# 2015 CAPUC NG Program Evaluation - capuc2015ngprogramevaluation (California; Natural Gas State Program Evaluation)

- **operation:** document
- **citation:** PHMSA capuc2015ngprogramevaluation
- **title:** 2015 CAPUC NG Program Evaluation - capuc2015ngprogramevaluation (California; Natural Gas State Program Evaluation)
- **source type:** inspection
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2015-01-01
- **effective on:** Not available
- **summary:** 2015 PHMSA natural gas program evaluation for California.
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1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2015 Gas State Program Evaluation for CALIFORNIA PUBLIC UTILITIES 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: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 1

2015 Gas State Program Evaluation -- CY 2015 Gas State Agency: California Rating: Agency Status: Date of Visit: 08/22/2016 - 08/26/2016 Agency Representative: Ken Bruno PHMSA Representative: Michael Thompson, David Lykken Commission Chairman to whom follow up letter is to be sent: Name/Title: Mr. Michael Picker, President Agency: California Public Utilities Commission Address: 505 Van Ness Avenue City/State/Zip: San Francisco, California 94102 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 2015 (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 13 13 C Program Performance 50 48 D Compliance Activities 15 13 E Incident Investigations 11 11 F Damage Prevention 8 8 G Field Inspections 12 12 H Interstate Agent State (If Applicable) 0 0 I 60106 Agreement State (If Applicable) 0 0 TOTALS 119 115 State Rating................................................................................................................................................... 96.6 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 2

PART 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 1 1 Evaluator Notes: CaPUC still has only partial jurisdiction over master meter operators and gas gathering lines. No issues with accuracy. 2 Review of Inspection Days for accuracy - Progress Report Attachment 2 Yes = 1 No = 0 Needs Improvement = .5 1 1 Evaluator Notes: More improvement needed in this area. Staff has provided monthly summary of person-days but better explanation as to time applied to particular inspection category is needed. New time entry system should help alleviate this issue by proving a corresponding inspection number with the time entry provided by the inspector. Inspectors should also provide sufficient detail in the description box of the time entry system. 3 Accuracy verification of Operators and Operators Inspection Units in State - Progress Report Attachment 3 Yes = 1 No = 0 Needs Improvement = .5 1 1 Evaluator Notes: No Issues. They have gained one more LNG facility. PG&E LNG mobile units are now one inspection unit.inspection unit. 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: Incident/Accidentent information listed in Attachment 4 of Progress Report complete and accurate. Reconciles with information located in Data Mart. No issues noted. 5 Accuracy verification of Compliance Activities - Progress Report Attachment 5 1 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes, compliance activities for 2015 were reviewed and no issues found. 6 Were pipeline program files well-organized and accessible? - Progress Report Attachment 6 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: The program files are in better condition with almost al;l being electronic. 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, the CaPUC has committed a lot of effort to getting their inspectors thru the required training. 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 1 1 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 3

9 List of Planned Performance - Did state describe accomplishments on Progress Report in detail - Progress Report Attachment 10 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 1 Yes, the CaPUC completed this portion of the progress report. 10 General Comments: Info Only = No Points Evaluator Notes: Info Only Info Only Total points scored for this section: 10 Total possible points for this section: 10 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 4

PART B - Program Inspection Procedures Points(MAX) Score 1 Standard Inspection procedures should give guidance to state inspectors that 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 = 2 No = 0 Needs Improvement = 1 Evaluator Notes: 2 2 The CaPUC procedures manual GO 112 F last updated August 2016. Standard inspections are covered in Section 2. 2 IMP and DIMP 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 CaPUC procedures manual GO 112 F last updated August 2016. IMP and DIMP are generally covered in section 2, and also in detail that the actions for both DIMP and IMP will be covered on an annual basis. 3 OQ 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 CaPUC procedures manual GO 112 F last updated August 2016. OQ inspections are covered in Section 2 along with the procedure to upload the results of those inspections to the PHMSA data base. The field portions of the OQ inspections are conducted with standard inspections.. 4 Damage Prevention Inspection procedures should give guidance to state inspectors that 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: The procedures for Damage Prevention inspections are covered in Section 2 of the CaPUC GO 112 F. 1 1 5 Any operator training conducted should be outlined and appropriately documented as 1 1 needed. Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The CaPUC has a program for providing training to master meter operators during their scheduled inspections. 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: Constructions inspection procedures have been improved this year and great effort has been made to improve this type of inspection with new forms and training of inspectors. 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 6 6 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 5

a. 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: Review of the 2015 and other records showed no issues for the elements. 8 General Comments: Info Only = No Points Evaluator Notes: Info Only Info Only Total points scored for this section: 13 Total possible points for this section: 13 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 6

