Petersen Engineering — Pipeline Safety Interpretation

Page 1U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Avenue, SE Washington, D.C. 20590 SEP 2 7 2016 Mr. J. Douglas Lindsay Principal Engineer Petersen Engineering 8902 Vincennes Circle, Suite F Indianapoli s, IN 46268 Dear Mr. Lindsay: In a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA) dated November 23 , 2015, you requested an interpretation of 49 CFR Part 195.204. You asked how the requirements of § 195.204 apply to contractor serv ices and employees who work on an installation of a new interstate hazardous liquid pipeline or pipeline system for a pipeline operator. You ask: (1) if the term "operator personnel" refers onl y to pipeline operator" s personnel or its contractors' personnel ; (2) if the installation inspection provision onl y applies to on-site installation work or if it appli es also to off-site installatio n work: (3) if an operator is allowed to assign or contract an installati on contractor or a fabricator to prov ide perso nnel and other specialized inspection and testing reso urces. and what PHMSA ex pec ts of' the operator for install ation inspection of pipe. valves and other mate ri als and equipment that will be produced or al ready have been produced (" in-stock"); (4) if § 195.204 is limited to the immed iate pipe and pipeline systems or if it extends to other construction scope, install ati ons and inspections and testing; and (5) what prima facie evidence and records wi ll be sati sfactory to PHMSA to demonstrate compli ance w ith § 195 .204. W ith regard to yo ur first question ( I), the operato r is responsible for safe operation of its pipeline(s). Operator is defined in§ 195.2 as "a person who owns or operates pipeline fac ilities." Person is defined in thi s section as .. any indi vidua l. firm . joint ve nture. partnership, corporation, association, state, municipality. cooperative associat ion. or joint stoc k association. and inc ludes any trustee, receiver, assignee. or personal representative thereof." Therefore. the term ·'operator personnel ' . refers to both the operator·s and its contractor· s employees. Furthermore, any work done on behalf of the operator must comply with app li cable federal pipeline safety regu lations. With regard to your second question (2). pipeline or pipeline .) ystem is defined in § 195.2 to mean '·a.JI parts of a pipeline faci li ty through which a hazardous liquid or carbon dioxide moves in transportation. including, but not limi ted to. line pipe. valves. and other appurtenances connected to line pipe, pumping units. fabricated assemblies associated with pumping units. metering and de li very stati ons and fabricated assemblies therein, and breakout tanks.·· Whether The Pipeline and Hazardous Materi als Safety A dmini stration. Oflice or Pipeline Safety provides written clarilications of the Regulations (49 CFR Parts 1 90-1 99) in the form of interpretation letters. These letters rellect the agency's current appli cation of the regu lations to the spcci lie facts presented by the person requesting the clarification. Interpretations do not create k gall y-enlOrccable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 22 the construction is onsite or offsite, § 195.204 is a construction requirement and, therefore, all offsite work on shop-fabricated assemblies and breakout tanks must be compliant with applicable federal pipeline safety regulations before installed into the pipeline system. Also, all pipeline and pipeline components must be visually inspected before they are installed in the pipeline system(§ 195.206). With regard to your third question (3), please refer to our responses to your first and second questions. That is, whether the construction is onsite or offsite, it is still the operator's responsibility to comply with the federal pipeline safety regulations. The operator may use contract personnel or its personnel for these inspections as long as those personnel are not inspecting their own work. With regard to your fourth question ( 4), the § 195.204 requirements are to ensure the installation of pipe or pipeline systems in accordance with the requirements of Subpart D - Construction. As we previously mentioned, the term pipeline or pipeline system is defined in § 195 .2 as all parts of a pipeline facility through which a hazardous liquid or carbon dioxide moves in transportation. The term pipeline facility is also defined in§ 195.2 as "new and existing pipe, rights-of-way, and any equipment, facility, or building used in the transportation of hazardous liquids or carbon dioxide." Therefore, this section' s requirements include all construction, installations, inspections, and testing that may affect all parts of a pipeline facility. With regard to your last question (5), an operator must maintain the records necessary to demonstrate compliance with the applicable regulations including required inspections or training and qualifications. If we can be of further assistance, please contact Tewabe Asebe at 202-366-5523. Sincerely, Director, Standards and Rulemaking Division The Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR Parts 1 90-1 99) in the form of interpretation letters. These letters refl ect the agency's current application of the regul ations to the specific facts presented by the person requesting the clarification. Interpretations do not create legall y-enfo rceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 3-P-T RS_N." ENGINEERING November 23, 2015 Mr. John A. Gale Director, Office of Standards and Rulemaking Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Avenue, SW (East Building) Washington, DC 20590 RE: Request for Interpretation §195.204 -Inspection -General Dear Mr. Gale: Guidance is appreciated on how the construction inspection regulation, as provided by §195.204, may be involved for an installation of a new interstate, hazardous liquid pipeline or pipeline system for a new operator or an existing operator that employs contract services, general contractors or fabricators to supply inspection. Operator Personnel As written, the regulation only governs "operator personnel" regarding training, qualifications, inspections and tasks. Does the term "operator personnel" refer only to personnel under the control or employment by the operator and not to personnel that may be employed or under hire by construction contractors or fabricators? Installation Inspection The regulation addresses only installation inspection. 1. Does the installation inspection provision only apply to on-site installation or does it apply also to off-site installation work for shop-fabricated assemblies (e.g., metering and delivery stations) and breakout tanks (e.g, API12F for shop assembled tanks)? 2. What is expected of the operator for installation inspection of pipe, valves and other materials and equipment that will be produced or already has been produced ("in-stock")? Contractual Inspection Limitations Is an operator allowed to assign or contract an installation contractor or a fabricator to provide personnel and other specialized inspection and testing resources including specialized, "third-party" inspection (e.g., NDE), pressure testing, and Ill and caliper tool !'I I • ~ I I : I • .. ,.#

Page 4-P=T RS-N " ENGINEERING Request for Interpretation November 23, 2015 Page 2 services that are not directly involved with the installation? Operators may not have sufficient direct employees and resources to conduct or manage all phases of construction inspection and must contract that work directly or through a general or installing contractor or fabricator or such inspections can be more efficiently managed logistically by a contractor or fabricator. Extent This section is located under Subpart D of Part 195. Sections 195.200 and 202 specify the respective scope and compliance with specifications and standards for this Subpart. Is §195.204 limited to the immediate pipe and pipeline systems or does it extend to other construction scope, installations and inspections and testing to include pipeline facility electrical and control systems and wiring, foundations, computational pipeline systems, cathodic protection, SCADA and control room systems, and ancillary equipment, and painting as may be governed by other subparts? Prima Facie Evidence What prima facie evidence and records will be satisfactory to PHMSA to demonstrate compliance with §195.204? I do agree that appropriate inspections are an important means to ensure the safety, integrity and productive operations of pipelines. An expeditious, but thorough, response is greatly appreciated. lfthere any questions,- please feel free to contact me at your earliest convenience. I may be contacted at dlindsay@pei-engineering.com or (317} 217-1701, ext. 115 to facilitate discussions.#