{"operation":"document","citation":"CPF 220186002","title":"DUKE ENERGY KENTUCKY - LIQUID — Notice of Probable Violation","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2018-05-15","effective_on":null,"summary":"CLOSED notice of probable violation citing 195.1(a), 195.402(a), 195.446(a), 195.446(j)(1), 195.452(b)(5), 195.452(f), 195.452(j)(5), 195.452(l)(1)(ii), 195.49, 195.573(a)(1), 195.588(b)(1), 195.589(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-220186002.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-220186002.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-220186002","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/220186002","body":"Notice of Probable Violation involving DUKE ENERGY KENTUCKY - LIQUID. PHMSA's enforcement data identifies the cited regulations as 195.1(a),  195.402(a),  195.446(a),  195.446(j)(1),  195.452(b)(5),  195.452(f),  195.452(j)(5),  195.452(l)(1)(ii),  195.49,  195.573(a)(1),  195.588(b)(1),  195.589(c). The case was opened on 2018-05-15 and is reported as closed as of 2019-04-25. Proposed civil penalty: $55,700. Assessed civil penalty: $55,700. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n220186002_Closure Letter_04252019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220186002/220186002_Closure%20Letter_04252019.pdf\n\n220186002_Closure Letter_04252019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220186002/220186002_Closure%20Letter_04252019_text.pdf\n\n220186002_Final Order_02042019.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220186002/220186002_Final%20Order_02042019.pdf\n\n220186002_Final Order_02042019_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220186002/220186002_Final%20Order_02042019_text.pdf\n\n220186002_NOPV PCP PCO_05152018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220186002/220186002_NOPV%20PCP%20PCO_05152018.pdf\n\n220186002_NOPV PCP PCO_05152018_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220186002/220186002_NOPV%20PCP%20PCO_05152018_text.pdf\n\n220186002_Operator Response to Notice_06082018.pdf: https://primis.phmsa.dot.gov/enforcement-documents/220186002/220186002_Operator%20Response%20to%20Notice_06082018.pdf\n\n220186002_Final Order_02042019_text.pdf\n\nFebruary 4, 2019\nMs. Lynn J. Good\nChairman, President, and CEO\nDuke Energy Corporation\n139 East Fourth Street, Mail Drop EX403\nCincinnati, OH 45202\nRe: CPF No. 2-2018-6002\nDear Ms. Good:\nEnclosed please find the Final Order issued in the above-referenced case to your subsidiary,\nDuke Energy Kentucky, Inc. It makes findings of violation, assesses a civil penalty of $55,700,\nand specifies actions that need to be taken by Duke Energy Kentucky, Inc., to comply with the\npipeline safety regulations. This is to acknowledge receipt of payment of the full penalty\namount, by wire transfer, dated June 12, 2018. When the terms of the compliance order have\nbeen completed, as determined by the Director, Southern Region, this enforcement action will be\nclosed. Service of the Final Order by certified mail is effective upon the date of mailing, as\nprovided under 49 C.F.R. § 190.5.\nThank you for your cooperation in this matter.\nSincerely,\nAlan K. Mayberry\nAssociate Administrator\nfor Pipeline Safety\nEnclosure\ncc: Mr. James A. Urisko, Director, Southern Region, Office of Pipeline Safety, PHMSA\nMr. Victor Gaglio, Senior VP & Chief Operations Officer Natural Gas, Duke Energy\nCorporation\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\n\n\n\nU.S. DEPARTMENT OF TRANSPORTATION\nPIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION\nOFFICE OF PIPELINE SAFETY\nWASHINGTON, D.C. 20590\n__________________________________________\nIn the Matter of )\nDuke Energy Kentucky, Inc., ) CPF No. 2-2018-6002\na subsidiary of Duke Energy Corporation, )\n)\n)\n)\nRespondent. )\n__________________________________________)\nFINAL ORDER\nBetween July 31 and September 21, 2017, pursuant to 49 U.S.C. § 60117, representatives of the\nPipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety\n(OPS), conducted an on-site pipeline safety inspection of the facilities of Duke Energy\nKentucky, Inc. (Duke Energy or Respondent), in Kenton County, Kentucky, and the records of\nDuke Energy in Cincinnati, Ohio, and Erlanger, Kentucky. Duke Energy is a subsidiary of Duke\nEnergy Corporation, which conducts natural gas transmission and distribution operations in the\nCarolinas, Tennessee, southwestern Ohio and Northern Kentucky.1 In addition, Respondent\noperates a 2.91-mile 8-inch Liquified Petroleum Gas (LPG) pipeline in Kenton County,\nKentucky.2\nAs a result of the inspection, the Director, Southern Region, OPS (Director), issued to\nRespondent, by letter dated May 15, 2018, a Notice of Probable Violation, Proposed Civil\nPenalty, and Proposed Compliance Order (Notice), which also included warnings pursuant to\n49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that\nDuke Energy had committed four violations of 49 C.F.R. Part 195 and proposed assessing a civil\npenalty of $55,700 for two of the alleged violations. The Notice also proposed ordering\nRespondent to take certain measures to correct the other two alleged violations. The warning\nitems required no further action, but warned the operator to correct the probable violations or\nface possible future enforcement action.