# 2009 AR NG Program Evaluation - ar2009ngprogramevaluation (Arkansas; Natural Gas State Program Evaluation)

- **operation:** document
- **citation:** PHMSA ar2009ngprogramevaluation
- **title:** 2009 AR NG Program Evaluation - ar2009ngprogramevaluation (Arkansas; Natural Gas State Program Evaluation)
- **source type:** inspection
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2009-01-01
- **effective on:** Not available
- **summary:** 2009 PHMSA natural gas program evaluation for Arkansas.
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1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2009 Natural Gas State Program Evaluation for ARKANSAS PUBLIC SERVICE COMMISSION Document Legend PART: O -- Representative Date and Title Information A -- General Program Qualifications B -- Inspections and Compliance - Procedures/Records/Performance C -- Interstate Agent States D -- Incident Investigations E -- Damage Prevention Initiatives F -- Field Inspection G -- PHMSA Initiatives - Strategic Plan H -- Miscellaneous I -- Program Initiatives DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 1

2009 Natural Gas State Program Evaluation -- CY 2009 Natural Gas State Agency: Arkansas Rating: Agency Status: Date of Visit: 09/13/2010 - 09/17/2010 Agency Representative: PHMSA Representative: Patrick, Gaume Commission Chairman to whom follow up letter is to be sent: Name/Title: Paul Suskie, Chairman Agency: Arkansas Public Service Commission Address: 1000 Center St City/State/Zip: Little Rock, Arkansas 72203-0400 60105(a): Yes 60106(a): No Interstate Agent: No Robert Henry, Sr Inspector & Robert Booth, Manager, Gas & Water Utilities Section INSTRUCTIONS: Complete this evaluation in accordance with the Procedures for Evaluating State Pipeline Safety Program. The evaluation should generally reflect state program performance during CY 2009 (not the status of performance at the time of the evaluation). All items for which criteria have not been established should be answered based on the PHMSA representative's judgment. A deficiency in any one part of a multiple part question should be scored as needs improvement. Determine the answer to the question then select the appropriate point value. If a state receives less then the maximum points, include a brief explanation in the space provided for general comments/regional observations. If a question is not applicable to a state, select NA. Please ensure all responses are COMPLETE and ACCURATE, and OBJECTIVELY reflect state program performance. Increasing emphasis is being placed on performance. This evaluation together with selected factors reported in the state's annual certification/agreement attachments provide the basis for determining the state's pipeline safety grant allocation. Field Inspection (PART F): The field inspection form used will allow different areas of emphasis to be considered for each question. Question 13 is provided for scoring field observation areas. In completing PART F, the PHMSA representative should include a written summary which thoroughly documents the inspection. Scoring Summary PARTS Possible Points Points Scored A General Program Qualifications 26 25 B Inspections and Compliance - Procedures/Records/Performance 24.5 24.5 C Interstate Agent States 0 0 D Incident Investigations 6.5 6.5 E Damage Prevention Initiatives 9 9 F Field Inspection 10 10 G PHMSA Initiatives - Strategic Plan 9 9 H Miscellaneous 3 3 I Program Initiatives 9 9 TOTALS 97 96 State Rating................................................................................................................................................... 99.0 DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 2

PART A - General Program Qualifications Points(MAX) Score 1 Did the state submit complete and accurate information on the attachments to its most current 60105(a) Certification/60106 (a) Agreement? (NOTE: PHMSA Representative to verify certification/agreement attachments by reviewing appropriate state documentation. Score a deficiency in any one area as "needs improvement". Attachment numbers appear in parenthesis) Previous Question A.1, Items a-h worth 1 point each Yes = 8 No = 0 Needs Minor Improvement = 3-7 Needs Major Improvement = 2 a. State Jurisdiction and agent status over gas facilities (1) b. Total state inspection activity (2) c. Gas facilities subject to state safety jurisdiction (3) d. Gas pipeline incidents (4) e. State compliance actions (5) f. State record maintenance and reporting (6) g. State employees directly involved in the gas pipeline safety program (7) h. State compliance with Federal requirements (8) 8 7 SLR Notes: A.1 IMPROVEMENT NEEDED 7 points. A---- Need to CHANGE- change Transmission Interstate from 'F' to 'B', & change Transmission Interstate LNG from 'F' to 'A' AR PSC has both 192 & 193; there is one LNG facility, Arkansas Western Gas, Blytheville Plant. b----all operators are seen on a two year rotation, not to exceed 3 calendar years. c----are listed on attachment 3 of the Natural Gas certification document. D----1 significant incident was not reported on Attachment 4; #20090052, NRC 899711, Arkansas Western Gas Co, 3/11/2009. 