Bureau Veritas North America, Inc. — Pipeline Safety Interpretation

Page 1U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Avenue, SE Washington, D.C. 20590 JUL 18 2016 Mr. Nate Chandler Mechanical Engineer Bureau Veritas North America, Inc. Industry, Power and Utilities Group 180 Promenade Circle, Suite 150 Sacramento, CA 95834 Dear Mr. Chandler: In a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA) dated January 11, 2016, you requested an interpretation of 49 CFR Part 192. You asked what the value ·for the longitudinal joint factor (E) in 49 CFR 192.113 should be in determining the yield strength (S) for steel pipe in 49 CFR 192.107. You stated that Part 192 Subpart C - Pipe Design requires that the yield strength to be used in the design formula in 49 CFRl 92.105 is 24,000 psi if a pipe's specification or tensile properties are unknown. Also, you stated the longitudinal joint factor (E) should be employed in the yield strength calculation because the quality of the material properties, and the quality of joint are two separate and distinct items required to be accounted for the calculation. You stated that your understanding of§§ 192.107 and 192.113 is that for unknown pipe material with unknown seam, the specified minimum yield strength value used in the denominator of the percent specified minimum yield strength calculation should be 14,400 psi (24,000 x 0.6) using the E value of 0.6. Therefore, you asked if your understanding of the yield strength determination is correct. In addition, PHMSA asked you to provide us with an example of the numerator and denominator values for yield strength calculations. You responded to our follow up questions on April 4, 2016, as follows: 1. You assumed SMYS to be 30,000 psi (no tensile data available) because the operator thinks this is what it should be based on inconclusive records, from 30's, 40's, 50's or 60's or 70's, and has "no tensile," data for these vintages to support 30ksi. 2. You stated that the operator is unsure about wall thickness or seam joint of this vintage pipe based on lack of records. 3. You asked if the calculation for percentage SMYS is equal to= 30,000/(30,000*0.6) x 100 using the 30,000 psi and E factor of 0.6 in the denominator, or equal to= 30,000/(24,000*0.6) x 100 using 24,000 psi and E factor of 0.6 in the denominator, or equal to= 30,000/24,000 x 100 using 24,000 psi in the denominator and without E factor? The Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations ( 49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 22 Our responses to your April 4, 2016, email are as follows: 1) It is incorrect to assume 30,000 psi for a pipeline without proper records and your calculations would increase the percentage SMYS than decrease it. Per§ 192.107(b)(2), a yield strength of 24,000 psi should be used for a steel pipeline with unknown yield strength. 2) When a pipe's wall thickness is unknown, the wall thickness is determined by the method used in § 192.109. If a pipe's longitudinal seam type is not known, it is determined using the information in§ 192.113. 3) Your values chosen for yield strength and related calculations are incorrect. Under § 192.105, an accurate yield strength is required to determine the design pressure of a pipeline. Your calculations are therefore incorrect, as you use an estimated, and inaccurate, SMYS within these calculations. If you chose to use the§§ 192.107 and 192.113 requirements instead of tensile testing, for unknown pipe material, you must use 24,000 psi yield strength to determine the design pressure in§ 192.105. Pipe mechanical properties of diameter, wall thickness, pipe grade (strength) and longitudinal seam type are then used in the design pressure formula of§ 192.105, along with any derating based upon operational temperatures and derating factors in§ 192.115. Ifwe can be of further assistance, please contact Tewabe Asebe at 202-366-5523. Sincerely, Director, Office of Standards and Rulemaking The Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety provides written clarifications of the Regulations (49 CFR Parts 190-199) in the form of interpretation letters. These letters reflect the agency's current application of the regulations to the specific facts presented by the person requesting the clarification. Interpretations do not create legally-enforceable rights or obligations and are provided to help the public understand how to comply with the regulations.#

