# K O TRANSMISSION COMPANY — Notice of Probable Violation

- **operation:** document
- **citation:** CPF 220181004
- **title:** K O TRANSMISSION COMPANY — Notice of Probable Violation
- **source type:** enforcement
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2018-06-29
- **effective on:** Not available
- **summary:** CLOSED notice of probable violation citing 191.17(a), 191.29(a)(1), 192.225(a), 192.465(a), 192.605(a), 192.615(b)(2), 192.709(c), 192.805(c), 192.805(g), 192.805(h), 192.805(i), 192.809(d), 192.809(e), 192.907(a), 192.917(a), 192.921(a), 192.925(b), 192.945(a), 192.947(d).
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- **source url:** https://primis.phmsa.dot.gov/enforcement-data/case/220181004
**body:**

Notice of Probable Violation involving K O TRANSMISSION COMPANY. PHMSA's enforcement data identifies the cited regulations as 191.17(a),  191.29(a)(1),  192.225(a),  192.465(a),  192.605(a),  192.615(b)(2),  192.709(c),  192.805(c),  192.805(g),  192.805(h),  192.805(i),  192.809(d),  192.809(e),  192.907(a),  192.917(a),  192.921(a),  192.925(b),  192.945(a),  192.947(d). The case was opened on 2018-06-29 and is reported as closed as of 2019-05-03. Proposed civil penalty: $94,900. Assessed civil penalty: $94,900. Open the official case record for notices, responses, orders, and the latest status.

Official case documents:

220181004_Final Order_05032019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220181004/220181004_Final%20Order_05032019.pdf

220181004_Final Order_05032019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220181004/220181004_Final%20Order_05032019_text.pdf

220181004_NOPV_PCP_PCO_06292018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220181004/220181004_NOPV_PCP_PCO_06292018.pdf

220181004_NOPV_PCP_PCO_06292018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220181004/220181004_NOPV_PCP_PCO_06292018_text.pdf

220181004_Operator Response to Notice_07302018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220181004/220181004_Operator%20Response%20to%20Notice_07302018.pdf

220181004_Final Order_05032019_text.pdf

May 3, 2019
Ms. Lynn J. Good
Chairman, President, and CEO
Duke Energy Corporation
550 South Tryon Street
Charlotte, North Carolina 28202
Re: CPF No. 2-2018-1004
Dear Ms. Good:
Enclosed please find the Final Order issued in the above-referenced case to your subsidiary, KO
Transmission Company. It makes findings of violation and assesses a civil penalty of $94,900.
It further finds that KO Transmission Company has completed the actions specified in the Notice
to comply with the pipeline safety regulations and acknowledges receipt of payment of the full
penalty amount, by wire transfer dated July 30, 2018. This enforcement action is now closed.
Service of the Final Order by certified mail is effective upon the date of mailing, as provided
under 49 C.F.R. § 190.5.
Thank you for your cooperation in this matter.
Sincerely,
Alan K. Mayberry
Associate Administrator
for Pipeline Safety
Enclosure
cc: Mr. James A. Urisko, Director, Southern Region, Office of Pipeline Safety, PHMSA
Mr. Victor Gaglio, Senior Vice President and Chief Operations Officer Natural Gas,
Duke Energy Corporation
Mr. Franklin H. Yoho, CEO, KO Transmission Company, 550 South Tryon Street,
Charlotte, North Carolina 28202



