KERN RIVER GAS TRANSMISSION CO — Notice of Probable Violation

case documentOfficial PDFCPF_NO_5-2006-1006.pdf#

520061006_Final Order_12112006.pdf, page 1Official PDF@ U.S. Deportment of Tronsporlollon Pipeline ond Hozdrdous Moleriols Sofety Adminislrotion 400 Seventh Street, S.W. Washington, D C. 20590 i:r'': 1 i Mr. Micheal Dunn Vice President, Operations, IT & Engineering Kern River Gas Transmission Co 2755E Cottonwood Pkwy Ste 300 Salt Lake City, UT 84121-6949 Re: CPFNo.5-2006-1006 Dear Mr. Dunn: Enclosed is the Final Order issued by the Acting Associate Administrator for Pipeline Safety in the above-referenced case. It makes a finding ofviolation and specifies actions to be taken to comply with the pipeline safety regulations. It also withdraws one of the allegations of violation. When the terms of the compliance order are completed, as determined by the Director, Western Region, this enforcement action will be closed. Your receipt of this Final Order constitutes service under 49 C.F.R. I 190.5. Sincerely, iltt 14 *rc I/ L--- \ l James Reynolds Pipeline Compliance Registry Office of Pipeline Safety Enclosure WA CERTIFIED WIL -RETURN RECEIPTREOUESTED#

520061006_Final Order_12112006.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATNRIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 In the Matter of Kern River Gas Transmission Company, Respondent CPF No.5-2006-1006 ) F'INAL ORDER On July I l-15 and 2518,2005, pursuant to 49 U.S.C. $ 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) conducted an on-site pipeline safety inspection of Respondent's Integrity Management Program (IMP) in Salt Lake City, Utah. As a result of the inspection, the Director, Westem Region, issued to Respondent, by letter dated February 22,2006, a Notice of Probable Violation and Proposed Compliance Order (Notice). In accordance with 49 C.F.R. $ 190.207, the Notice alleged that Respondent committed violations of 49 C.F.R. $ 192.917 and proposed ordering Respondent to take certain measures to correct the alleged violations. Respondent responded to the Notice by letter dated March 27, 2006 (Response). Respondent contested the allegations ofviolation, offered information in explanation ofthe allegations, and requested a hearing. The hearing was held on June 7,2006 in Lakewood, Colorado- Respondent submitted a written post-hearing statement dated June 30, 2006 (Post-hearing Statement). F'INDING OF' }IIOLATION Item 1 in the Notice alleged that Respondent violated 49 C.F.R. $ 192.917(b) by failing to analyze all relevant information and risk factors to identifo and evaluate potential threats to pipeline segments in a high consequence area. The Notice alleged that Respondent's risk analysis database did not contain complete information on maximum allowable'operating pressure, pipe size, material properties, and coating information, which are required to be included under g 192.917(b) and the ASME 831.85 standard incorporated by reference. In its Response and at the hearing,, Respondent acknowledged that some data was missing from its risk analysis database. Respondent argued, however, that the ASME B31.8S standard prescribes methods for addressing missing data and that Respondent complied with those methods. Respondent further explained that subject matter experts evaluated the results of the risk analysis and determined that the missing data did not affect the outcome of the risk analysis.#

520061006_Final Order_12112006.pdf, page 3Section 192.917 of the gas transmission pipeline integrity management regulations requires operators to identify all potential threats to each pipeline segment in a high consequence area and conduct a risk assessment that considers those tlreats and prioritizes segments for integrity assessment, Section 192.917(b) specifies that operators must gather and integrate existing data and information on the entire pipeline to identify and evaluate potential integrity threats. "In performing this data gathering and integration, an operator must follow the requirements in ASME/ANSI B3l.8S, section 4. At a minimum, an operator must gather and evaluate the set of data specified in Appendix A to ASME/ANSI B31 .8S . . . ."' Section 4'2 of ASME 83 I .8S states that an operator "shall collect, at a minimum" the data elements specified in Appendix A, including operating pressure, pipe size, material properties, and coating information' Appendix A also addresses instances where data may be missing or questionable. "Where the operator is missing data, conservative assumptions shall be used when performing the risk assessment or alternatively the segment shall be placed in a higher priority category." Section 5.7(e) of the standard, cited by Respondeni, addresses risk assessments and staies: "For missing or questionable data, the operator should determine and document the default values that will be used and why they were chosen. The operator should choose default values that conservatively reflect the values of other similar segments on the pipeline or in the operator's system." In accordance with $ 192.917(b), Respondent must identify potential threats to its pipelines by gathering and integrating the data elements specified in Appendix A to ASME 83l.8S, including maximum allowable operating pressure, pipe size, material properties, and coating information. If data is missing, Respondent must use default values (conservative assumptions) when performing the risk assessment and should determine and document the default values used and the reasons why those values were chosen' Respondent acknowledged at the hearing and in its written responses that it did not gather and integrate all of the data pertaining to maximum allowable operating pressure, pipe size, material properties, and coating information (although Respondent asserted that most of the information ietitea to those elements was included). Respondent presented no documentation explaining why such basic pipeline information was not gathered and integrated as required. Instead, Respondent stated that it utilized a process to address the missing data as provided for under ASME B31.SS. Respondent explained that the process used to complete the risk analysis involved a software prcgram and algorithm that "[!]y design utilizes conservative assumptions when faced with unknown or missing data."z l,lowever, Respondent did not provide furthei details and documentation of the process. For example, Respondent did not provide documentation to show how defhults values were chosen to replace missing data or what the effects of those values were on the risk analysis. Although Respondent stated that subject matter experts evaluated the results of the risk model and confirmed that the missing data had no impact on relative risk rankings (compared to subsequent models), Respondent did not provide any documentation of the experts' analyses to support Respondent's statement that the missing data t 49 C.F.R. $ 192.917(b). The ASME 831.8S standard for managing gas pipeline system integrity is published by the American Society of Mechanical Engineers and is incotporated by reference at 49 C.F.R. $ 192.7. 2 Respondent's Posl-hearing Statement, p.2 (June 30,2006)'#

