COLUMBIA GAS TRANSMISSION, LLC — Notice of Probable Violation

party submissionOfficial PDF320091018_Operator Response_09242009.pdf#

320091018_Final Order 11162010.pdf, page 1Official PDFU.S. Department of Transportation 1200 New Jersey Ave., SE Washington, DC 20590 Pipeline and Hazardous Materials Safety Administration NOV 1 62010 Mr. Victor M. Gaglio Senior Vice President, Operations NiSource Gas Transmission and Storage 1700 MacCorkle Avenue, SE Charleston, WV 25301 Re: CPF No. 3-2009-1018 Dear Mr. Gaglio: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $120,000, acknowledges your payment of the penalty by wire transfer, and finds that NiSource Gas Transmission has completed the actions specified in the Notice to comply with the pipeline safety regulations. This enforcement action is now closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. sincerely, Bitese Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure Cc: Mr. Chad Zamarin, Director, Integrity Management, NiSource Gas Transmission and Storage, 5151 San Felipe, Suite 2500, Houston, TX 77056 Mr. David Barrett, Director, Central Region, PHMSA (by email) CERTIFIED MAIL - RETURN RECEIPT REQUESTED [7005 1160 0001 0041 0640]#

320091018_Final Order 11162010.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 ) ) NiSource Gas Transmission and Storage, ) CPF No. 3-2009-1018 ) Respondent. ) FINAL ORDER On July 17-21 and August 1-3, 2006, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), the Ohio Public Utilities Commission, the New York Department of Public Service, and the West Virginia Public Service Commission inspected the integrity management plan and procedures of NiSource Gas Transmission and Storage (NiSource or Respondent) in Charleston, West Virginia. NiSource operates over 15,000 miles of natural gas pipelines including Columbia Gas Transmission, Columbia Gulf Transmission, Crossroads Pipeline, and Granite State Gas Transmission operations. As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated August 20, 2009, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that NiSource had committed various violations of 49 C.F.R. Part 192 and proposed assessing a civil penalty of $120,000 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. NiSource responded to the Notice by letter dated September 24, 2009 (Response). The company did not contest the allegations of violation and paid the proposed civil penalty of $120,000, as provided in 49 C.F.R. § 190.227. Payment of the penalty serves to close the case with prejudice to Respondent. FINDINGS OF VIOLATION In its Response, NiSource did not contest the allegations in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 1A: The Notice alleged that Respondent violated 49 C.F.R. § 192.907(a), which states in relevant part:#

320091018_Final Order 11162010.pdf, page 32 § 192.907(a) What must an operator do to implement this subpart? (a) General. No later than December 17, 2004, an operator of a covered pipeline segment must develop and follow a written integrity management program that contains all the elements described in § 192.911 and that addresses the risks on each covered transmission pipeline segment. The Notice alleged that Respondent violated 49 C.F.R. § 192.907(a) by failing to follow its written integrity management program including all elements specified in § 192.911. Section 192.911(a) requires that the integrity management program include an identification of all high consequence areas (HCAs). Specifically, the Notice alleged that NiSource did not identify all the HCA locations along its 12-inch UM10 (Ashland, KY) pipeline system by the December 17, 2004, deadline. Three additional HAs were identified at the time of the inspection in 2006. 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. § 192.907(a) by failing to follow its written integrity management program and identify all HAs by the December 17, 2004, deadline. Item 2A: The Notice alleged that Respondent violated 49 C.F.R. § 192.911, which states in relevant part: $ 192.911 What are the elements of an integrity management program? The initial [integrity management] program framework and subsequent program must, at minimum, contain the following elements.... (b) A baseline assessment plan meeting the requirements of § 192.919 and § 192.921. The Notice alleged that Respondent violated 49 C.F.R. § 192.911 by failing to have a baseline assessment plan meeting the requirements of § 192.921. Section 192.921(a) requires that an operator select the method or methods of assessment best suited to address the threats identified to the covered segment. Specifically, the Notice alleged that NiSource's baseline assessment plan did not include assessment methods that address stress corrosion cracking (SCC) despite having identified several covered pipeline segments that met the ASME B31.8S criteria for SCC. 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. § 192.911 by failing to have a baseline assessment plan that included assessment methods suited to address all identified threats in accordance with the requirements of § 192.921. Item 3A: The Notice alleged that Respondent violated 49 C.F.R. § 192.933(a), which states in relevant part: § 192.933 What actions must be taken to address integrity issues? (a) General requirements. An operator must take prompt action to address all anomalous conditions the operator discovers through the integrity assessment. In addressing all conditions, an operator must evaluate all anomalous conditions and remediate those that could reduce a pipeline's integrity....#