2 of the 3 significant Incidents in 2009 were reported. 2009 was an abnormal year as there was only 1 incident in '05 and 0 in '06, '07, & '08. e----59 in '05, 66 in '06, 99 in '07, 153 in '08, & 113 in 2009. All were processed per AR commission rules. f----keeping paper, spreadsheet, & d-base files. (good redundancy). g----It was noted that some of the classes that Inspectors have completed were not reported on this attachment. In August 2010, each inspector reviewed and compared his records of classes with Attachment 7 and with TQ records of his classes. The records that are used to generate Attachment 7 are fully current and complete. While some classes were omitted from Attachment 7, all classes reported have been verified as completed. All inspector TSI training & inspectors have their core training except for the new hire. h----in full compliance. 2 Did the state have an adequate mechanism to receive operator reporting of incidents to ensure state compliance with 60105(a) Certification/60106(a) Agreement requirements (fatality, injury requiring hospitalization, property damage exceeding $50,000 - Mechanism should include receiving "after hours" reports)? (Chapter 6) Previous Question A.2 Yes = 1 No = 0 1 1 SLR Notes: A.2 Yes, APSC requires the Operators to report to both the State and the Fed for federally reportable incidents. In addition the APSC has a $5000 reporting requirement, & requires a report for any injury that requires a Doctor's visit 3 Has the state held a pipeline safety TQ seminar(s) in the last 3 years? (NOTE: Indicate date of last seminar or if state requested seminar, but T&Q could not provide, indicate date of state request for seminar. Seminars must be held at least once every 3 calendar years.) (Chapter 8.5) Previous Question A.4 Yes = 2 No = 0 SLR Notes: A.3 Yes, APSC hosted a TSI Seminar on June 20-21, 2007 and on 8/10-11/2010. The nest one will likely occur in 2013 2 2 4 Were pipeline safety program files well-organized and accessible?(NOTE: This also includes electronic files) (Chapter 5) Previous Question A.5 Yes = 1 No = 0 SLR Notes: A.4 Yes, the files are in file cabinets in three PSC offices 1 1 5 Did state records and discussions with the state pipeline safety program manager indicate adequate knowledge of PHMSA program and regulations? (Chapter 4.1, Chapter 8.1) Previous Question A.6 Yes = 2 No = 0 Needs Improvement = 1 2 2 SLR Notes: A.5 Yes, Clint has a professional knowledge of the 49 CFR 190-194 regulations. 49 CFR 195 Hazardous Liquid Regulation is not handled by APSC. APSC considered but did not request authorization for Hazardous Liquid Regulation in the 2008 or 2010 Legislatures. APSC continues to consider the submission of a request for Hazardous Liquid Regulation as they have been encouraged to by PHMSA 6 Did the state respond in writing within 60 days to the requested items in the Chairman's letter following the Region's last program evaluation? (No response is necessary if no items are requested in letter and mark "Yes") (Chapter 8.1) Previous Question A.8 1 1 DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 3

Yes = 1 No = 0 SLR Notes: A.6 Yes, The Chairman letter was sent within 50 days of receipt. It addressed efforts for effective civil penalties for Damage Prevention, improving the data base for tracking inspections, consideration for inspecting Hazardous Liquid lines, improved consistency between inspection reports and violation letters, using risked base analysis for choosing inspections, using data to evaluate one-call effectiveness, efforts to keep the NPMS current , and updates to the D&A questionnaire. 7 What actions, if necessary, did the State initiate as a result of issues raised in the Chairperson's letter from the 1 1 previous year? Did actions correct or address deficiencies from previous year's evaluation? (No response is necessary if no items are requested in letter and mark "Yes") (Chapter 8.1) Previous Question A.8/A.9 Yes = 1 No = 0 SLR Notes: A.7 Yes, The Chairman letter was sent within 50 days of receipt. It addressed efforts for effective civil penalties for Damage Prevention, improving the data base for tracking inspections, consideration for inspecting Hazardous Liquid lines, improved consistency between inspection reports and violation letters, using risked base analysis for choosing inspections, using data to evaluate one-call effectiveness, efforts to keep the NPMS current , and updates to the D&A questionnaire. Specifically APSC has been working with Bob McArthur, CEO of AR One Call, to compare the 9 elements with the current AR Damage Prevention Law. Many elements are being