SOUTHERN STAR CENTRAL GAS PIPELINE, INC — Notice of Probable Violation

party submissionOfficial PDF320111016_Operator Response to NOPV_11212011.pdf#

party submissionOfficial PDF320111016_Operator_Response_to_NOPV_12282011.pdf#

320111016_NOVP PCP PCO_10212011_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED October 21, 2011 Mr. Robert Carlton Vice President & Chief Compliance Officer Southern Star Central Gas Pipeline 4700 Highway 56 Owensboro, KY 42301 CPF 3-2011-1016 Dear Mr. Carlton: On July 12, 13 and 14, 2011, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your Public Awareness Program in Owensboro, KY. 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:#

320111016_NOVP PCP PCO_10212011_text.pdf, page 21. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star Gas Central Pipeline (Southern Star) did not complete an annual audit for Plan Year 2006 and 2008 as required by API RP 1162. Southern Star assumed that submitting the 2006 Public Awareness Plan (PAP) to PHMSA Clearinghouse for review complied with an annual audit for Year 2006. Southern Star was unable to provide documentation to demonstrate that annual audits were performed for Plan Year 2006 or 2008. 2. §192.616 Public Awareness. (c)The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star failed to follow their PAP procedure for program administration. Southern Star failed to use their established and defined team to ensure the development, implementation, and ongoing oversight of the public awareness program was done in accordance with their established procedures. The 2010 Annual Audit was completed by a single individual. Also, Southern Star did not provide documentation that the annual audit recommendations were implemented or show there was a process in place to track the implementation of the audit recommendations. 3. § 192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star did not complete the baseline effectiveness evaluation within the time period of regulatory guidelines established in API RP 1162. Documentation provided indicates the evaluation was completed on October 18, 2010, four months beyond the 2#

320111016_NOVP PCP PCO_10212011_text.pdf, page 3required four year interval for evaluation. Southern Star provided no documentation or justification for why the effectiveness evaluation was not completed within the prescribed interval. 4. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star failed to adequately measure whether stakeholder audiences understood the content of messages and retained key information from the messages. Southern Star relied primarily on returned survey cards for assessing how well the message content was understood. Southern Star field personnel passed out calendars to the affected public during face-to-face meetings but did not ask questions designed to assess their understanding of the message content. The percentage of responses from stakeholder audiences was low (0.24%). 5. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Southern Star PAP contains a table of Supplemental Activities but no documentation was provided for the implementation of these activities or how these activities would be used for effectiveness evaluation. Also, no documentation was provided for follow-up activities with emergency response and public officials who did not attend training/informational meetings. 6. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star did not complete the annual audits in a timely manner so that recommendations could be included in the following year’s plan for implementation. 3#

320111016_NOVP PCP PCO_10212011_text.pdf, page 4Southern Star has performed annual audits for PAP Years 2007, 2009 and 2010 in September 2008, November 2010 and April 2011, respectively. 7. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Southern Star PAP listed six Objectives but the data collection efforts, data analysis and effectiveness evaluation processes do not measure bottom-line results to achieve the six Objectives listed in the PAP. 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 violation(s) and has recommended that you be preliminarily assessed a civil penalty of $25,300 as follows: Item number PENALTY 1 $12,800 3 $12,500 Warning Items With respect to items 5 and 6, we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these items. Be advised that failure to do so may result in Southern Star being subject to additional enforcement action. Proposed Compliance Order With respect to items 2, 3, 4 and 7, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Southern Star Central gas Pipeline. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. 4#

320111016_NOVP PCP PCO_10212011_text.pdf, page 5Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. In your correspondence on this matter, please refer to CPF 3-2011-1016 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, David Barrett Director, Central Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 5#

