PHMSA arog2014ngprogramevaluation - 2014 AR NG Program Evaluation - arog2014ngprogramevaluation (Arkansas; Natural Gas State Program Evaluation) | Regulus

AR NG Program Evaluation, 2014, page 1Official PDF1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2014 Gas State Program Evaluation for ARKANSAS OIL AND GAS COMMISSION Document Legend PART: O -- Representative Date and Title Information A -- Progress Report and Program Documentation Review B -- Program Inspection Procedures C -- Program Performance D -- Compliance Activities E -- Incident Investigations F -- Damage Prevention G -- Field Inspections H -- Interstate Agent State (If Applicable) I -- 60106 Agreement State (If Applicable) DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 1#

AR NG Program Evaluation, 2014, page 22014 Gas State Program Evaluation -- CY 2014 Gas State Agency: Arkansas Rating: Agency Status: Date of Visit: 09/15/2015 - 09/17/2015 Agency Representative: Gary Looney, Assistant Director Michael Gray, Program Manager/Inspector PHMSA Representative: Don Martin Commission Chairman to whom follow up letter is to be sent: Name/Title: Chad White, Chairman Agency: Arkansas Oil and Gas Commission Address: 301 Natural Resources Dr City/State/Zip: Little Rock, Arkansas 72205-1575 60105(a): Yes 60106(a): No Interstate Agent: No 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 2014 (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 progress report attachments provide the basis for determining the state's pipeline safety grant allocation. Field Inspection (PART G): 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 G, the PHMSA representative should include a written summary which thoroughly documents the inspection. Scoring Summary PARTS Possible Points Points Scored A Progress Report and Program Documentation Review 10 10 B Program Inspection Procedures 11 11 C Program Performance 33 33 D Compliance Activities 15 14 E Incident Investigations 4 4 F Damage Prevention 8 8 G Field Inspections 11 11 H Interstate Agent State (If Applicable) 0 0 I 60106 Agreement State (If Applicable) 0 0 TOTALS 92 91 State Rating................................................................................................................................................... 98.9 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 2#

AR NG Program Evaluation, 2014, page 3PART A - Progress Report and Program Documentation Review Points(MAX) Score 1 Accuracy of Jurisdictional Authority and Operator/Inspection Units Data - Progress Report Attachment 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: All operator and units information was verified with office records. No issues. 1 1 2 Review of Inspection Days for accuracy - Progress Report Attachment 2 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Inspection days were verified as correct. No issue. 1 1 3 Accuracy verification of Operators and Operators Inspection Units in State - Progress Report Attachment 3 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Information was verified by office records. Units in Attachment 1 matched units in Attachment 3. 1 1 4 Were all federally reportable incident reports listed and information correct? - Progress 1 1 Report Attachment 4 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: There were no reportable incidents listed on Attachment 4. There were no reportable incidents found in the Pipeline Data Mart. No issues. 5 Accuracy verification of Compliance Activities - Progress Report Attachment 5 1 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Probable violations counts matched records. Compliance actions were supported by a review of inspection files. 6 Were pipeline program files well-organized and accessible? - Progress Report Attachment 6 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues with file organization. 2 2 7 Was employee listing and completed training accurate and complete? - Progress Report Attachment 7 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes, employee listing was correct and training information was entered from TnQ Saba database. 1 1 8 Verification of Part 192,193,198,199 Rules and Amendments - Progress Report Attachment 8 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No issues found. 1 1 9 List of Planned Performance - Did state describe accomplishments on Progress Report in detail - Progress Report Attachment 10 1 1 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 3#

AR NG Program Evaluation, 2014, page 4Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Progress Report Attachment 10 was satisfactory. 10 General Comments: Info Only = No Points Evaluator Notes: The AOGC generally complied with the requirements of Part A of this evaluation. Info Only Info Only Total points scored for this section: 10 Total possible points for this section: 10 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 4#