320091018_Final Order 11162010.pdf, page 43 (1) Temporary pressure reduction. If an operator is unable to respond within the time limits for certain conditions specified in this section, the operator must temporarily reduce the operating pressure of the pipeline or take other action that ensures the safety of the covered segment.... An operator must notify PHMSA in accordance with § 192.949 if it cannot meet the schedule for evaluation and remediation required under paragraph (c) of this section and cannot provide safety through temporary reduction in operating pressure or other action.... The Notice alleged that Respondent violated 49 C.F.R. § 192.933(a) by failing to either take prompt action to address all anomalous conditions discovered through integrity assessments or reduce operating pressure. Specifically, the Notice alleged that on two occasions NiSource did not immediately remediate conditions that required immediate repair under § 192.933(d), did not reduce the operating pressure or take other action to ensure the safety of the covered segment, and did not notify PHMSA that it could not meet the schedule for remediation or take other action to provide safety. Respondent did not contest this allegation of violation. Accordingly, 3 192.933(a) by failing to either take prompt action to address all anomalous ased upon a review of all of the evidence, I find that Respondent violated 49 C.F.F conditions discovered through integrity assessments or reduce operating pressure. Item 3B: The Notice alleged that Respondent violated 49 C.F.R. § 192.933(b), which states in relevant part: § 192.933 What actions must be taken to address integrity issues? (a) .... (b) Discovery of condition. Discovery of a condition occurs when an operator has adequate information about a condition to determine that the condition presents a potential threat to the integrity of the pipeline.... Ar integrity assessment, obtain sufficient information about a condition to operator must promptly, but no later than 180 days after conducting ar make that determination, unless the operator demonstrates that the 180- day period is impracticable. The Notice alleged that Respondent violated 49 C.F.R. § 192.933(b) by failing to promptly assess available information and make a determination that a condition was a potential threat to the integrity of the pipeline. Specifically, the Notice alleged that NiSource did not promptly determine that there were conditions requiring immediate repair following the June 29, 2004, internal inspection of the VB LOOP line even though the final inspection report was made available to NiSource on August 8, 2004, and contained sufficient information to make that determination. 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. § 192.933(b) by failing to promptly assess available information and make a determination that a condition was a potential threat to the integrity of the pipeline. Item 4A: The Notice alleged that Respondent violated 49 C.F.R. § 192.947, which states:#

320091018_Final Order 11162010.pdf, page 54 $ 192.947 What records must an operator keep? An operator must maintain, for the useful life of the pipeline, records that demonstrate compliance with the requirements of [Subpart Ol. At minimum, an operator must maintain the following records for review during an inspection. (a) (d) Documents to support any decision, analysis and process developed and used to implement and evaluate each element of the baseline assessment plan and integrity management program. Documents include those developed and used in support of any identification, calculation, amendment, modification, justification, deviation and determination made, and any action taken to implement and evaluate any of the program elements. The Notice alleged that Respondent violated 49 C.F.R. § 192.947 by failing to maintain records that demonstrate compliance with the requirements of the Gas Transmission Pipeline Integrity Management regulations for the useful life of the pipeline. Specifically, the Notice alleged that NiSource could not produce the dig/repair reports for two immediate repair conditions that were reported to have been addressed in November 2004. 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. § 192.947 by failing to maintain records that demonstrate compliance with the requirements of the Gas Transmission Pipeline Integrity Management regulations for the useful life of the pipeline. 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 $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 $120,000 for the violations cited above. Item IA: The Notice proposed a civil penalty of $37,900 for Respondent's violation of 49 C.F.R. § 192.907(a), for failing to follow its written integrity management program by the December 17, 2004, deadline. NiSource 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 $37,900 for violation of 49 C.F.R. § 192.907(a).#