addressed, but enforcement has not been effectively addressed Personnel and Qualifications 8 Has each inspector fulfilled the 3 year TQ training requirement? If No, has the state been granted a waiver regarding TQ courses by the Associate Administrator for Pipeline Safety? (NOTE: If the State has new inspectors who have not attended all TQ courses, but are in a program which will achieve the completion of all applicable courses within 3 years of taking first course (5 years to sucessfully complete), or if a waiver has been granted by the applicable Region Director for the state, please answer yes.) (Chapter 4.4) Previous Question A.10 Yes = 3 No = 0 SLR Notes: A.8 Yes, the inspectors are trained or their training is underway and is on track to meet the 'within three years' time requirement 3 3 9 Brief Description of Non-TQ training Activities: Info Only = No Points Info Only Info Only For State Personnel: State personnel- annual H2S awareness training 8 hours. One inspector maintains the 8 hour hazwoper re- certification. All staff had an 8-hr first aid course, some are CPR certified. For Operators: Operators- In '09 APSC personnel attended and supported Nat'l and Regional NAPSR, participated on the NAPSR EFV committee, hosted a Master Meter training seminar in Little Rock, also individual on-site training of Operators. For Non-Operator Entities/Parties, Information Dissemination, Public Meetings: Non-Operator- there were no activities in 2009. Emphasis continues to be on training the new employees. SLR Notes: A.9 State personnel- annual H2S awareness training 8 hours. One inspector maintains the 8 hour hazwoper re-certification. All staff had an 8-hr first aid course, some are CPR certified. Operators- In '09 APSC personnel attended and supported Nat'l and Regional NAPSR, participated on the NAPSR EFV committee, hosted a Master Meter training seminar in Little Rock, also individual on-site training of Operators. Non-Operator- there were no activities in 2009. Emphasis continues to be on training the new employees. 10 Did the lead inspectors complete all required T&Q OQ courses and Computer Based Training (CBT) before conducting OQ Inspections? (Chapter 4.4.1) Previous Question A.12 Yes = 1 No = 0 1 1 SLR Notes: A.10 Bobby Henry was trained in Dec 2003 & Steve O'Connor was trained in Oct 2003. 4 inspectors have been trained in Course 299 (PL3OQ). All OQ inspections are done by those 3 inspectors 11 Did the lead inspectors complete all required TQ Integrity Management (IMP) Courses/Seminars and CBT before conducting IMP Inspections? (Chapter 4.4.1) Previous Question A.13 Yes = 1 No = 0 SLR Notes: A.11 Greg Loarie trained Jun 2005, & Bobby Henry trained Jun 2005 are the IMP Leads. 3 Inspectors have taken T&Q Course 297 1 1 12 DUNS: 096796201 2009 Natural Gas State Program Evaluation Was the ratio acceptable of Total inspection Person-days to Total Person-days charged to the program by state inspectors? (Region Director may modify points for just cause) (Chapter 4.3) Previous Question B.12 5 5 Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 4

Yes = 5 No = 0 A. Total Inspection Person Days (Attachment 2): 645.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 6.25 = 1375.00 Ratio: A / B 645.00 / 1375.00 = 0.47 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 SLR Notes: A.12- a- '09 total inspection days 659. b- person days '09 is 6.25*220=1375 days. c-score=A/B '09 score=659/1375=.479. .479 is greater than .38. Okay 13 Have there been modifications or proposed changes to inspector-staffing levels? (If yes, describe) Previous Info Only Info Only Question B.13 Info Only = No Points SLR Notes: A.13. ? Yes, authorized staffing levels for 2009 increased by 1 inspector in November 2009. It is now 1 supervisor, 7 inspectors, & 1 clerical. In July, 2010 Clint Stephens resigned to become a Fed. Bobby Henry is serving as 50% inspector/50% administrative duties until a new Chief is selected. Staffing for 2006, '07, & '08 were unchanged at 1 supervisor, 6 inspectors, & 1 clerical. Had resignations in August, 2008 (Ben Beaver) and July, 2010 (Clint Stephens); had new hires in April (Jason Donham) and October, 2008 (Mike Gray), and in October (Phillip Brown), 2009. Training for new hires is on pace 14 Part-A General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: A.14 The program to replace cast iron & bare pipe continues. At this point only one operator has any significant amount of cast iron pipe. The Operator is working a 27 year plan that started in 2001 and will continue through 2027. a summary of the last few years follows: Year cast iron (miles) bare steel (miles) cost (million$) 2006 29.46 41.12 12.0 2007 31.6 55.24 17.5 2008 23.12 23.33 14.3 2009 14.0 37.4 11.3 Bare pipe with other operators has not shown to be an integrity problem. 