EL PASO NATURAL GAS CO — Notice of Probable Violation

party submissionOfficial PDF520131012_Operator Response and Hearing Request_09192013.pdf#

520131012_Final Order_04032015_text.pdf, page 1Official PDFApril 3, 2015 Mr. Mark Kissel President El Paso Natural Gas Company, L.L.C. 2 North Nevada Avenue Colorado Springs, CO 80903 Re: CPF No. 5-2013-1012 Dear Mr. Kissel: Enclosed please find the Final Order issued in the above-referenced case. It makes a finding of violation, assesses a reduced civil penalty of $27,500, and specifies corrective action that must be completed. The penalty payment terms are set forth in the Final Order. When the civil penalty has been paid and the terms of the compliance order completed, as determined by the Director, Western Region, this enforcement action will be closed. Service of the Final Order is made pursuant to 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. Chris Hoidal, Director, Western Region, OPS Ms. Jessica Toll, Assistant General Counsel, Kinder Morgan, Inc. 370 Van Gordon St., Lakewood, CO 80228 CERTIFIED MAIL – RETURN RECEIPT REQUESTED#

520131012_Final Order_04032015_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 ) ) ) El Paso Natural Gas Company, L.L.C., ) Respondent. ) ___________________________________ ) ) CPF No. 5-2013-1012 FINAL ORDER On April 23-25, 2013, pursuant to 49 U.S.C. § 60117, a representative of the Arizona Corporation Commission, on behalf of the Pipeline and Hazardous Materials Safety Administration’s Office of Pipeline Safety (OPS), conducted an inspection of a pipeline operated by El Paso Natural Gas Company, L.L.C. (EPNG or Respondent).1 The 30-inch L2000 natural gas pipeline was damaged by third-party excavation on April 23, 2013, in western Arizona. As a result of the inspection, the Director, Western Region, OPS (Director), issued a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (Notice) to Respondent on August 16, 2013. In accordance with 49 C.F.R. § 190.207, the Notice alleged that EPNG had committed one violation of the natural gas pipeline safety regulations, proposed a civil penalty of $31,200, and proposed certain corrective action. In addition, the Notice included a warning item advising Respondent to correct another probable violation. EPNG responded to the Notice and requested a hearing by letter dated September 19, 2013 (Response). Respondent submitted supplemental information on February 24, 2014 (Pre-hearing Submittal). In accordance with § 190.211, a hearing was held on March 5, 2014, in Lakewood, Colorado, before a Presiding Official from the Office of Chief Counsel, PHMSA. After the hearing, Respondent submitted a post-hearing brief on April 30, 2014 (Brief). FINDING OF VIOLATION Item 2: The Notice alleged that Respondent violated 49 C.F.R. § 192.707(a), which states: 1 EPNG is a subsidiary of Kinder Morgan Energy Partners, L.P., operating approximately 10,000 miles of pipeline transporting natural gas primarily in Texas, New Mexico, and Arizona. This information is reported by EPNG for calendar year 2013 pursuant to 49 C.F.R. § 191.17.#

520131012_Final Order_04032015_text.pdf, page 3CPF No. 5-2013-1012 Page 2 §192.707 Line markers for mains and transmission lines. (a) Buried pipelines. Except as provided in paragraph (b) of this section, a line marker must be placed and maintained as close as practical over each buried main and transmission line: (1) At each crossing of a public road and railroad; and (2) Wherever necessary to identify the location of the transmission line or main to reduce the possibility of damage or interference. The Notice alleged that Respondent violated § 192.707(a) by failing to have line markers over the L2000 pipeline wherever necessary to identify the location of the line to reduce the possibility of damage or interference. The Notice alleged that the pipeline had been struck and damaged by a third-party excavator on April 23, 2013. At the time of the event, the Notice alleged, there were no line markers in the area identifying the location of Respondent’s pipeline. The Notice alleged that the closest marker was between 0.25 and 0.50 miles away from the excavation site. The Notice also stated that EPNG had previously been issued a warning for the same conduct after it had allegedly failed to place adequate line markers on its 2103 pipeline in South Tucson, Arizona. EPNG contested the alleged violation and offered additional information. Respondent stated that the excavator who damaged the pipeline was working for the owner of an adjacent farm in a rural agricultural area. Without providing advance notice of the excavation through a one-call notification system, the excavator operated a trackhoe in a ditch along a private dirt road and struck Respondent’s pipeline. The strike caused several gouges and a pin hole leak that began slowly releasing gas. EPNG responded to the event by closing valves on both sides of the damage, initiating a controlled blowdown, and repairing the pipe. Respondent maintained that it had complied with § 192.707(a) by placing four line markers in the area of the L2000 pipeline. Respondent asserted that it had one line marker 2063 feet (approximately 0.39 miles) to the west of the excavation damage and one line marker 670 feet (approximately 0.13 miles) to the east. 2 Respondent stated that two additional line markers were installed where the pipe crosses the private road, but those markers were likely knocked down prior to or during the excavation on April 23, 2013. After the event, EPNG again placed additional line markers at the location as a precautionary measure. Respondent argued that while markers are required at public road crossings, the regulation does not require markers at private road crossings or require that they be visible from the immediately preceding and following markers. Respondent also contested the relevance of the previous warning that was referenced in the Notice. In the earlier case, Respondent asserted, a line marker had been vandalized and new markers were installed the day after EPNG became aware of the issue. 2 Brief at 3.#