PART 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 5 5 A. Total Inspection Person Days (Attachment 2): 1893.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 22.30 = 4906.36 Ratio: A / B 1893.00 / 4906.36 = 0.39 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 Evaluator Notes: Yes, the CaPUC had a .39 ratio. We advised them that this was very close this year and that they needed to stay aware of the number of inspection days so they would not slip below the required .38 ratio. They also had 199 construction inspection days in 2015 which was 10% of their total. 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. Inspectors have taken required training in specific discipline(s) prior to leading specialized inspections. With the exception of newly hired persons, all current inspection staff have taken the PH3600 Root Cause course. Outside training completed: Cognitive Interviewing Techniques/December 2015. Due to the number of jurisdictional LPG operators (650) suggested that the CPUC identify staff who perform LPG inspections be registered and attend the new T&Q PL-5342 LPG course. To date one inspector (P. Penny) has attended. 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: Ken Bruno, Program Manager has a good understanding of the PHMSA states program and continues to increase his knowledge of the regulations. 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 2 2 Evaluator Notes: Yes, the letter was sent on 11/18/15 and the CaPUC responded on 12/8/2015. There are still some outstanding issues from the 2014 evaluation letter that are being addressed, but will take some time to resolve completely. 5 Did State hold PHMSA TQ Seminar in Past 3 Years? Chapter 8.5 Yes = 2 No = 0 2 2 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 7

Evaluator Notes: Last one held on 10/10/2014. They will need to hold one in 2017. 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 5 5 Evaluator Notes: Yes, after review of the CaPUC process for scheduling inspections and looking over a good percentage of the inspections conducted in 2015 they have all types of operators and inspection units in accordance with time intervals established in their written procedures. 7 Did inspection form(s) cover all applicable code requirements addressed on Federal 2 2 Inspection form(s)? Did State complete all applicable portions of inspection forms? Chapter 5.1 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Inspection forms used by CPUC staff appear to address all applicable code requirements although revision dates for CPUC checklists Control Room Management (Rev 3-2012) and DIMP (Rev 9-2011) are older than the current PHMSA "IA Equivalent" forms posted on the PHMSA web site (CRM Rev 5-2015 and DIMP Rev 3-2015). A review of completed inspection forms for CY2015 show staff do a good job at documenting their observations when a probable violation, area of concern, or other issue has been identified but provide little or no information when a finding of satisfactory has been found. Recommendation(s): 1. To ensure inspection forms are kept current, suggest that the CPUC task an individual with the responsibility of maintaining the content of all inspections forms. 2. Establish some basic Version Control Guidelines such as the inclusion of "document dates" and "version numbers" to ensure that staff are using the most up to date inspection forms. 3. To properly conduct an inspection of an operator's facilities, inspection forms should be documented well enough that the agency could defend the inspection to a 3rd party. Inspection staff should include substantive comments on inspection checklists of observations made in the field to support the inspector's rational for determining the operator's compliance, both satisfactory and unsatisfactory. 8 Did the state review operator procedures for determining if exposed cast iron pipe was 1 1 examined for evidence of graphitization and if necessary remedial action was taken? (NTSB) Chapter 5.1 Yes = 1 No = 0 Evaluator Notes: Yes. Information contained on CPUC Safety & Enforcement Division (SED) Form OM "Operations & Maintenance of a Gas Dist and Trans Pipeline", Page 26. 9 Did the state review operator procedures for surveillance of cast iron pipelines, including 1 1 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: Yes. Information contained on page 28 of the CPUC Safety & Enforcement Division (SED) Form OM "Operations & Maintenance of a Gas Dist and Trans Pipeline". 10 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) Chapter 5.1 Yes = 1 No = 0 1 1 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 8

