CITY OF SUSANVILLE — Notice of Amendment

party submissionOfficial PDF520160005M_Operator Petition For Reconsideration_06192018.pdf#

520160005M_Closure Letter_01132020_text.pdf, page 1Official PDFCERTIFIED MAIL - RETURN RECEIPT REQUESTED January 13, 2020 Mr. Dan Newton Public Works Director City of Susanville 720 South Street Susanville, CA 96130 CPF 5-2016-0005M Closure Letter Dear Mr. Newton: On December 15 through 17, 2015, representatives from the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to chapter 601 of 49 United States Code, conducted an on-site pipeline safety inspection of The City of Susanville Gas Transmission System (Susanville) procedures for Operations and Maintenance in Susanville, California. As a result of the inspection, Susanville was issued a Notice of Amendment, and after a hearing, was issued an Order Directing Amendment on June 1, 2018, which directed amendment of your procedures.1 Susanville submitted its amended procedures on June 28, 2019. My staff reviewed the amended procedures, and it appears that the inadequacies outlined in the Order Directing Amendment have been corrected. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Dustin Hubbard Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 J. Dunphy (#148382) 1 Susanville filed a Petition for Reconsideration on the Order Directing Amendment, which was denied in the Decision on Petition for Reconsideration, issued by PHMSA on June 19, 2019.#

520160005M_Order Directing Amendment_06012018_text.pdf, page 1Official PDFJune 1, 2018 Mr. Dan Newton Public Works Director City of Susanville 720 South Street Susanville, CA 96130 Re: CPF No. 5-2016-0005M Dear Mr. Newton: Enclosed please find the Order Directing Amendment issued in the above-referenced case. It makes findings of inadequate procedures and requires that the City of Susanville amend certain of its operating and maintenance procedures. When the amendment of procedures is completed, as determined by the Director, Western Region, this enforcement action will be closed. Service of the Final Order by certified mail is effective upon the date of mailing 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: Director, Western Region, Office of Pipeline Safety, PHMSA CERTIFIED MAIL - RETURN RECEIPT REQUESTED#

520160005M_Order Directing Amendment_06012018_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 ) City of Susanville, ) CPF No. 5-2016-0005M ) ) ) Respondent. ) ____________________________________) ORDER DIRECTING AMENDMENT On December 15-17, 2015, pursuant to 49 U.S.C. § 60117, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS), inspected the procedures for operations and maintenance for the City of Susanville’s (Susanville or Respondent) gas system in Susanville, California. Susanville operates a 6-inch diameter pipeline approximately 10 miles in length along with the city’s gas distribution system.1 As a result of the inspection, the Director, Western Region, OPS (Director), issued to Respondent, by letter dated June 7, 2016, a Notice of Amendment (Notice). In accordance with 49 C.F.R. § 190.206, the Notice alleged certain inadequacies in Respondent’s Operating and Maintenance Manual and proposed requiring Susanville to amend its procedures to comply with the provisions of 49 C.F.R. Part 192. Susanville responded to both this Notice and a Notice of Probable Violation and Proposed Compliance Order issued in companion case CPF 5-2016-0004 by letter dated July 12, 2016, as supplemented by letter dated December 29, 2016 (Response). Susanville contested the allegations on legal grounds and requested a hearing. A hearing was subsequently held on January 11, 2017 in Lakewood, Colorado, with an attorney from the Office of Chief Counsel, PHMSA, presiding. After the hearing, Respondent provided a post-hearing submission for the record, by letter dated February 21, 2017 (Closing). FINDINGS OF INADEQUACY In its Response and at the hearing, Susanville contested the Notice, contending that the pipeline is not a transmission line, but rather is a distribution main line. The terms Distribution line and Transmission line are defined in 49 C.F.R. § 192.3 as follows: 1 Pipeline Safety Violation Report (Violation Report), (May 15, 2015) (on file with PHMSA), at 1.#