2009 NAPSR participation included; Mr Bobby Henry being named to the NAPSR Excess Flow Valve Committee, and Clint Stephens serving on the Public Awareness Committee. Clint was also on the inactive Gathering Line NAPSR Committee. The Arkansas PSO intends to nominate additional NAPSR staff members as NAPSR committee postions become available. The Pipeline Safety Office (PSO), participates in the Arkansas Department of Emergency Management's (ADEM) comprehensive Emergency Operations Plan with emphasis on gas leak response due to natural disaster or manmade events. Natural Disaster threats are mostly tornados or ice storms with consideration for the New Madrid fault and floods. All necessary pipeline code revisions were submitted on December 10, 2008 to the 2008 Legislature and they were approved. APSC has been working with Bob McArthur, CEO of AR One Call, to compare the 9 elements with the current AR Damage Prevention Law. During 2009, APSC spent 14 man days in this effort. Many elements are being addressed, but enforcement has not been effectively addressed. A review of the 9 elements relative to Arkansas Laws and the AR One Call program shows that 8 of the elements are being met or nearly met. The exception is element 7, Enforcement. One-Call enforcements; citations, fines, letters, civil penalties; they are not happening Total points scored for this section: 25 Total possible points for this section: 26 DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 5

PART B - Inspections and Compliance - Procedures/Records/ Performance Points(MAX) Score Inspection Procedures 1 Does the State have a written inspection plan to complete the following? (all types of operators including LNG) 6.5 6.5 (Chapter 5.1) Previous Question B.1 + Chapter 5 Changes + Incorporate LNG Yes = 6.5 No = 0 Needs Improvement = 50% Deduction a Standard Inspections (Including LNG) (Max points = 2) b IMP Inspections (Including DIMP) (Max points = .5) c OQ Inspections (Max points = .5) d Damage Prevention (Max points = .5) e On-Site Operator Training (Max points = .5) f Construction Inspections (Max points = .5) g Incident/Accident Investigations (Max points = 1) h Compliance Follow-up (Max points = 1) Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement SLR Notes: B.1. a, b, c, d, e, f, g, & h, Yes, have procedures in the Arkansas Pipeline Safety Operation and Inspection Plan. Damage Prevention is part of the Std Inspections 2 Did the written Procedures for selecting operators adequately address key concerns? (Chapter 5.1) Previous 2 2 Question B.2, items a-d are worth .5 point each Yes = 2 No = 0 Needs Improvement = 50% Deduction a Length of time since last inspection Yes No Needs Improvement b History of Operator/unit and/or location (including leakage , incident and compliance history) Yes No Needs Improvement c Type of activity being undertaken by operator (construction etc) Yes No Needs Improvement d For large operators, rotation of locations inspected Yes No Needs Improvement SLR Notes: B.2 All selecting criteria are named and used, but the dominate criteria is length of time since the last inspection. The other criteria are used more for determining special and follow-up inspections Inspection Performance 3 Did the state inspect all types of operators and inspection units in accordance with time intervals established in its written procedures? (Chapter 5.1) Previous Question B.3 Yes = 2 No = 0 2 2 SLR Notes: B.3 Improvement Needed ?If improvement needed is not available then will choose Yes. YES for Standard Inspections. All Units are within a 3 year inspection cycle. Could not determine inspection frequency for OQ & IM inspections of Operators, however, as OQ & IM were performed in 2005, then 2009 is within the 5 yr re-inspection interval. Information Technology attempts to generate an Operator list that showed OQ & IM inspection frequencies was not successful during this Evaluation visit. This is an area of concern for next year's evaluation 4 Did the state inspection form cover all applicable code requirements addressed on the Federal Inspection forms? (Chapter 5.1 (3)) Previous Question B.4 Yes = 1 No = 0 1 1 SLR Notes: B.4- Arkansas uses the federal forms that have been modified in places to meet more stringent Arkansas regulations 5 Did state complete all applicable portions of inspection forms? (Chapter 5.1 (3)) Previous Question B.5 1 1 Yes = 1 No = 0 SLR Notes: B.5- Yes. A spot check of OQ and Standard inspections showed the reports to be complete, with U, NA, and NC items explained, and the inspection was consistent with the NOPV letter 6 Did the state initiate appropriate follow-up actions to Safety Related Condition Reports? (Chapter 6.3) Previous Question B.6 DUNS: 096796201 2009 Natural Gas State Program Evaluation .5 NA Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 6