520061006_Final Order_12112006.pdf, page 43 had no impact.' Although Respondent stated that it used conservative default values to address missing data in accordance with $ 192.917(b) and ASME 83 1.8S, Respondent did not present suffrcient documentation of the process or supportive analysis to show compliance. During the hearing, Respondent admitted that it could not provide adequate documentation of the process. Respondent argued that $ 192.917(b) and ASME 83l.8S do not require documentation, because section 5.7(e) of ASME 831.8S states only that operators "should determine and document the default values that will be used and why they were chosen."" As explained to Respondent during the hearing, however, PHMSA expects operators to implement "should" statements in industry standards that are invoked by regulation.' If an operator chooses not to implement a "should" statement, tle operator must document in its integrity management program a sound technical basis for why the operator has chosen not to implement it.o Moreover, PHMSA has published on its Gas Transmission Pipeline Integrity Management web site the actual inspection protocols used by PHMSA in conducting compliance inspections. Inspection Protocol C.02 perlaining to data gathering and integration states: "Ifthe operator lacks sufhcient data or where daia q-uality is suspect, verify that the operator has followed the requirements in ASME B31 .8S [and that] ' . . [r]ecords are maintained that identiff how unsubstantiated data are used, so that the impact on the variability and accuracy of assessment results can be considered."T In the present case, Respondent did not gather and integrate each data element listed in Appendix A to ASME 83l.8S as required, and provided no justification for the missing data. Respondent did not document a process used to address the missing data, including what default values wete chosen to replace missing data, why those values were chosen, how they were used, and how the values impacted the assessment results. Respondent did not provide any technical basis for its failure to document this process. Accordingly, I find Respondent violated $ 192.917(b). This finding of violation will be considered a prior offense in any subsequent enforcement action taken against Respondent. 3 Respondent's Response, pp. I 3 (March 27, 2006) and Post-hearing Statement, pp. 3 & 6 (June 30' 2006)' Respondent also argued that since the missing data had no impact on risk rankings, the process was valid and met .rguluto.y requirerients. Since the allegation is that Respondent's process did not comply with $ 192'917' Respondent's assertions concerning the outcome ofthal process are not relgvant. a Section 5.?(e) of ASME 83 l.8S (emphasis added). 5 This expectation and other guidance material concerning compliance with the integrity management regulalions are communicated to operators via PHMSA's Gas Transmission Pipeline Integrity Management web site at http://primis.phmsa.dot.gbvlgasimp. Specifically, Frequently Asked Question (FAQ)No- 244 states: "tyhat is the OfS p*itio" *itn ugora i impiemeitation { tshoutd' statements in industry slandards thal are invoked by the rute? OPS expects operators to implement 'should' statements in industry standards that are invoked by the rule' Operators maychoosi to implemeni an alternative approach in meeting the recommendations of invoked standards. tithis approach is taken, program requirements for the altcrnative approach must exist in IM Program documents and recoids must be generatid by the alternative approach. The IM Program documents must also technically justiff that the altemitive approach provides an equivalent level of protection. If an operator chooses not to implement a .should' statement in an invoked standard, a sound technical basis for why it has not been implemented must be documented in the IM Program documents." Wlile answers to FAQs are not rules, they provide informal guidanco to the regulated community about how to implement their integrity management programs in accordance with the requirements of 49 C.F.R. part 192. o Id_ ? Protocol C.02 "Data Gathering and Integration" available at http://primis.phmsa.dot.gov/sasimp. o#

520061006_Final Order_12112006.pdf, page 54 WITHDRAWAL OF ALLEGATION Item 2 in the Notice alleged that Respondent violated 49 C,F.R. $ 192.917(c). Based on t}re recommendation of the Director, Western Region, this allegation is withdrawn. The corresponding compliance order item is also withdrawn. COMPLIANCE ORDER The Notice proposed a compliance order with respect to the violation of 49 C.F.R. $ 192.917(b) in Item 1. 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. Pursuant to the authority of 49 U.S.C. $ 601l8(b) and 49 C.F.R. $ 190.217, Respondent is ordered to take the following actions to ensure compliance with t}le pipeline safety regulations applicable to its operations. Respondent must- 1. In accordance with,ig C.F.R. S 192.917, complete a risk analysis and ranking of each pipeline segment located in a high consequence area. The risk analysis model must include all applicable risk factors that influence the integrity of covered pipeline segments and must document relevant input and data to ensure repeatable results. 2. Complete this item within 60 days of receipt of this Final Order and submit documentation of completion to the Director, Westem Region, Pipeline and Hazardous Materials Safety Administration, 12300 W Dakota Ave Ste 110, Lakewood, CO 80228- 2585. The Director, Westem Region, may grant an extension of time to comply with any of the required items upon a written request timely submitted by the Respondent demonstrating good cause for an extension. Failure to comply with this Order may result in administrative assessment of civil penalties up to $100,000 p". duy for each violation and in referral to the Attorney General for appropriate relief in a district court of the United States. Under 49 C.F.R. $ 190.215, Respondent has a right to submit a Petition for Reconsideration of this Final Order. The petition must be received within 20 days of Respondent's receipt of this Final Order and must contain a brief statement of the issue(s). The terms of the order, including any required corrective action, remain in full effect unless the Associate Administrator' upon ."qu"rq grants a stay. The terms and conditions of'this Final Order are effective on receipt. l j * r . I l Date lssued L. Willke Associate Administrator#