ANR PIPELINE CO — Notice of Probable Violation

party submissionOfficial PDF320181001_Operator Response to Notice_07232018.pdf#

320181001_NOPV PCP PCO_04242018_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED April 24, 2018 Mr. Stanley Chapman Senior Vice President and General Manager ANR Pipeline Company / TransCanada 700 Louisiana Street Houston, TX 77002 CPF 3-2018-1001 Dear Mr. Chapman: On July 26-28, August 2-4, and August 23-25, 2016, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), pursuant to Chapter 601 of 49 United States Code (U.S.C.), inspected your records and facilities in Indiana and part of Illinois. 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 (CFR). The items inspected and the probable violations are: 1. §192.905 How does an operator identify a high consequence area? (a) . . . (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#

320181001_NOPV PCP PCO_04242018_text.pdf, page 2planning 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. ANR Pipeline Company (ANR) failed to identify and did not incorporate a High Consequence Area (HCA) into their Integrity Management Program. Specifically, ANR did not identify a high consequence area (HCA) on the Pete Dye Golf Course in West Baden Springs, Indiana until July 2016. The identified site in the Celestine Unit has been in operation since 2009. On June 22, 2016, ANR submitted a Safety Related Condition Report in a location that was classified as a non-HCA. After the SRCR submittal, ANR realized that the SRC was in an HCA. ANR contacted PHMSA by phone to alert them to this misidentification. This coincided with a previously scheduled field visit in the area of the SRC and PHMSA inspectors included this location with the field inspection. ANR’s Baseline Assessment & Reassessment Plan (BARP) from 2016 did not reflect the identified HCA. ANR indicated that the BARP would be updated to reflect the new HCA. As a result, ANR identified the issues that led to this misidentification including evaluation of the contractor’s performance, reanalysis of locations on the ANR pipeline corridor, and the modification of procedures to prevent a similar event from occurring in the future. 2. §192.905 How does an operator identify a high consequence area? (a) . . . (c) Newly identified areas. When an operator has information that the area around a pipeline segment not previously identified as a high consequence area could satisfy any of the definitions in § 192.903, the operator must complete the evaluation using method (1) or (2). If the segment is determined to meet the definition as a high consequence area, it must be incorporated into the operator's baseline assessment plan as a high consequence area within one year from the date the area is identified. ANR failed to incorporate into its baseline assessment plan within one year from the date a segment determined to meet the definition as a high consequence area was identified. Specifically, ANR did not incorporate a newly identified HCA (MP 858 to 858.3 Mainline Loop 1-100 St. John to Bridgman – Calumet Pipeline, Indiana) into its BARP within one year from the date the area was identified. The newly identified HCA was discovered on April 15, 2015 using Method 2, and should have been in the 2016 BARP. OPS reviewed the 2016 BARP and discovered that newly identified HCA (MP 858 to 858.3 Mainline Loop 1-100 St. John to Bridgman – Calumet Pipeline, Indiana) was not in the 2016 BARP list. In addition, TEP-US-GAS-HCA-IMP US Gas HCA Integrity Management Processes, Rev. 00, effective February 8, 2014, states in section 5.3.7: “New covered segments are included in the baseline assessment plan within one year of 2#