Yes = .5 No = 0 SLR Notes: B.6- NA no SRCR in 2009 7 Did the state review operator procedures for determining if exposed cast iron pipe was examined for evidence of graphitization and if necessary remedial action was taken? (NTSB) Previous Question B.7 Yes = .5 No = 0 .5 .5 SLR Notes: B.7- Yes. In early '07 it was discovered that this question was not well addressed on the current Federal inspection form. APSC modified the Federal Form to include this subject. APSC is emphasizing cast iron pipe replacement, & reviews every leak repair form to check that proper procedures were followed every time. Luckily, graphitization is a very minor cause of leaks in cast iron pipes in Arkansas, (brittle fracture is the major cause) 8 Did the state review operator procedures for surveillance of cast iron pipelines, including appropriate action resulting from tracking circumferential cracking failures, study of leakage history, or other unusual operating maintenance condition? (Note: See GPTC Appendix G-18 for guidance) (NTSB) Previous Question B.8 Yes = .5 No = 0 .5 .5 SLR Notes: B.8- Yes. In early '07 it was discovered that this question was not well addressed on the current inspection form. APSC modified the Federal Form to include this subject. AR does inspect to Appendix G-192-18. AR policy includes a financial incentive to replace cast iron pipe & bare steel pipe 9 Did the state review operator emergency response procedures for leaks caused by excavation damage near buildings and determine whether the procedures adequately address the possibility of multiple leaks and underground migration of gas into nearby buildings Refer to 4/12/01 letter from PHMSA in response to NTSB recommendation P-00-20 and P-00-21? (NTSB) Previous Question B.9 Yes = .5 No = 0 .5 .5 SLR Notes: B.9- Yes. In early '07 it was discovered that this question was not well addressed on the current inspection form. APSC modified the Federal Form to include this subject. AR emphasizes review of operator responses to emergencies or leaks at or near buildings 10 Did the state review operator records of previous accidents and failures including reported third party damage and leak response to ensure appropriate operator response as required by 192.617? (NTSB) Previous Question 1 1 B.10 Yes = 1 No = 0 SLR Notes: B.10 ? Yes. AR has more stringent requirements for reporting accidents. All reportable accidents are reviewed to ensure proper response Compliance - 60105(a) States 11 Did the state adequately document sufficient information on probable violations? (Chapter 5.2) Previous 1 1 Question B.14 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: B.11 Yes. all violations are documented and processed through the Commission rules. All information is kept in the same file; the inspection, the evidence, the violation letter, the response, the final finding? 12 Does the state have written procedures to identify the steps to be taken from the discovery to the resolution of a 1 1 probable violation as specified in the "Guidelines for State Participating in the Pipeline Safety Program"? (Chapter 5.1) Previous Question D(1).1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: B.12 Yes, & the Commission has its own rules for processing any probable violations noted in it's inspection program. Effective August, 2010, a peer review of NOPV reports has been initiated until a new Pipeline Chief has been found 13 Does the state have written procedures to notify an operator when a noncompliance is identified as specified in the "Guidelines for States Participating in the Pipeline Safety Program"? (Chapter 5.1(4)) Previous Question D 1 1 (1).2 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: inspection) B.13 Yes. The Commission sends notices to the operators that have probable violations, NOA, recommendations, or no violations found (notice of DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 7

14 Does the state have a written procedure for routinely reviewing the progress of compliance actions to prevent delays or breakdowns of the enforcement process, as required by the "Guidelines for States Participating in the Pipeline Safety Program"? (Chapter 5.1(5)) Previous Question D(1).3 Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: Inspector) B.14 Yes. The tracking system is 'the suspense file', Dbase tracking, & also a spreadsheet maintained by the Chief. (as of 8/2010 Acting Lead & Sr 15 Has the State issued compliance actions for all probable violations discovered? (Note : PHMSA representative has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation) Previous Question D(1).4 Yes = 1 No = 0 SLR Notes: B.15 Yes, 113 in 2009. Violations are found regularly during inspections and notices are sent out 1 1 16 Did the state follow its written procedures for reviewing compliance actions and follow-up to determine that prompt corrective actions were taken by operators, within the time frames established by the procedures and compliance correspondence, as required by the "Guidelines for States Participating in the