520131012_Final Order_04032015_text.pdf, page 4CPF No. 5-2013-1012 Page 3 A. Location of Line Markers in the Area of the Excavation PHMSA first determines as a factual matter whether Respondent had line markers present in the vicinity of the excavation site on April 23, 2013. OPS produced evidence that its Inspector arrived at the incident site on April 23, 2013. He stayed through the morning of April 25, 2013. During this period, he walked around the area of the excavation and could only locate one line marker belonging to Respondent. The marker was adjacent to the closest public roadway, Harquahala Valley Road, at an estimated distance of 0.25 to 0.50 miles west of the damage site. The Inspector did not see any other line markers for Respondent’s pipeline during his time at the site. The Inspector’s visual observations were corroborated by several photographs that depict the landscape around the pipeline.3 Other than the marker at Harquahala Valley Road, no other markers can be seen in the photographs. During the inspection, the Inspector also interviewed the manager of the third-party excavator who struck Respondent’s pipeline. The manager stated that he did not see any line markers in the area before breaking ground. During the incident, farm personnel were evacuated from the area. One individual located a nearby line marker belonging to another pipeline company. The person called the number on the marker to report the incident, and that company notified Respondent. Respondent agreed there was a line marker about 0.39 miles west of the incident site at Harquahala Valley Road. Respondent asserted that a second marker was closer to the site of the damage, approximately 0.13 miles to the east of the site. At the hearing, Respondent claimed that the marker could be seen in one of the photographs offered by OPS. Respondent also presented an affidavit and testimony of its Operations Specialist, who stated that two additional EPNG pipeline markers, one of which was damaged, were discovered in a ditch near the excavation site during the pipeline repair. Having considered the evidence, PHMSA finds the testimony and documents presented by OPS were credible and substantial. Evidence of two eyewitnesses were offered, both of whom were present on April 23, 2013. Both witnesses noted a lack of line markers at and around the area of the excavation. The eyewitness evidence was corroborated by photographs taken the date of the incident. The evidence presented by Respondent, on the other hand, consisted mostly of conclusory statements with little to no corroboration. Respondent stated that it had a line marker placed 0.13 miles east of the incident location, but no documentation in the form of photographs, business records, or eyewitness testimony was offered to corroborate the claim. Although Respondent asserted the marker could be seen in one of the photographs already in evidence, after a careful review PHMSA finds no marker can be seen in that photograph. In addition, Respondent’s Operations Specialist stated in an affidavit that he found two line markers at the scene of the incident. This testimony purportedly corroborated Respondent’s contention that two additional line markers had been placed at the site of the incident and then 3 OPS Pipeline Safety Violation Report (Aug. 16, 2013), Exhibit A-2.#