320111016_NOVP PCP PCO_10212011_text.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Southern Star Central Gas Pipeline (Southern Star) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Southern Star with the pipeline safety regulations: 1. In regard to Item Number 2 of the Notice pertaining to failure to follow the Public Awareness Plan (PAP) procedure for program administration by failing to use your established and defined Public Awareness Team for oversight of the public awareness program, Southern Star shall complete the following: • Ensure that an internal group performs the annual audits of the PAP following the internal assessment method. • Submit a written plan to Central Region by December 31, 2011 with details of how recommendation from annual audits will be implemented and completed, • Implement and complete all recommendation from annual audits conducted for Plan Years 2006 – 2010 no later than August 31, 2012 and submit supporting documentation to Central Region. 2. In regard to Item Number 3 of the Notice pertaining to failure to complete the baseline effectiveness evaluation by the required deadline of June 20, 2010, Southern Star shall complete the following: • Submit a written document to Central Region by December 31, 2011 with details of how recommendations from Effectiveness Evaluations will be implemented and closed. • Implement and complete all recommendations from the 2010 Effectiveness Evaluation no later than August 31, 2012 and submit supporting documentation to Central Region. 3. In regard to Item Number 4 of the Notice pertaining to failure to adequately measure whether stakeholder audiences understand the content of messages and retained key information in the messages. Southern Star shall complete the following: • Follow the recommendations of API 1162, specifically addressing “survey target stakeholder audiences” and develop a survey plan and forms for surveying target audiences no later than December 31, 2011. • Implement the survey for measuring understandability no later than February 29, 2012. 4. In regard to Item Number 7 of the Notice pertaining to lack of measuring bottom- line results to achieve the Plan Objectives, Southern Star shall complete the following: • After the amendment of the PAP procedure for Effective Evaluations, as required in Item 4 of CPF 3-2011-1017M, has been completed, measure the bottom-line results to determine if the six Objectives of the PAP have been achieved. • Submit documentation of the bottom-line results in relation to the Objectives no later than September 30, 2012. 6#

320111016_NOVP PCP PCO_10212011_text.pdf, page 75. Unless specifically noted, documentation of completion shall be sent to the Regional Director, Central Region within 30 days of the completion date. 6. It is requested (not mandated) that Southern Star maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to David Barrett, Director, Central Region, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs 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#

320111016_NOPV PCP PCO_10212011.pdf, page 1Official PDFu.s. Department of Transportation Pipeline and Hazardous Materials Safety Administration 901 Locust Street, Suite 462 Kansas City, MO 641 06-2641 NOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAJL- RETURN RECEIPT REQUESTED October 21, 2011 Mr. Robert Carlton Vice President & Chief Compliance Officer Southern Star Central Gas Pipeline 4700 Highway 56 Owensboro, KY 42301 CPF 3-2011-1016 Dear Mr. Carlton: On July 12, 13 and 14, 2011, representatives ofthe Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected your Public Awareness Program in Owensboro, KY. 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:#

320111016_NOPV PCP PCO_10212011.pdf, page 21. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star Gas Central Pipeline (Southern Star) did not complete an annual audit for Plan Year 2006 and 2008 as required by API RP 1162. Southern Star assumed that submitting the 2006 Public Awareness Plan (PAP) to PHMSA Clearinghouse for review complied with an annual audit for Year 2006. Southern Star was unable to provide documentation to demonstrate that annual audits were performed for Plan Year 2006 or _ 2008. 2. §192.616 Public Awareness. (c)The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star failed to follow their PAP procedure for program administration. Southern Star failed to use their established and defined team to ensure the development, implementation, and ongoing oversight of the public awareness program was done in accordance with their established procedures. The 2010 Annual Audit was completed by a single individual. Also, Southern Star did not provide documentation that the annual audit recommendations were implemented or show there was a process in place to track the implementation of the audit recommendations. 3. § 192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star did not complete the baseline effectiveness evaluation within the time period of regulatory guidelines established in API RP 1162. Documentation provided indicates the evaluation was completed on October 18, 2010, four months beyond the 2#

320111016_NOPV PCP PCO_10212011.pdf, page 3required four year intenrar for evaluation. Southern Star provided no documentation or justification for why the effectiveness evaluation was not completed within the prescribed interval. 4. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star failed to adequately measure whether stakeholder audiences understood the content of messages and retained key information from the messages. Southern Star relied primarily on returned survey cards for assessing how well the message content was understood. Southern Star field personnel passed out calendars to the affected public during face-to-face meetings but did not ask questions designed to assess their understanding of the message content. The percentage of responses from stakeholder audiences was low (0.24%). 5. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Southern Star PAP contains a table of Supplemental Activities but no documentation was provided for the implementation of these activities or how these activities would be used for effectiveness evaluation. Also, no documentation was provided for follow-up activities with emergency response and public officials who did not attend training/informational meetings. 6. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. Southern Star did not complete the annual audits in a timely manner so that recommendations could be included in the following year's plan for implementation. 3#