Pipeline Safety Program"? Previous Question D(1).5 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: B.16 Yes, AR follows its written program. Notices are followed until compliance is achieved 1 1 17 If compliance could not be established by other means, did state pipeline safety program staff request formal action, such as a "Show Cause Hearing" to correct pipeline safety violations? (check each states enforcement procedures) Previous Question D(1).6 No = 0 Yes = 1 1 1 SLR Notes: B.17 Yes. It is an available process, but is rarely needed (Show Cause Hearing). Most Operators are cooperative. Even fines are seldom necessary 18 Did the state adequately document the resolution of probable violations? (Chapter 5.1 (6)) Previous Question D(1).7 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: B.18 Yes. Final resolutions are documented and placed in the appropriate file 1 1 19 Were compliance actions sent to a company officer? (manager or board member if municipal/government system) (Chapter 5.1(4)) Previous Question D(1).8 Yes = .5 No = 0 SLR Notes: B.19 Yes, APSC sends notices to owners or Corporate officers .5 .5 20 Did the compliance proceedings give reasonable due process to all parties? (check each states enforcement procedures) Previous Question D(1).9 Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: show cause hearings B.20 Yes. It is a formalized process that is followed and explained to the Operator in the notice letter. Per the Plan, it includes notices, response times, & Compliance - 60106(a) States 21 Did the state use the current federal inspection form(s)? Previous Question D(2).1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: B.21 ? B.26 NA. Arkansas is a 60105(a) program 1 NA 22 Are results adequately documented demonstrating inspection units were reviewed in accordance with state inspection plan? Previous Question D(2).2 Yes = 1 No = 0 Needs Improvement = .5 DUNS: 096796201 2009 Natural Gas State Program Evaluation 1 NA Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 8

SLR Notes: B.21 ? B.26 NA. Arkansas is a 60105(a) program 23 Were any probable violations identified by state referred to PHMSA for compliance? (NOTE: PHMSA representative has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation.) Previous Question D(2).3 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: B.21 ? B.26 NA. Arkansas is a 60105(a) program 24 Did the state immediately report to PHMSA conditions which may pose an imminent safety hazard to the public or to the environment? Previous Question D(2).4 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: B.21 ? B.26 NA. Arkansas is a 60105(a) program 25 Did the state give written notice to PHMSA within 60 days of all probable violations found? Previous Question D(2).5 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: B.21 ? B.26 NA. Arkansas is a 60105(a) program 26 Did the state initially submit adequate documentation to support compliance action by PHMSA on probable violations? Previous Question D(2).6 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: B.21 ? B.26 NA. Arkansas is a 60105(a) program 27 Part B: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: B.27 The Arkansas Pipeline Safety Office (PSO) continues to be well run. The new Inspection Database has now been in operation for close to two years, it has proven to be an improvement over the previous system and further improvement is promised. The PSO was allowed to increase staff by 1 inspector in October, 2009. The PSO is dedicating manpower to OQ, IMP, Damage Prevention, Public awareness, Gathering Line Regulations, Construction Inspections, & other special projects in addition to its primary focus on Standard Inspections. The Expansion of the program to include Hazardous Liquid was re-visited Total points scored for this section: 24.5 Total possible points for this section: 24.5 DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 9

PART C - Interstate Agent States Points(MAX) Score 1 Did the state use the current federal inspection form(s)? Previous Question D(3).1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent 1 NA 2 Are results documented demonstrating inspection units were reviewed in accordance with "PHMSA directed inspection plan"? Previous Question D(3).2 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent 1 NA 3 Did the state submit documentation of the inspections within 60 days as stated in its latest Interstate Agent Agreement form? Previous Question D(3).3 Yes = 1 No = 0 SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent 1 NA 4 Were any probable violations identified by state referred to PHMSA for compliance? (NOTE: PHMSA representative has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation.) Previous Question D(3).4 Yes = 1 No = 0 1 NA SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent 5 Did the state immediately report to PHMSA