# 2009 KY NG Program Evaluation - ky2009ngprogramevaluation (Kentucky; Natural Gas State Program Evaluation)

- **operation:** document
- **citation:** PHMSA ky2009ngprogramevaluation
- **title:** 2009 KY NG Program Evaluation - ky2009ngprogramevaluation (Kentucky; 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 Kentucky.
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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 KENTUCKY 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: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 1

2009 Natural Gas State Program Evaluation -- CY 2009 Natural Gas State Agency: Kentucky Rating: Agency Status: Date of Visit: 06/14/2010 - 08/13/2010 Agency Representative: Jason Brangers PHMSA Representative: Don Martin and Dale Bennett Commission Chairman to whom follow up letter is to be sent: Name/Title: , Chairman Agency: Kentucky Public Service Commission Address: City/State/Zip: Frankfort, Kentucky 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 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 26 B Inspections and Compliance - Procedures/Records/Performance 24.5 24.5 C Interstate Agent States 0 0 D Incident Investigations 7 6.5 E Damage Prevention Initiatives 9 9 F Field Inspection 12 12 G PHMSA Initiatives - Strategic Plan 9.5 9 H Miscellaneous 3 3 I Program Initiatives 9 8 TOTALS 100 98 State Rating................................................................................................................................................... 98.0 DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 2

PART A - General Program Qualifications Points(MAX) Score 8 8 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) SLR Notes: The 2010 Certification document appeared to have accurate information based upon a review of the KPSC's records for 2009. Jason Branger's inspector category probably should be a Category II instead of III that was in the certification. 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: reports. Yes. The KPSC maintains a log of telephonic reports. The information is maintained the KPSC's report database which is used to track the status of incident 3 Has the state held a pipeline safety TQ seminar(s) in the last 3 years? (NOTE: Indicate date of last seminar or if 2 2 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: during 2010. The KPSC conducted a regulations update seminar in April, 2007. At the KPSC's request, PHMSA Training and Qualifications has scheduled a seminar 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 1 1 SLR Notes: Yes. The KPSC maintains both electronic and hard copies of their inspections reports. The KPSC utilizes a database system to complete reports electronically and stored in the database. Hard copy inspection reports are kept in filing cabinets that are organized by operator and the date of the inspection. Other electronic files are kept to keep track of telephonic reports of incidents, summary information of inspections and track follow up on non- compliance issues found. All of the files are well organized and easy to access. 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: Jason Brangers exhibited knowledge of pipeline safety regulations and the requirements for a state pipeline safety program outlined in the Guidelines For A State Pipeline Safety Program. Mr. Brangers has been the program manager for the KPSC for approximately five years. 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 Yes = 1 No = 0 1 1 SLR Notes: There were no items in the Chairperson letter that required a response. DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 3

7 What actions, if necessary, did the State initiate as a result of issues raised in the Chairperson's letter from the 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: There were no actions required by the KPSC resulting from the Chairperson letter. 1 1 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 3 3 SLR Notes: Two inspectors have completed the required courses. Two inspectors have not reached the five year deadline to successfully complete the core courses. The most recently hired inspectors are progressing in attending the required number of courses within the 3 year timeframe and the 5 year completion requirement. 9 Brief Description of Non-TQ training Activities: Info Only = No Points For State Personnel: The KPSC has participated in various training opportunities with the Kentucky Gas Association. For Operators: None during 2009. For Non-Operator Entities/Parties, Information Dissemination, Public Meetings: The KPSC has continued its interactions with local fire departments. SLR Notes: See notes above. Info Only Info Only 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: inspections were conducted. Yes. Upon a review of the OQ database and training records, the inspectors assigned to lead OQ inspections completed the required training prior to the time 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 1 1 SLR Notes: Upon a review of PHMSA Training and Qualification records and IMP inspection files, inspectors assigned to IMP inspections completed the required training prior to the inspections. 12 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 Yes = 5 No = 0 5 5 A. Total Inspection Person Days (Attachment 2): 463.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 2.98 = 655.60 Ratio: A / B 463.00 / 655.60 = 0.71 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 SLR Notes: The KPSC had 463 inspection person days during 2009. The KPSC assigned 2.98 person years to the natural gas pipeline safety program. The calculated ratio of inspection person days to person years is .71 which the minimum ratio of .0.38. DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 4