AR NG Program Evaluation, 2014, page 5PART B - Program Inspection Procedures Points(MAX) Score 1 Standard Inspection procedures should give guidance to state inspectors that insure 2 2 consistency in all inspections conducted by the state? The following elements should be addressed at a minimum - pre-inspection activities, inspection activities, post-inspection activities. Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: AOGC Pipeline Inspection Manual, Section III. states standard inspections of all inspection units will be completed once every three years. 2 IMP and DIMP Inspection procedures should give guidance to state inspectors that insure 1 NA consistency in all inspections conducted by the state? The following elements should be addressed at a minimum - pre-inspection activities, inspection activities, post-inspection activities. Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC recently received notice of transmission facilities by operators. The AOGC has completed the required training and will include these procedures prior to conducting the IMP inspections. 3 OQ Inspection procedures should give guidance to state inspectors that insure 1 NA consistency in all inspections conducted by the state? The following elements should be addressed at a minimum - pre-inspection activities, inspection activities, post-inspection activities. Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC recently received notice of transmission facilities by operators. The AOGC has completed the required training and will include these procedures prior to conducting the OQ inspections. 4 Damage Prevention Inspection procedures should give guidance to state inspectors that 1 1 insure consistency in all inspections conducted by the state? The following elements should be addressed at a minimum - pre-inspection activities, inspection activities, post- inspection activities. Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Damage Prevention requirements for operators are inspected during Standard Inspections. Standard Inspections are completed once every three years. 5 Any operator training conducted should be outlined and appropriately documented as needed. Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Operator training is performed on an informal basis and is provided during Standard Inspections. 1 1 6 Construction Inspection procedures should give guidance to state inspectors that insure 1 1 consistency in all inspections conducted by the state? The following elements should be addressed at a minimum - pre-inspection activities, inspection activities, post-inspection activities. Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC has notification requirements of operators for construction activities including pipeline repair work. The AOGC schedules inspections as notifications are received. 7 Does inspection plan address inspection priorities of each operator, and if necessary each unit, based on the following elements? Yes = 6 No = 0 Needs Improvement = 1-5 DUNS: NA 2014 Gas State Program Evaluation 6 6 Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 5#

AR NG Program Evaluation, 2014, page 6a. Length of time since last inspection (Within five year interval) Yes No Needs Improvement b. Operating history of operator/unit and/or location (includes leakage, incident and compliance activities) Yes No Needs Improvement c. Type of activity being undertaken by operators (i.e. construction) Yes No Needs Improvement d. Locations of operators inspection units being inspected - (HCA's, Geographic areas, Population Density, etc) Yes No Needs Improvement e. Process to identify high-risk inspection units that includes all threats - (Excavation Damage, Corrosion, Natural Forces, Outside Forces, Material and Welds, Equipment, Yes No Needs Improvement Operators and any Other Factors) f. Are inspection units broken down appropriately? Yes No Needs Improvement Evaluator Notes: Items a. through d. are considered in the AOGC's frequency of inspections. The AOGC has developed a spreadsheet which estimates the relative risk of all operators. At this time the results of this assessment has not identified any inspection untis that should be inspected differently from the AOGC's present schedule of once each three years. Each operator receives an inspection of at least one of its units each year. Units appear to be broken down appropriately. 8 General Comments: Info Only = No Points Evaluator Notes: Info Only Info Only The AOGC has generally complied with the requirements of Part B of this evaluation. The AOGC does need to incorporate procedures for its inspectors in conducting pre-inspection activity, inspection activity and post inspection activity. These became requirements in the 2015 Guidelines. Total points scored for this section: 11 Total possible points for this section: 11 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 6#