conditions which may pose an imminent safety hazard to the public or to the environment? Previous Question D(3).5 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent 6 Did the state give written notice to PHMSA within 60 days of all probable violations found? Previous Question D(3).6 Yes = 1 No = 0 SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent 1 NA 7 Did the state initially submit documentation to support compliance action by PHMSA on probable violations? Previous Question D(3).7 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent 1 NA 8 Part C: General Comments/Regional Observations Info Only = No Points SLR Notes: C.1 ? C.8. NA. Not an Interstate Agent Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 10

PART D - Incident Investigations Points(MAX) Score 1 Are state personnel following the procedures for Federal/State cooperation in case of an incident? (See Appendix in "Guidelines for States Participating in the Pipeline Safety Program") (Chapter 6.1) Previous Question E.1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: D.1 Yes, 'Appendix E ? Federal/State Cooperation in Case of an Incident/Accident' is being followed 1 1 2 Are state personnel familiar with the jurisdictional authority and Memorandum of Understanding between NTSB and PHMSA? (See Appendix in "Guidelines for States Participating in the Pipeline Safety Program") (Chapter 6 ? Appendix D) Previous Question E.2 Yes = .5 No = 0 SLR Notes: D.2 Yes, the State has a good understanding of the MOU between NTSB and DOT (PHMSA) .5 .5 3 Did the state keep adequate records of incident notifications received? Previous Question E.3 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: D.3 YES, All incidents are investigated and a report is made. (one incident in '05, none since) 1 1 4 If an onsite investigation of an incident was not made, did the state obtain sufficient information by other means to determine the facts and support the decision not to go on-site? Previous Question E.4 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: D.4 Yes, telephonic contact, but it is the practice of PSC to visit every federally reportable incident 1 1 5 Were investigations thorough and conclusions and recommendations documented in an acceptable manner? Previous Question E.5, comprehensive question worth 2 points total Yes = 2 No = 0 Needs Improvement = 1 a. Observations and Document Review 2 2 b. Contributing Factors c. Recommendations to prevent recurrences where appropriate SLR Notes: Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement D.5 Yes, Fed Form F7100.1 is required of all Federal or State reportable incidents. In the event that a site visit is made, the PHMSA Form 11 is used. In '09, there were 3 Fed reportable incidents reported. Two of the federally reportable incidents were visited on-site & the other was handled telephonically. 6 Did the state initiate enforcement action for violations found during any incident investigation(s)? Previous Question E.6 Variation Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: D.6 Yes, there were 3 Fed reportable incidents and there were probable violations found on 2 of those incidents 1 1 7 Did the state assist region office by taking appropriate follow-up actions related to the operator incident reports to ensure accuracy and final report has been received by PHMSA? (validate annual report data from operators concerning incidents/accidents and investigate discrepancies) (Chapter 6) Previous Question E.7/E.8 Yes = .5 No = 0 SLR Notes: D.7 NA, there were no Federal follow up actions in '09. All historical intrastate incidents have been closed .5 NA 8 Part D: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: D.8 Yes, NRC reports are received, telephonic reports are filed, and site visits are made for federally reportable incidents. Form F7100.1 reports will be reviewed & checked to ensure a final report has been submitted. How a significant Federally reportable incident missed being reported on the 2010 Natural Gas Certification will be investigatedDUNS: 096796201 Arkansas 2009 Natural Gas State Program Evaluation ARKANSAS PUBLIC SERVICE COMMISSION, Page: 11

Total points scored for this section: 6.5 Total possible points for this section: 6.5 DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 12