520131012_Final Order_04032015_text.pdf, page 5CPF No. 5-2013-1012 Page 4 were removed or damaged unbeknownst to Respondent. Accepting as true that two line markers were discovered in a ditch at the scene of the incident, the evidence is still insufficient to show how recently the markers were present in their original location, or that they were present at the time of the incident. Respondent stated that it patrolled its pipeline twice annually, but presented no records from those patrols to document observation of the markers. The markers could have been knocked down long before the incident.4 Having considered the evidence, PHMSA finds the closest line marker in the area of Respondent’s pipeline on the date of the excavation was 0.39 miles west of the site at Harquahala Valley Road. There is insufficient evidence that any other EPNG line markers were present and observable on that date. B. Compliance with Applicable Safety Standards Having found there was only one line marker in the area, PHMSA must determine whether that marker satisfied the applicable standards for pipeline marking. Section § 192.707(a) requires operators of gas transmission pipelines to have line markers as close as practical over each pipeline.5 The markers must be placed and maintained at each crossing of a public road and railroad and “[w]herever necessary to identify the location of the transmission line . . . to reduce the possibility of damage or interference.”6 The purpose of this regulation is to “increase the likelihood that outsiders will seek assistance in locating underground lines before excavating.” 7 As explained in prior enforcement cases, the regulations for line marking do not establish a uniform distance between markers along every pipeline.8 The regulations provide some flexibility for operators to mark their pipelines in a manner appropriate for their system, as long as placement of the markers is sufficient to identify the location of the pipeline to reduce the possibility of third-party excavation damage. 4 There were also some inconsistencies between the Operations Specialist’s affidavit and his testimony at the hearing, specifically with regard to when the markers were found and when they were disposed of. The Operations Specialist testified that he had taken pictures of the markers, but the pictures were subsequently lost. The agency Inspector denied ever seeing any markers discovered while he was there. 5 There are certain exceptions to this requirement in § 192.707(b), which are not relevant here. 6 § 192.707(a). 7 Line Markers for Mains and Transmission Lines, 40 Fed. Reg. 13502 (Mar. 27, 1975). 8 Magellan Pipeline Company, LP, CPF 4-2012-5010, Item 2, 2014 WL 5431188 (Sept. 2, 2014) (discussing line marking requirements and “line-of-sight” for hazardous liquid pipelines). Prior enforcement materials can be viewed at http://www.phmsa.dot.gov/pipeline/enforcement (follow links for enforcement actions since 2002 and then actions issued by year).#

520131012_Final Order_04032015_text.pdf, page 6CPF No. 5-2013-1012 Page 5 The aerial photograph of Respondent’s L2000 pipeline demonstrates the pipeline runs west to east along a private dirt access road in a rural agricultural area. 9 In the area of the incident, the pipeline bends abruptly north, crosses under the private roadway and irrigation ditch where the excavation occurred, and then turns abruptly eastward again. While § 192.707(a) does not state that line markers are required at each crossing of a private road like it does for “each crossing of a public road,” the regulation does require operators to place line markers if necessary to identify the location of the pipeline to reduce the possibility of damage, including at or near a private road crossing if necessary. 10 In this case, the closest line marker to the excavation site was 0.39 miles—a distance of more than five football fields. This distance coupled with the change in direction of the pipeline at the road crossing was not enough to alert people to the location of the L2000 pipeline to reduce the possibility of damage at the incident site. Accordingly, PHMSA finds Respondent did not have sufficient line markers at the time of the incident to identify the location of the pipeline. C. Previous Warning and Other Issues Raised by Respondent Respondent objected to a statement in the Notice that EPNG had previously been issued a warning for the same issue. Respondent argued the prior warning had to do with line markers that were vandalized, which is distinct from the line marking issue in the present case. PHMSA recognizes the factual differences between the two cases. Based on a review of the Violation Report in this case, PHMSA confirms the prior warning was not considered a “prior offense” for purposes of determining whether a violation occurred in this case, or for purposes of calculating an appropriate civil penalty. 11 Respondent also noted that the third-party excavator in this case never made a one-call notification before starting to excavate as required by law. 12 Respondent indicated the excavator had received Respondent’s public awareness mailings on multiple occasions, including on December 7, 2012.13 Respondent contended that if a one-call notification been made, the damage would have been avoided because EPNG would have marked the location of the line and would have been present during the excavation if planned within 25 feet of its line. 9 Pre-hearing Submittal, Exhibit C. 10 § 192.707(a)(2). 11 The Violation Report noted that the alleged violation in the present case was not a repeat violation. 12 Excavators have a duty before engaging in excavation to make a one-call notification to establish the location of underground facilities in the area. 49 U.S.C. § 60114(d). 13 Under § 192.616, pipeline operators must have a program for making the public aware of nearby buried pipelines and steps for preventing and responding to incidents.#