AR NG Program Evaluation, 2014, page 7PART C - Program Performance Points(MAX) Score 1 Was ratio of Total Inspection person-days to total person days acceptable? (Director of State Programs may modify with just cause) Chapter 4.3 Yes = 5 No = 0 A. Total Inspection Person Days (Attachment 2): 33.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 0.40 = 88.00 Ratio: A / B 33.00 / 88.00 = 0.38 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 0 Evaluator Notes: The AOGC met the ratio of Inspection Person Days to Total Person Days during calendar year 2014. 5 5 2 Has each inspector and program manager fulfilled the T Q Training Requirements? (See 5 5 Guidelines Appendix C for requirements) Chapter 4.4 Yes = 5 No = 0 Needs Improvement = 1-4 a. Completion of Required OQ Training before conducting inspection as lead? Yes No Needs Improvement b. Completion of Required DIMP*/IMP Training before conducting inspection as lead? *Effective Evaluation CY2013 Yes No Needs Improvement c. Root Cause Training by at least one inspector/program manager Yes No Needs Improvement d. Note any outside training completed Yes No Needs Improvement e. Verify inspector has obtained minimum qualifications to lead any applicable standard inspection as the lead inspector. Yes No Needs Improvement Evaluator Notes: Training requirements have been met by inspector and program manager. 3 Did state records and discussions with state pipeline safety program manager indicate adequate knowledge of PHMSA program and regulations? Chapter 4.1,8.1 Yes = 2 No = 0 Needs Improvement = 1 2 2 Evaluator Notes: No issues were identified with the program manager's knowledge of regulations or PHMSA's pipeline safety program. 4 Did state respond to Chairman's letter on previous evaluation within 60 days and correct or address any noted deficiencies? (If necessary) Chapter 8.1 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: There were no deficiencies noted in the Chairman's letter and a response was not required. 2 NA 5 Did State hold PHMSA TQ Seminar in Past 3 Years? Chapter 8.5 Yes = 2 No = 0 2 2 Evaluator Notes: The timeframes were met. The AOGC partners with the Arkansas Public Service Commission in conducting these seminars. 6 Did state inspect all types of operators and inspection units in accordance with time intervals established in written procedures? Chapter 5.1 Yes = 5 No = 0 Needs Improvement = 1-4 Evaluator Notes: The AOGC has met its frequency of once each three years. DUNS: NA 2014 Gas State Program Evaluation 5 5 Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 7#

AR NG Program Evaluation, 2014, page 87 Did inspection form(s) cover all applicable code requirements addressed on Federal Inspection form(s)? Did State complete all applicable portions of inspection forms? Chapter 5.1 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: 2 2 The AOGC utilizes PHMSA's forms for its inspections of gathering and transmission operators under its oversight. 8 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) Chapter 5.1 Yes = 1 No = 0 Evaluator Notes: No cast iron pipe exists in operator facilities under the oversight of the AOGC. 1 NA 9 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) Chapter 5.1 Yes = 1 No = 0 Evaluator Notes: No cast iron pipe exists in operator facilities under the oversight of the AOGC. 1 NA 10 Did the state review operator emergency response procedures for leaks caused by 1 1 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) Chapter 5.1 Yes = 1 No = 0 Evaluator Notes: The AOGC has added this inspection element on the Addendum page attached to PHMSA's form. No leaks have occurred on operators' systems. 11 Did the state review operator records of previous accidents and failures including 1 1 reported third party damage and leak response to ensure appropriate operator response as required by 192.617? Chapter 5.1 Yes = 1 No = 0 Evaluator Notes: The AOGC has added this inspection element on the Addendum page attached to PHMSA's form. It is reviewed during Standard Inspections. 12 Has the state reviewed Operator Annual reports, along with Incident/Accident reports, for accuracy and analyzed data for trends and operator issues? Yes = 2 No = 0 Needs Improvement = 1 2 2 Evaluator Notes: The annual reports are reviewed for completeness and possible errors. The AOGC's program is very small. The data is somewhat limited to evaluate. 13 Did state input all applicable OQ, IMP inspection results into federal database in a timely 2 NA manner? This includes replies to Operator notifications into IMDB database. Chapter 5.1 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: It is only recent that the AOGC has facilities which fall under OQ and IMP requirements. The AOGC has completed the required training for OQ and IMP but has not completed inspections as of the date of this evaluation. DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 8#