520160005M_Order Directing Amendment_06012018_text.pdf, page 3CPF No. 5-2016-0005M Page 2 Distribution line means a pipeline other than a gathering or transmission line. Transmission line means a pipeline, other than a gathering line, that: (1) Transports gas from a gathering line or storage facility to a distribution center, storage facility, or large volume customer that is not down-stream from a distribution center; (2) operates at a hoop stress of 20 percent or more of SMYS; or (3) transports gas within a storage field. Note: A large volume customer may receive similar volumes of gas as a distribution center, and includes factories, power plants, and institutional users of gas. A pipeline meets the regulatory definition of a transmission line if it meets any one of the three prongs set forth in the definition. OPS contended that the pipeline was a transmission line because it met two of the three prongs. OPS stated that the pipeline met the first prong in that it transported gas to a large volume customer that is not down-stream from a distribution center and met the second prong in that it operates at a hoop stress of 20 percent or more of specified minimum yield strength (SMYS). Susanville disagreed with OPS and argued that neither of the two prongs OPS pointed to were met. In the companion case, I found that Susanville committed four violations of 49 C.F.R. Part 192. For reasons more fully discussed in that order, I found that Respondent’s pipeline is a transmission line because it serves two large volume customers that are not downstream from a distribution center and operates at a hoop stress above 20 percent SMYS for purposes of classification. In its Response and at the hearing, Susanville acknowledged that if the pipeline is determined to be a transmission line, the facts as alleged establish the inadequacy of its operations and maintenance procedures as alleged in this proceeding. AMENDMENT OF PROCEDURES Accordingly, I find that Susanville’s procedures are inadequate to ensure safe operation of its pipeline system. Pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R. § 190.206, Susanville is ordered to make the following revisions to its procedures. Respondent must: 1. Amend its procedures to explicitly require exposed pipe to be examined for evidence of corrosion or coating deterioration including documenting any findings and required remedial action in accordance with § 192.459. 2. Amend its procedures for the allowance and dimensions of miter joints to conform with the requirements of § 192.233. 3. Submit the amended procedures to the Director within 180 days following receipt of this Order.#

520160005M_Order Directing Amendment_06012018_text.pdf, page 4CPF No. 5-2016-0005M Page 3 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 administrative assessment of civil penalties not to exceed $200,000, as adjusted for inflation (49 C.F.R. § 190.223), 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. Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Order to the Associate Administrator, Office of Pipeline Safety, PHMSA, 1200 New Jersey Avenue, SE, East Building, 2nd Floor, Washington, DC 20590, with a copy sent to the Office of Chief Counsel, PHMSA, at the same address, no later than 20 days after receipt of this 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 terms of the order remain in effect unless the Associate Administrator, upon request, grants a stay. The terms and conditions of this Order are effective upon service in accordance with 49 C.F.R. § 190.5. June 1, 2018 ___________________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety#

520160005M_Notice of Amendment_06072016_text.pdf, page 1Official PDFNOTICE OF AMENDMENT CERTIFIED MAIL - RETURN RECEIPT REQUESTED June 7, 2016 Mr. Dan Newton Public Works Director City of Susanville 720 South Street Susanville, CA 96130 CPF 5-2016-0005M Dear Mr. Newton: On December 15-17, 2015, representatives of the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code inspected The City of Susanville’s Gas System (Susanville) procedures for Operations and Maintenance in Susanville, CA. Both the Susanville Transmission and Distribution pipelines were inspected. On the basis of the inspection, PHMSA has identified the apparent inadequacies found within Susanville’s plans or procedures for maintaining your Transmission systems, as described below:#

520160005M_Notice of Amendment_06072016_text.pdf, page 21. §192.459 External corrosion control: Examination of buried pipeline when exposed. Whenever an operator has knowledge that any portion of a buried pipeline is exposed, the exposed portion must be examined for evidence of external corrosion if the pipe is bare, or if the coating is deteriorated. If external corrosion requiring remedial action under Secs. 192.483 through 192.489 is found, the operator shall investigate circumferentially and longitudinally beyond the exposed portion (by visual examination, indirect method, or both) to determine whether additional corrosion requiring remedial action exists in the vicinity of the exposed portion. The Susanville Operations and Maintenance Plan does not contain procedures explicitly requiring exposed pipe be examined for evidence of corrosion or coating deterioration, completing and documenting any findings or required remedial action in accordance with §192.459. 2. §192.233 Miter joints. (a) A miter joint on steel pipe to be operated at a pressure that produces a hoop stress of 30 percent or more of SMYS may not deflect the pipe more than 3°. (b) A miter joint on steel pipe to be operated at a pressure that produces a hoop stress of less than 30 percent, but more than 10 percent of SMYS may not deflect the pipe more than 12 1/2° and must be a distance equal to one pipe diameter or more away from any other miter joint, as measured from the crotch of each joint. (c) A miter joint on steel pipe to be operated at a pressure that produces a hoop stress of 10 percent or less of SMYS may not deflect the pipe more than 90°. The City of Susanville O&M Manual allows installation of miter joints on transmission lines and mains with the permission the engineer. This procedure language is vague as to which engineer will approve, how much miter is allowed per joint and under what circumstances miters joints will be allowed. §192.233 is prescriptive and must be followed if miter joints are allowed to be installed in a gas pipeline. Susanville must incorporate the requirements of §192.233 if they intend to allow miter joints. Distribution System Please note that Items 1 and 2 also apply to your Distribution system pipelines. PHMSA will address these same items in a similar but separate letter. 2#