\nDuke Energy responded to the Notice by letter dated June 8, 2018 (Response). The company did\nnot contest the allegations of violation, paid the proposed civil penalty of $55,700, and agreed to\ncomplete the proposed compliance actions. In accordance with 49 C.F.R. § 190.208(a)(1),\npayment of the penalty authorizes the Associate Administrator to make findings of violation and\nto issue this final order without further proceedings. Respondent did not request a hearing and\ntherefore has waived its right to one.\n1 Duke Energy 2017 Annual Report, available at https://www.duke-energy.com/annual-report/ /media/pdfs/our-\ncompany/investors/de-annual-reports/2017/2017annualreport.pdf (last accessed September 26, 2018).\n2 Pipeline Safety Violation Report (Violation Report), (May 22, 2018) (on file with PHMSA), at 1.\n\n\n\nCPF No. 2-2018-6002\nPage 2\nFINDINGS OF VIOLATION\nIn its Response, Duke Energy did not contest the allegations in the Notice that it violated 49\nC.F.R. Part 195, as follows:\nItem 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.1(a), which states:\n§ 195.1 Which pipelines are covered by this Part?\n(a) Covered. Except for the pipelines listed in paragraph (b) of this\nSection, this Part applies to pipeline facilities and the transportation of\nhazardous liquids or carbon dioxide associated with those facilities in or\naffecting interstate or foreign commerce, including pipeline facilities on the\nOuter Continental Shelf (OCS). Covered pipelines include, but are not\nlimited to:\n(1) Any pipeline that transports a highly volatile liquid;\n(2) Any pipeline segment that crosses a waterway currently used for\ncommercial navigation;\n(3) Except for a gathering line not covered by paragraph (a)(4) of this\nSection, any pipeline located in a rural or non-rural area of any diameter\nregardless of operating pressure;\n(4) Any of the following onshore gathering lines used for transportation\nof petroleum:\n(i) A pipeline located in a non-rural area;\n(ii) A regulated rural gathering line as provided in § 195.11; or\n(iii) A pipeline located in an inlet of the Gulf of Mexico as provided in\n§ 195.413.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.1(a) by failing to apply Part 195 to\ncertain covered pipelines. Specifically, the Notice alleged that Duke Energy failed to incorporate\nits Constance Cavern Liquid Propane Gas (LPG) Storage Facility (Constance Cavern) into all\nrelevant portions of Duke Energy’s hazardous liquid pipeline safety program.\nThe term “Pipeline or pipeline system” is defined in § 195.2 as:\n[A]ll parts of a pipeline facility through which a hazardous liquid or\ncarbon dioxide moves in transportation, including, but not limited to, line\npipe, valves, and other appurtenances connected to line pipe, pumping\nunits, fabricated assemblies associated with pumping units, metering and\ndelivery stations and fabricated assemblies therein, and breakout tanks.\nFurthermore, “pipeline facility” is defined in § 195.2 as \"new and existing pipe, rights-of-way\nand any equipment, facility, or building used in the transportation of hazardous liquids or carbon\ndioxide.\" Duke Energy’s Constance Cavern meets the definition of “pipeline facility” because\nthe submerged pumps and appurtenances within the cavern transfer LPG out of the storage\ncavern to a bi-directional pipeline for transport downstream (relative to the cavern) to the\ncompany’s Erlanger plant. Additionally, Constance Cavern receives LPG from the same bi-\ndirectional pipeline via trucking injection at the Erlanger plant. Therefore, Constance Cavern is\ncovered by Part 195.\n\n\n\nCPF No. 2-2018-6002\nPage 3\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.1(a) by failing to apply Part 195\nto certain covered pipelines.\nItem 4: The Notice alleged that Respondent violated 49 C.F.R. § 195.446(a), which states:\n§ 195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility\nwith a controller working in a control room who monitors and controls all\nor part of a pipeline facility through a SCADA system. Each operator must\nhave and follow written control room management procedures that\nimplement the requirements of this section. The procedures required by this\nsection must be integrated, as appropriate, with the operator's written\nprocedures required by § 195.402. An operator must develop the\nprocedures no later than August 1, 2011, and must implement the\nprocedures according to the following schedule. The procedures required\nby paragraphs (b), (c)(5), (d)(2) and (d)(3), (f) and (g) of this section must\nbe implemented no later than October 1, 2011. The procedures required by\nparagraphs (c)(l) through (4), (d)(l), (d)(4), and (e) must be implemented no\nlater than August 1, 2012. The training procedures required by paragraph\n(h) must be implemented no later than August 1, 2012, except that any\ntraining required by another paragraph of this section must be implemented\nno later than the deadline for that paragraph.