320111016_NOPV PCP PCO_10212011.pdf, page 4Southern Star has performed annual audits for PAP Years 2007, 2009 and 2010 in September 2008, November 2010 and April2011, respectively. 7. §192.616 Public Awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why conditions with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Southern Star PAP listed six Objectives but the data collection efforts, data analysis and effectiveness evaluation processes do not measure bottom-line results to achieve the _ six Objectives listed in the PAP. 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 violation(s) and has recommended that you be preliminarily assessed a civil penalty of $25,300 as follows: Item number 1 3 PENALTY $12,800 $12,500 Warning Items With respect to items 5 and 6, we have reviewed the circumstances and supporting documents involved in this case and have decided not to conduct additional enforcement action or penalty assessment proceedings at this time. We advise you to promptly correct these items. Be advised that failure to do so may result in Southern Star being subject to additional enforcement action. Proposed Compliance Order With respect to items 2, 3, 4 and 7, pursuant to 49 United States Code§ 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Southern Star Central gas Pipeline. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. 4#

320111016_NOPV PCP PCO_10212011.pdf, page 5Response to this Notice Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action 1s subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b ), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt ofthis Notice, this constitutes a waiver ofyour 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 3-2011-1016 and for each document you submit, please provide a copy in electronic format whenever possible. David Barrett Director, Central Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 5#

320111016_NOPV PCP PCO_10212011.pdf, page 6PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code§ 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Southern Star Central Gas Pipeline (Southern Star) a Compliance Order incorporating the following remedial requirements to ensure the compliance of Southern Star with the pipeline safety regulations: 1. 2. 3. 4. In regard to Item Number 2 of the Notice pertaining to failure to follow the Public Awareness Plan (PAP) procedure for program administration by failing to use your established and defined Public Awareness Team for oversight of the public awareness program, Southern Star shall complete the following: • Ensure that an internal group performs the annual audits of the PAP following the internal assessment method. • Submit a written plan to Central Region by December 31, 2011 with details ofhow recommendation from annual audits will be implemented and completed, • Implement and complete all recommendation from annual audits conducted for Plan Years 2006 - 201 0 no later than August 31, 2012 and submit supporting documentation to Central Region. In regard to Item Number 3 of the Notice pertaining to failure to complete the baseline effectiveness evaluation by the required deadline of June 20, 2010, Southern Star shall complete the following: • Submit a written document to Central Region by December 31, 20 11 with details ofhow recommendations from Effectiveness Evaluations will be implemented and closed. • Implement and complete all recommendations from the 2010 Effectiveness Evaluation no later than August 31, 2012 and submit supporting documentation to Central Region. In regard to Item Number 4 of the Notice pertaining to failure to adequately measure whether stakeholder audiences understand the content of messages and retained key information in the messages. Southern Star shall complete the following: • Follow the recommendations of API 1162, specifically addressing "survey target stakeholder audiences" and develop a survey plan and forms for surveying target audiences no later than December 31, 2011. • Implement the survey for measuring understandability no later than February 29, 2012. In regard to Item Number 7 of the Notice pertaining to lack of measuring bottom- line results to achieve the Plan Objectives, Southern Star shall complete the following: • After the amendment of the PAP procedure for Effective Evaluations, as required in Item 4 of CPF 3-2011-10 17M, has been completed, measure the bottom-line results to determine ifthe six Objectives of the PAP have been achieved. • Submit documentation of the bottom-line results in relation to the Objectives no later than September 30, 2012. 6#

320111016_NOPV PCP PCO_10212011.pdf, page 75. 6. Unless specifically noted, documentation of completion shall be sent to the Regional Director, Central Region within 30 days of the completion date. It is requested (not mandated) that Southern Star maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to David Barrett, Director, Central Region, Pipeline and Hazardous Materials Safety Administration. It is requested that these costs 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#