520131012_Final Order_04032015_text.pdf, page 7CPF No. 5-2013-1012 Page 6 PHMSA recognizes damage prevention is the responsibility of many parties, not only pipeline operators. Respondent’s conduct was not alleged to be a causal factor in the accidental release of natural gas. While the incident could have potentially been avoided if the excavator used one-call, that does not impact whether Respondent had adequate markers under § 192.707(a). D. Conclusion PHMSA finds Respondent violated § 192.707(a) as alleged in the Notice, by failing to have line markers over the L2000 pipeline wherever necessary to identify the location of the line to reduce the possibility of damage or interference. This finding of violation will be considered a prior offense 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 related series of violations. The Notice proposed a civil penalty of $31,200 for the violation cited in Item 2. Respondent requested that the civil penalty be withdrawn or reduced. In determining the amount of a civil penalty under 49 U.S.C. § 60122 and 49 C.F.R. § 190.225, PHMSA 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 good faith of Respondent in attempting to comply with the pipeline safety regulations; and the effect on Respondent’s ability to continue in business. In addition, PHMSA may consider the economic benefit gained from the violation and such other matters as justice may require. The proposed penalty amount was based on assertions in the Notice and Violation Report relevant to the penalty assessment criteria. With regard to nature, circumstances and gravity of the violation, the Violation Report stated that a civil penalty was appropriate because the lack of line markers in the area gave a false impression that the area was clear of any buried natural gas lines. The Violation Report suggested a lower level of gravity due to the rural area in which the violation occurred. The Violation Report did not suggest the violation was a causal factor in the pipeline incident. Based on a review of the evidence, PHMSA finds these assertions are accurate and the proposed civil penalty amount is supported by the nature, circumstances and gravity of the violation. With respect to culpability and good faith in attempting to comply, the Violation Report suggested that no penalty reduction was appropriate because Respondent failed to take actions to comply with a regulatory requirement that was clearly applicable.#

520131012_Final Order_04032015_text.pdf, page 8CPF No. 5-2013-1012 Page 7 Based on a review of the evidence, PHMSA finds Respondent did take some steps to comply with the applicable requirement even though Respondent did not ultimately achieve full compliance. Respondent submitted evidence that it had installed two additional markers in the area of the incident site, but the markers were damaged at an unknown time by an unknown party. PHMSA finds the fact that additional markers were previously installed should be factored into the penalty assessment, even though there is not sufficient evidence to demonstrate the markers were present at the time of the incident. PHMSA considers the history of Respondent’s prior offenses and the effect on Respondent’s ability to continue in business. The Violation Report noted a total of five prior offenses in the five-year period prior to issuance of the Notice. Respondent did not claim the proposed penalty would affect its ability to continue in business. Accordingly, for the reasons stated above, Respondent is assessed a reduced civil penalty of $27,500 for the violation of § 192.707(a). Payment of the civil penalty must be made within 20 days of service. Federal regulations (49 C.F.R. § 89.21(b)(3)) require such payment to be made by wire transfer through the Federal Reserve Communications System (Fedwire), to the account of the U.S. Treasury. Detailed instructions are contained in the enclosure. Questions concerning wire transfers should be directed to: Financial Operations Division (AMK-325), Federal Aviation Administration, Mike Monroney Aeronautical Center, P.O. Box 269039, Oklahoma City, Oklahoma 73125. The Financial Operations Division telephone number is (405) 954-8845. Failure to pay the $27,500 civil penalty will result in accrual of interest at the current annual rate in accordance with 31 U.S.C. § 3717, 31 C.F.R. § 901.9 and 49 C.F.R. § 89.23. Pursuant to those same authorities, a late penalty charge of six percent (6%) per annum will be charged if payment is not made within 110 days of service. Furthermore, failure to pay the civil penalty may result in referral of the matter to the Attorney General for appropriate action in a district court of the United States. COMPLIANCE ORDER The Notice proposed a compliance order with respect to the violation cited in Item 2. 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. § 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. EPNG must ensure that it has written procedures specifying that markers be placed wherever necessary to identify the location of transmission lines or mains in order to reduce the possibility of damage or interference.#