320091018_Final Order 11162010.pdf, page 65 Item 2A: The Notice proposed a civil penalty of $23,200 for Respondent's violation of 49 C.F.R. $ 192.911, for failing to have a baseline assessment plan meeting the requirements of $ 192.921. NiSource 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 $23,200 for violation of 49 C.F.R. § 192.911. Item 3A: The Notice proposed a civil penalty of $23,200 for Respondent's violation of 49 C.F.R. § 192.933(a), for failing to either take prompt action to address all anomalous conditions discovered through integrity assessments or reduce operating pressure. NiSource 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 $23,200 for violation of 49 C.F.R. § 192.933(a). Item 3B: The Notice proposed a civil penalty of $23,200 for Respondent's violation of 49 C.F.R. § 192.933(b), for failing to determine that a condition was a potential threat to the integrity of the pipeline. NiSource 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 $23,200 for violation of 49 C.F.R. § 192.933(b). Item 4A: The Notice proposed a civil penalty of $12,500 for Respondent's violation of 49 C.F.R. § 192.947, for failing to maintain records that demonstrate compliance with the requirements of the Gas Transmission Pipeline Integrity Management regulations for the useful life of the pipeline. NiSource 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 $12,500 for violation of 49 C.F.R. § 192.947. 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 $120,000, which amount has already been paid by Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 2A in the Notice for violation of 49 C.F.R. § 192.921(a). 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 Respondent has taken the following actions specified in the proposed compliance order: With respect to the violation of § 192.921(a) (Item 2A), NiSource provided PHMSA with documentation substantiating that it revised its baseline assessment plan to include appropriate assessment methods to address stress corrosion cracking (SCC). NiSource submitted a schedule for completion of the integrity assessments for all pipeline segments that meet the B31.8S criteria for SCC. NiSource maintained documentation of the safety improvement costs associated with the compliance order and submitted the total to the Director, Central Region, PHMSA.#

320091018_Final Order 11162010.pdf, page 76 Accordingly, I find that compliance has been achieved with respect to this violation. Therefore, the compliance terms proposed in the Notice are not included in this Order. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. $ 190.5. Dullese NOV 1 62010 Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#

320091018_Final Order_11162010_text.pdf, page 1Official PDFNOV 16 2010 Mr. Victor M. Gaglio Senior Vice President, Operations NiSource Gas Transmission and Storage 1700 MacCorkle Avenue, SE Charleston, WV 25301 Re: CPF No. 3-2009-1018 Dear Mr. Gaglio: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $120,000, acknowledges your payment of the penalty by wire transfer, and finds that NiSource Gas Transmission has completed the actions specified in the Notice to comply with the pipeline safety regulations. This enforcement action is now closed. Service of the Final Order by certified mail is deemed effective upon the date of mailing, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure cc: Mr. Chad Zamarin, Director, Integrity Management, NiSource Gas Transmission and Storage, 5151 San Felipe, Suite 2500, Houston, TX 77056 Mr. David Barrett, Director, Central Region, PHMSA (by email) CERTIFIED MAIL – RETURN RECEIPT REQUESTED [7005 1160 0001 0041 0640]#

320091018_Final Order_11162010_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 ) ) NiSource Gas Transmission and Storage, ) CPF No. 3-2009-1018 ) Respondent. ) ____________________________________) FINAL ORDER On July 17-21 and August 1-3, 2006, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), the Ohio Public Utilities Commission, the New York Department of Public Service, and the West Virginia Public Service Commission inspected the integrity management plan and procedures of NiSource Gas Transmission and Storage (NiSource or Respondent) in Charleston, West Virginia. NiSource operates over 15,000 miles of natural gas pipelines including Columbia Gas Transmission, Columbia Gulf Transmission, Crossroads Pipeline, and Granite State Gas Transmission operations. As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated August 20, 2009, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that NiSource had committed various violations of 49 C.F.R. Part 192 and proposed assessing a civil penalty of $120,000 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. NiSource responded to the Notice by letter dated September 24, 2009 (Response). The company did not contest the allegations of violation and paid the proposed civil penalty of $120,000, as provided in 49 C.F.R. § 190.227. Payment of the penalty serves to close the case with prejudice to Respondent. FINDINGS OF VIOLATION In its Response, NiSource did not contest the allegations in the Notice that it violated 49 C.F.R. Part 192, as follows: Item 1A: The Notice alleged that Respondent violated 49 C.F.R. § 192.907(a), which states in relevant part:#