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.446(a) by failing to have and\nfollow written control room management (CRM) procedures that implement the requirements of\n§ 195.446. Specifically, the Notice alleged that Duke Energy did not have CRM procedures\nbecause it failed to identify its Erlanger air-propane plant office (Erlanger office) as a control\nroom. The term “Control room” is defined in § 195.2 as “an operations center staffed by\npersonnel charged with the responsibility for remotely monitoring and controlling a pipeline\nfacility.\" The term “Controller” is defined in § 195.2 as \"a qualified individual who remotely\nmonitors and controls the safety-related operations of a pipeline facility via a SCADA system\nfrom a control room, and who has operational authority and accountability for the remote\noperational functions of the pipeline facility.”\nDuring the inspection, PHMSA inspectors interviewed personnel at the Erlanger office regarding\ncertain plant operators' roles in operating and controlling Duke Energy's Line LP03, as well as its\nConstance Cavern facility. Based on these interviews, PHMSA allegedly determined that the\nErlanger office remotely controlled the pipeline and was therefore a “control room.” PHMSA\nalso determined that certain operators at the Erlanger air-propane plant met the definition of\n“controller” set forth above As such, Duke Energy was allegedly required to have and follow\nwritten CRM procedures.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.446(a) by failing to have and\nfollow written control room management procedures that implement the requirements of\n§ 195.446.\n\n\n\nCPF No. 2-2018-6002\nPage 4\nItem 6: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(b)(5), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . . .\n(b) What program and practices must operators use to manage pipeline\nintegrity? Each operator of a pipeline covered by this section must:\n(1) Develop a written integrity management program that addresses\nthe risks on each segment of pipeline . . .\n(5) Implement and follow the program.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(b)(5) by failing to follow its\nown written integrity management program (IMP). Specifically, the Notice alleged that Duke\nEnergy failed to follow its: (1) Assessment Methods Selection Process Flowchart, GD70.06-006,\nprocedure when it used an integrity-assessment method that was not specified in the procedure as\nan approved method; (2) Hazardous Liquid IMP Information Analysis, GD75.01-008, when it\nfailed to review assessment results and perform an information analysis within the required 150-\nday timeframe; (3) Continuing Evaluation and Assessment, GD75.01-007, when it failed to\nperform the required formal evaluations of the integrity of its pipelines that must “consider the\nresults of the baseline and subsequent assessments, the information analysis performed after each\nassessment, decisions regarding remediation and decisions regarding preventive and mitigative\nmeasures;\" and (4) Hazardous Liquid Pipeline IMP, Section 9 – Performance Plan, and\nAppendix B – Performance Measures, when it failed to compile the required annual IMP\nperformance measures for calendar years 2013, 2014, and 2015.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.452(b)(5) by failing to follow its\nown written IMP.\nItem 9: The Notice alleged that Respondent violated 49 C.F.R. § 195.452(l)(1)(ii), which states:\n§ 195.452 Pipeline integrity management in high consequence areas.\n(a) . . . .\n(l) What records must an operator keep to demonstrate compliance?\n(1) An operator must maintain, for the useful life of the pipeline, records\nthat demonstrate compliance with the requirements of this subpart. At a\nminimum, an operator must maintain the following records for review\nduring an inspection:\n(i) . . . .\n(ii) Documents to support the decisions and analyses, including any\nmodifications, justifications, deviations and determinations made,\nvariances, and actions taken, to implement and evaluate each element of the\nintegrity management program listed in paragraph (f) of this section.\nThe Notice alleged that Respondent violated 49 C.F.R. § 195.452(l)(ii) by failing to maintain, for\nthe useful life of the pipeline, documents to support the decisions and analyses, including any\nmodifications, justifications, deviations and determinations made, variances, and actions taken,\nto implement and evaluate each element of the integrity management program listed in\n§ 195.452(f). Specifically, the Notice alleged that four segments of the pipeline were pressure-\n\n\n\nCPF No. 2-2018-6002\nPage 5\ntested as part of a baseline assessment on October 20, 2005. Under Duke Energy’s Continuing\nEvaluation and Assessment Procedure, GD75.01-007, each pipeline covered by its IMP must be\nreassessed “within a maximum period of five years of the previous assessment.” Accordingly,\nthe four segments were required to be reassessed by October 20, 2010; however, the Notice\nalleged that this was not done. Duke Energy did not have any records or documents to support\nthe decision to deviate from implementing its IMP regarding reassessments for these four in-\nservice segments.