PART E - Damage Prevention Initiatives Points(MAX) Score 1 Has the state reviewed directional drilling/boring procedures of each pipeline operator or its contractor to determine if they include actions to protect their facilities from the dangers posed by drilling and other trench less technologies? Previous Question B.11 Yes = 2 No = 0 Needs Improvement = 1 2 2 SLR Notes: E.1 In early '07 it was discovered that this question was not well addressed on the current Federal Standard Inspection form. APSC modified the Federal Form to include this subject. APSC reviews operator's directional drilling procedures during their inspections, and requires 'pot-holing' to insure the bored pipe is located correctly 2 Did the state inspector check to assure the pipeline operator is following its written procedures pertaining to notification of excavation, marking, positive response and the availability and use of the one call system? New 2008 Yes = 2 No = 0 2 2 SLR Notes: E.2 Yes, it is in the Std Insp Form, under Damage Prevention 3 Did the state encourage and promote the adoption of the Common Ground Alliance Best Practices document to 2 2 its regulated companies as a means of reducing damages to all underground facilities? Previous Question A.7 Yes = 2 No = 0 Needs Improvement = 1 SLR Notes: E.3 Yes, APSC has a One-Call link on its web site. It is addressed in the every 3rd year TSI Seminars. It is reviewed during every Standard Inspection. In '09 APSC helped to establish an Arkansas CGA Regional Partnership. Specifically APSC has been working with Bob McArthur, CEO of AR One Call, to compare the 9 elements with the current AR Damage Prevention Law. Many elements are being addressed, but enforcement has not been effectively addressed. One-call membership is mandatory of all underground utilities including Gas Operators. AR Law 14-271 requires One-Call notifications with exceptions per 14-271-109 (hand tools, some routine road work, farming, graves, pre-engineered projects, & some emergency responses), and allows for Civil penalties per 14-271-104. In '06-participated in a legislative initiative to require mandatory one-call membership for any company with underground facilities. Senate Bill 82. In '05-participated with an RP 1162 compliance seminar. PSC regulates the One-call center 4 Has the agency or another organization within the state collected data and evaluated trends on the number of pipeline damages per 1,000 locate requests? New 2008 Yes = 1 No = 0 1 1 SLR Notes: E.4 ARKUPS, the pipe locating service of AR One-Call tracks the number of locates per damage. It was 1/2832 in 2009 and 1/3012 in 2010 year to date 5 Did the state review operators' records of accidents and failures due to excavation damage to ensure causes of failure are addressed to minimize the possibility of recurrence as required by 192.617? Yes = 2 No = 0 SLR Notes: E.5 Yes, for federally reportable and State reportable incidents 2 2 6 Part E: General Comments/Regional Observations Info Only = No Points SLR Notes: Info Only Info Only E.6 APSC continues to work on achieving the 9 elements of the 2006 PIPES ACT. The AR CGA was created in 2009 Total points scored for this section: 9 Total possible points for this section: 9 DUNS: 096796201 2009 Natural Gas State Program Evaluation Arkansas ARKANSAS PUBLIC SERVICE COMMISSION, Page: 13

PART F - Field Inspection Points(MAX) Score 1 Operator, Inspector, Location, Date and PHMSA Representative Info Only = No Points Name of Operator Inspected: Center Point Energy Arkansas Gas Co, opid 603 Name of State Inspector(s) Observed: Risa Parker Location of Inspection: Oppello, Perry, and Perryville, AR Date of Inspection: September 15, 2010 Name of PHMSA Representative: Patrick Gaume SLR Notes: F.1 Center Point Energy Arkansas Gas Co, opid 603 Risa Parker Oppello, Perry, and Perryville, AR September 15, 2010 Patrick Gaume Info Only Info Only 2 Was the operator or operator's representative notified and/or given the opportunity to be present during inspection? New 2008 Yes = 1 No = 0 SLR Notes: F.2 Yes, the Operator was notified in advance and they had up to 4 personnel participating in the inspection 1 1 3 Did the inspector use an acceptable inspection form/checklist and was the form/checklist used as a guide for the inspection? (New regulations shall be incorporated) Previous Question F.2 Yes = 2 No = 0 SLR Notes: F.3 Yes, Form 2, Standard Inspection Report of Gas Distribution Operator, Rev 03/28/10 2 2 4 Did the inspector thoroughly document results of the inspection? Previous Question F.3 Yes = 2 No = 0 2 NA SLR Notes: F.4 NA, A full day field inspection was observed, the field notes were through, but filling out the Form was not the targeted objective on the day I observed. I have full confidence the Form will be filled out based on the field notes 5 Did the inspector check to see if the operator had necessary equipment during inspection to conduct tasks viewed? (Maps, pyrometer, soap spray, CGI, etc.) New 2008 Yes = 1 No = 0 1 1 SLR Notes: F.5 Yes, multi-meter, CGI unit, Operator CP list, half cell, hand tools, paint, brushes, mastic coating, replacement meters, signs, stickers, etc 6 What type of inspection(s) did the state inspector conduct during the field portion of the state evaluation? (i.e. Standard, Construction, IMP, etc) New 2008 Info Only = No Points Info Only Info Only SLR Notes: F.6 Standard Inspection of a Distribution Unit, specifically a field in
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