320111016_NOPV PCP PCO_10212011.pdf, page 8-Response Options for Pipeline Operators in Compliance Proceedings The requirements of 49 C.P.R. Part 190, Subpart B (§§ 190.201-190.237) govern response to Notices issued by a Regional Director, Pipeline and Hazardous Materials Safety Administration (PHMSA). Be advised that all material submitted by a respondent in response to an enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). I. Procedures for Responding to a NOTICE OF PROBABLE VIOLATION: Within 30 days of receipt of a Notice of Probable Violation, the respondent shall respond to the Regional Director who issued the Notice in the following way: a. When the Notice contains a proposed CIVIL PENALTY* -- 1. 2. 3. 4. If you are not contesting any violations alleged in the Notice, pay the proposed civil penalty and advise the Regional Director of the payment. This authorizes PHMSA to issue an order making findings of violation and upon confirmation that the payment has been received PHMSA will close the case with prejudice to the respondent. Payment terms are outlined below; If you are not contesting any violations alleged in the Notice but wish to submit written explanations, information, or other materials you believe warrant mitigation of the civil penalty, you may submit such materials. This authorizes PHMSA to make findings and to issue a Final Order assessing a penalty amount up to the amount proposed in the Notice. Refer to 49 C.F .R. § 190.225 for assessment considerations, which include the respondent's ability to pay and the effect on the respondent's ability to stay in business, upon which civil penalties are based; If you are contesting one or more of the items in the Notice but are not requesting an oral hearing, submit a written response to the allegations and/or seek elimination or mitigation of the proposed civil penalty; or Request a hearing as described below to contest the allegations and/or proposed assessment of a civil penalty. 1 of5#

320111016_NOPV PCP PCO_10212011.pdf, page 9b. When the Notice contains a proposed COMPLIANCE ORDER*-- 1. If you are not contesting the compliance order, notify the Regional Director that you intend to take the steps in the proposed compliance order; c. 2. If you are not contesting the compliance order but wish to submit written explanations, information, or other materials you believe warrant modification of the proposed compliance order in whole or in part, or you seek clarification of the terms of the proposed compliance order, you may submit such materials. This authorizes PHMSA to make findings and issue a compliance order; 3. If you are contesting the proposed compliance order but are not requesting an oral hearing, submit written explanations, information, or other materials in answer to the allegations in the Notice and stating your reasons for objecting to the proposed compliance order items in whole or in part; or 4. Request a hearing as described below to contest the allegations and/or proposed compliance order items. When the Notice contains a WARNING ITEM-- No written response is required. The respondent is warned that if it does not take appropriate action to correct these items, enforcement action will be taken if a subsequent inspection reveals a violation. *Failure of the respondent to respond to the Notice within 30 days of receipt constitutes a waiver of the right to contest the allegations in the Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in the Notice without further notice to the respondent and to issue a Final Order. II. Procedures for Responding to a NOTICE OF AMENDMENT*-- Within 30 days of receipt of a Notice of Amendment, the respondent shall respond to the Regional Director who issued the Notice in the following way: a. If you are not contesting the Notice, notify the Regional Director of your plans to address the inadequacies identified in the Notice; b. If you are not contesting the Notice but wish to submit written explanations, information, or other materials you believe warrant modification of the Notice of Amendment in whole or in part, or you seek clarification of the terms of the 2 of5#

