PEMBINA COCHIN LLC — Notice of Probable Violation

party submissionOfficial PDF320155008_Operator Response to Notice and Request for Hearing_01042016.pdf#

320155008_NOPV PCP PCO_10302015_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED October 30, 2015 Mr. Ron McClain Vice President – Engineering and Operations Kinder Morgan Cochin, LLC 500 Dallas Street, Suite 1000 Houston, Texas 77002 CPF 3-2015-5008 Dear Mr. McClain: On June 11-15, 2012, and July 23-27, 2012, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code inspected your Cochin hazardous liquid pipeline in the areas of Charles City, Iowa, and Jamestown, North Dakota. As a result of the inspection, it appears that Kinder Morgan Cochin, LLC (KM) has committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violation(s) are:#

320155008_NOPV PCP PCO_10302015_text.pdf, page 21. 2. §195.428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7½ months, but at least twice each calendar year, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. KM failed to inspect and test each highly volatile liquids pump station pressure limiting device to determine that it was functioning properly, in good mechanical condition, and adequate from the standpoint of capacity and reliability. KM uses an electrical communication loop for operation of the overpressure protection system at its pump stations. This communication loop is from the pressure sensing line, to the transmitter, to the programmable logic controller, to the variable frequency drive or variable speed drive, and to the pump. In this scenario the “pressure limiting device” is the entire communication loop, since all of these devices must be functioning properly for pressure control. Therefore, the entire loop must be inspected to meet the requirement of §195.428. KM only inspected the transmitters and failed to inspect any other portion of the communication loop for four (4) inspection cycles from October 2010 to April 2012 at the Masonville Pump Station in Iowa. §195.428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7½ months, but at least twice each calendar year, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. KM failed to adequately inspect and test the pressure limiting device at the highly volatile liquids Alameda Pump Station for function at the proper pressure limit. Inspection records of the Alameda Pump Station indicate that the pressure limiting device was set at 1200 psig on June 22, 2011, and 1300 psig on October 24, 2011, which are both above 110% of the 1000 psig maximum operating pressure limit. 2#

320155008_NOPV PCP PCO_10302015_text.pdf, page 33. §195.428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7½ months, but at least twice each calendar year, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. KM did not inspect and test the highly volatile liquids Alameda Pump Station at intervals not to exceed 7½ months, but at least twice each calendar year. KM did not have any records of inspection conducted on the pressure limiting devices at the station between June 1, 2010, and June 22, 2011. An inspection should have occurred no later than December 31, 2010. Therefore the inspection interval was exceeded by five (5) months and 22 days. (Note: The Alameda Pump Station in Canada provides overpressure protection for PHMSA’s regulated segment from Milepost 621 at the Canadian/US border to Milepost 652 at Maxbass Pump Station, North Dakota.) Proposed Civil Penalty Under 49 United States Code, § 60122, you are subject to a civil penalty not to exceed $200,000 per violation per day the violation persists up to a maximum of $2,000,000 for a related series of violations. For violations occurring prior to January 4, 2012, the maximum penalty may not exceed $100,000 per violation per day, with a maximum penalty not to exceed $1,000,000 for a 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 $51,400 as follows: Item number PENALTY 1 $15,100 2 $14,700 3 $21,600 Proposed Compliance Order With respect to item 1 pursuant to 49 United States Code § 60118, The Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to Kinder Morgan Cochin, LLC. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. 3#

320155008_NOPV PCP PCO_10302015_text.pdf, page 4Response 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. All material you submit in response to this enforcement action may be 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 3-2015-5008 and for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Allan C. Beshore Director, Central Region, OPS Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings 4#

