. ... (h) What actions must an operator take to address integrity issues? ... (4) Special requirements for scheduling remediation. (i) Immediate repair conditions. An operator's evaluation and remediation schedule must provide for immediate repair conditions. To maintain safety, an operator must temporarily reduce operating pressure or shut down the pipeline until the operator completes the repair of these conditions. An operator must calculate the temporary reduction in operating pressure using the formula in Section 451.6.2.2 (b) of ANSI/ASME B31.4 (incorporated by reference, see § 195.3). An operator must treat the following conditions as immediate repair conditions: Enmark's IMP Section 7.2 Immediate Repair Conditions required a temporary reduction in operating pressure of its pipelines if an Immediate Repair Condition was identified. The procedure stated, "...the pipeline operating pressure will be reduced in accordance with ASME B31.4 (or other basis for determining safe operating pressure) until the repair(s) are completed." However, Enmark's IMP and O&M procedures did not address how a pressure reduction for corrosion anomalies would actually be determined in accordance with ASME B31.4, nor how a reduced operating pressure would be determined for other Immediate Repair Conditions, such as certain dents. Additionally, Enmark's IMP did not address how Enmark would implement a temporary operating pressure reduction. Enmark did not have pressure control devices on its pipeline so pressure control for Enmark's pipelines is provided by Denbury. But, Enmark did not have procedures for coordinating and implementing a pressure reduction on its pipeline with Denbury. 5. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: (a) Identify covered tasks; (b) Ensure through evaluation that individuals performing covered tasks are qualified; The Enmark written Operator Qualification Program (OQP) did not provide adequate procedures on how Enmark would 1) evaluate an outside entity’s OQP to assure OQ covered tasks have been identified and 2) ensure that the individuals performing covered tasks that could affect Enmark’s Sandhill and Air Liquide pipelines are properly OQ qualified. 3#

220136012M_notice of amendment_12062013_text.pdf, page 4Enmark’s OQP Section 13 - Mutual Assistance indicated that a process was developed to ensure the consistent review of a third-party pipeline operator’s or operating subsidiary’s OQP in the event that the third-party might be called upon to perform an OQ covered task. However, the process was not explained in sufficient detail to understand what is required. Further, Section 13 specifically stated it is “applicable to those entities that are (they/themselves) subject to the OQ rule because they operate regulated (Part 195/192) assets.” Individuals working for Enmark’s customers, Sandhill and Air Liquide, perform covered tasks that affect the operation of Enmark’s pipelines and neither company is regulated under Part 195 or Part 192. 6. §195.505 Qualification program. Each operator shall have and follow a written qualification program. The program shall include provisions to: ... (c) Allow individuals that are not qualified pursuant to this subpart to perform a covered task if directed and observed by an individual that is qualified; The Enmark OQP did not adequately address the process for allowing individuals that are not qualified to perform an OQ covered task under the direction and observation of a qualified individual. Enmark’s OQP Section 11- Non-Qualified Individuals indicated that it is the responsibility of the qualified person directing and observing an individual to limit the number of non-qualified individuals performing a given covered task to the span of control ratio indicated in the covered task list; yet, the covered task list did not list any span of control ratios. Additionally, Section 12 - Contractors stated “The contractor must provide span of control acceptable to Enmark Energy while Covered Tasks are performed” but the OQP did not indicate or explain what is acceptable to Enmark. Response to this Notice This Notice is provided pursuant to 49 U.S.C. §60108(a) and 49 C.F.R. §190.237. 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. If, after opportunity for a hearing, your plans or procedures are found inadequate as alleged in this Notice, you may be ordered to amend your plans or procedures to correct the inadequacies (49 C.F.R. § 190.237). If you are not contesting this Notice, we propose that you submit your amended procedures to my office within 60 days of receipt of this Notice. This period may be extended by written request for good cause. Once the inadequacies 4#

220136012M_notice of amendment_12062013_text.pdf, page 5identified herein have been addressed in your amended procedures, this enforcement action will be closed. It is requested (not mandated) that Enmark Energy, Inc. maintain documentation of the safety improvement costs associated with fulfilling this Notice of Amendment (preparation/revision of plans, procedures) and submit the total to Wayne T. Lemoi, Director, Southern Region, Pipeline and Hazardous Materials Safety Administration. In correspondence concerning this matter, please refer to CPF 2-2013-6012M and, for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Wayne T. Lemoi Director, Office of Pipeline Safety PHMSA Southern Region Enclosure: Response Options for Pipeline Operators in Compliance Proceedings 5#