Evaluator Notes: Yes. Information contained on CPUC Safety & Enforcement Division (SED) Page 3, Form 4, "EP - Emergency Plan Inspection Report of a Gas Dist and Trans Pipeline". 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: Yes. Information contained on CPUC Safety & Enforcement Division (SED) Page 3, Form 4, "EP - Emergency Plan Inspection Report of a Gas Dist and Trans Pipeline". 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: Yes, they have personnel assigned to the=is task and the information is reviewed by supervisors and the program manager. 13 Did state input all applicable OQ, DIMP/IMP inspection results into federal database in a 2 1 timely manner? This includes replies to Operator notifications into IMDB database. Chapter 5.1 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Improvement needed. Good job uploading Operator Qualification program review and field verification form into the OQDB. Only two TIMP inspections noted in the IMDB. Only one form uploaded (SDG&E). Although some IM field verification work had been completed in CY2015, no PHMSA Form 16's had been uploaded into the IMDB. No DIMP forms uploaded. 14 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. No issues noted. 1 1 15 Is the state verifying operators are conducting drug and alcohol tests as required by 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, they are doing D&A inspections on a three year cycle. 2 2 16 Is state verifying operators OQ programs are up to date? This should include verification 2 2 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: Yes, they are verifying this each year while doing their O&M inspections. They also do PHMSA form 9 during standard inspections. 17 Is state verifying operator's gas transmission integrity management programs (IMP) are 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: 2 1 Further attention is needed by inspectors to go out and field verify operators are performing tests, repairs, and other remedial DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 9

actions identified as part of their IM assessments. Field inspections documented need to be uploaded onto the IMDB as noted under question C13. 18 Is state verifying operator's gas distribution integrity management Programs (DIMP)? 2 2 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 have been complete by December 2014 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes, they have been working with their operators. But it is time to formally start to revisit all operators to verify their activities and plans. 19 Is state verifying operators Public Awareness programs are up to date and being 2 2 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 be conducted every four years per RP1162 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. Four PA inspections conducted in CY2015. Sempra, SWG, Lodi Gas Storage, and Wild Goose Storage. Currently doing effectiveness inspections as part of CY2016 inspection plan. 20 Does the state have a mechanism for communicating with stakeholders - other than state 1 1 pipeline safety seminar? (This should include making enforcement cases available to public). Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes, the CaPUC provides information on inspections, enforcement and has guidance materials and information for small operators on their web site. 21 Did state execute appropriate follow-up actions to Safety Related Condition (SRC) Reports? Chapter 6.3 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes, they have a good process in place. 1 1 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: The operators in California work with and provide information to the PPDC. The CaPUC needs to ad a question to their distribution system inspection form in order to expand their information on this issue. 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: Yes, they have responded to NAPSR surveys and with the PHMSA on requests for information. 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. No = 0 Needs Improvement = .5 Yes = 1 Evaluator Notes: 1 1 They have created a list of all waivers granted by the PHMSA and the state and are working to clear the ones they can. DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 10

25 Did the state attend the National NAPSR Board of Directors Meeting in CY being evaluated? No = 0 Needs Improvement = .5 Yes = 1 Evaluator Notes: Yes, the program manager and one supervising engineer attended the national NAPSR meeting in 2015. 1 1 26 Discussion on State Program Performance Metrics found on Stakeholder Communication 2 2 site - http://primis.phmsa.dot.gov/comm/states.htm No = 0 Needs Improvement = 1 Yes = 2 a. Discussion of Potential Accelerated Actions (AA's) based on any negative trends Yes No Needs Improvement b. NTSB P-11-20 Meaningful Metrics Yes No Needs Improvement Evaluator Notes: The State Program Performance Metrics were reviewed with the program manager and the following trends discussed. Damages per 100 locate tickets have increased from 2014 to 2015 back to level of 2012 and 2013. Inspection days per 1000 miles of pipeline have stayed about steady with 2014, but have decreased from 2013. Inspection days per MMO/LPG have increased over 2014 and are on level with 2013. Pipeline inspector qualification has improved dramatically over previous years. Gas distribution system leaks show that the number of leaks repaired per 1000 miles has gone up, hazardous leaks repaired has stayed the same and leaks outstanding have gone up a little. Enforcement program evaluation score has stayed the same for 2014 and 2015. Incident investigation score has gone up significantly. 27 General Comments: Info Only Info Only Info Only = No Points Evaluator Notes: Points C-17 Loss of 1 point. Further attention is needed by inspectors to go out and field verify operators are performing tests, repairs, and other remedial actions identified as part of their IM assessments. Field inspections documented need to be uploaded onto the IMDB as noted under question C13. Recommendations: Question C2 - Due to the number of jurisdictional LPG operators (650) suggested that the CPUC identify staff who perform LPG inspections be registered and attend the new T&Q PL-5342 LPG course. Question C7: 1. To ensure inspection forms are kept current, suggest that the CPUC task an individual with the responsibility of maintaining the content of all inspections forms. 2. Establish some basic Version Control Guidelines such as the inclusion of "document dates" and "version numbers" to ensure that staff are using the most up to date inspection forms. 3. To properly conduct an inspection of an operator's facilities, inspection forms should be documented well enough that the agency could defend the inspection to a 3rd party. Inspection staff should include substantive comments on inspection checklists of observations made in the field to support the inspector's rational for determining the operator's compliance, both satisfactory and unsatisfactory. C-18 Yes, they have been working with their operators on DIMP. But it is time to formally start to revisit all operators to verify their activities and DIMP plans. C-13, C-17. Recommend utilizing the IA program to improve on program elements (e.g., inspection form updates; track IMP, DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 11