Page 3January 11, 2016 49 CF FR 192 Requ uest for Inte erpretation Subpar rts C & L %S SMYS Calcu lations for U Unknown P Pipe Materia al & Unknow wn Seam Mr. John Ga ale, Director r Standards a and Rulema aking Pipeline and d Hazardou s Materials U.S. Depart tment of Tra n ansportation 1200 New J ersey Aven ue S.E. Washington n, DC 20590 0-0001 Email: John n.Gale@dot.g gov Safety Adm ministration ( (PHP-30) Re: Prior r Emails on 12/17/2015, attached PD DF file Dear Mr. Ga ale: At the reque est of one of f your staff m members, I h have capture ed the essen nce of my ea arlier e-mail r requests for interpreta ation, in this s abbreviated d letter. But t first, a little about BV, in n the event y you have no ot heard of us before no ow. Founded in 1828, Burea u Veritas has s developed a worldwide e network to h help busines sses, agencie es and organization ns assess, att tain and dem monstrate com mpliance with h standards and regulatio ons in the fie elds of Quality, Hea alth & Safety, , Environmen ntal and Soci ial Accountab bility (QHSE- -SA). The co ompany’s foc cus is on protecting its s clients’ bran nds, assets a and business s. Our service es have set t the standard d for compreh hensive, client focuse ed solutions t to environme ental liabilities s, structural i integrity, emp ployee health h and safety concerns as well as re egulatory com mpliance issu ues. Bureau V Veritas has s served the q uality assura ance, testing and expediting n eeds of the p power gener ration and dis stribution ind ustry worldw wide. Working g in concert w with agencies, ve endors, owne ers and prog ram manage ers, we have developed a and tailored o our procedur res to meet the stringent t needs of ou ur clients. During one o of our review ws related to a an NGL (natu ural gas line) ) and regulat tions 49 CFR R 192 specific cally, we have discove ered a point of concern a and request a a formal inter rpretation of t the applicab le sections o of the code. Our clarificat tion is specif fically addres ssed to the re ecommended d calculation s for %SMYS S. This is us sually some calculated h oop stress a t a particular r pressure (n umerator) div vided by SM MYS (demonin nator) in term ms resoled in terms of p percent. The specific con ncern is what t value to use e for the deno ominator of t the %SMYS calculation as it applies to “unknown n pipe materi al with unkno own seam ty ype.” S Subpart C-P ipe Design, i is very clear that 24,000 psi and a joi nt factor, E, are to be em mployed in th e absence o of tensile dat ta (49 CFR 1 192.107 & 11 13). It is clea ar that the co ode, in this se ection, consi ders the qua ality of the m material prop perties and th he quality of joint to be tw wo separate and distinct items that ar re required to o be a accounted fo or. However , when calcu ulating %SMY YS values fo or pre-1970 u unknown exis sting pipe ma aterial with u unknown join nt factor for s strength testi ng, the code e is not clear specific to th he demomin ator. C Conservative e engineering g judgement t, and implica ations of Sub bpart C, wou ld indicate th hat for unkno own pipe m material with unknown se eam, the SM MYS value, us sed in the de enominator o of the %SMY YS calculation n would be B u r e a u u V e r i t as N N o r t h A m e r i i c a , I nc . Main: (916) 725-4 4200 180 Prome enade Circle, Suite 1 150 Sacramento o, CA 95834 Fax: (916) 725-8 8242 www.us.bureauver ritas.com#

Page 42 24,000 psi x 0.6 = 14,400 0 psi. Typica ally, the joint factor, E, is ignored in th he denomina ator. As such h, 14,400 p psi would be used in the denominato r of the %SM MYS calculat tion for unkno own pipe ma aterial having g an u unknown sea am weld. Th he percent di fference in % %SMYS calc culations, bet tween 24,000 0 psi or 14,4 400 psi, k keeping all o other valuable es constant, would be 66 6.7%. Such a a difference could put the e pipe line ov ver a 30% o of SMYS thre eshold for str rength testin g 1 hour ver rsus 8 hours, , in isolated i nstances, de epending on the MAOP t the operator is attempting g to qualify th he line to. I In summary, Subpart-C r regulations in ndicates that t "unknown" p pipe has two o unknown fa actors, mater rial quality a and seam we eld quality. In n the absenc ce of tensile d data or quali ty control rec cords, from t the factory, w which, if a available, sh ould include the seam w eld of the "un nknown," pip pe in questio on, the most c conservative e of both f factors shoul ld be employ yed (e.g; 24,0 000 psi and E=0.6). In co ontrast, new pipe is tensi