U.S. DEPARTMENT OF TRANSPORTATION
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590
__________________________________________
In the Matter of )
KO Transmission Company, ) CPF No. 2-2018-1004
a subsidiary of Duke Energy Corporation, )
)
)
)
Respondent. )
__________________________________________)
FINAL ORDER
From July 31 through September 21, 2017, pursuant to 49 U.S.C. § 60117, representatives of the
Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety
(OPS), conducted an on-site pipeline safety inspection of the facilities and records of KO
Transmission Company (KOT or Respondent) in its Erlanger, Kentucky, and Cincinnati, Ohio
offices. KOT is a wholly-owned subsidiary of Duke Energy Corporation that operates and co-
owns, with Columbia Gas Transmission Corporation, approximately 90 miles of natural gas
transmission pipeline near Lexington, KY.1
As a result of the inspection, the Director, Southern Region, OPS (Director), issued to
Respondent, by letter dated June 29, 2018, a Notice of Probable Violation, Proposed Civil
Penalty, and Proposed Compliance Order (Notice), which also included warnings pursuant to 49
C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that
KOT had committed four violations of 49 C.F.R. Part 192 and proposed assessing a civil penalty
of $94,900 for the alleged violations. The Notice also proposed ordering Respondent to take
certain measures to correct the alleged violations. The warning items required no further action
but warned the operator to correct the probable violations or face possible future enforcement
action.
Duke responded to the Notice on behalf of Respondent by letter dated July 30, 2018 (Response).
The company did not contest the allegations of violation, paid the proposed civil penalty of
$94,900, and completed the proposed compliance actions. In accordance with 49 C.F.R.
§ 190.208(a)(1), such payment authorizes the Associate Administrator to make findings of
violation and issue this final order without further proceedings. Respondent did not request a
hearing and therefore has waived its right to one.
1 KO Transmission Company website, available at http://www.kotransmission.com/ (last accessed November 21,
2018).



CPF 2-2018-1004
Page 2
FINDINGS OF VIOLATION
In its Response, KOT did not contest the allegations 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. § 192.805, which states, in
relevant part:
§ 192.805 Qualification program.
Each operator shall have and follow a written qualification program. The
program shall include provisions to:
(a) Identify covered tasks; . . . .
(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; . . .
(g) Identify those covered tasks and the intervals at which evaluation of the
individual's qualifications is needed;
(h) After December 16, 2004, provide training, as appropriate, to ensure that
individuals performing covered tasks have the necessary knowledge and skills to
perform the tasks in a manner that ensures the safe operation of pipeline facilities;
and
(i) After December 16, 2004, notify the Administrator or a state agency
participating under 49 U.S.C. Chapter 601 if the operator significantly modifies the
program after the administrator or state agency has verified that it complies with
this section. . . .
The Notice alleged that Respondent violated 49 C.F.R. § 192.805 by failing to include provisions
in its written qualification program that are required under paragraphs (c), (g), (h), and (i) of that
section. Specifically, the Notice alleged that KOT’s written qualification program failed: (1) to
provide sufficient details to describe how § 192.805(c) would be satisfied for KOT’s particular
system, including the conditions under which non-qualified individuals could perform a covered
task if directed and observed by a qualified individual (e.g., information on span-of-control ratios
and verbal communications for applicable covered tasks); (2) to show how and if evaluation
criteria would be applied under § 192.805(g) to establish re-qualification intervals; (3) to address
the requirement under § 192.805(h) that KOT would provide training, as appropriate, to ensure
that individuals performing covered tasks had the necessary knowledge and skills to perform the
tasks in a manner that ensured the safe operation of pipeline facilities; and (4) to explain how
KOT would meet the requirement under § 192.805(i) that KOT notify the Administrator or a
state agency if KOT significantly modified its qualification program.
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. § 192.805 by failing to include
provisions in its written qualification program required under paragraphs (c), (g), (h), and (i) of
that section.