520160005M_Notice of Amendment_06072016_text.pdf, page 3Response to this Notice This Notice is provided pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R. § 190.237. Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a Final Order. If, after opportunity for a hearing, your plans or procedures are found inadequate as alleged in this Notice, you may be ordered to amend your plans or procedures to correct the inadequacies (49 C.F.R. § 190.237). If you are not contesting this Notice, we propose that you submit your amended procedures to my office within sixty (60) days of receipt of this Notice. This period may be extended by written request for good cause. Once the inadequacies identified herein have been addressed in your amended procedures, this enforcement action will be closed. It is requested (not mandated) that The City of Susanville Gas System maintain documentation of the safety improvement costs associated with fulfilling this Notice of Amendment (preparation/revision of plans, procedures) and submit the total to Chris Hoidal, Director, Western Region, Pipeline and Hazardous Materials Safety Administration. In correspondence concerning this matter, please refer to CPF 5-2016-0005M and, for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Chris Hoidal Director, Western Region Pipeline and Hazardous Materials Safety Administration cc: PHP-60 Compliance Registry PHP-500 Jason Dunphy (#148382) Enclosure: Response Options for Pipeline Operators in Compliance Proceedings 3#

520160005M_Decision on Petition for Reconsideration_06192019_text.pdf, page 1Official PDFJune 19, 2019 Mr. Dan Newton Public Works Director City of Susanville 720 South Street Susanville, California 96130 Re: CPF No. 5-2016-0005M Dear Mr. Newton: Enclosed please find the Decision on Reconsideration issued in the above-referenced case. It denies your Petition for Reconsideration. Service of the Decision 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. Dustin Hubbard, Director, Western Region, Office of Pipeline Safety, PHMSA CERTIFIED MAIL – RETURN RECEIPT REQUESTED#

520160005M_Decision on Petition for Reconsideration_06192019_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 ) City of Susanville, California, ) CPF No. 5-2016-0005M a municipal corporation, ) ) ) ) Petitioner. ) ____________________________________) DECISION ON RECONSIDERATION In a June 1, 2018 Order Directing Amendment (Order), I found that the City of Susanville’s (Susanville) written procedures were inadequate to ensure safe operation of its pipeline system following an inspection by the Office of Pipeline Safety (OPS) of a 6-inch diameter, 10-mile long gas pipeline operated by Susanville.1 I ordered Susanville to make certain revisions to its procedures to correct these inadequacies. On June 19, 2018, Susanville submitted a Petition for Reconsideration (Petition) of the Order.2 The Petition questioned two aspects of the Order and requested that PHMSA reconsider its findings.3 Because the evidence of record supports the findings in question, I am denying the Petition and affirming the Order without modification. Background Following a December 2015 onsite pipeline safety inspection of Respondent’s facilities and records in Susanville, California by OPS, on June 7, 2016, the Director, Western Region, OPS (Director) issued a Notice of Amendment (Notice) to Susanville.4 In accordance with 49 C.F.R. § 190.206, the Notice alleged certain inadequacies in Respondent’s Operating and Maintenance 1 City of Susanville, Order Directing Amendment, CPF No. 5-2016-0005M (June 1, 2018). 2 One-page letter from Mr. Daniel Gibbs, PE, Acting Public Works Director, City of Susanville to Mr. Alan K. Mayberry, Associate Administrator for Pipeline Safety, PHMSA, dated June 19, 2018 (Petition). 3 Id. 4 Notice of Amendment, CPF No. 5-2016-0005M (June 7, 2016).#