320181001_NOPV PCP PCO_04242018_text.pdf, page 3identification”. The February 8, 2014 procedure was in effect during the time of the newly discovered HCA. 3. §192.709 Transmission lines: Record-keeping Each operator shall maintain the following records for transmission line for the periods specified: (a) . . . (c) A record of each patrol, survey, inspection, and test required by subparts L and M of this part must be retained for at least 5 years or until the next patrol, survey, inspection, or test is completed, whichever is longer. ANR failed to retain a record of each patrol, survey, inspection and test required by subparts L and M of Part 192 for at least 5 years or until the next patrol, survey, inspection, or test is completed, whichever is longer. Subparts L and M of Part 195 require odorization checks and overpressure protection inspections. Specifically, ANR did not maintain records for the odorization checks in the St. John, Indiana, operating area and also did not maintain records for overpressure protection at the Alliance interconnect. ANR relies on a third party for odorization at the Crown Point interconnect on Line 1-100 at MP 861.36, which is a Class 3 location in the St. John area. ANR was unable to produce any odorization records during the field inspection to show that the line was adequately odorized. During a final meeting in October 26, 2016, ANR provided odorization records from the third party for 2013 through February 2016. However, no process was established to receive and review odorization records going forward. Additionally, ANR relies on a separate third party for overpressure protection at the Alliance interconnect. ANR was unable to provide any records for the required time period verifying the over-pressure protection device was inspected. Furthermore, it was identified that ANR does not have a process to ensure a third party’s qualification and the receiving and maintaining of those records. Proposed Civil Penalty As of April 27, 2017, under 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed $209,002 per violation per day the violation persists up to a maximum of $2,090,022 for a 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 $46,600 as follows: Item number 1 2 Penalty $15,500 $31,100 3#

320181001_NOPV PCP PCO_04242018_text.pdf, page 4Proposed Compliance Order With respect to item three (3) pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to ANR Pipeline Company. Please refer to the Proposed Compliance Order, which is enclosed and made a part of this Notice. Response 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). Following the receipt of this Notice, you have 30 days to submit written comments, or request a hearing under 49 CFR § 190.211. 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. If you are responding to this Notice, we propose that you submit your correspondence to my office within 30 days from receipt of this Notice. This period may be extended by written request for good cause. In your correspondence on this matter, please refer to CPF 3-2018-1001 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 Enforcement Proceedings 4#

320181001_NOPV PCP PCO_04242018_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 ANR Pipeline Company a Compliance Order incorporating the following remedial requirements to ensure the compliance of ANR Pipeline Company (ANR) with the pipeline safety regulations: 1. 2. In regard to Item Number 3 of the Notice pertaining to ANR’s failure to maintain odorization records and inspection records of the overpressure protection device at the Alliance interconnect, ANR must identify all locations within the St. John operating area that are being odorized by a third party and document the completion of all odorization testing requirements. ANR must also document the testing and maintaining of the over- pressure protection devices on ANR pipe whether performed directly by ANR personnel or performed on ANR's behalf pursuant to an agreement. ANR must maintain such documentation for the period specified in the pipeline safety regulations. Any required inspection and testing performed by another entity pursuant to an agreement must be performed by qualified personnel and copies of the records must be maintained by ANR. Alternatively, ANR may install overpressure protection device(s) at the interconnect and begin performing the necessary inspection and testing. ANR may also do the same with the odorization equipment. A plan to accomplish this Item must be submitted to PHMSA within 30 days of issuance of the Final Order for approval by the Director, Central Region. ANR must complete necessary actions as delineated in the approved plan within 60 days of the Director's approval. It is requested (not mandated) that ANR maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Allan C. Beshore, 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. 5#

320181001_Final Order_05162019_text.pdf, page 1Official PDFMay 16, 2019 Mr. Russell K. Girling President and CEO TransCanada Corporation 450 – 1 Street SW Calgary, Alberta, Canada, T2P 5H1 Re: CPF No. 3-2018-1001 Dear Mr. Girling: Enclosed please find the Final Order issued in the above-referenced case. It makes findings of violation and assesses a civil penalty of $46,600. This is to acknowledge receipt of payment of the full penalty amount, by wire transfer dated August 8, 2018. It further finds that your subsidiary, ANR Pipeline Company, has completed the actions specified in the Notice to comply with the pipeline safety regulations. Therefore, this enforcement action is now closed. Service of the Final Order by certified mail is effective as provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosure cc: Mr. Allan Beshore, Director, Central Region, Office of Pipeline Safety, PHMSA Mr. Stanley Chapman, Senior Vice President and General Manager, TransCanada Corporation, 700 Louisiana Street, Houston, Texas 77002 Mr. Lee Romack, Manager, U.S. Regulatory Compliance, TransCanada Corporation, 700 Louisiana Street, Houston, Texas 77002 CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