\nRespondent did not contest this allegation of violation. Accordingly, based upon a review of all\nof the evidence, I find that Respondent violated 49 C.F.R. § 195.452(l)(ii) by failing to maintain\ndocuments to support the decisions and analyses, including any modifications, justifications,\ndeviations and determinations made, variances, and actions taken, to implement and evaluate\neach element of the integrity management program required under § 195.452(f).\nThese findings of violation will be considered prior offenses in any subsequent enforcement\naction taken against Respondent.\nASSESSMENT OF PENALTY\nUnder 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed\n$200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any\nrelated series of violations.3 In determining the amount of a civil penalty under 49 U.S.C.\n§ 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature,\ncircumstances, and gravity of the violation, including adverse impact on the environment; the\ndegree of Respondent’s culpability; the history of Respondent’s prior offenses; and any effect\nthat the penalty may have on its ability to continue doing business; and the good faith of\nRespondent in attempting to comply with the pipeline safety regulations. In addition, I may\nconsider the economic benefit gained from the violation without any reduction because of\nsubsequent damages, and such other matters as justice may require. The Notice proposed a total\ncivil penalty of $55,700 for the violations cited above.\nItem 6: The Notice proposed a civil penalty of $39,200 for Respondent’s violation of 49 C.F.R.\n§ 195.452(b)(5), for failing to follow its own IMP. Duke Energy neither contested the allegation\nnor presented any evidence or argument justifying elimination of the proposed penalty.\nAccordingly, having reviewed the record and considered the assessment criteria, I assess\nRespondent a civil penalty of $39,200 for violation of 49 C.F.R. § 195.452(b)(5).\nItem 9: The Notice proposed a civil penalty of $16,500 for Respondent’s violation of 49 C.F.R.\n§ 195.452(l)(1)(ii), for failing to maintain documents to support the decisions and analyses,\nincluding any modifications, justifications, deviations and determinations made, variances, and\nactions taken, to implement and evaluate each element of the integrity management program\nrequired under § 195.452(f). Duke Energy neither contested the allegation nor presented any\nevidence or argument justifying elimination of the proposed penalty. Accordingly, having\nreviewed the record and considered the assessment criteria, I assess Respondent a civil penalty of\n3 These amounts are adjusted annually for inflation. See, e.g., Pipeline Safety: Inflation Adjustment of Maximum\nCivil Penalties, 82 Fed. Reg. 19325 (April 27, 2017).\n\n\n\nCPF No. 2-2018-6002\nPage 6\n$16,500 for violation of 49 C.F.R. § 195.452(l)(1)(ii).\nIn summary, having reviewed the record and considered the assessment criteria for each of the\nItems cited above, I assess Respondent a total civil penalty of $55,700, which amount was paid\nin full by wire transfer on June 12, 2018.\nCOMPLIANCE ORDER\nThe Notice proposed a compliance order with respect to Items 1 and 4 in the Notice for\nviolations of 49 C.F.R. §§ 195.1(a) and 195.446(a), respectively. Under 49 U.S.C. § 60118(a),\neach person who engages in the transportation of hazardous liquids or who owns or operates a\npipeline facility is required to comply with the applicable safety standards established under\nchapter 601. Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217,\nRespondent is ordered to take the following actions to ensure compliance with the pipeline safety\nregulations applicable to its operations:\n1. With respect to the violation of § 195.1(a) (Item 1), Respondent must revise its\nwritten plans and procedures to incorporate Constance Cavern and to include all\npipeline facilities (as defined in § 195.2) located at the plant site and on plant\nproperty, including plant property security fencing. The revisions, at a minimum and\nas applicable to each facility, must be in accordance with Duke Energy’s written\nplans and procedures used to administer its pipeline safety program including, but not\nlimited to, written plans and procedures required by Part 195, Subparts F and G.\n2. With respect to the violation of § 195.1(a) (Item 1), Respondent must also provide\nto PHMSA, for approval, a written list of activities, with a completions schedule, that\nare required to be performed in order for Constance Cavern to comply with Duke\nEnergy’s revised written plans and procedures described in Compliance Order Item 1\nabove.