le tested acr ross the s seam weld a and therefore e, SMYS for n new pipe wo ould include t the seam we eld joint quali ty and the jo oint factor, E E, would not be required or would be E=1. Howev ver, it is the p presumption that this is n not the case f for, "unknow n," pipe prod duced decad es earlier, an nd SMYS' = SMYS x 0.6 6 = 24,000 x 0.6 =14.400 psi would b be the conse ervative engin neering appr roach to take e since the m maximum %S SMYS is at th he minimum d denominator r and maximu um numerato or. [ [Note: It is un nderstood tha at the operat tor, can dete ermine the m inimum and maximum st trength test p parameters. Therefore, fi inal MAOP w will be determ mined by test t. It is also kn nown that thi is may be a g gap in t the CFR cod de, and there efore, an indu ustry wide co oncern. How wever, it is no oted here as a code inter pretation c concern only y.] B Based on wh here the NGL L industry ha as come from m and the dire ection the DO OT and NGL L operators w wish to go, i t would be h elpful to hav ve an interpre etation in this s matter. S Sincerely, N Nate Chandl er, PE M Mechanical E Engineer I Industry, Pow wer & Utilities s Group B Bureau Verit as North Am merica, Inc. w www.us.Bure eauVeritas.c com w www.Bureau uVeritas.com m cc c: Tewabe Asebe, DO OT B u r e a u u V e r i t as N N o r t h 180 Prome enade Circle, Suite 1 150 Sacramento o, CA 95834 A m e r i i c a , I nc . Main: (916) 725-4 4200 Fax: (916) 725-8 8242 www.us.bureauver ritas.com#

Page 5Request for Formal Interpretation -Revision Nate Chandler to: infocntr 12/17/2015 11:44 AM From: Nate Chandler/USA/VERITAS To: infocntr@dot.gov Revised to change P (stress) to S (stress). To Whom it May Concern: After calling the PHMSA Information line, I was directed to address my request, for interpretation, to this email. needed. If by mistake I have reached the incorrect email, please reply and help me redirect my request as This email may be forward, as required, among PHMSA personnel only, at this time. I would request it remain confidential between PHMSA and BV, and not be posted on the PHMSA interpretation website until receipt of the interpretation, followed by a review and approval of the text to be shared with the public, be obtained. I hope this request is acceptable. Corporate intellectual property and contract confidentiality requirements should be honored. During an engineering review of documentation, authorized by one of our clients, our engineer raised a point of concern. Since then engineers on the technical staff have been in debate about this point. We are now looking for a formal interpretation of the engineer's findings. It has to do with the correct way to calculate %SMYS for "unknown," pre-1970 pipe, or just unknown pipe. Considering that the engineer's presumptions have a significant effect on %SMYS results which can change from below 30% to above above 40%, it's important for the operator to have a clear classification based on accurate %SMYS calculations for their Integrity Management Program (IMP). Without further wording, to confuse the issue, let me copy and place the findings of the engineer below: Quoted Findings: "Per 49 CFR 192.107 and 49 CFR 192.113 clearly state that both a SMYS value of 24,000 "and" a longitudinal joint factor of E=0.6 (E=JF for this discussion) should be used for "unknown" or "pre-1970," pipe in calculating Design Pressures and %SMYS. SMYS and Joint Factor, E, represent two independent factors. One for unknown material quality and the other for unknown seam joint quality, as the old pipe was produced from the factory and lays in the ground today.. Therefore, a conservative engineering approach to the %SMYS calculation would factor both into the denominator of the %SMYS calculation as %SMYS = [S/(24,000 x 0.6)] x 100 = [S/14,400] x 100, versus %SMYS = [S/24,000] x100. In summary, the code indicates that "unknown" pipe has two unknown factors, material quality and seam weld quality. In the absence of tensile data or quality control records, from the factory, which, if available, should include the seam weld of the "unknown," pipe in question, the most conservative of both factors should be employed (e.g; 24,000 psi and E=0.6). In contrast, new pipe is tensile tested across the seam weld and therefore, SMYS for new pipe would include the seam weld joint quality and the joint factor, E, would not be required or would be E=1. However, it is the engineers presumption that this is not the case for, "unknown," pipe and SMYS' = SMYS x 0.6 = 24,000 x 0.6 =14.400 psi. Note: It is understood that the operator, can determine the minimum and maximum strength test parameters. Therefore, final MAOP will be determined by test. It is also known that this may be an gap in the CFR code, and therefore, industry wide, however, it is noted here as a code interpretation concern only. "#