OQ, PA inspection results/data collection, etc.). Total points scored for this section: 48 Total possible points for this section: 50 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 12

PART 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. List of companies and official's names in Appendix "A" of the CPUC GO112-F Gas Safety and Reliability Branch (GSRB) Inspection Manual. Procedures to review progress of compliance actions noted on page 24 of GSRB inspection manual. 2 Did the state follow compliance procedures (from discovery to resolution) and adequately 4 2 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. Document probable violations Yes No Needs Improvement c. Resolve probable violations Yes No Needs Improvement d. Routinely review progress of probable violations Yes No Needs Improvement e. Were applicable civil penalties outlined in correspondence with operator(s) Yes No Needs Improvement Evaluator Notes: Yes, compliance correspondence sent to appropriate company officials. Good use of notes and photographs when documenting probable violations and other area's of concern. Improvement needed in timeliness of issuing inspection findings to operators after exit interview. Length of time to issue letter to operator averaging 4 months or longer. Operator compliance with agency enforcement actions typically followed up on during next inspection cycle. Not very timely since it may be up to three years before inspection staff can confirm compliance. No process in place to formally document close out operators actions taken to comply with enforcement actions. Recommend using the IA program to better monitor inspection activity. 3 Did the state issue compliance actions for all probable violations discovered? Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes, this was verified by reviewing the inspection/enforcement records for 2015. 2 2 4 Did compliance actions give reasonable due process to all parties? Including "show 2 2 cause" hearing if necessary. Yes = 2 No = 0 Evaluator Notes: Yes, the information can be found in the SED - Citations procedure that was effective on 3/25/2015 and for formal proceedings in Resolution ALJ 274. 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 is familiar with the states process for imposing civil penalties, and has used them over the past several years. DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 13

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 CaPUC collected $301,000,000.00 in civil penalties in 2015. 7 General Comments: Info Only Info Only Info Only = No Points Evaluator Notes: Points; D-2 Loss of 2 points, Compliance correspondence sent to appropriate company officials. Good use of notes and photographs when documenting probable violations and other area's of concern. Improvement needed in timeliness of issuing inspection findings to operators after exit interview. Length of time to issue letter to operator averaging 4 months or longer. Operator compliance with agency enforcement actions typically followed up on during next inspection cycle. Not very timely since it may be up to three years before inspection staff can confirm compliance. No process in place to formally document close out operators actions taken to comply with enforcement actions. Recommended utilizing the IA program for monitoring staff inspection activity/status Total points scored for this section: 13 Total possible points for this section: 15 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 14

PART 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: Yes. GSRB Gas Incident Investigation Procedures Manual. Revision Aug 2016 includes procedures for investigating incidents and incident investigation report requirements. Appendices include processes and procedures for On-Call duties, Incident Investigation process Flow Chart, Decision Tree, Pre-set Data Request for identified large LDC's, Incident Report Template, and other supplemental guidance. 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: Yes, the state has an adequate mechanism to receive and respond to operator reports of incidents, including after-hours reports, and as kept adequate records of Incident/Accident notifications received. 3 If onsite investigation was not made, did state obtain sufficient information from the 1 1 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: Yes, if the state decides to not go on site their procedure requires them to send a request to the operator for a data set to supply the information needed to support their decision to not go on site. 4 Were all incidents investigated, thoroughly documented, and with conclusions and recommendations? Yes = 3 No = 0 Needs Improvement = 1-2 a. Observations and document review 3 3 Yes No Needs Improvement b. Contributing Factors Yes No Needs Improvement c. Recommendations to prevent recurrences when appropriate Yes No Needs Improvement Evaluator Notes: Yes, incident investigations were thoroughly documented and they are adding a step to the process to include conclusions and recommendations. 5 Did the state initiate compliance action for violations found during any incident/accident investigation? Yes = 1 No = 0 Evaluator Notes: 1 1 Yes, they initiated compliance actions for the violations found in the records that were reviewed during the evaluation. 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: 1 1 Yes, the state works very closely with Peter Katchmar the PHMSA Accident Coordinator for the Western Region. DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 15