320111016_NOPV PCP PCO_10212011.pdf, page 10Notice of Amendment, you may submit such materials. This authorizes PHMSA to mak-e findings and issue an Order Directing Amendment; c. If you are contesting the Notice of Amendment but are not requesting an oral hearing, submit written explanations, information, or other materials in answer to the allegations in the Notice and stating your reasons for obiecting to the Notice of Amendment items in whole or in part; or d. Request a hearing as described below to contest the allegations in the Notice. *Failure of the respondent to respond to the Notice within 30 days of receipt constitutes a waiver of the right to contest the allegations in the Notic.e and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in the Notice without further notice to the respondent and to issue a Final Order. III. Procedure for Requesting a Hearing A request for a hearing must be in writing and accompanied by a statement of the issues that the respondent intends to raise at the hearing. The issues may relate to the allegations, new information, or to the proposed compliance order or proposed civil penalty amount. Refer to 49 C.P.R. § 190.225 for assessment considerations upon which civil penalties are based. A respondent's failure to specify an issue may result in waiver of the right to raise that issue at the hearing. The respondent's request must also indicate whether or not respondent will be represented by counsel at the hearing. Failure to request a hearing in writing within 30 days of receipt of a Notice waives the right to a hearing. In addition, if the amount of the proposed civil penalty or the proposed corrective action is less than $10,000, the hearing will be held by telephone, unless the respondent submits a written request for an in-person hearing. Complete hearing procedures can be found at 49 C.F .R. § 190.211. IV. Extensions of Time An extension of time to prepare an appropriate response to a Notice may be granted, at the agency's discretion, following submittal of a written request to the Regional Director. The request must indicate the amount of time needed and the reasons for the extension. The request must be submitted within 30 days of receipt of the Notice. V. Freedom of Information Act Any material provided to PHMSA by the respondent, and materials prepared by PHMSA including the Notice and any order issued in this case, may be considered public information and subject to disclosure under the Freedom of Information Act (FOIA). If you believe the information you are providing is security sensitive, privileged, confidential or may cause your company competitive disadvantages, please clearly identify the material and provide justification why the documents, or portions of a document, should not be released under FOIA. If we receive a request for your material, we will notify you if PHMSA, after reviewing the materials and your provided justification, determines that withholding the materials does not meet any exemption 3 of5#

320111016_NOPV PCP PCO_10212011.pdf, page 11provided under the FOIA. You may appeal the agency's decision to release material under the FO IA at that time. Your appeal will stay the release of those materials until a final decision is made. VI. Small Business Regulatory Enforcement Fairness Act Information The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from·small businesses about federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the enforcement actions ofthe Pipeline and Hazardous Materials Safety Administration, call1-888-REG-FAIR (1-888-734-3247) or go to http:/ /www.sba.gov/ombudsman/dsp _ faq.html. VII. Payment Instructions Civil Penalty Payments of Less Than $10,000 Payment of a civil penalty of less than $10,000 proposed or assessed, under Subpart B of Part 190 of the Pipeline Safety Regulations can be made by certified check, money order or wire transfer. Payment by certified check or money order (containing the CPF Number for this case) should be made payable to the "Department of Transportation" and should be sent to: Federal Aviation Administration Mike Monroney Aeronautical Center Financial Operations Division (AMZ-341) P .0. Box 269039 Oklahoma City, OK 73125-4915 Wire transfer payments of less than $10,000 may be made through the Federal Reserve Communications System (Fedwire) to the account of the U.S. Treasury. Detailed instructions are provided below. Questions concerning wire transfer should be directed to the Financial Operations Division at (405) 954-8893, or at the above address. Civil Penalty Payments of $10,000 or more Payment of a civil penalty of $10,000 or more proposed or assessed under Subpart B of Part 190 of the Pipeline Safety Regulations must be made wire transfer (49 C.F.R. § 89.21 (b)(3)), through the Federal Reserve Communications System (Fedwire) to the account of the U.S. Treasury. Detailed instructions are provided below. Questions concerning wire transfers should be directed to the Financial Operations Division at ( 405) 954-8893, or at the above address. 4of5#

