INTERIOR GAS UTILITY — Notice of Amendment

party submissionOfficial PDF52022010NOA_Operator Response to Notice_08162022_(20-191036).pdf#

52022010NOA_Order Directing Amendment_08022023_(20-191036)_text.pdf, page 1Official PDFAugust 2, 2023 VIA ELECTRONIC MAIL TO: mrockwell@interiorgas.com Mr. Mark Rockwell Director of Operations Interior Gas Utility 2525 Phillips Field Road Fairbanks, Alaska 99709 Re: CPF No. 5-2022-010-NOA Dear Mr. Rockwell: Enclosed please find the Order Directing Amendment issued in the above-referenced case to Interior Gas Utility (IGU). It makes findings of inadequate procedures, finds that certain amended procedures are adequate, and requires IGU to amend certain portions of its procedures. When the amendment of procedures has been completed, as determined by the Director, Western Region, this enforcement action will be closed. Service of the Order Directing Amendment by e- mail is effective upon the date of transmission and acknowledgement of receipt 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. Dustin Hubbard, Director, Western Region, Office of Pipeline Safety, PHMSA Mr. Daniel Britton, General Manager, Interior Gas Utility, dwbritton@interiorgas.com Mr. Brendan Kern, Engineer, Interior Gas Utility, bkern@interiorgas.com CONFIRMATION OF RECEIPT REQUESTED#

52022010NOA_Order Directing Amendment_08022023_(20-191036)_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 ) Interior Alaska Natural Gas Utility, ) CPF No. 5-2022-010-NOA d/b/a Interior Gas Utility, ) ) ) ) Respondent. ) ____________________________________) ORDER DIRECTING AMENDMENT On January 12, 2021, a representative from the Pipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected Interior Gas Utility’s (IGU or Respondent) procedures for welding and cooldown/start-up in North Pole, Alaska. As a result of the inspection, the Director, Western Region, OPS (Director), issued to Respondent, by letter dated July 18, 2022, a Notice of Amendment (Notice). In accordance with 49 CFR § 190.206, the Notice proposed finding that certain of IGU’s procedures were inadequate to assure safe operation and proposed that Respondent amend its procedures. IGU responded to the Notice by letter dated August 16, 2022 (Response). In its Response, IGU submitted additional documentation and contested the allegations in the Notice. Personnel from IGU and PHMSA met online on December 13, 2022, to discuss the issues addressed in the notice1. Respondent did not request a hearing and therefore waived its right to one. FINDING OF INADQUATE PROCEDURES Item 1: The Notice alleged that Respondent’s procedures were inadequate in regard to 49 CFR § 193.2301, which states: § 193.2301 Scope. Each LNG facility constructed after March 31, 2000 must comply with requirements of this part and of NFPA-59A-2001 (incorporated by reference see § 193.2013). In the event of a conflict between this part and NFPA 59A, this part prevails. 1 Region Recommendation, at 1.#

52022010NOA_Order Directing Amendment_08022023_(20-191036)_text.pdf, page 3The Notice alleged IGU’s welding procedures were inadequate to assure safe operation of a pipeline facility. Specifically, the Notice alleged IGU’s procedures failed to implement the requirements of NFPA 59A 6.3.4.1, as required per § 193.2301.2 NFPA 59A 6.3.4.1 states, “Qualification and performance of welders shall be in accordance with Section 328.2 of ASME B 31.3, Process Piping, and 6.3.4.2 of this standard.” The Notice alleged that at the time of the inspection, IGU’s procedures were inadequate because they failed to clearly state which welding specifications were to be utilized to complete construction welds. 3 In its Response, IGU stated that NFPA 59A 10.114 is the standard that applied to its facility. 5 IGU argued that its procedures were adequate because it relies on contractors and subcontractors, each of which have their own procedures, for construction and welding projects.6 Respondent averred that because the contractors and subcontractors have their own specific requirements for welders, IGU’s procedures cannot specify what procedures a particular company must require as they use different contractors for different projects.7 Respondent further argued at the time of the inspection, the subcontractor used for the construction projects reviewed by the inspector utilized welders trained on approved welding procedure specifications (WPS) for that company, and that the welders performing the work utilized the company’s WPS most appropriate to meet the piping specifications for the project.8 Section 193.2301 requires each operator of an LNG facility to comply with requirements of Part 193 and NFPA-59A-2001. Regarding welding, section 6.3.4.1 of NFPA 59A states that the qualification and performance of welders shall be in accordance with Section 328.2 of ASME B 31.3, in addition to other requirements. As it relates to IGU’s response, ASME B 31.3, Section 328.1 states “Each employer is responsible for the welding done by the personnel of his organization and, except as provided in paras. 328.2.2 and 328.3, shall conduct the tests required to qualify welding procedures, and to qualify and as necessary requalify welders and welding operators.” Additionally, ASME B 31.3, paragraph 328.2.2 states, in part, that, Each employer is responsible for qualifying any welding procedure that personnel of the organization will use. Subject to the specific approval of the Inspector, welding procedures qualified by others may be used, provided that the following conditions are met. (a) The Inspector shall be satisfied that: (1) the proposed welding procedure specification (WPS) has been prepared, qualified and 2 Notice, at 2. 3 Id. 4 NFPA 59A 10.11.1 states, “All piping that is part of an LNG container and the facility associated with the container for handling cryogenic liquid or flammable fluid shall be in accordance with ASME B 31.3, Process Piping.” 5 Response, at 1. 6 Response, at 1. 7 Id. 8 Id.#