\n3. Submit to the Director, Southern Region, OPS, within 30 days following receipt of\nthe Final Order, written documentation of steps taken to satisfy Compliance Order\nItems 1 and 2 above.\n4. With respect to the violation of § 195.446(a) (Item 4), Respondent must revise its\nwritten CRM procedures to incorporate its Erlanger office as a control room, and\nidentify individuals located at the Erlanger office who control Line LP03 as\ncontrollers (as defined in § 195.2), and provide to PHMSA, for approval, a written list\nof activities, with a completions schedule, that are required to be performed in order\nfor the Erlanger office and individuals identified as controllers to be in compliance\nwith Duke Energy’s revised CRM procedures.\n5. Submit to the Director, Southern Region, OPS, within 60 days following receipt of\nthe Final Order, written documentation of steps taken to satisfy Compliance Order\nItem 4 above.\n\n\n\nCPF No. 2-2018-6002\nPage 7\nThe Director may grant an extension of time to comply with any of the required items upon a\nwritten request timely submitted by the Respondent and demonstrating good cause for an\nextension.\nIt is requested that Respondent maintain documentation of the safety improvement costs\nassociated with fulfilling this Compliance Order and submit the total to the Director. It is\nrequested that these costs be reported in two categories: (1) total cost associated with\npreparation/revision of plans, procedures, studies and analyses; and (2) total cost associated with\nreplacements, additions and other changes to pipeline infrastructure.\nFailure to comply with this Order may result in the administrative assessment of civil penalties\nnot to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), for each violation for\neach day the violation continues or in referral to the Attorney General for appropriate relief in a\ndistrict court of the United States.\nWARNING ITEMS\nWith respect to Items 2, 3, 5, 7, 8, 10, 11, and 12, the Notice alleged probable violations of Part\n195 but did not propose a civil penalty or compliance order for these items. Therefore, these are\nconsidered to be warning items. The warnings were for:\n49 C.F.R. § 195.49 (Item 2) ─ Respondent’s alleged failure to complete an\nannual report on DOT Form PHMSA F 7000-1.1 for 2016; and\n49 C.F.R. § 195.402(a) (Item 3) ─ Respondent’s alleged failure to review its\nmanual of written procedures for handling emergencies, at intervals not exceeding\n15 months, but at least once each calendar year; and\n49 C.F.R. § 195.446(j)(1) (Item 5) ─ Respondent’s alleged failure to maintain\nrecords that demonstrate compliance with the requirements of § 195.446(e)(3),\nrelating to alarm management; and\n49 C.F.R. § 195.452(f) (Item 7) ─ Respondent’s alleged failure to continually\nchange its integrity management program to reflect operating experience,\nconclusions drawn from the results of integrity assessments, and other\nmaintenance and surveillance data; and\n49 C.F.R. § 195.452(j)(5)(iv) (Item 8) ─ Respondent’s alleged failure to notify\nOPS 90 days before conducting an assessment using “other technology;”\n49 C.F.R. § 195.573(a)(1) (Item 10) ─ Respondent’s alleged failure to conduct\ncathodic protection tests on its protected pipeline at least once each calendar year,\nbut with intervals not exceeding 15 months;\n49 C.F.R. § 195.588(b)(1) (Item 11) ─ Respondent’s alleged failure to follow the\nrequirements of NACE SP0502 (incorporated by reference, see § 195.3) for\nperforming external corrosion direct assessments; and\n\n\n\nCPF No. 2-2018-6002\nPage 8\n49 C.F.R. § 195.589(c) (Item 12) ─ Respondent’s alleged failure to maintain\nrecords for at least five years of each analysis, check, demonstration, examination,\ninspection, investigation, review, survey, and test required by Subpart H of Part\n195 in sufficient detail to demonstrate the adequacy of corrosion-control measures\nor that corrosion requiring control measures does not exist.\nIf OPS finds a violation of any of these items in a subsequent inspection, Respondent may be\nsubject to future enforcement action.\nThe terms and conditions of this Final Order are effective upon service in accordance with 49\nC.F.R. § 190.5.\nFebruary 4, 2019\n___________________________________ __________________________\nAlan K. Mayberry Date Issued\nAssociate Administrator\nfor Pipeline Safety\n\n220186002_NOPV PCP PCO_05152018_text.pdf\n\nNOTICE OF PROBABLE VIOLATION\nPROPOSED CIVIL PENALTY\nand\nPROPOSED COMPLIANCE ORDER\nCERTIFIED MAIL - RETURN RECEIPT REQUESTED\nMay 15, 2018\nMs. Lynn J. Good\nChairman, President and Chief Executive Officer\nDuke Energy Kentucky, Inc.\n139 East Fourth Street, Mail Drop EX403\nCincinnati, OH, 45202\nCPF 2-2018-6002\nDear Ms. Good:\nBetween July 31, 2017 and September 21, 2017, representatives of the Pipeline and\nHazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS),\npursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected Duke Energy Kentucky,\nInc.’s (Duke Energy) records in its Cincinnati, Ohio and Erlanger, Kentucky offices, and\ninspected Duke Energy’s facilities in Kenton County, Kentucky.