320155008_NOPV PCP PCO_10302015_text.pdf, page 5PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to Kinder Morgan Cochin, LLC a Compliance Order incorporating the following remedial requirements to ensure the compliance of Kinder Morgan Cochin, LLC with the pipeline safety regulations: 1. In regard to Item 1 of the Notice pertaining to inspecting and testing its pressure limiting devices, Kinder Morgan shall amend it practices and procedures to include the entire electrical communication loop which controls its overpressure protection devices. Kinder Morgan shall submit the amended procedure manual within 90 days of the Final Order. KM shall then conduct an inspection of its overpressure protection devices in accordance with its amended procedure within 180 days of the Final Order. 2. It is requested (not mandated) that Kinder Morgan Cochin, LLC maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Allan C. Beshore, Director, Central Region, OPS, 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. 5#

320155008_Final Order_12292016_text.pdf, page 1Official PDFDecember 29, 2016 Mr. Steven J. Kean President and Chief Executive Officer Kinder Morgan Inc. 1001 Louisiana Street Houston, TX 77002-5089 Re: CPF No. 3-2015-5008 Dear Mr. Kean: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violations and assesses a civil penalty of $36,300. This is to acknowledge receipt of payment of the full penalty amount, by wire transfer, dated April 26, 2016. 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, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Mr. Allan C. Beshore, Director, Central Region, OPS Mr. Wayne G. Simmons, VP – Engineering and Operations, Kinder Morgan Cochin, LLC, 500 Dallas Street, Suite 1000, Houston , Texas 77002 (email) Mr. Vince Murchison, Esquire CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

320155008_Final Order_12292016_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 ) ) Kinder Morgan Cochin, LLC ) CPF No. 3-2015-5008 a Kinder Morgan Company ) ) Respondent. ) ____________________________________) FINAL ORDER On July 23-27, 2012, 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 and records of Kinder Morgan Cochin, LLC (Kinder Morgan Cochin or Respondent) in the areas of Charles City, Iowa, and Jamestown, North Dakota. Kinder Morgan Cochin operates 1,239 miles of highly volatile liquid from North Dakota, through Minnesota, Iowa, Illinois, Indiana, Michigan and Ohio. 1 As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated October 30, 2015, 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 Kinder Morgan Cochin had committed multiple violations of 49 C.F.R. § 195.428 and proposed assessing a civil penalty of $51,400 for the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. Respondent responded to the Notice by letter dated January 4, 2016 (Response). With respect to Item 1 of the Notice only, Kinder Morgan Cochin contested the alleged violation, presented information seeking mitigation of the proposed penalty, and requested a hearing. The company did not contest the allegations of violation and associated civil penalty for Items 2 and 3 of the Notice. By letter dated March 17, 2016, the Director informed Respondent that Item 1 of the Notice and its associated Proposed Civil Penalty and Proposed Compliance Order would be withdrawn. By letter dated April 26, 2016 (Supplemental Response), Respondent withdrew its request for a hearing and thereby waived its right to one and authorized the entry of this Final Order without further notice. Further, Respondent paid the full penalty amount for Items 2 and 3 by wire transfer dated April 26, 2016. 1 Pipeline Safety Violation Report (Violation Report), (Oct. 30, 2015) (on file with PHMSA), at 1.#

320155008_Final Order_12292016_text.pdf, page 3CPF No. 3-2015-5008 Page 2 FINDINGS OF VIOLATION Item 1: The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a), which states: § 195.428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7 ½ months, but at least twice each calendar year, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and test each highly volatile liquids pump station pressure limiting device to determine that it was functioning properly, in good mechanical condition, and adequate from the standpoint of capacity and reliability. Specifically, the Notice alleged that Kinder Morgan Cochin’s uses an electrical communication loop for operation of the overpressure protection system at its pump stations. This communication loop is from the pressure sensing line, to the transmitter, to the programmable logic controller, to the variable frequency drive or variable speed drive, and to the pump. In this scenario the "pressure limiting device" is the entire communication loop, since all of these devices must be functioning properly for pressure control. The Notice alleged that the entire loop must be inspected to meet the requirement of §195.428 but that Kinder Morgan Cochin only inspected the transmitters and did not inspect any other portion of the communication loop for four (4) inspection cycles from October 2010 to April 2012 at the Masonville Pump Station in Iowa. Respondent contested the alleged violation, presented information seeking mitigation of the proposed penalty, and requested a hearing. As a result, by letter dated March 17, 2016, the Director informed Respondent that Item 1 of the Notice and its associated Proposed Civil Penalty and Proposed Compliance Order would be withdrawn. Accordingly, this alleged violation is withdrawn. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a), which states: § 195.428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7 ½ months, but at least twice each calendar year, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used.#