52022010NOA_Order Directing Amendment_08022023_(20-191036)_text.pdf, page 4executed by a responsible, recognized organization with expertise in the field of welding; and (2) the employer has not made any change the welding procedure. In this case, IGU stated that they use contractors and subcontractors who have their own WPS for welding projects. 9 Respondent further contended in its Response that, a “welder is required to use an approved WPS prepared by their company and with their company letterhead on it.”10 IGU was allowed to utilize another organization’s procedure so long as the conditions stated in ASME B 31.3, paragraph 328.2.2 were met. However, IGU has not established that its current procedures align with ASME B 31.3 as required by NFPA 59A, paras. 6.3.1.4 and 10.11, pursuant to § 193.2301. While in its Response, IGU described the methods its subcontractors utilized to select the WPS used for the construction work referenced in the Notice11, IGU has not demonstrated through its Response that it has procedures in place to document and review a contractor and subcontractor’s procedures to verify that those procedures have been prepared, qualified, and executed by a responsible, recognized organization with expertise in the field of welding, as is required by ASME B 31.3, paragraph 328.2.2. Accordingly, based upon a review of all the evidence, I find Respondent’s procedures were inadequate to assure safe operation of the pipeline facility. Pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R. § 190.206, Respondent must amend its procedures, as necessary, to include a method to review and document contractor and subcontractor welding procedures. Respondent must submit the applicable procedures to the Director, Western Region, OPS within 30 days following receipt of this Order. The Regional Director may extend the period for compliance with this Order 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. Item 2: The Notice alleged that Respondent’s procedures were inadequate in regard to 49 CFR § 193.2503, which states: § 193.2503 Operating procedures. Each operator shall follow one or more manuals of written procedures to provide safety in normal operation and in responding to an abnormal operation that would affect safety. The procedures must include provisions for: (a) … (b) Startup and shutdown, including for initial startup, performance 9 Id. 10 Id. 11 Id.#

52022010NOA_Order Directing Amendment_08022023_(20-191036)_text.pdf, page 5testing to demonstrate that components will operate satisfactory in service. The Notice alleged that IGU’s cooldown and start-up procedures were inadequate to assure safe operation of a pipeline facility by failing to implement the requirements of § 193.2503(b). IGU opposed the allegation in the Notice and the parties met virtually on December 13, 2022.12 Per a letter dated February 3, 2023 (Letter), the Director acknowledged receipt of North Pole Gasification Plan, on August 16, 2022, and LNG Storage Tank Purging and Cooldown Procedure Manual, SOP S4-6202, on January 17, 2023.13 Upon review of the received procedures, the Director determined in the Letter that inadequacies previously found in IGU’s cooldown and start-up procedures had been corrected.14 Accordingly, based upon a review of all evidence, I find Respondent’s procedures were inadequate, as alleged in the Notice, but have subsequently been adequately amended. Therefore, no further action is necessary regarding this Item. Under 49 C.F.R. § 190.243, Respondent may submit a Petition for Reconsideration of this Final 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. The written petition must be received no later than 20 days after receipt of the 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, including corrective action, 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. August 2, 2023 ___________________________________ ______________________ Alan K. Mayberry Date Issued Associate Administrator for Pipeline Safety 12 Region Recommendation, at 1. 13 See Letter. 14 Id.#

52022010NOA_Closure Letter_09222023_(20-191036)_text.pdf, page 1Official PDFVIA ELECTRONIC MAIL TO: MR. DANIEL BRITTON - dwbritton@interiorgas.com September 22, 2023 Mr. Daniel Britton IGU General Manager Interior Gas Utility 2525 Phillips Field Road Fairbanks, AK 99709 CPF 5-2022-010-NOA Closure Letter Dear Mr. Britton: On January 12, 2021, a representative 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 Interior Gas Utility’s (IGU) procedures for Welding & Cooldown/Start-up in North Pole, Alaska. As a result of the inspection, IGU was issued a Notice of Amendment on July 18, 2022, which proposed amendments of its procedures. IGU submitted a response to PHMSA, contesting Item 1 and Item 2 of the NOA on August 16, 2022. Upon discussion with IGU and review of documentation provided to PHMSA, Item 2 of the NOA was considered adequate and accepted via region recommendation on February 3, 2023. An Order Directing Amendment was issued on August 2, 2023 directing IGU to amend its procedures with respect to Item 1 of the NOA. IGU submitted its amended procedures, for Item 1 of the NOA, on August 25, 2023. My staff reviewed the amended procedures, and it appears that the inadequacies outlined in this Notice of 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 M. Yeager (#20-191036) Elena Sudduth, Interior Gas Utility (esudduth@interiorgas.com) Brendan Kern, Engineer, Interior Gas Utility (bkern@fngas.com)#