\nAs a result of the inspection, it is alleged that Duke Energy committed probable violations of\nthe Pipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items\ninspected and the probable violations are:\n1. §195.1 Which pipelines are covered by this Part?\n(a) Covered. Except for the pipelines listed in paragraph (b) of this Section, this Part\napplies to pipeline facilities and the transportation of hazardous liquids or carbon\ndioxide associated with those facilities in or affecting interstate or foreign commerce,\nincluding pipeline facilities on the Outer Continental Shelf (OCS). Covered pipelines\ninclude, but are not limited to:\n(1) Any pipeline that transports a highly volatile liquid;\n(2) Any pipeline segment that crosses a waterway currently used for commercial\nnavigation;\n\n\n\n(3) Except for a gathering line not covered by paragraph (a)(4) of this Section, any\npipeline located in a rural or non-rural area of any diameter regardless of operating\npressure;\n(4) Any of the following onshore gathering lines used for transportation of\npetroleum:\n(i) A pipeline located in a non-rural area;\n(ii) A regulated rural gathering line as provided in §195.11; or\n(iii) A pipeline located in an inlet of the Gulf of Mexico as provided in §195.413.\nDuke Energy failed to comply with the regulation because it did not incorporate its\nConstance Cavern Liquid Propane Gas (LPG) Storage Facility (Constance Cavern) into all\nrelevant portions of its pipeline safety program.\nSection 195.2 defines pipeline or pipeline system as “all parts of a pipeline facility through\nwhich a hazardous liquid or carbon dioxide moves in transportation, including, but not\nlimited to, line pipe, valves, and other appurtenances connected to line pipe, pumping\nunits, fabricated assemblies associated with pumping units, metering and delivery stations\nand fabricated assemblies therein, and breakout tanks.” Furthermore, § 195.2 defines\npipeline facility as “new and existing pipe, rights-of-way and any equipment, facility, or\nbuilding used in the transportation of hazardous liquids or carbon dioxide.”\nDuke Energy’s Constance Cavern meets the above-referenced definition of “pipeline\nfacility” because the submerged pumps and appurtenances within the cavern transfer LPG\nout of the storage cavern to the bi-directional pipeline for transport downstream (relative\nto the cavern) to the Erlanger plant. Furthermore, the cavern receives LPG from the same\nbi-directional pipeline via trucking injection at the Erlanger plant. Consequently,\nConstance Cavern is covered under § 195.1.\n2. §195.49 Annual report.\nEach operator must annually complete and submit DOT Form PHMSA F 7000-1.1\nfor each type of hazardous liquid pipeline facility operated at the end of the previous\nyear. An operator must submit the annual report by June 15 each year, except that\nfor the 2010 reporting year the report must be submitted by August 15, 2011. A\nseparate report is required for crude oil, HVL (including anhydrous ammonia),\npetroleum products, carbon dioxide pipelines, and fuel grade ethanol pipelines. For\neach state a pipeline traverses, an operator must separately complete those sections\non the form requiring information to be reported for each state.\nDuke Energy failed to comply with the regulation because it did not complete its 2016\nAnnual Report as required by § 195.49.\nPart F, Section 5 of the Annual Report requires operators to provide “Mileage Inspected\nand Actions Taken in Calendar Year Based on Other Inspection Techniques.” Review of\nDuke Energy’s integrity assessment plan indicated that, in Calendar Year 2016, Duke\nEnergy conducted an integrity assessment on its Line LP03 using “Other Technology”\n(LP-ICDA). Duke Energy failed to include this data in Part F, Section 5 of its 2016\nAnnual Report.\n2\n\n\n\n3. §195.402 Procedural manual for operations, maintenance, and emergencies.\n(a) General. Each operator shall prepare and follow for each pipeline system a\nmanual of written procedures for conducting normal operations and maintenance\nactivities and handling abnormal operations and emergencies. This manual shall be\nreviewed at intervals not exceeding 15 months, but at least once each calendar year,\nand appropriate changes made as necessary to insure that the manual is effective.\nThis manual shall be prepared before initial operations of a pipeline system\ncommence, and appropriate parts shall be kept at locations where operations and\nmaintenance activities are conducted.\nDuke Energy failed to comply with the regulation because it could not demonstrate that it\nreviewed its emergency plans and procedures at intervals not exceeding 15 months, but at\nleast once each calendar year. Specifically, Duke Energy could not demonstrate that it\nhad reviewed its Plan for Emergencies and Natural Disasters at intervals not exceeding\n15 months, but at least once each calendar year.