320181001_Final Order_05162019_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 ) ANR Pipeline Company, ) CPF No. 3-2018-1001 a subsidiary of TransCanada Corporation, ) ) ) ) Respondent. ) __________________________________________) FINAL ORDER From July 26 through August 25, 2016, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), conducted an on-site pipeline safety inspection of the facilities and records of ANR Pipeline Company (ANR or Respondent), a subsidiary of TransCanada Corporation (TransCanada), in Indiana and Illinois, more specifically the St. John, Celestine, LaGrange, and Sulphur Springs units of the ANR Pipeline. The ANR Pipeline transports natural gas from Texas, Oklahoma, and Louisiana to cities and towns in Wisconsin, Michigan, Illinois and Ohio.1 The ANR Pipeline is approximately 10,600 miles in length and has a capacity of more than six billion cubic feet of natural gas.2 As a result of the inspection, the Director, Central Region, OPS (Director), issued to Respondent, by letter dated April 24, 2018, 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 ANR had violated 49 C.F.R. §§ 192.905(b)(1), 192.905(c) and 192.709(c) and proposed assessing a civil penalty of $46,600 for two of the alleged violations. The Notice also proposed ordering Respondent to take certain measures to correct the alleged violations. After requesting and receiving an extension of time to respond, TransCanada responded to the Notice on behalf of ANR by letter, dated July 23, 2018 (Response). The company did not contest the allegations of violation, but provided information concerning the corrective actions ANR had taken. The company also paid the proposed penalty of $46,600 by wire transfer, dated August 8, 2018. In accordance with § 190.208(a)(1), such payment authorizes the Associate Administrator to make findings of violation and to issue this Final Order without further proceedings. 1 TransCanada ANR Pipeline site, available at www.transcanada.com/en/operations/natural-gas-anr-pipeline (last accessed Feb. 27, 2019). 2 Id.#

320181001_Final Order_05162019_text.pdf, page 3CPF 3-2018-1001 Page 2 FINDINGS OF VIOLATION In its Response, ANR 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. § 192.905(b)(1), which states: § 192.905 How does an operator identify a high consequence area? (a) . . . . (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. The Notice alleged that Respondent violated 49 C.F.R. § 192.905(b)(1) by failing to identify an identified site, for purposes of Subpart O, from information the operator 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. Specifically, the Notice alleged that ANR failed to identify a High Consequence Area (HCA) around the ANR Pipeline’s Celestine Unit near French Lick, Indiana, at the Pete Dye Golf Course. The Notice alleged that ANR failed to incorporate this HCA into its Integrity Management Program until seven years after the pipeline had been in operation at that site. 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. § 192.905(b)(1) by failing to identify an identified site, for purposes of Subpart O, from information the operator 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. Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.905(c), which states: § 192.905 How does an operator identify a high consequence area? (a) . . . . (c) Newly identified areas. When an operator has information that the area around a pipeline segment not previously identified as a high consequence area could satisfy any of the definitions in § 192.903, the operator must complete the evaluation using method (1) or (2). If the segment is determined to meet the definition as a high consequence area, it must be incorporated into the operator's baseline assessment plan as a high consequence area within one year from the date the area is identified.#