CPF 2-2018-1004
Page 3
Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.809, which states, in
relevant part:
§ 192.809 General.
(a) Operators must have a written qualification program by April 27, 2001. The
program must be available for review by the Administrator or by a state agency
participating under 49 U.S.C. Chapter 601 if the program is under the authority of
that state agency.
(b) Operators must complete the qualification of individuals performing
covered tasks by October 28, 2002. . . .
(d) After October 28, 2002, work performance history may not be used as a
sole evaluation method.
(e) After December 16, 2004, observation of on-the-job performance may not
be used as the sole method of evaluation.
The Notice alleged that Respondent violated 49 C.F.R. § 192.809 by failing to dis-allow the use
of work-performance-history reviews as a sole evaluation method of qualification after October
28, 2002, and observation of on-the-job performance as a sole evaluation method of qualification
after October 16, 2004. Specifically, the Notice alleged that KOT’s written operator
qualification plan did not dis-allow the use of the two methods stated above as sole evaluation
methods as of the date of the PHMSA inspection in 2017.
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. § 192.809 by failing to dis-allow the
use of work-performance-history reviews as the sole evaluation method of qualification after
October 28, 2002, and observation of on-the-job performance as the sole evaluation method of
qualification after October 16, 2004.
Item 6: The Notice alleged that Respondent violated 49 C.F.R. § 192.465(a), which states:
§ 192.465 External corrosion control: Monitoring.
(a) Each pipeline that is under cathodic protection must be tested at least once
each calendar year, but with intervals not exceeding 15 months, to determine
whether the cathodic protection meets the requirements of §192.463. However, if
tests at those intervals are impractical for separately protected short sections of
mains or transmission lines, not in excess of 100 feet (30 meters), or separately
protected service lines, these pipelines may be surveyed on a sampling basis. At
least 10 percent of these protected structures, distributed over the entire system
must be surveyed each calendar year, with a different 10 percent checked each
subsequent year, so that the entire system is tested in each 10-year period.
The Notice alleged that Respondent violated 49 C.F.R. § 192.465(a) by failing to test each
pipeline under cathodic protection (CP), at least once each calendar year but with intervals not
exceeding 15 months, to determine whether such system meets the requirements of § 192.463 at
several test stations. Specifically, the Notice alleged that KOT exceeded the 15-month test
interval at seven test sites from between 70 and 120 days.



CPF 2-2018-1004
Page 4
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. § 192.465(a) by failing to test each
pipeline under CP, at least once each calendar year but with intervals not exceeding 15 months,
to determine whether such system meets the requirements of § 192.463 at several test stations.
Item 14: The Notice alleged that Respondent violated 49 C.F.R. § 192.921(a), which states:
§ 192.921 How is the baseline assessment to be conducted?
(a) Assessment methods. An operator must assess the integrity of the line pipe
in each covered segment by applying one or more of the following methods
depending on the threats to which the covered segment is susceptible. An operator
must select the method or methods best suited to address the threats identified to
the covered segment (See §192.917).
The Notice alleged that Respondent violated 49 C.F.R. § 192.921(a) by failing to conduct a
baseline assessment on two covered segments of line pipe. Specifically, the Notice alleged that
KOT failed to provide any documentation that pipe segments HCA30 and HCA20, which
Respondent had identified as segments covered by its integrity management program, had ever
been the subject of a baseline assessment or any other integrity assessment.
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. § 192.921(a) by failing to conduct a
baseline assessment on two covered segments of pipe.
These findings of violation will be considered prior offenses in any subsequent enforcement
action taken against Respondent.
ASSESSMENT OF PENALTY
Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed
$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any
related series of violations.2 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; 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 $94,900 for the two violations cited above.
Item 6: The Notice proposed a civil penalty of $42,400 for Respondent’s violation of 49 C.F.R.
2 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum
Civil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).



CPF 2-2018-1004
Page 5
§ 192.465(a), for failing to test, at least once each calendar year but with intervals not exceeding
15 month, each pipeline under CP to determine whether its CP system meets the requirements of
§ 192.463 at several test stations. KOT neither contested the allegation nor presented any
evidence or argument justifying a reduction in the proposed penalty. Accordingly, having
reviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of
$42,400 for violation of 49 C.F.R. § 192.465(a).
Item 14: The Notice proposed a civil penalty of $52,500 for Respondent’s violation of 49
C.F.R. § 192.921(a), for failing to conduct a baseline assessment on two covered segments of
pipe. KOT neither contested the allegation nor presented any evidence or argument justifying a
reduction in the proposed penalty. Accordingly, having reviewed the record and considered the
assessment criteria, I assess Respondent a civil penalty of $52,500 for violation of 49 C.F.R.
§ 192.921(a).
In summary, having reviewed the record and considered the assessment criteria for each of the
Items cited above, I assess Respondent a total civil penalty of $94,900. Respondent paid the
civil penalty in full, by wire transfer dated July 30, 2018.
COMPLIANCE ORDER
The Notice proposed a compliance order with respect to Items 1 and 2 in the Notice for
violations of 49 C.F.R. §§ 192.805 and 192.809, respectively. 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 indicates that KOT has taken the following actions specified in the proposed
compliance order:
1. With respect to the violation of § 192.805 (Item 1), Respondent has revised its
written operator qualification program as follows:
(a) For each covered task that KOT allows “not qualified” individuals to perform,
develop a justifiable “span-of-control ratio” for the purpose of assuring that such
individuals will be directed and observed by a qualified individual when performing
the task;
(b) For each covered task, determine an evaluation interval, based on a written
justification, at which re-evaluation of individuals’ qualifications are needed;
(c) Develop and/or identify a written training program that meets the
requirements of § 192.805(h). KOT must include, or make reference to, the training
program in its written operator qualification program, and must include cross-
references between each covered task and the applicable required training; and
(d) Include the notification requirement as specified in § 192. 805(i).
2. With respect to the violation of § 192.809 (Item 2), Respondent has revised its
written operator qualification plan to include the program restrictions required under
§§ 192.809(d) and 192.809(e).