520160005M_Decision on Petition for Reconsideration_06192019_text.pdf, page 3CPF No. 5-2016-0005M Page 2 Manual and proposed requiring Susanville to amend its procedures to comply with the provisions of 49 C.F.R. Part 192.5 Susanville responded to both this Notice and a Notice of Probable Violation and Proposed Compliance Order issued in companion case CPF 5-2016-0004 by letter dated July 12, 2016, as supplemented by letter dated December 29, 2016 (Response). Susanville contested the allegations on legal grounds and requested a hearing. A hearing was subsequently held on January 11, 2017 in Lakewood, Colorado before a PHMSA Presiding Official. On June 1, 2018, I simultaneously issued a Final Order in a companion case and an Order Directing Amendment (Order) in this case incorporating the finding from the companion case that the pipeline was a transmission line. The Order incorporated the finding in the companion Final Order that the 6-inch diameter pipeline operated by Susanville was properly classified as a transmission line under two different prongs of the regulatory definition of a transmission line, either of which renders it a transmission line, and that Susanville had an obligation to comply with the regulatory requirements for transmission lines.6 Susanville acknowledged that if the pipeline were determined to be a transmission line, the facts as alleged in the Notice established the cited inadequacies. Accordingly, I found that Susanville’s procedures were inadequate as proposed in the Notice and ordered Susanville to amend its procedures for implementing 49 C.F.R. §§ 192.459 and 192.233. On June 19, 2018, Susanville submitted this Petition requesting reconsideration of the determination that the pipeline was a transmission line. Standard of Review Under 49 C.F.R. § 190.243, a respondent is afforded the right to petition the Associate Administrator for reconsideration of an order directing amendment. However, that right is not an appeal or an opportunity to seek a de novo review of the record. 7 It is a venue for presenting the Associate Administrator with information that was not previously available or requesting that any errors in the order be corrected. Requests for consideration of additional facts or arguments must be supported by a statement of reasons as to why those facts or arguments were not presented prior to the issuance of the order. Repetitious information or arguments will not be considered. 5 OPS simultaneously issued a Notice of Probable Violation and Proposed Compliance Order proposing to find that Susanville committed several violations of 49 C.F.R. Part 192. Notice of Probable Violation and Proposed Compliance Order, CPF No. 5-2016-0004 (June 7, 2016). A Final Order for that proceeding was issued simultaneously with the Order Directing Amendment for which Susanville also filed a Petition for Reconsideration. A Decision on Reconsideration for that Petition is being issued simultaneously with this decision. 6 City of Susanville, Final Order, CPF No. 5-2016-0004 (June 1, 2018) at 2-5 (Final Order). 7 49 C.F.R. § 190.243(a)-(d).#

520160005M_Decision on Petition for Reconsideration_06192019_text.pdf, page 4CPF No. 5-2016-0005M Page 3 Analysis In its Petition, Susanville raised two issues for reconsideration relating to the determination (more fully explained in the companion case Final Order) that the 6-inch diameter, 10-mile pipeline it operates is properly classified as a transmission line. First, Susanville expressed the concern that a 2016 Notice of Proposed Rulemaking (NPRM) raised by Susanville in its Response and during the hearing was not sufficiently considered in support of its arguments. Second, Susanville questioned whether the location where its large volume customers were connected to the pipeline may constitute a connection or branch that would warrant changing the transmission line classification to distribution line for the portion of the pipeline extending between that location and the Susanville City Gate station. I will discuss each in turn. With respect to the first issue, Susanville expressed the concern that the 2016 NPRM raised by Susanville in its Response and during the hearing was not sufficiently considered in support of its arguments. Susanville raised this NPRM in connection with the applicability of the term “distribution center” which is not defined in the regulations (notably, the NPRM has not become a Final Rule). The companion Final Order discussed this portion of the NPRM in the following manner: Susanville also argued that the power plant and the correctional facility were downstream of a “distribution center” which, if correct, would negate a transmission line designation under this prong of the definition. Section 192.3 does not contain a definition of a distribution center, but the term is generally understood to mean the point where an incoming gas pipeline branches into a lower pressure network of distribution lines that provide gas service to customers.8 Respondent further argued that it believed its position was supported by a Notice of Proposed Rulemaking (NPRM) issued by PHMSA in 2016 that proposed adding a definition of distribution center to § 192.3.9 This NPRM proposed defining a distribution center as a location where “gas volumes are either metered or have pressure or volume reductions prior to delivery to customers.” However, this proposed definition appears to refer to typical gas utility customers such as homes and businesses because it did not use the term large volume customers. The proposition that the word “customers” in this proposed definition of “distribution center” should include large volume customers would be inconsistent with the longstanding regulatory definition of “transmission line” which expressly includes lines serving large volume customers. In any event this NPRM has not become a final rule. In this instance, the location where a network of distribution lines that serves as the distribution center delivering gas service to customers is the Susanville City Gate station 8 Letter from Edward J. Ondak, Director, Office of Pipeline Safety, to David Sinclair, Vice President of Operations, Enstar Natural Gas Company, CPF No. 58014W, 1998 WL 35166442 (Aug. 21, 1998). 9 Pipeline Safety: Safety of Gas Transmission and Gathering Lines, (81 Fed. Reg. 20807). This NPRM has not become a final rule.#