320181001_Final Order_05162019_text.pdf, page 4CPF 3-2018-1001 Page 3 The Notice alleged that Respondent violated 49 C.F.R. § 192.905(c) by failing to complete an evaluation to identify a HCA using method (1) or (2) from the definition of “High Consequence Area” contained in § 192.903 when the operator had information that the area around a pipeline segment not previously identified as an HCA could satisfy any of the definitions in § 192.903, and by failing to incorporate an identified HCA in the operator’s baseline assessment plan as an HCA within one year from the date the area was identified. Specifically, the Notice alleged that ANR failed to incorporate a newly-identified HCA, i.e., the area starting at milepost 858 and extending to milepost 858.3 along the ANR Pipeline Mainline Loop, into its baseline assessment plan within one year from the date the HCA was identified by the company. 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. § 192.905(c) by failing to incorporate an identified HCA in the operator’s baseline assessment plan within one year from the date the area was identified. Item 3: The Notice alleged that Respondent violated 49 C.F.R. § 192.709(c), which states: § 192.709 Transmission Lines: Record keeping. Each operator shall maintain the following records for transmission lines for the periods specified: (a) . . . . (c) A record of each patrol, survey, inspection, and test required by subparts L and M of this part must be retained for at least 5 years or until the next patrol, survey, inspection, or test is completed, whichever is longer. The Notice alleged that Respondent violated 49 C.F.R. § 192.709(c) by failing to retain a record of each patrol, survey, inspection, and test required by Subparts L and M of Part 192 for at least five years or until the next patrol, survey, inspection, or test is completed, whichever is longer. Specifically, the Notice alleged that ANR did not retain records of odorization testing at the Crown Point interconnect on the ANR Pipeline from 2013 through 2016. Additionally, the Notice alleged that ANR failed to retain any records regarding overpressure-protection inspections at the Alliance interconnect on the ANR Pipeline. 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. § 192.709(c) by failing to retain a record of each patrol, survey, inspection, and test required by Subparts L and M of Part 192 for at least five years or until the next patrol, survey, inspection, or test is completed, whichever is longer. 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#

320181001_Final Order_05162019_text.pdf, page 5CPF 3-2018-1001 Page 4 related series of violations.3 In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, I must consider the following criteria: the nature, circumstances, and gravity of the violation, including adverse impact on the environment; the degree of Respondent’s culpability; the history of Respondent’s prior offenses; any effect that the penalty may have on its ability to continue doing business; and the good faith of Respondent in attempting to comply with the pipeline safety regulations. In addition, I may consider the economic benefit gained from the violation without any reduction because of subsequent damages, and such other matters as justice may require. The Notice proposed a total civil penalty of $46,600 for the violations cited above. Item 1: The Notice proposed a civil penalty of $15,500 for Respondent’s violation of 49 C.F.R. § 192.905(b)(1), for failing to identify an identified site, for purposes of Subpart O, from information the operator obtained from routine operation and maintenance activities and from public officials with safety or emergency response or planning responsibilities who indicated to the operator that they knew of locations that met the identified-site criteria. ANR 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 $15,500 for violation of 49 C.F.R. § 192.905(b)(1). Item 2: The Notice proposed a civil penalty of $31,100 for Respondent’s violation of 49 C.F.R. § 192.905(c), for failing to incorporate an identified HCA into ANR’s baseline assessment plan within one year from the date the area was identified. ANR 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 $31,100 for violation of 49 C.F.R. § 192.905(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 $46,600, which amount was paid in full by wire transfer dated August 8, 2018. COMPLIANCE ORDER The Notice proposed a compliance order with respect to Item 3 in the Notice for a violation of 49 C.F.R. § 192.709(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 indicates that Respondent has taken the following actions specified in the proposed compliance order: 1. With respect to the violation of § 192.709(c) (Item 3), Respondent has instituted work orders in its Work Management System requiring operating personnel to create and maintain the required compliance records at the subject locations annually. Respondent has also instituted ongoing work orders to witness the required tests and 3 These amounts are adjusted annually for inflation. See 49 C.F.R. § 190.223; Revisions to Civil Penalty Amounts, 83 Fed. Reg. 60732, 60744 (Nov. 27, 2018).#

320181001_Final Order_05162019_text.pdf, page 6CPF 3-2018-1001 Page 5 inspections whenever they can be coordinated with third-party operators. 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. This enforcement action is now closed. The terms and conditions of this Final Order are effective upon service in accordance with 49 C.F.R. § 190.5. May 16, 2019 ___________________________________ _________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#