Page 6.......End of Quoted Findings Although the regulations are clear with respect to new pipe and pressure calculations for such pipe, it is not explicit as to the precise form of calculating %SMYS for "unknown," pipe. The engineer's concern is specifically related to "unknown," pipe "as specified by the operator," per CFR guidelines. The concern is that material and seam welding flaws produced from the factory in the 30's, 40's and 50's may not be reliable, especially for operator proclaimed "unknown," or non-tensile tested pipe. The "intent," and "spirit," of the code appear to be that operators, and engineers, should take the most conservative approach for questionable conditions not precisely or explicitly covered in the code. Operators, do not always take such an approach since they are driven to optimize and maximize existing infrastructure, thereby minimizing costs. As all good, conservative engineers do, when in doubt, they take the most conservative approach. As such, it is expected the operator will question the finding, since they historically have not employed the Joint Factor, E, in their denominator for %SMYS calculations relative to "unknown," pipe. We are hoping to get an interpretation from PHMSA as supporting basis to our finding, or to remove the concern depending on the PHMSA interpretation received. Typically, the operator only uses the SMYS value of the unknown pipe for %SMYS calculations that ultimately, get placed into the IMP systems with respect to "unknown," pipe. In most cases 24,000 psi is used and no joint factor is applied, or E=1 is employed, even for "unknown," seam welded pipe. Thank you for your time and effort in this matter. I hope I have made our question and request clear for PHMSA to render a technical review and interpretation. Please call or email for further clarification., as needed. An estimated time frame to render an interpretation would be helpful if it can be provided. Thank you, Nate Chandler , P.E. Mechanical Engineer - Industry / Power & Utilities Bureau Veritas North America, Inc. 180 Promenade Circle, Suite 150 Sacramento, CA 95834 P: 916.617.2028 F: 916.617.2068 D: 916.514.4519 Nate.Chandler@us.bureauveritas.com www.us.bureauveritas.com/energyusa Management Systems Global Certifications: ISO 9001:2008 – Quality ● ISO 14001:2004 – Environmental ● OHSAS 18001:2007 – Health & Safety NOTICE: This message contains confidential information. To know more, please click on the following link: http://disclaimer.bureauveritas.com  Please consider the environment before printing this e-mail Chandler_Nate.vcf Chandler_Nate.vcf ----- Forwarded by Nate Chandler/USA/VERITAS on 12/17/2015 11:42 AM ----- From: Nate Chandler/USA/VERITAS To: infocntr@dot.gov Date: 12/16/2015 01:57 PM Subject: Request for Formal Interpretation#

Page 7Revised for spelling, punctuation and grammar 1:55pm, 12/16/2015. To Whom it May Concern: After calling the PHMSA Information line, I was directed to address my request, for interpretation, to this email. needed. If by mistake I have reached the incorrect email, please reply and help me redirect my request as This email may be forward, as required, among PHMSA personnel only, at this time. I would request it remain confidential between PHMSA and BV, and not be posted on the PHMSA interpretation website until receipt of the interpretation, followed by a review and approval of the text to be shared with the public, be obtained. I hope this request is acceptable. Corporate intellectual property and contract confidentiality requirements should be honored. During an engineering review of documentation, authorized by one of our clients, our engineer raised a point of concern. Since then engineers on the technical staff have been in debate about this point. We are now looking for a formal interpretation of the engineer's findings. It has to do with the correct way to calculate %SMYS for "unknown," pre-1970 pipe, or just unknown pipe. Considering that the engineer's presumptions have a significant effect on %SMYS results which can change from below 30% to above above 40%, it's important for the operator to have