320155008_Final Order_12292016_text.pdf, page 4CPF No. 3-2015-5008 Page 3 The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a) by failing to adequately inspect and test the pressure limiting device at the highly volatile liquids Alameda Pump Station to determine that it functioned at the proper pressure limit. Specifically, the Notice alleged that Kinder Morgan Cochin’s inspection records of the Alameda Pump Station indicated that the pressure limiting device was set at 1200 pounds per square inch gauge (psig) on June 22, 2011, and 1300 psig on October 24, 2011, which are both above 110 percent of the 1000 psig maximum operating pressure limit. 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. § 195.428(a) by failing to adequately inspect and test the pressure limiting device at the highly volatile liquids Alameda Pump Station to determine that it functioned at the proper pressure limit. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 195.428, which states: § 195.428 Overpressure safety devices and overfill protection systems (a) Except as provided in paragraph (b) of this section, each operator shall, at intervals not exceeding 15 months, but at least once each calendar year, or in the case of pipelines used to carry highly volatile liquids, at intervals not to exceed 7 ½ months, but at least twice each calendar year, inspect and test each pressure limiting device, relief valve, pressure regulator, or other item of pressure control equipment to determine that it is functioning properly, is in good mechanical condition, and is adequate from the standpoint of capacity and reliability of operation for the service in which it is used. The Notice alleged that Respondent violated 49 C.F.R. § 195.428(a) by failing to inspect and test the highly volatile liquids Alameda Pump Station at intervals not to exceed 7 ½ months, but at least twice each calendar year. Specifically, the Notice alleged that Kinder Morgan Cochin did not have any records of inspection conducted on the pressure limiting devices at the station between June 1, 2010, and June 22, 2011. An inspection should have occurred no later than December 31, 2010. Therefore the inspection interval was exceeded by five months and 22 days. 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. § 195.428(a) by failing to inspect and test the highly volatile liquids Alameda Pump Station at intervals not to exceed 7 ½ months, but at least twice each calendar year. These findings of violation will be considered prior offenses in any subsequent enforcement action taken against Respondent. ASSESSMENT OF PENALTY Under 49 U.S.C. § 60122, Respondent is subject to an administrative civil penalty not to exceed $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any#

320155008_Final Order_12292016_text.pdf, page 5CPF No. 3-2015-5008 Page 4 related series of violations.2 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; 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 $51,400 for the violations cited above. Item 1: The Notice proposed a civil penalty of $15,100. Since this item was withdrawn, the proposed civil penalty for this item is not assessed. Item 2: The Notice proposed a civil penalty of $14,700 for Respondent’s violation of 49 C.F.R. § 195.428(a), for failing to adequately inspect and test the pressure limiting device at the highly volatile liquids Alameda Pump Station to determine that it functioned at the proper pressure limit. Kinder Morgan Cochin 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 $14,700 for violation of 49 C.F.R. § 195.428(a). A payment for this Item was received on April 26, 2016. Item 3: The Notice proposed a civil penalty of $21,600 for Respondent’s violation of 49 C.F.R. § 195.428(a), for failing to inspect and test the highly volatile liquids Alameda Pump Station at intervals not to exceed 7 ½ months, but at least twice each calendar year. Kinder Morgan Cochin 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 $21,600 for violation of 49 C.F.R. § 195.428(a). A payment for this Item was received on April 26, 2016. 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 $36,300, which has already been paid. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. December 29, 2016 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety 2 The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, Pub. L. No. 112-90, § 2(a)(1), 125 Stat. 1904, January 3, 2012, increased the civil penalty liability for violating a pipeline safety standard to $200,000 per violation for each day of the violation, up to a maximum of $2,000,000 for any related series of violations.#