320111016_NOPV PCP PCO_10212011.pdf, page 12INSTRUCTIONS FOR ELECTRONIC FUND TRANSFERS (1) RECEIVER ABA NO. (2) TYPE/SUB-TYPE 021030004 (Provided by sending bank) (3) SENDING BANK ABA NO. (Provided by sending bank) (4) SENDING BANK REF NO. (Provided by sending bank)· (5)AMOUNT (6) SENDING BANK NAME (Provided by sending bank) (7) RECEIVER NAME TREASNYC (8) PRODUCT CODE (Normally CTR, or as provided by sending bank) (9) BENEFICIAL (BNF) =AGENCY LOCATION CODE BNF = I ALC-69-14-000 1 ( 1 0) REASONS FOR PAYMENT Example: PHMSA - CPF # I Ticket Number/Pipeline Assessment number INSTRUCTIONS: You, as sender of the wire transfer, must provide the sending bank with the information for blocks (1), (5), (7), (9), and (10). The information provided in Blocks (1), (7), and (9) are constant and remain the same for all wire transfers to the Pipeline and Hazardous Materials Safety Administration, Department of Transportation. Block #1- RECEIVER ABA NO.- "021030004". Ensure the sending bank enters this 9-digit identification number; it represents the routing symbol for the U.S. Treasury at the Federal Reserve Bank in New York. Block #5 - AMOUNT - You as the sender provide the amount of the transfer. Please be sure the transfer amount is punctuated with commas and a decimal point. EXAMPLE: $10,000.00 Block #7 - RECEIVER NAME - "TREAS NYC". Ensure the sending bank enters this abbreviation. It must be used for all wire transfers to the Treasury Department. Block#9- BENEFICIAL- AGENCY LOCATION CODE- "BNF=/ALC-69-14-0001". Ensure the sending bank enters this information. This is the Agency Location Code for the Pipeline and Hazardous Materials Safety Administration, Department of Transportation. Block #10- REASON FOR PAYMENT- "AC-payment for PHMSA Case# I To ensure your wire transfer is credited properly, enter the case number/ticket number or Pipeline Assessment number, and country." NOTE: A wire transfer must comply with the format and instructions or the Department cannot accept the wire transfer. You as the sender can assist this process by notifying the Financial Operations Division ( 405) 954-8893 at the time you send the wire transfer. February 2009 . 5 of5#

320111016_Closure_01062014_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED January 6, 2014 Mr. Robert W. Carlton Vice President and Chief Compliance Officer Southern Star Central Gas Pipeline, Inc. 4700 Highway 56 Owensboro, Kentucky 42301 Re: CPF 3-2011-1016 Dear Mr. Carlton: On June 17, 2013, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to Southern Star Central Gas Pipeline, Inc. a Final Order in the above-referenced case. This Order included a Compliance Order and Civil Penalty assessment. Based on our review of the documentation you provided and confirmation of payment of the civil penalty, it has been determined that you have complied with the terms of this Order. Accordingly, this case is now closed and no further action is contemplated with respect to the matters involved in this case. Thank you for your cooperation in this matter. Sincerely, Linda Daugherty Director, Central Region Pipeline and Hazardous Materials Safety Administration#

320111016_Final Order_06172013_text.pdf, page 1Official PDFJUNE 17, 2013 Mr. Jerry L. Morris President and Chief Executive Officer Southern Star Central Gas Pipeline, Inc. 4700 Highway 56 Owensboro, KY 42301 Re: CPF No. 3-2011-1016 Dear Mr. Morris: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation, assesses a civil penalty of $25,300, and specifies actions that need to be taken by Southern Star to comply with the pipeline safety regulations. This letter acknowledges receipt of payment of the full penalty amount, by wire transfer, dated November 22, 2011. When the terms of the Compliance Order have been completed, as determined by the Director, Central Region, this enforcement action will be 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. David Barrett, Director, Central Region, OPS Mr. Alan Mayberry, Deputy Associate Administrator for Field Operations, OPS Mr. Robert W. Carlton, Vice President and Chief Compliance Officer, Southern Star Central Gas Pipeline, Inc. CERTIFIED MAIL - RETURN RECEIPT REQUESTED [INSERT RECEIPT NO.]#

320111016_Final Order_06172013_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 ) Southern Star Central Gas Pipeline, Inc., ) ) ) ) Respondent. ) ____________________________________) CPF No. 3-2011-1016 FINAL ORDER On June 12-14, 2011, pursuant to 49 U.S.C. § 60117, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities, records, and Public Awareness Program of Southern Star Central Gas Pipeline, Inc., (Southern Star or Respondent) in Owensboro, Kentucky. Southern Star transports natural gas over approximately 6,000 miles of transmission pipeline in Missouri, Kansas, Oklahoma, Wyoming, Colorado, Nebraska and 1 Texas. As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated October 21, 2011, a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice), which also included a warning pursuant to 49 C.F.R. § 190.205. In accordance with 49 C.F.R. § 190.207, the Notice proposed finding that Southern Star had committed several violations of 49 C.F.R. § 192.616 and proposed assessing a civil penalty of $25,300 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 enforcement action. Southern Star responded to the Notice by letter dated November 21, 2011 (Response). The company did not contest the allegations of violation and paid the proposed civil penalty of $25,300, as provided in 49 C.F.R. § 190.227. The company also provided information concerning the corrective actions it had taken. Respondent did not request a hearing and therefore has waived its right to one. 1 Southern Star, About Southern Star, available at http://www.sscgp.com/about-southern-star/ (last accessed May 28, 2013).#