a clear classification based on accurate %SMYS calculations for their Integrity Management Program (IMP). Without further wording, to confuse the issue, let me copy and place the findings of the engineer below: Quoted Findings: "Per 49 CFR 192.107 and 49 CFR 192.113 clearly state that both a SMYS value of 24,000 "and" a longitudinal joint factor of E=0.6 (E=JF for this discussion) should be used for "unknown" or "pre-1970," pipe in calculating Design Pressures and %SMYS. SMYS and Joint Factor, E, represent two independent factors. One for unknown material quality and the other for unknown seam joint quality, as the old pipe was produced from the factory and lays in the ground today.. Therefore, a conservative engineering approach to the %SMYS calculation would factor both into the denominator of the %SMYS calculation as %SMYS = [P/(24,000 x 0.6)] x 100 = [P/14,400] x 100, versus %SMYS = [P/24,000] x100. In summary, the code indicates that "unknown" pipe has two unknown factors, material quality and seam weld quality. In the absence of tensile data or quality control records, from the factory, which, if available, should include the seam weld of the "unknown," pipe in question, the most conservative of both factors should be employed (e.g; 24,000 psi and E=0.6). In contrast, new pipe is tensile tested across the seam weld and therefore, SMYS for new pipe would include the seam weld joint quality and the joint factor, E, would not be required or would be E=1. However, it is the engineers presumption that this is not the case for, "unknown," pipe and SMYS' = SMYS x 0.6 = 24,000 x 0.6 =14.400 psi. Note: It is understood that the operator, can determine the minimum and maximum strength test parameters. Therefore, final MAOP will be determined by test. It is also known that this may be an gap in the CFR code, and therefore, industry wide, however, it is noted here as a code interpretation concern only. " .......End of Quoted Findings Although the regulations are clear with respect to new pipe and pressure calculations for such pipe, it is not explicit as to the precise form of calculating %SMYS for "unknown," pipe. The engineer's concern is specifically related to "unknown," pipe "as specified by the operator," per CFR guidelines. The concern is that material and seam welding flaws produced from the factory in the 30's, 40's and 50's may not be reliable, especially for operator proclaimed "unknown," or non-tensile tested pipe. The "intent," and#

Page 8"spirit," of the code appear to be that operators, and engineers, should take the most conservative approach for questionable conditions not precisely or explicitly covered in the code. Operators, do not always take such an approach since they are driven to optimize and maximize existing infrastructure, thereby minimizing costs. As all good, conservative engineers do, when in doubt, they take the most conservative approach. As such, it is expected the operator will question the finding, since they historically have not employed the Joint Factor, E, in their denominator for %SMYS calculations relative to "unknown," pipe. We are hoping to get an interpretation from PHMSA as supporting basis to our finding, or to remove the concern depending on the PHMSA interpretation received. Typically, the operator only uses the SMYS value of the unknown pipe for %SMYS calculations that ultimately, get placed into the IMP systems with respect to "unknown," pipe. In most cases 24,000 psi is used and no joint factor is applied, or E=1 is employed, even for "unknown," seam welded pipe. Thank you for your time and effort in this matter. I hope I have made our question and request clear for PHMSA to render a technical review and interpretation. Please call or email for further clarification., as needed. An estimated time frame to render an interpretation would be helpful if it can be provided. Thank you, Nate Chandler , P.E. Mechanical Engineer - Industry / Power & Utilities Bureau Veritas North America, Inc. 180 Promenade Circle, Suite 150 Sacramento, CA 95834 P: 916.617.2028 F: 916.617.2068 D: 916.514.4519 Nate.Chandler@us.bureauveritas.com www.us.bureauveritas.com/energyusa Management Systems Global Certifications: ISO 9001:2008 – Quality ● ISO 14001:2004 – Environmental ● OHSAS 18001:2007 – Health & Safety NOTICE: This message contains confidential information. To know more, please click on the following link: http://disclaimer.bureauveritas.com  Please consider the environment before printing this e-mail#