7 Does state share lessons learned from incidents/accidents? (sharing information, such as: at NAPSR Region meetings, state seminars, etc) Yes = 1 No = 0 Evaluator Notes: 1 1 Yes, the state shared lessons learned at the 2015 NAPSR Western Region meeting during their State of the State report. 8 General Comments: Info Only = No Points Evaluator Notes: Recommendations; Info Only Info Only The state should continue to train inspectors to take a broader view when approaching each incident/incident site for investigation. Total points scored for this section: 11 Total possible points for this section: 11 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 16

PART F - Damage Prevention Points(MAX) Score 1 Has the state reviewed directional drilling/boring procedures of each pipeline operator or 2 2 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: Yes. Page three of the Safety and Enforcement Division (SED) Form 14 "DP - Damage Prevention Inspection Report of a Gas Dist. & Trans. Pipeline". 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: Yes, this is part of the inspection form used by the CaPUC. 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: Yes, Inspector Sunil Shori is the CPUC lead for their damage prevention efforts. He is an active member of the Common Ground Alliance (CGA) Regional Committee and works with both the USA North, (Northern California) and Dig Alert (Southern California) one call systems as part of the California One Call. He is also tracking the efforts in the state legislature to get a more effective enforcement process going. 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 CaPUC requires operators to submit quarterly reports in order to evaluate trends for the number of damages to pipeline facilities and the percentage for damages per 1000 locate requests. they are currently at 4.35 damages. 5 General Comments: Info Only = No Points Evaluator Notes: Info Only Info Only Total points scored for this section: 8 Total possible points for this section: 8 DUNS: 947393922 2015 Gas State Program Evaluation California CALIFORNIA PUBLIC UTILITIES COMMISSION, Page: 17

PART 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: 1. Southern California Gas 2. Pacific Gas and Electric (PG&E) Name of State Inspector(s) Observed: 1. Mahmoud Intably, James Zhang, Desmond Lew, KanWai Tong, Ken Bruno 2. Sikandar Khatri (Lead), Nathan Sarina, Durga Shrestha, Alula Grebremedhin Location of Inspection: 1. Glendale, CA and surrounding area 2. Oakland, Richmond and surrounding areas Date of Inspection: 1. June 6-9, 2016 2. Aug 30, 31, Sep 1, 2016 Name of PHMSA Representative: 1. Michael Thompson and David Appelbaum 2. David Lykken Evaluator Notes: 1. CPUC conducted myriad evaluations of meter, regulator and valve maintenance activities. 2. CPUC records and field audit of PG&E's East Bay Division's Gas Pressure Regulator stations and Emergency Valves facilities. 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: 1. Yes, operator was notified in advance and had all requisite records and personnel available. Operator also had someone from their compliance group in attendance. 2. Yes. Operator was notified in advance and a schedule of the first week's daily activities arranged ahead of time. Several PG&E personnel were in attendance including staff form regulatory compliance, engineering, field operations. Most records were available. 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: 1. Yes, inspectors had current inspection forms available. 2. Yes. SED "Form 2B - Standard Inspection Report of a Gas Distribution Pipeline" utilized. Recommendation: consider deploying a process to utilize inspection guidance when conducting field evaluations. This will ensure consistency and uniformity with all inspectors. 4 Did the inspector thoroughly document results of the inspection? Yes = 2 No = 0 Needs Improvement = 1 2 2 Evaluator Notes: 1. Inspectors appeared to take very good notes of all observations. 2. Yes. CPUC inspectors took detailed notes of observations noted during both the records review and field check of gas facilities visited. 5 Did the inspector check to see if the operator had necessary equipment during inspection to conduct tasks vi
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