52022010NOA_Notice of Amendment_07182022_(20-191036)_text.pdf, page 1Official PDFNOTICE OF AMENDMENT VIA E-MAIL TO MR. DANIEL BRITTON July 18, 2022 Mr. Daniel Britton IGU General Manager Interior Gas Utility 2525 Phillips Field Road Fairbanks, AK 99709 CPF 5-2022-010-NOA Dear Mr. Britton: On January 12, 2021, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code, inspected Interior Gas Utility’s (IGU) procedures for Welding & Cooldown/Start-up in North Pole, Alaska. As a result of the inspection, it appears that IGU’s written procedures are inadequate to assure safe operation of the pipeline as follows: 1. § 193.2301 Scope. Each LNG facility constructed after March 31, 2000 must comply with requirements of this part and of NFPA-59A-2001 (incorporated by reference see §193.2013). In the event of a conflict between this part and NFPA 59A, this part prevails. NFPA 59A 6.3.4 Welding 6.3.4.1 Qualification and performance of welders shall be in accordance with Section 328.2 of ASME B 31.3, Process Piping, and 6.3.4.2 of this standard.#

52022010NOA_Notice of Amendment_07182022_(20-191036)_text.pdf, page 2ASME B 31.1, paragraph 328.1 Welding and Brazing Qualification. Welding and brazing procedure specifications (WPSs and BPSs) to be followed in production welding shall be prepared and qualified… IGU’s procedures were inadequate to assure safe operation of a pipeline facility. Specifically, IGU’s written procedures failed to implement the requirements of NFPA 59A 6.3.4.1, which states that “[q]ualification and performance of welders shall be in accordance with Section 328.2 of ASME B 31.3, Process Piping, and 6.3.4.2 of this standard.” Paragraph 328.1 of ASME B 31.3 requires that, “[w]elding and brazing procedure specifications (WPSs and BPSs) to be followed in production welding shall be prepared and qualified …” IGU did not prepare welding procedure specifications to be followed in production welding. IGU’s drawings & welding procedures did not reference which welding specifications were utilized. As a result, it was impossible to determine whether correct welding specification processes were followed to complete construction welds. IGU must revise its procedures to clearly state which welding specifications must be utilized to complete construction welds. 2. § 193.2503 Operating procedures. Each operator shall follow one or more manuals of written procedures to provide safety in normal operation and in responding to an abnormal operation that would affect safety. The procedures must include provisions for: (a) . . . . (b) Startup and shutdown, including for initial startup, performance testing to demonstrate that components will operate satisfactory in service. IGU’s procedures were inadequate to assure safe operation of a pipeline facility. Specifically, IGU’s written procedures failed to implement the requirements of § 193.2503 (b), which states that procedures must include provisions for startup, including for initial startup and performance testing to demonstrate that components will operate satisfactory in service. IGU’s Cooldown & Start-up Procedure allowed for natural gas to be introduced into the distribution system to customers at unsafe concentrations for transportation/usage. Moreover, the procedure document had illegible sections with missing verbiage and data. IGU must revise its procedures to require that gas be introduced into the distribution system to customers at concentrations that are safe for transportation/usage and prevent the formation of a hazardous mixture of gas and air in accordance with § 192.629(a). Response to this Notice This Notice is provided pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R. § 190.206. Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Compliance Proceedings.#

52022010NOA_Notice of Amendment_07182022_(20-191036)_text.pdf, page 3Please 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). Following the receipt of this Notice, you have 30 days to submit written comments, revised procedures, or a request for a hearing under §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 an Order Directing Amendment. If 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. § 190.206). If you are not contesting this Notice, we propose that you submit your amended procedures to my office within 30 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 Interior Gas Utility maintain documentation of the safety improvement costs associated with fulfilling this Notice of Amendment (preparation/revision of plans, procedures) and submit the total to Dustin Hubbard, Director, Western Region, Pipeline and Hazardous Materials Safety Administration. In correspondence concerning this matter, please refer to CPF 5-2022-010-NOA and, for each document you submit, please provide a copy in electronic format whenever possible. Sincerely, Dustin Hubbard Director, Western Region Pipeline and Hazardous Materials Safety Administration Enclosure: Response Options for Pipeline Operators in Compliance Proceedings cc: PHP-60 Compliance Registry PHP-500 M. Yeager (#20-191036) Mark Rockwell, Interior Gas Utility (via email) Brendan Kern, Engineer, Interior Gas Utility (via email)#