AR NG Program Evaluation, 2014, page 914 Has state confirmed intrastate transmission operators have submitted information into NPMS database along with changes made after original submission? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes, this item is covered while utilizing PHMSA's Standard Inspection Form for Transmission. 1 1 15 Is the state verifying operators are conducting drug and alcohol tests as required by 2 2 regulations? This should include verifying positive tests are responded to in accordance with program. 49 CFR 199 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. The AOGC added this question to their Standard Inspection addendum page. The AOGC reviews testing rates and verifies operators follow their plan is positive results occur. 16 Is state verifying operators OQ programs are up to date? This should include verification 2 NA of any plan updates and that persons performing covered tasks (including contractors) are properly qualified and requalified at intervals determined in the operators plan. 49 CFR 192 Part N Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: It is only recent that the AOGC has facilities which fall under OQ and IMP requirements. The AOGC has completed the required training for OQ and IMP but has not completed inspections as of the date of this evaluation. These inspections are scheduled to be completed in the near future. 17 Is state verifying operator's gas transmission integrity management programs (IMP) are 2 NA up to date? This should include a previous review of IMP plan, along with monitoring progress on operator tests and remedial actions. In addition, the review should take in to account program review and updates of operators plan(s). 49 CFR 192 Subpart 0 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: It is only recent that the AOGC has facilities which fall under OQ and IMP requirements. The AOGC has completed the required training for OQ and IMP but has not completed inspections as of the date of this evaluation. IMP inspections are to be completed in the near term. 18 Is state verifying operator's gas distribution integrity management Programs (DIMP)? 2 NA This should include a review of DIMP plans, along with monitoring progress. In addition, the review should take in to account program review and updates of operators plan(s). 49 CFR 192 Subpart P DIMP ? First round of program inspections should be complete by December 2014 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: The AOGC does not have any Distribution operators under its oversight. The Arkansas Public Service Commission has responsibility for Distribution operators. 19 Is state verifying operators Public Awareness programs are up to date and being followed. State should also verify operators have evaluated Public Awareness programs for effectiveness as described in RP1162. 49 CFR 192.616 (I13-16) PAPEI Effectiveness Inspections should have been completed by December 2013 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. These were noted as complete in the CY2013 Program Evaluation. 2 2 20 Does the state have a mechanism for communicating with stakeholders - other than state pipeline safety seminar? (This should include making enforcement cases available to public). Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: DUNS: NA 2014 Gas State Program Evaluation 1 1 Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 9#

AR NG Program Evaluation, 2014, page 10The AOGC maintains a web site that provides opportunity to view information when posted. 21 Did state execute appropriate follow-up actions to Safety Related Condition (SRC) 1 NA Reports? Chapter 6.3 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No safety related condition reports were filed by operators during CY2014. The Pipeline Data Mart was reviewed to confirm none were reported. 22 Did the State ask Operators to identify any plastic pipe and components that has shown a 1 1 record of defects/leaks and what those operators are doing to mitigate the safety concerns? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: For operators which have plastic pipe in their system (very small amount) the AOGC covers this issue during its Standard Inspection. No issues have been identified to date. Operators are required to report any repair activities to the AOGC. The AOGC has immediate information if there is a repair on any plastic pipe. 23 Did the state participate in/respond to surveys or information requests from NAPSR or PHMSA? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No instances were discovered whereby the AOGC did not respond. 1 1 24 If the State has issued any waivers/special permits for any operator, has the state verified conditions of those waivers/special permits are being met? This should include having the operator amend procedures where appropriate.(New Question for CY2013, no points until CY2015 evaluation conducted in CY2016) Info Only = No Points Evaluator Notes: The AOGC has not granted any waivers. 0 0 25 Did the state attend the National NAPSR Board of Directors Meeting in CY being evaluated? (New Question for CY2014, no points first year) Info Only = No Points Evaluator Notes: Yes. Gary Looney attended the meeting in Illinois in CY2014. 0 0 26 Discussion on State Program Performance Metrics found on Stakeholder Communication 0 0 site. (question will be rolled up and included as part of Question C12 on future evaluations) http://primis.phmsa.dot.gov/comm/states.htm Info Only = No Points Evaluator Notes: No issues with metrics at this time. The program is very small. There is not a reasonable amount of information at this time to examine any trends. 27 General Comments: Info Only = No Points Evaluator Notes: The AOGC has generally complied with the requirements of Part C of this evaluation. Info Only Info Only Total points scored for this section: 33 Total possible points for this section: 33 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 10#