520131012_Final Order_04032015_text.pdf, page 9CPF No. 5-2013-1012 Page 8 2. Submit documentation demonstrating compliance within 60 days of receipt of this Order. Documentation must be submitted to the Director, Western Region, Pipeline and Hazardous Materials Safety Administration, 12300 W. Dakota Ave., Suite 110, Lakewood, CO 80228. 3. It is requested that EPNG maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to the Director. 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 physical changes to pipeline infrastructure, including pipeline replacement and additions. 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 $200,000 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 ITEM With respect to Item 1, the Notice alleged a probable violation of Part 192 and specifically considered it to be a warning item. In accordance with § 190.205, an operator may respond to a warning, but PHMSA does not adjudicate whether a violation occurred. The warning was for: 49 C.F.R. § 191.5 – Respondent’s alleged failure to report the event on April 23, 2013, at the earliest practicable moment following discovery. The Notice alleged the event met the criteria for a reportable incident because the total amount of gas lost as a result of the leak, plus the amount of gas released during Respondent’s intentional blow-down to repair the pipeline, equaled more than the 3 million cubic feet threshold for reporting. In its written submissions and at the hearing, EPNG contested the allegation that the event was a reportable incident. In particular, Respondent noted that only approximately 200,000 cubic feet of gas was lost unintentionally as a result of the failure. After the failure was discovered and the pipeline was isolated, EPNG decided to blow down the line to make the repair. Respondent argued the subsequent blow-down was voluntary, intentional, controlled, and did not contribute to the volume of gas that was lost unintentionally for purpose of the reporting regulation.14 14 Under §§ 191.3(1)(iii) and 191.5(a), an immediately reportable incident includes the release of gas from a pipeline that results in an “unintentional estimated gas loss of three million cubic feet or more.”#

520131012_Final Order_04032015_text.pdf, page 10CPF No. 5-2013-1012 Page 9 In its Post-hearing Brief, EPNG indicated that it had resolved this issue with the OPS Western Region and no longer requested a determination as to whether the facts alleged in the Notice would support a violation. Since this item is a warning, PHMSA makes no finding as to whether the facts alleged would constitute a violation. Under 49 C.F.R. § 190.243, Respondent may submit a petition for reconsideration of this Final Order to the Associate Administrator for Pipeline Safety, PHMSA, 1200 New Jersey Avenue SE, East Building, 2nd Floor, Washington, D.C. 20590, no later than 20 days after receipt of the Final Order by Respondent. Any petition submitted must contain a statement of the issue(s) and meet all other requirements of 49 C.F.R. § 190.243. The filing of a petition automatically stays the payment of any civil penalty assessed, however, the other terms of the order, including the corrective action, remain in effect unless the Associate Administrator, upon request, grants a stay. 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#

520131012_Closure Letter_10072015_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED October 7, 2015 Mr. Gary Buchler Vice President, Engineering/Operations El Paso Natural Gas Company, L.L.C. 1001 Louisiana Street, Suite 1000 Houston, Texas 77002 CPF 5-2013-1012 Dear Mr. Buchler: On April 3, 2015, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to El Paso Natural Gas Company 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, Chris Hoidal Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 T. Finch#

520131012_NOPV PCP PCO_08162013_text.pdf, page 1Official PDFNOTICE OF PROBABLE VIOLATION PROPOSED CIVIL PENALTY and PROPOSED COMPLIANCE ORDER CERTIFIED MAIL - RETURN RECEIPT REQUESTED August 16, 2013 Mr. Gary Buchler Vice President, Engineering/Operations El Paso Natural Gas Company, L.L.C. A Kinder Morgan Company 1001 Louisiana Street, Suite 1000 Houston, Texas 77002 CPF 5-2013-1012 Dear Mr. Buchler: On April 23-25, 2013, a representative from the Arizona Corporation Commission, on behalf of the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code, inspected El Paso Natural Gas, LLC (EPNG)’s, a Kinder Morgan Company, EPNG 2000 mainline pipe located near Milepost 391 in Western Arizona. As a result of the inspection, it appears that El Paso has committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. The items inspected and the probable violations are:#