CPF 2-2018-1004
Page 6
Accordingly, I find that compliance has been achieved with respect to these violations.
Therefore, the compliance terms proposed in the Notice are not included in this Order.
WARNING ITEMS
With respect to Items 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 15, and 16, the Notice alleged probable
violations of Parts 191 and 192 but did not propose a civil penalty or compliance order for these
items. Therefore, these are considered to be warning items. The warnings were for:
49 C.F.R. § 192.945(a) (Item 3) ─ Respondent’s alleged failure to use appropriate
methods to measure whether its integrity management program was effective in
assessing and evaluating the integrity of each covered pipeline segment and in
protecting high consequence areas;
49 C.F.R. § 191.17(a) (Item 4) ─ Respondent’s alleged failure to submit several
types of required data in its annual report for transmission pipeline systems;
49 C.F.R. § 191.29(a)(1) (Item 5) ─ Respondent’s alleged failure to provide
certain geospatial data on its pipelines to PHMSA for the National Pipeline
Mapping System;
49 C.F.R. § 192.605(a) (Item 7) ─ Respondent’s alleged failure to prepare and
follow certain required provisions of its own operations and maintenance manual;
49 C.F.R. § 192.615(b)(2) (Item 8) ─ Respondent’s alleged failure to provide
documentation that its emergency response personnel are knowledgeable of the
company’s emergency-response procedures;
49 C.F.R. § 192.709(c) (Item 9) ─ Respondent’s alleged failure to maintain
records showing the most recent inspection for evidence of atmospheric corrosion
of above-ground facilities;
49 C.F.R. § 192.907(a) (Item 10) ─ Respondent’s alleged failure to follow two
sections of its own written integrity management program;
49 C.F.R. § 192.925(b) (Item11) ─ Respondent’s alleged failure to conduct proper
External Corrosion Direct Assessments (ECDA) because it did not follow the
requirements of NACE SP0502;
49 C.F.R. § 192.225(a) (Item 12) ─ Respondent’s alleged failure to ensure that
certain of its welders were tested in accordance with KOT’s own qualified welding
procedures;



CPF 2-2018-1004
Page 7
49 C.F.R. § 192.947(d) (Item 13) ─ Respondent’s alleged failure to maintain, for
the useful life of the pipeline, integrity management documents that supported
various decisions, analyses, and processes developed and used to implement and
evaluate each element of its program;
49 C.F.R. § 192.917(a) (Item 15) ─ Respondent’s alleged failure to identify and
evaluate all potential threats to each pipeline segment covered by its integrity
management program; and
49 C.F.R. § 192.709(c) (Item 16) ─ Respondent’s alleged failure to maintain
adequate records of each pipeline right-of-way patrol conducted during calendar
years 2016 and 2017.
If OPS finds a violation of any of these items in a subsequent inspection, Respondent may be
subject to future enforcement action.
The terms and conditions of this Final Order are effective upon service in accordance with 49
C.F.R. § 190.5.
May 3, 2019
___________________________________ __________________________
Alan K. Mayberry Date Issued
Associate Administrator
for Pipeline Safety
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