320091018_Final Order_11162010_text.pdf, page 32 § 192.907(a) What must an operator do to implement this subpart? (a) General. No later than December 17, 2004, an operator of a covered pipeline segment must develop and follow a written integrity management program that contains all the elements described in § 192.911 and that addresses the risks on each covered transmission pipeline segment. The Notice alleged that Respondent violated 49 C.F.R. § 192.907(a) by failing to follow its written integrity management program including all elements specified in § 192.911. Section 192.911(a) requires that the integrity management program include an identification of all high consequence areas (HCAs). Specifically, the Notice alleged that NiSource did not identify all the HCA locations along its 12-inch UM10 (Ashland, KY) pipeline system by the December 17, 2004, deadline. Three additional HCAs were identified at the time of the inspection in 2006. 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. § 192.907(a) by failing to follow its written integrity management program and identify all HCAs by the December 17, 2004, deadline. Item 2A: The Notice alleged that Respondent violated 49 C.F.R. § 192.911, which states in relevant part: § 192.911 What are the elements of an integrity management program? …. The initial [integrity management] program framework and subsequent program must, at minimum, contain the following elements…. (b) A baseline assessment plan meeting the requirements of § 192.919 and § 192.921. The Notice alleged that Respondent violated 49 C.F.R. § 192.911 by failing to have a baseline assessment plan meeting the requirements of § 192.921. Section 192.921(a) requires that an operator select the method or methods of assessment best suited to address the threats identified to the covered segment. Specifically, the Notice alleged that NiSource’s baseline assessment plan did not include assessment methods that address stress corrosion cracking (SCC) despite having identified several covered pipeline segments that met the ASME B31.8S criteria for SCC. 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. § 192.911 by failing to have a baseline assessment plan that included assessment methods suited to address all identified threats in accordance with the requirements of § 192.921. Item 3A: The Notice alleged that Respondent violated 49 C.F.R. § 192.933(a), which states in relevant part: § 192.933 What actions must be taken to address integrity issues? (a) General requirements. An operator must take prompt action to address all anomalous conditions the operator discovers through the integrity assessment. In addressing all conditions, an operator must evaluate all anomalous conditions and remediate those that could reduce a pipeline's integrity….#

320091018_Final Order_11162010_text.pdf, page 43 (1) Temporary pressure reduction. If an operator is unable to respond within the time limits for certain conditions specified in this section, the operator must temporarily reduce the operating pressure of the pipeline or take other action that ensures the safety of the covered segment…. An operator must notify PHMSA in accordance with § 192.949 if it cannot meet the schedule for evaluation and remediation required under paragraph (c) of this section and cannot provide safety through temporary reduction in operating pressure or other action…. The Notice alleged that Respondent violated 49 C.F.R. § 192.933(a) by failing to either take prompt action to address all anomalous conditions discovered through integrity assessments or reduce operating pressure. Specifically, the Notice alleged that on two occasions NiSource did not immediately remediate conditions that required immediate repair under § 192.933(d), did not reduce the operating pressure or take other action to ensure the safety of the covered segment, and did not notify PHMSA that it could not meet the schedule for remediation or take other action to provide safety. 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. § 192.933(a) by failing to either take prompt action to address all anomalous conditions discovered through integrity assessments or reduce operating pressure. Item 3B: The Notice alleged that Respondent violated 49 C.F.R. § 192.933(b), which states in relevant part: § 192.933 What actions must be taken to address integrity issues? (a) …. (b) Discovery of condition. Discovery of a condition occurs when an operator has adequate information about a 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 conducting an integrity assessment, obtain sufficient information about a condition to make that determination, unless the operator demonstrates that the 180- day period is impracticable. The Notice alleged that Respondent violated 49 C.F.R. § 192.933(b) by failing to promptly assess available information and make a determination that a condition was a potential threat to the integrity of the pipeline. Specifically, the Notice alleged that NiSource did not promptly determine that there were conditions requiring immediate repair following the June 29, 2004, internal inspection of the VB LOOP line even though the final inspection report was made available to NiSource on August 8, 2004, and contained sufficient information to make that determination. 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. § 192.933(b) by failing to promptly assess available information and make a determination that a condition was a potential threat to the integrity of the pipeline. Item 4A: The Notice alleged that Respondent violated 49 C.F.R. § 192.947, which states:#