\nRecords provided to the PHMSA inspectors consisted of the first page of the 2014, 2015,\nand 2016 revisions of the Plan for Emergency and Natural Disasters. The pages\nreferenced only the December revision (edition) dates of the prior year. While Duke\nEnergy personnel provided plan approval records for the referenced years, these records\ndid not indicate that the plans had been reviewed as required of the regulations.\nSimilarly, records documenting the required annual reviews of Duke Energy’s Hazardous\nLiquid Operations Plan (HLOP) referenced review due dates for years 2014, 2015, and\n2016, but did not provide the dates the reviews were completed.\n4. §195.446 Control room management.\n(a) General. This section applies to each operator of a pipeline facility with a\ncontroller working in a control room who monitors and controls all or part of a\npipeline facility through a SCADA system. Each operator must have and follow\nwritten control room management procedures that implement the requirements of\nthis section. The procedures required by this section must be integrated, as\nappropriate, with the operator's written procedures required by §195.402. An\noperator must develop the procedures no later than August 1, 2011, and must\nimplement the procedures according to the following schedule. The procedures\nrequired by paragraphs (b), (c)(5), (d)(2) and (d)(3), (f) and (g) of this section must\nbe implemented no later than October 1, 2011. The procedures required by\nparagraphs (c)(1) through (4), (d)(1), (d)(4), and (e) must be implemented no later\nthan August 1, 2012. The training procedures required by paragraph (h) must be\nimplemented no later than August 1, 2012, except that any training required by\nanother paragraph of this section must be implemented no later than the deadline\nfor that paragraph.\nDuke Energy failed to comply with the regulation because it did not have and follow\nwritten control room management (CRM) procedures that implement the requirements of\n§ 195.446. Specifically, Duke Energy did not identify the Erlanger air-propane plant\noffice (Erlanger office) as a control room, as defined in § 195.2\n3\n\n\n\nControl room is defined in § 195.2 as “an operations center staffed by personnel charged\nwith the responsibility for remotely monitoring and controlling a pipeline facility.”\nFurthermore, controller is defined in § 195.2 as “a qualified individual who remotely\nmonitors and controls the safety-related operations of a pipeline facility via a SCADA\nsystem from a control room, and who has operational authority and accountability for the\nremote operational functions of the pipeline facility.” During the inspection, PHMSA\ninspectors interviewed personnel at the Erlanger office regarding certain plant operators’\nroles in operating and controlling Duke Energy’s Line LP03, as well as its Constance\nCavern facility.\nBased on the information and facts listed below, the Erlanger office is a Control Room\nand certain Erlanger plant operators are Controllers, per § 195.2.\n August 3, 2017 interview with the gas Control Manager (Cincinnati): Control Center\ncalls the Erlanger air-propane plant (Erlanger Plant), located at the north end of\nLine LP03, and instructs Erlanger personnel when to operate the pipeline. (See below\nregarding Erlanger operation of the pipeline.) Cincinnati Gas Control monitors the\nLP03 line pressures, receives safety-related alarms, and has the ability to shut down\nthe pumps at Constance Cavern.\n August 4, 2017 and September 21, 2017 interviews at Erlanger plant with the Systems\nOperations Manager and an Erlanger Plant Operator:\no Erlanger could be called on to start and operate the LP03 line to supply its natural\ngas system during certain peak demand days during winter months.\no Starting the pipeline on peak days to supply the propane-air plant: Erlanger\noperator(s) remotely start the submerged pump(s) and manipulate certain valves\nlocated at Constance Cavern (3.41 pipeline miles from Erlanger), via the use of\nErlanger SCADA screen data and pump on/off and valve positioning commands.\nErlanger operators monitor the pipeline operation and pressure on a 24/7 basis\nwhen the line is operating in withdrawal mode.\no Refilling Constance Cavern: propane trucks typically pump the propane into the\npipeline at Erlanger, and the product moves down the pipeline into the cavern via\ngravity flow. May take a month to refill the cavern, depending on storage volume\nand number of Mon-Fri 12-hour daytime (only) shifts when re-filling the cavern.\n November 10, 2017 email response conveys that Duke Energy considers Cincinnati\nGas Control to be its only control room. Procedure GD50.1263-2, titled “Erlanger\nGas Plant – Starting, Operating And Shutting Down Mixing System,” also conveys\npipeline start up and shutdown as part of the Erlanger plant operation.