AR NG Program Evaluation, 2014, page 11PART D - Compliance Activities Points(MAX) Score 1 Does the state have written procedures to identify steps to be taken from the discovery to 4 4 resolution of a probable violation? Chapter 5.1 Yes = 4 No = 0 Needs Improvement = 1-3 a. Procedures to notify an operator (company officer) when a noncompliance is identified Yes No Needs Improvement b. Procedures to routinely review progress of compliance actions to prevent delays or breakdowns Yes No Needs Improvement Evaluator Notes: Yes, these requirements are addressed in the AOGC's procedures. 2 Did the state follow compliance procedures (from discovery to resolution) and adequately 4 3 document all probable violations, including what resolution or further course of action is needed to gain compliance? Chapter 5.1 Yes = 4 No = 0 Needs Improvement = 1-3 a. Were compliance actions sent to company officer or manager/board member if municipal/government system? Yes No Needs Improvement b. Were probable violations documented? Yes No Needs Improvement c. Were probable violations resolved? Yes No Needs Improvement d. Was the progress of probable violations routinely reviewed? Yes No Needs Improvement Evaluator Notes: Upon a review of all inspection reports completed during 2014, all probable violations were documented, operators responded and non-compliance was resolved. The AOGC followed up on probable violations appropriately. On a least two occasions the written notification was not addressed to a corporate officer as required by PHMSA and as stated in the AOGC's procedures. Since needing improvement on this requirement, one point was deducted for not sending compliance actions to a company officer. 3 Did the state issue compliance actions for all probable violations discovered? Yes = 2 No = 0 Needs Improvement = 1 2 2 Evaluator Notes: Upon a review of all inspection reports completed during 2014, no instances were found where the AOGC failed to issue a compliance action when a probable violation was identified. 4 Did compliance actions give reasonable due process to all parties? Including "show cause" hearing if necessary. Yes = 2 No = 0 Evaluator Notes: Yes. 2 2 5 Is the program manager familiar with state process for imposing civil penalties? Were 2 2 civil penalties considered for repeat violations (with severity consideration) or violations resulting in incidents/accidents? (describe any actions taken) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes, the program manager stated the criteria considered when issuing a civil penalty. The criteria included repeat violations and those resulting in incidents. 6 Can the State demonstrate it is using their enforcement fining authority for pipeline safety 1 1 violations? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes, the AOGC issued and collected a $6000 civil penalty in 2014. It has issued civil penalties in prior years also. DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 11#

AR NG Program Evaluation, 2014, page 127 General Comments: Info Only Info Only Info Only = No Points Evaluator Notes: Question D.2 - Upon a review of all inspection reports completed during 2014, on at least two occasions the written notification was not addressed to a corporate officer as required by PHMSA and as stated in the AOGC's procedures. Since needing improvement on this requirement, one point was deducted for not sending compliance actions to a company officer. In all other requirements of Part D the AOGC generally complied. Total points scored for this section: 14 Total possible points for this section: 15 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 12#

AR NG Program Evaluation, 2014, page 13PART E - Incident Investigations Points(MAX) Score 1 Does the state have written procedures to address state actions in the event of an incident/ 2 2 accident? Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: The AOGC has a 24 hour answering service to distribute calls. The operators have been given this number. The AOGC's procedures states that an investigation will be conducted on site for all federally reportable incidents. 2 Does state have adequate mechanism to receive and respond to operator reports of 2 2 incidents, including after-hours reports? And did state keep adequate records of Incident/ Accident notifications received? Chapter 6 Yes = 2 No = 0 Needs Improvement = 1 a. Acknowledgement of MOU between NTSB and PHMSA (Appendix D) Yes No Needs Improvement b. Acknowledgement of Federal/State Cooperation in case of incident/accident (Appendix E) Yes No Needs Improvement Evaluator Notes: The AOGC has a 24 hour answering service to distribute calls. The operators have been given this number. The AOGC program manager understands the MOU and the acknowledgement of cooperation. It is stated in procedures. 3 If onsite investigation was not made, did state obtain sufficient information from the operator and/or by other means to determine the facts to support the decision to not go on-site? Chapter 6 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: There were no incidents reported by operators regulated by the AOGC during calendar year 2014. 1 NA 4 Were all incidents investigated, thoroughly documented, and with conclusions and 3 NA recommendations? Yes = 3 No = 0 Needs Improvement = 1-2 a. Observations and document review Yes No Needs Improvement b. Contributing Factors Yes No Needs Improvement c. Recommendations to prevent recurrences when appropriate Yes No Needs Improvement Evaluator Notes: There were no incidents reported by operators regulated by the AOGC during calendar year 2014. 5 Did the state initiate compliance action for violations found during any incident/accident investigation? Yes = 1 No = 0 Evaluator Notes: There were no incidents reported by operators regulated by the AOGC during calendar year 2014. 1 NA 6 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 report data from operators concerning incidents/accidents and investigate discrepancies) Chapter 6 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: There were no incidents reported by operators regulated by the AOGC during calendar year 2014. 1 NA 7 Does state share lessons learned from incidents/accidents? (sharing information, such as: at NAPSR Region meetings, state seminars, etc) Yes = 1 No = 0 1 NA DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 13#