320091018_Final Order_11162010_text.pdf, page 54 § 192.947 What records must an operator keep? An operator must maintain, for the useful life of the pipeline, records that demonstrate compliance with the requirements of [Subpart O]. At minimum, an operator must maintain the following records for review during an inspection. (a) …. (d) Documents to support any decision, analysis and process developed and used to implement and evaluate each element of the baseline assessment plan and integrity management program. Documents include those developed and used in support of any identification, calculation, amendment, modification, justification, deviation and determination made, and any action taken to implement and evaluate any of the program elements. The Notice alleged that Respondent violated 49 C.F.R. § 192.947 by failing to maintain records that demonstrate compliance with the requirements of the Gas Transmission Pipeline Integrity Management regulations for the useful life of the pipeline. Specifically, the Notice alleged that NiSource could not produce the dig/repair reports for two immediate repair conditions that were reported to have been addressed in November 2004. 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. § 192.947 by failing to maintain records that demonstrate compliance with the requirements of the Gas Transmission Pipeline Integrity Management regulations for the useful life of the pipeline. 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 $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 $120,000 for the violations cited above. Item 1A: The Notice proposed a civil penalty of $37,900 for Respondent’s violation of 49 C.F.R. § 192.907(a), for failing to follow its written integrity management program by the December 17, 2004, deadline. NiSource 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 $37,900 for violation of 49 C.F.R. § 192.907(a).#

320091018_Final Order_11162010_text.pdf, page 65 Item 2A: The Notice proposed a civil penalty of $23,200 for Respondent’s violation of 49 C.F.R. § 192.911, for failing to have a baseline assessment plan meeting the requirements of § 192.921. NiSource 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 $23,200 for violation of 49 C.F.R. § 192.911. Item 3A: The Notice proposed a civil penalty of $23,200 for Respondent’s violation of 49 C.F.R. § 192.933(a), for failing to either take prompt action to address all anomalous conditions discovered through integrity assessments or reduce operating pressure. NiSource 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 $23,200 for violation of 49 C.F.R. § 192.933(a). Item 3B: The Notice proposed a civil penalty of $23,200 for Respondent’s violation of 49 C.F.R. § 192.933(b), for failing to determine that a condition was a potential threat to the integrity of the pipeline. NiSource 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 $23,200 for violation of 49 C.F.R. § 192.933(b). Item 4A: The Notice proposed a civil penalty of $12,500 for Respondent’s violation of 49 C.F.R. § 192.947, for failing to maintain records that demonstrate compliance with the requirements of the Gas Transmission Pipeline Integrity Management regulations for the useful life of the pipeline. NiSource 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 $12,500 for violation of 49 C.F.R. § 192.947. 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 $120,000, which amount has already been paid by Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 2A in the Notice for violation of 49 C.F.R. § 192.921(a). 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 Respondent has taken the following actions specified in the proposed compliance order: With respect to the violation of § 192.921(a) (Item 2A), NiSource provided PHMSA with documentation substantiating that it revised its baseline assessment plan to include appropriate assessment methods to address stress corrosion cracking (SCC). NiSource submitted a schedule for completion of the integrity assessments for all pipeline segments that meet the B31.8S criteria for SCC. NiSource maintained documentation of the safety improvement costs associated with the compliance order and submitted the total to the Director, Central Region, PHMSA.#

320091018_Final Order_11162010_text.pdf, page 76 Accordingly, I find that compliance has been achieved with respect to this violation. Therefore, the compliance terms proposed in the Notice are not included in this Order. 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#