320111016_Final Order_06172013_text.pdf, page 32 FINDINGS OF VIOLATION In its Response, Southern Star 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. § 192.616(c), which states: § 192.616 Public awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c) by failing to follow the program recommendations, including baseline and supplemental requirements of American Petroleum Institute (API) Recommended Practice (RP) 1162.2 Specifically, the Notice alleged that Southern Star did not complete an annual audit of its Public Awareness Program (PAP) for calendar years 2006 and 2008. 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. § 192.616(c) by failing to complete an annual audit of its Public Awareness Program (PAP) for calendar years 2006 and 2008 in accordance with API RP 1162. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c), which states: § 192.616 Public awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c) by failing to follow the program recommendations, including baseline and supplemental requirements of API RP 1162. Specifically, the Notice alleged that Southern Star failed to follow the PAP audit procedures that it established pursuant to API RP 1162 and failed to track the implementation of audit recommendations. Southern Star did not provide documentation showing that audit recommendations had been implemented. Nor did it demonstrate that the company had a process for tracking the disposition of audit recommendations. In addition, its PAP established and defined a Public Awareness Team who had responsibilities for the annual assessment, but the 2010 auditing was conducted by a single individual. 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. § 192.616(c) by failing to have and follow a process for tracking and documenting the implementation of audit recommendations in accordance with API RP 1162. 2 API RP 1162 is incorporated by reference into Part 192. See 49 C.F.R. § 192.7.#

320111016_Final Order_06172013_text.pdf, page 43 Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c), which states: § 192.616 Public awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c) by failing to follow the program recommendations, including baseline and supplemental requirements of API RP 1162. Specifically, the Notice alleged that Southern Star did not complete a timely baseline effectiveness evaluation. The company’s documentation indicated that it completed an evaluation on October 18, 2010, four months after the maximum four-year interval set forth in API RP 1162. 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. § 192.616(c) by failing to complete a timely baseline effectiveness evaluation in accordance with API RP 1162. Item 4: The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c), which states: § 192.616 Public awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety. The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c) by failing to follow the program recommendations, including baseline and supplemental requirements of API RP 1162. Specifically, the Notice alleged that Southern Star did not adequately measure whether the PAP’s audience understood and retained the key pipeline safety information in delivered messages. Following meetings with the affected public, the company relied solely on stakeholder audience surveys that had only a 0.24% response rate. 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. § 192.616(c) by failing to adequately measure whether the PAP’s audience understood and retained the key pipeline safety information in delivered messages in accordance with API RP 1162. Item 7: The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c), which states: § 192.616 Public awareness. (c) The operator must follow the general program recommendations, including baseline and supplemental requirements of API RP 1162, unless the operator provides justification in its program or procedural manual as to why compliance with all or certain provisions of the recommended practice is not practicable and not necessary for safety.#