520131012_NOPV PCP PCO_08162013_text.pdf, page 21. §191.5 Immediate notice of certain incidents. (a) At the earliest practicable moment following discovery, each operator shall give notice in accordance with paragraph (b) of this section of each incident as defined in §191.3. EPNG failed to report to the National Response Center an incident involving pipeline damage as a result of an excavation activity. This incident occurred on April 23, 2013, near Milepost 391, 5901 South 515th Avenue, Harquahala Valley, Arizona. The total amount of gas released from both the leak and a blow-down of a 16-mile isolated segment to allow for repairs was 23,157,000 cubic feet. Pursuant to §191.3, an ‘incident’ includes any unintentional estimated gas loss of three million cubic feet or more. EPNG should have reported this incident at the earliest practicable moment following discovery. 2. §192.707. Line markers for mains and transmission lines. (a) Buried pipelines. Except as provided in paragraph (b) of this section, a line marker must be placed and maintained as close as practical over each buried main and transmission line: (1) At each crossing of a public road and railroad; and (2) Wherever necessary to identify the location of the transmission line or main to reduce the possibility of damage or interference. EPNG failed to place adequate line markers on the EPNG 2000 pipeline. Section 192.707 required EPNG to place line markers wherever necessary to identify the location of the transmission line or main to reduce the possibility of damage or interference. The EPNG 2000 line was struck and damaged by an excavator on April 23, 2013, causing a leak and the necessary blow down of 16 miles of 30-inch diameter pipeline in order to repair this leak. The total amount of released gas exceeded 23 million cubic feet. At the time of the incident, there were no line markers in the area identifying the location of the EPNG line. The line marker nearest to the damage site was located approximately ¼ to ½ mile west of the damage site. Following this incident EPNG personnel installed additional line markers along this pipeline. PHMSA previously issued EPNG a warning item (See CPF 5-2013-1003W, Item 3) for this same violation, § 192.707, for failure to place adequate line markers on its 2103 line in South Tucson, Arizona. Proposed Civil Penalty Under 49 United states Code, § 60122, you are subject to a civil penalty not to exceed $200,000 for each violation for each day the violation persists up to a maximum of $2,000,000 for any related series of violations. The Compliance Officer has reviewed the circumstances and supporting documentation involved in the above probable violation and has recommended that you be preliminarily assessed a civil penalty of $31,200 as follows: Item number PENALTY 2 $31,200#

520131012_NOPV PCP PCO_08162013_text.pdf, page 3Warning Items With respect to item number 1, 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 this item. Failure to do so may result in additional enforcement action. Proposed Compliance Order With respect to item number 2, pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration proposes to issue a Compliance Order to El Paso. 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). 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 5-2013-1012 and for each document you submit, please provide a copy in electronic format to PHP-WRADMIN@dot.gov whenever possible. Sincerely, Chris Hoidal Director, Western Region Pipeline and Hazardous Materials Safety Administration Enclosures: Proposed Compliance Order Response Options for Pipeline Operators in Compliance Proceedings cc: PHP-60 Compliance Registry PHP-500 T. Finch (#143558) Arizona Corporation Commission - Mr. Robert Miller#

520131012_NOPV PCP PCO_08162013_text.pdf, page 4PROPOSED COMPLIANCE ORDER Pursuant to 49 United States Code § 60118, the Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to issue to El Paso Natural Gas Company, L.L.C. (EPNG), a Kinder Morgan Company, a Compliance Order incorporating the following remedial requirements to ensure the compliance of El Paso with the pipeline safety regulations: 1. 2. 3. In regard to Item Number 2 of the Notice pertaining to the placement of adequate line markers for mains and transmission lines. EPNG must ensure that it has written procedures specifying that markers be placed wherever necessary to identify the location of transmission line or mains in order to reduce the possibility of damage or interference. Third-party damage occurred on April 23, 2013. Therefore, it is clear that the markers were not placed in an area to reduce the possibility of damage. EPNG must complete Compliance Item #1 within 60 days of issuance of the Final Order. It is requested (not mandated) that El Paso Natural Gas Company, L.L.C., a Kinder Morgan Company, maintain documentation of the safety improvement costs associated with fulfilling this Compliance Order and submit the total to Chris Hoidal, Director, Western 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.#