320091018_NOPV PCP PCO_08202009_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED August 20, 2009 Mr. Victor Gaglio Senior Vice President, Operations NiSource Gas Transmission and Storage 1700 MacCorkle Ave. SE Charleston, WV 25301 CPF 3-2009-1018 Dear Mr. Gaglio: On July 17-21, 2006 and August 1-3, 2006, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Ohio Public Utilities Commission, New York Department of Public Service, and the West Virginia Public Service Commission pursuant to Chapter 601 of 49 United States Code inspected the NiSource Gas Transmission and Storage (NiSource) integrity management plan and procedures in Charleston, West Virginia. The integrity management (IM) plan and procedures are applicable to the Columbia Gas Transmission, Columbia Gulf Transmission, Crossroads Pipeline and Granite State Gas Transmission operations. As a result of the inspection, 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: §192.911 What are the elements of an integrity management program?#

320091018_NOPV PCP PCO_08202009_text.pdf, page 2An operator's initial integrity management program begins with a framework (see §192.907) and evolves into a more detailed and comprehensive integrity management program, as information is gained and incorporated into the program. An operator must make continual improvements to its program. The initial program framework and subsequent program must, at minimum, contain the following elements. (When indicated, refer to ASME/ANSI B31.8S (ibr, see §192.7) for more detailed information on the listed element.) 1. §192.911(a) An identification of all high consequence areas, in accordance with §192.905. §192.905(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. Item 1A. §192.907(a) General. No later than December 17, 2004, an operator of a covered pipeline segment must develop and follow a written integrity management program that contains all the elements described in §192.911 and that addresses the risks on each covered transmission pipeline segment. The initial integrity management program must consist, at a minimum, of a framework that describes the process for implementing each program element, how relevant decisions will be made and by whom, a time line for completing the work to implement the program element, and how information gained from experience will be continuously incorporated into the program. The framework will evolve into a more detailed and comprehensive program. An operator must make continual improvements to the program. NiSource did not identify all the high consequence area (HCA) locations along its pipeline system as required. HCA identification was not completed for the 12-inch UM10 (Ashland, KY) pipeline by the 12/17/2004 deadline. Identified sites are located 2#

320091018_NOPV PCP PCO_08202009_text.pdf, page 3in close proximity to the pipeline, yet an evaluation using the potential impact radius (PIR) to identify HCAs was not completed for these locations. Between the two weeks of the inspection, NiSource measured the distances between the pipeline and the identified sites and defined 3 new HCAs (about 0.3 miles total of new covered segments, risk-ranked in the bottom 50%) on this pipeline. 2. §192.911(b) A baseline assessment plan meeting the requirements of §192.919 and §192.921. Item 2A. §192.921(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). NiSource did not utilize appropriate assessment methods to address the threats identified. Several covered segments (e.g., WBS6-15:545620, VBS2-50:207265) were identified that meet the B31.8S criteria for stress corrosion cracking (SCC). The baseline assessment plan does not include assessment methods that address SCC for any of these segments. An assessment on at least one segment that meets the SCC criteria (Columbia Gulf ML 200-27:36220) was reportedly completed, but the in-line inspection methods employed did not address SCC. The rule requires that integrity assessment methods assess all threats identified for a covered segment. 3. §192.911(e) Provisions meeting the requirements of §192.933 for remediating conditions found during an integrity assessment. §192.933(a) What actions must be taken to address integrity issues? General requirements. An operator must take prompt action to address all anomalous conditions that the operator discovers through the integrity assessment. In addressing all conditions, an operator must evaluate all anomalous conditions and remediate those that could reduce a pipeline's integrity. An operator must be able to demonstrate that the remediation of the condition will ensure that the condition is unlikely to pose a threat to the integrity of the pipeline until the next reassessment of the covered segment. If an operator is unable to respond within the time limits for certain conditions specified in this section, the operator must temporarily reduce the operating pressure of the pipeline or take other action that ensures the safety of the covered segment. If the pressure is reduced, an operator must determine the temporary reduction in operating pressure using ASME/ANSI B31G (ibr, see §192.7) or AGA Pipeline Research Committee Project PR–3–805 (“RSTRENG”; ibr, see §192.7)… §192.933(b) Discovery of condition. Discovery of a condition occurs when an operator has adequate information about a condition to determine that the 3#