\nAs of PHMSA’s inspection, Duke Energy did not consider the Erlanger office as a Control\nRoom, and the referenced operators as Controllers, subject to the Control Room\nManagement requirements of § 195.446. Furthermore, Duke Energy provided no records\nor related procedures, indicating it conducted any study referencing the Control Room and\nController definitions in § 195.2, to determine whether the Erlanger was a Control Room.\nThe Erlanger office is located at the south end of the 3.41-mile long Line LP03, and\n4\n\n\n\nremotely controls the pipeline; therefore, it meets the definition of a Control Room, as\ndefined in § 195.2. Because the Erlanger office is a Control Room, Duke Energy was\nrequired to have and follow written CRM procedures that implement the requirements of §\n195.446.\n5. §195.446 Control room management.\n…(j) Compliance and deviations. An operator must maintain for review during\ninspection:\n(1) Records that demonstrate compliance with the requirements of this section.\nDuke Energy failed to comply with the regulation because it did not maintain records\nrelating to alarm management as prescribed in §195.446(e)(3).\nSection 195.446(e)(3) requires that “[e]ach operator using a SCADA system must have a\nwritten alarm management plan to provide for effective controller response to alarms. An\noperator’s plan must include provisions to... [v]erify the correct safety-related alarm set-\npoint values and alarm descriptions when associated field instruments are calibrated or\nchanged and at least once each calendar year, but at intervals not to exceed 15 months.”\nDuke Energy’s CRM records did not accurately describe a pressure deviation alarm for\nLine LP03 in its annual (not to exceed 15 months) safety-related alarm reviews, as\nrequired by § 195.446(e)(3). Duke Energy’s 2014, 2015, and 2016 safety-related alarm\nreview records describe the pressure deviation alarm as “RTU Calculation Based on\nPressures.” However, in its response to PHMSA’s request to describe the\nprogramming/algorithm(s) in its Supervisory Control and Data Acquisition (SCADA)\nsystem that would trigger the leak detection alarm(s), Duke Energy described the alarm as\n“When comparison of Constance Cavern outlet pressure and Erlanger Gas Plant pressure\ndeviates more than 5 psig for a period of more than 2 minutes.”\n6. §195.452 Pipeline integrity management in high consequence areas.\n…(b) What program and practices must operators use to manage pipeline integrity?\nEach operator of a pipeline covered by this section must:\n…(5) Implement and follow the program.\nDuke Energy failed to comply with the regulation because it did not follow its Integrity\nManagement (IM) program as follows:\nA. Duke Energy performed an integrity assessment on its Line LP03 in 2016 using a\nLiquid Petroleum Internal Corrosion Direct Assessment (LP-ICDA) assessment method.\nAt the time of the assessment, which was completed on July 1, 2016, Section 8 of Duke\nEnergy’s Hazardous Liquid Pipeline IMP, dated September 30, 2013, and Duke Energy\nProcedure GD70.06-006, titled “Assessment Methods Selection Process Flowchart,” did\nnot specify LP-ICDA as an approved integrity assessment method. Duke Energy drafted a\nLP-ICDA procedure in February of 2016, prior to the 2016 assessment, but the procedure\nwas not finalized until April 6, 2017. Furthermore, as of PHMSA’s 2017 inspection,\nDuke Energy had not incorporated the above-referenced LP-ICDA procedure into its IM\nprogram.\n5\n\n\n\nB. Item 4A of Duke Energy Procedure GD75.01-008, titled “Hazardous Liquid IMP\nLiquid Analysis,” requires that “Within 150 days of completion of the Integrity\nAssessment for each pipeline, a review of the assessments results will be completed and\nthe Information Analysis will be performed.” Following a June 6, 2016, External\nCorrosion Direct Assessment (ECDA) of Line LP03, the required Information Analysis\nwas submitted to Duke Energy on July 20, 2017, 259 days after the 150-day deadline\nrequired by the above-referenced procedure.\nC. Section 3 of Duke Energy Procedure GD75.01-007 (Effective Date November 25,\n2013), titled “Continuing Evaluation and Assessment,” requires that Duke Energy perform\nformal evaluations of the integrity of its pipelines, including the development and\ndocumentation of a formal process for such evaluations. Furthermore, the same procedure\nrequires that the evaluations “will consider the results of the baseline and subsequent\nassessments, the information analysis performed after each assessment, decisions\nregarding remediation and decisions regarding preventive and mitigative measures.”\nDuke Energy conducted an ECDA assessment of its Line LP03 on June 6, 2016. At the\ntime of PHMSA’s inspection, Duke Energy personnel were unable to produce a record of\nthe required formal evaluation. Duke Energy stated that its Continual Assessment Plan\n(CAP) complied with this requirement. However, the CAP does not provide the\ninformation required by the above-referenced procedure, such as the results of the\nassessment, the information analysis, decisions regarding remediation, and decisions\nregarding Preventive and Mitigative Measures (P&MMs).\nD. Duke","truncated":true,"body_characters":60539}