320111016_Final Order_06172013_text.pdf, page 54 The Notice alleged that Respondent violated 49 C.F.R. § 192.616(c) by failing to follow the program recommendations, including baseline and supplemental requirements of API RP 1162. Specifically, the Notice alleged that Southern Star established six objectives for its PAP, but defined evaluation processes that failed to measure the program’s bottom-line results achieving those objectives. 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. § 192.616(c) by failing to follow the program recommendations of API RP 1162. 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 $25,300 for two of the violations cited above. Item 1: The Notice proposed a civil penalty of $12,800 for Respondent’s violation of 49 C.F.R. § 192.616(c) for failing to follow the program recommendations, including baseline and supplemental requirements of API RP 1162, by not completing annual audits of the company’s PAP for 2006 and 2008. With respect to the nature, circumstances, and gravity of this violation, annual audits help verify that a PAP’s design meets the objectives, elements, and schedules in API RP 1162, and make certain that the program’s implementation is consistent with its design. Respondent is culpable for the violation because it failed to evaluate its PAP in 2006 and 2008, Respondent cannot verify the PAP design or implementation for those years. Nothing in the record constitutes a good faith effort to comply prior to the OPS inspection. Southern Star 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 $12,800 for violation of 49 C.F.R. § 192.616(c). Item 3: The Notice proposed a civil penalty of $12,500 for Respondent’s violation of 49 C.F.R. § 192.616(c) for failing to follow the program recommendations, including baseline and supplemental requirements of API RP 1162, by not completing a timely baseline effectiveness evaluation. With respect to the nature, circumstances, and gravity of this violation, effectiveness evaluations are necessary to assess whether a PAP, as implemented, achieves its objectives. Respondent is culpable for the violation because by delaying its baseline evaluation, Respondent may have missed opportunities to improve how it educates the affected public about the presence and safety of its pipelines in their communities. Nothing in the record constitutes a#

320111016_Final Order_06172013_text.pdf, page 65 good faith effort to comply prior to the OPS inspection. Southern Star 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. § 192.616(c). 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 $25,300, which has already been paid by Respondent. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Items 2, 3, 4, and 7 in the Notice for violations of 49 C.F.R. § 192.616(c). 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 has indicated that Respondent has taken the following actions to address some of the cited violations: 1. With respect to the violation of § 192.616(c) (Item 2), Respondent has amended its PAP to clarify annual audit responsibilities and include processes for tracking the implementation of recommendations from annual audits. Respondent has submitted a written plan detailing the implementation schedule for recommendations from past audits. 2. With respect to the violation of § 192.616(c) (Item 4), Respondent has conducted a survey of its stakeholder audiences, following the recommendations of API RP 1162, to measure the understandability of Respondent’s PAP messages. Respondent has submitted documentation of the results of that survey. 3. With respect to the violation of § 192.616(c) (Item 7), Respondent has measured the PAP’s bottom-line results in relation to the PAP’s objectives and has submitted documentation of those bottom-line results. Accordingly, I find that compliance has been achieved with respect to Items 4 and 7 and partial compliance has been achieved with respect to Item 2. Therefore, the compliance terms proposed in the Notice for Items 4 and 7 are not included in this order. The compliance terms proposed in the Notice for Items 2 and 3 are modified from the terms proposed in the Notice. Pursuant to the authority of 49 U.S.C. § 60118(b) and 49 C.F.R. § 190.217, Respondent is ordered to take the following actions to ensure compliance with the pipeline safety regulations applicable to its operations: 1. With respect to the violation of § 192.616(c) (Item 2), Respondent must implement and complete all recommendations from annual audits conducted for Plan Years 2006 – 2010 no later than December 31, 2013. Respondent must submit written documentation of the implementation and completion of those recommendations to Central Region no later than March 31, 2014.#

320111016_Final Order_06172013_text.pdf, page 76 2. With respect to the violation of § 192.616(c) (Item 3), Respondent must submit, no later than December 31, 2013, a written document detailing how recommendations from Effectiveness Evaluations will be implemented and closed. Respondent must implement and complete all recommendations from the 2010 Effectiveness Evaluation no later than December 31, 2013. Respondent must submit written documentation of the implementation and completion of those recommendations to Central Region no later than March 31, 2014. The Director may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent and demonstrating good cause for an extension. Failure to comply with this Order may result in the administrative assessment of civil penalties not to exceed $100,000 for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. WARNING ITEMS With respect to Items 5 and 6, the Notice alleged probable violations of Part 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. § 192.616(c) (Item 5) ─ Respondent’s alleged failure to document its implementation of Supplemental Activities, its process for using Supplemental Activities in its Effectiveness Evaluation, and its follow-up activities with some groups of stakeholders; and 49 C.F.R. § 192.616(c) (Item 6) ─ Respondent’s alleged failure to complete timely annual audits for PAP Years 2007, 2009, and 2010. Southern Star presented information in its Response and subsequent correspondence showing that it had taken certain actions to address the cited items. 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. ___________________________________ __________________________ Jeffrey D. Wiese Date Issued Associate Administrator for Pipeline Safety#