320091018_NOPV PCP PCO_08202009_text.pdf, page 4condition presents a potential threat to the integrity of the pipeline. A condition that presents a potential threat includes, but is not limited to, those conditions that require remediation or monitoring listed under paragraphs (d)(1) through (d)(3) of this section. An operator must promptly, but no later than 180 days after conducting an integrity assessment, obtain sufficient information about a condition to make that determination, unless the operator demonstrates that the 180-day period is impracticable. • Item 3A: §192.933(a) The operating pressure was not lowered promptly as required by the rule in at least two instances: Two immediate repair conditions, both reportedly dents with metal loss, were discovered on the VB Loop in HCAs 50:384482 and 50:390977 on November 19, 2004. The operating pressure in the pipeline was not reduced upon discovery. Emails indicate that repairs were scheduled to commence on November 29 and that if it took longer than December 6, 2004 to complete the repairs, then the operating pressure would have to be reduced. The necessary repairs were completed as scheduled so the operating pressure was never reduced. The rule requires that a pressure reduction be taken to ensure public safety if immediate repair conditions can not be repaired immediately. Documentation for VM-107 dig 7 indicates that the preliminary report was received on October 8, 2004; at which time the safe reduced operating pressure was established utilizing RSTRENG. The operating pressure, however, was not actually reduced until October 14, 2004. • Item 3B: §192.933(b) Discovery of a condition did not occur when adequate information about the condition was available to determine that it was a potential threat to the integrity of the pipeline. Immediate repair conditions from a June 29, 2004 internal inspection of the VB LOOP line were not “discovered” until November 19, 2004, even though the final vendor report, which was received on August 8, contained sufficient information to identify the conditions. The rule requires repair conditions to be discovered when adequate information is available to determine whether the conditions present a threat to pipeline integrity. 4#

320091018_NOPV PCP PCO_08202009_text.pdf, page 54. §192.911(j) Record keeping provisions meeting the requirements of §192.947. Item 4A. § 192.947 What records must an operator keep? An operator must maintain, for the useful life of the pipeline, records that demonstrate compliance with the requirements of this subpart. At minimum, an operator must maintain the following records for review during an inspection. §192.947(d) Documents to support any decision, analysis and process developed and used to implement and evaluate each element of the baseline assessment plan and integrity management program. Documents include those developed and used in support of any identification, calculation, amendment, modification, justification, deviation and determination made, and any action taken to implement and evaluate any of the program elements; Records specified in 192.947 were not adequately maintained for the useful life of the pipeline as required. The dig/repair reports for two immediate repair conditions that were reported to have been addressed in November 2004 could not be located. Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $100,000 for each violation for each day the violation persists up to a maximum of $1,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violations and has recommended that you be preliminarily assessed a civil penalty of $120,000 as follows: Item number PENALTY 1A $ 37,900 2A $ 23,200 3A $ 23,200 3B $ 23,200 4A $ 12,500 Proposed Compliance Order With respect to item 2A pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to NiSource. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response to this NoticeEnclosed 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 5#

320091018_NOPV PCP PCO_08202009_text.pdf, page 6material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 3-2009-1018 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Ivan A. Huntoon Director, Central Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 6#

320091018_NOPV PCP PCO_08202009_text.pdf, page 7PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to NiSource a Compliance Order incorporating the following remedial requirements to ensure the compliance of NiSource with the pipeline safety regulations: 1. In regard to Item Number 2A of the Notice, NiSource must provide this office documentation that substantiates that the Baseline Assessment Plan includes appropriate assessment methods to address stress corrosion cracking (SCC) and a schedule for completion of the integrity assessments for all pipeline segments that meet the B31.8S criteria for SCC. 2. Submit the results of the Proposed Compliance Order items above to the Region Director, Central Region, Office of Pipeline Safety, Pipeline and Hazardous Materials Safety Administration, 901 Locust Street, Suite 462, Kansas City, MO 64106. This is to be accomplished within 30 days following receipt of the Final Order. 3. NiSource shall maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Ivan A. Huntoon, Director, Central Region, Pipeline and Hazardous Materials Safety Administration. Costs shall be reported in two categories: 1) total cost associated with preparation/revision of plans, procedures, studies and analyses, and 2) total cost associated with replacements, additions and other changes to pipeline infrastructure. 7#