520160005M_Decision on Petition for Reconsideration_06192019_text.pdf, page 5CPF No. 5-2016-0005M Page 4 at the downstream end of the 10-mile segment. Therefore, Respondent’s pipeline serves two large volume customers that are not downstream from a distribution center and the first prong is met. Susanville also raised the NPRM in connection with arguing whether the established maximum allowable operating pressure (MAOP), not the current actual operating pressure, is used for regulatory classification purposes. The Final Order discussed this portion of the NPRM in the following manner: Prior PHMSA pipeline enforcement proceedings and interpretations make it clear that the established MAOP, not the current actual operating pressure, is used for regulatory classification purposes.10 For example, PHMSA issued an Interpretation Letter stating that a pipeline that delivered gas to a large volume customer qualified as a transmission line despite the fact that the pipeline actually operated at less than 20% of SMYS.11 If actual operating pressure could be used, there would be nothing stopping an operator from easily configuring its line to raise the pressure as high as the established MAOP at times and lower it at other times causing uncertainty in the classification and affecting the applicability of various maintenance requirements. Thus, for purposes of classification as a line that operates above or below 20 percent SMYS, operators must use the established MAOP for the pipeline when determining the hoop stress. If an operator wants to de-rate or lower its MAOP for whatever reason, it would need to be done in a permanent manner reflected in its written procedures and design plans. With regard to Respondent’s argument that its position was supported by the NPRM issued by PHMSA in 2016, the preamble reveals that the impetus for proposing a change to the Transmission line definition was to address the demarcation between transmission and gathering lines, not between transmission and distribution lines.12 While the NPRM was silent on the reason for this particular proposed change to this prong (i.e., replacing “operates at…” with the term MAOP), if anything the absence of discussion implies that this was a clarification to existing policy and practice as opposed to being needed to drive a significant change in behavior. Therefore, Respondent’s pipeline operates at a hoop stress above 20 percent SMYS for purposes of classification and the second prong in the definition of transmission line is met. 10 See, e.g., Breitburn Energy Partners, LP, Final Order, CPF No. 5-2009-0008 (Apr. 2, 2012). 11 PHMSA Interp. No. 01-0102 (Feb. 15, 2001). 12 Pipeline Safety: Safety of Gas Transmission and Gathering Lines, (81 Fed. Reg. 20807). This NPRM has not become a final rule.#

520160005M_Decision on Petition for Reconsideration_06192019_text.pdf, page 6CPF No. 5-2016-0005M Page 5 The Petition does not provide any explanation or argument as to what, if anything, about the analysis in the Final Order of the NPRM content was erroneous. I fully considered Susanville’s arguments citing the NPRM and found them unpersuasive for the reasons stated in the Final Order. There is nothing in the Petition that would warrant a change in this conclusion. If a future rulemaking proceeding in this area becomes final and takes effect, Susanville can subsequently request that OPS review the classification of its pipeline under that future regulation. Like any enforcement case, however, I must decide this case under the existing regulations. With respect to the second issue, Susanville questioned whether the location where its large volume customers were connected to the pipeline may constitute a connection or branch that would warrant changing the transmission line classification to distribution line for the portion of the pipeline extending between that location and the Susanville City Gate station. Presumably, Susanville is conceding that the portion of the 10-mile pipeline upstream of the large volume customers is a transmission line, but would argue that this does not mean the portion downstream of that point could not be a distribution line. Susanville, however, did not present facts in its Petition that would establish that the location where the large volume customers received gas was a distribution center. Even if Susanville had attempted to do so, this argument would presumably be negated by the second prong of the definition of a transmission line which involves a determination on whether the pipeline operates at a hoop stress of 20 percent or more of specified minimum yield strength (SMYS). The established MAOP of the pipeline currently applies to its entire length.13 Susanville did not provide any documentation or evidence that it has taken any steps to permanently de-rate the MAOP of the portion of the pipeline downstream from the large volume customers during the proceeding or in connection with its Petition. RELIEF DENIED Based on the information provided in the Petition, a review of the record, and for the reasons stated above, I am affirming the Order without modification. This Decision is the final administrative action in this proceeding. June 19, 2019 _____________________________ __________________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety 13 Final Order at 4-5.#