AR NG Program Evaluation, 2014, page 14Evaluator Notes: There were no incidents reported by operators regulated by the AOGC during calendar year 2014. 8 General Comments: Info Only Info Only Info Only = No Points Evaluator Notes: The AOGC has generally complied with the applicable requirements of Part E of this evaluation. There were no reportable incidents during 2014 which caused several questions not to be applicable. Total points scored for this section: 4 Total possible points for this section: 4 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 14#

AR NG Program Evaluation, 2014, page 15PART F - Damage Prevention 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? NTSB Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: 2 2 It is covered in the Addendum attached to the Standard Federal Inspection Form for Transmission pipelines. 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? Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: This requirement is covered while inspecting requirements of 192.614 on the Standard Transmission Form. 2 2 3 Did the state encourage and promote practices for reducing damages to all underground 2 2 facilities to its regulated companies? (i.e. such as promoting/adopting the CGA Best Practices encouraging adoption of the 9 Elements, etc.) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: The AOGC has taken the opportunity to promote these practices during Standard inspections and during meetings with operators such as TQ seminars. 4 Has the agency or another organization within the state collected data and evaluated 2 2 trends on the number of pipeline damages per 1,000 locate requests? (This can include DIRT and other data shared and reviewed by the pipeline safety program) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. The AOGC has collected this information. There is not a proper level of data to evaluate trends at this time. The AOGC plans to access the Arkansas Public Service Commission's data in order to identify any improvement issues that could be applied to gathering and transmission facilities under the oversight of the AOGC. 5 General Comments: Info Only = No Points Evaluator Notes: The AOGC has generally complied with the requirements of Part F of this evaluation. Info Only Info Only Total points scored for this section: 8 Total possible points for this section: 8 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 15#

AR NG Program Evaluation, 2014, page 16PART G - Field Inspections Points(MAX) Score 1 Operator, Inspector, Location, Date and PHMSA Representative Info Only Info Only Info Only = No Points Name of Operator Inspected: BHP Billiton, Represented by Ben Beaver Name of State Inspector(s) Observed: Michael Gray Location of Inspection: Facilities near Searcy and Rosebud, AR Date of Inspection: 9/16/2015 Name of PHMSA Representative: Don Martin Evaluator Notes: A Standard Inspection was conducted on the operator. The operator facilities consist of gathering and transmission pipelines. The AOGC utilized PHMSA's Standard Transmission Inspection Form. During the observation overpressure protection devices were verified, cathodic protection tests were performed, aboveground facilities were inspected for atmospheric corrosion, markers, signs and security protections. 2 Was the operator or operator's representative notified and/or given the opportunity to be 1 1 present during inspection? Yes = 1 No = 0 Evaluator Notes: Yes, the AOGC provides written notification to operators prior to inspections. The written notification for this inspection provided ample time for operator personnel to prepare and be present. 3 Did the inspector use an appropriate inspection form/checklist and was the form/checklist used as a guide for the inspection? (New regulations shall be incorporated) Yes = 2 No = 0 Needs Improvement = 1 2 2 Evaluator Notes: The inspector used PHMSA's Standard Inspection Form for Transmission Pipelines. The inspector referred to the form during the inspection. A completed will be provided to the evaluator upon completion of the inspection. 4 Did the inspector thoroughly document results of the inspection? Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. Results were noted during the day of the observation. 2 2 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.) Yes = 1 No = 0 Evaluator Notes: Yes, cathodic protection equipment was verified for accuracy. Maps were reviewed. 1 1 6 Did the inspector adequately review the following during the field portion of the state evaluation? (check all that apply on list) Yes = 2 No = 0 Needs Improvement = 1 a. Procedures b. Records c. Field Activities d. Other (please comment) Evaluator Notes: 2 2 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 16#

AR NG Program Evaluation, 2014, page 17Only field testing was performed during the day of observation. Other inspection activities are to be completed outside of the observation. 7 Did the inspector have adequate knowledge of the pipeline safety program and regulations? (Evaluator will document reasons if unacceptable) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues with the inspector's knowledge. He has completed all of the required classes at TQ. 2 2 8 Did the inspector conduct an exit interview? (If inspection is not totally complete the interview should be based on areas covered during time of field evaluation) Yes = 1 No = 0 Evaluator Notes: Yes. It was stated that no compliance issues were found on this day. 1 1 9 During the exit interview, did the inspector identify probable violations found during the inspections? (if applicable) Yes = 1 No = 0 Evaluator Notes: None were identified during the day of observation. 1 NA 10 General Comments: 1) What did the inspector observe in the field? (Narrative description of field observations and how inspector performed) 2) Best Practices to Share with Other States - (Field - could be from operator visited or state inspector practices) 3) Other. Info Only = No Points a. Abandonment b. Abnormal Operations c. Break-Out Tanks d. Compressor or Pump Stations e. Change in Class Location f. Casings g. Cathodic Protection h. Cast-iron Replacement i. Damage Prevention j. Deactivation k. Emergency Procedures l. Inspection of Right-of-Way m. Line Markers n. Liaison with Public Officials o. Leak Surveys p. MOP q. MAOP r. Moving Pipe s. New Construction t. Navigable Waterway Crossings u. Odorization v. Overpressure Safety Devices w. Plastic Pipe Installation x. Public Education y. Purging z. Prevention of Accidental Ignition A. Repairs Info Only Info Only DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 17#

AR NG Program Evaluation, 2014, page 18B. Signs C. Tapping D. Valve Maintenance E. Vault Maintenance F. Welding G. OQ - Operator Qualification H. Compliance Follow-up I. Atmospheric Corrosion J. Other Evaluator Notes: Field testing was inspected for cathodic protection. Overpressure devices were verified to records. Valves were operated. Atmospheric corrosion was checked. Signs, markers and other aboveground facility concerns were checked. Total points scored for this section: 11 Total possible points for this section: 11 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 18#

AR NG Program Evaluation, 2014, page 19PART H - Interstate Agent State (If Applicable) Points(MAX) Score 1 Did the state use the current federal inspection form(s)? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC is not an interstate agent. 1 NA 2 Are results documented demonstrating inspection units were reviewed in accordance with "PHMSA directed inspection plan"? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC is 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? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC is not an interstate agent. 1 NA 4 Were 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.) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC is not an interstate agent. 1 NA 5 Did the state immediately report to PHMSA conditions which may pose an imminent safety hazard to the public or to the environment? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC is not an interstate agent. 1 NA 6 Did the state give written notice to PHMSA within 60 days of all probable violations found? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC is not an interstate agent. 1 NA 7 Did the state initially submit documentation to support compliance action by PHMSA on probable violations? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC is not an interstate agent. 1 NA 8 General Comments: Info Only = No Points Evaluator Notes: The AOGC is not an interstate agent. Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 19#

AR NG Program Evaluation, 2014, page 20PART I - 60106 Agreement State (If Applicable) Points(MAX) Score 1 Did the state use the current federal inspection form(s)? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC does not have a Section 60106 agreement with PHMSA. 1 NA 2 Are results documented demonstrating inspection units were reviewed in accordance with state inspection plan? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC does not have a Section 60106 agreement with PHMSA. 1 NA 3 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.) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC does not have a Section 60106 agreement with PHMSA. 1 NA 4 Did the state immediately report to PHMSA conditions which may pose an imminent safety hazard to the public or to the environment? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC does not have a Section 60106 agreement with PHMSA. 1 NA 5 Did the state give written notice to PHMSA within 60 days of all probable violations found? Evaluator Notes: Yes = 1 No = 0 Needs Improvement = .5 The AOGC does not have a Section 60106 agreement with PHMSA. 1 NA 6 Did the state initially submit adequate documentation to support compliance action by PHMSA on probable violations? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The AOGC does not have a Section 60106 agreement with PHMSA. 1 NA 7 General Comments: Info Only = No Points Evaluator Notes: The AOGC does not have a Section 60106 agreement with PHMSA. Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: NA 2014 Gas State Program Evaluation Arkansas ARKANSAS OIL AND GAS COMMISSION, Page: 20#