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: There were no inspector staffingl level changes during 2009. No changes are proposed. 14 Part-A General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: The KPSC has generally complied with the requirements of Part A. Total points scored for this section: 26 Total possible points for this section: 26 DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY 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: The KPSC creates a spreadsheet at the beginning of the year that shows scheduled inspections during the year. The schedule is developed in consideration of procedures outlined in its office procedures. The KPSC developed a risk ranking process during 2009 that it will implement for 2010 inspections. The risk ranking process will be incorporated into its written office procedures. 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: The KPSC's written office procedures for 2009 inspections requires operators to be inspected at least once each three years. The length of time since the last inspection is the key driver for scheduling inspections during 2009. The KPSC is transitioning into a risk based scheduling process for its 2010 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: Upon a review of a summary sheet showing inspections conducted during 2009, it appeared that the KPSC complied with its once every three year requirement established in its written office procedures. 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: The KPSC uses the federal inspection forms to conduct its inspections. Upon a review of randomly selected inspection report files, the inspection were documented on the federal inspection forms and were fully completed. 5 Did state complete all applicable portions of inspection forms? (Chapter 5.1 (3)) Previous Question B.5 Yes = 1 No = 0 SLR Notes: Upon a reiview of randomly selected inspection files, the inspection forms were fully completed. 1 1 6 Did the state initiate appropriate follow-up actions to Safety Related Condition Reports? (Chapter 6.3) Previous Question B.6 Yes = .5 No = 0 .5 NA DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 6

SLR Notes: There were no safety related condition reports filed by an operator in Kentucky during 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: Yes. The KPSC reviews this issue when conducting an operator headquarter's inspection which covers operation and maintenance of the operator. The KPSC also provides a listing of advisory bulletins to operators when conducting standard inspections. 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: Yes. The KPSC considers cast iron mains a prime risk factor for pipeline safety. The KPSC encourages operators to have cast iron replacement programs. The KPSC reviews this issue when conducting an review of operator's operation and maintenance procedures. The KPSC provides a listing of advisory bulletins to operators when conducting standard inspections. 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: Yes. The KPSC verifies that operator's procedures have procedures to identify the extent of migration of underground leaks when reviewing operator's emergency procedures and leak response procedures. The KPSC reviews leak survey and leak repair records during its standard inspections. 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: inspections. Yes. The KPSC's standard inspection covers Part 192.617 requirements on the federal inspection form. The KPSC reviews leak repair records during its 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: Upon a reveiw of randomly selected inspection reports completed in 2009, probable violations (term "deficiency" is used by the KPSC)were documented with descriptions of the operator's actions or lack of actions that resulted in a probable violation. 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: Yes. The KPSC's procedures provide the operators with 30 days to respond to alleged probable violations. A form for the operator to complete (if a deficiency is found) is included with the letter to the operator detailing the results of each inspection. The operator must completed the three questions on the form for the KPSC to consider closing the file on the inspection. The operator has the opportunity to argue their case if they feel like a probable violation did not occur. 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: Yes. Probable violations are documented in written notification provided to the operator. An attachment to the letter describes what actions or lack of actions on the part of the operator that caused a probable violation of pipeline safety regulations. DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY 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: Yes. The KPSC includes a Deficiency Transaction Report (DTR) for each probable violation is communicated to operators. The DTR provides three questions to be answered by the operators to document their corrective actions. The DTR also shows the required response date also contained in the written notification. The procedures state that follow up inspections are scheduled after written notification of non compliance has been sent to an operator. Each inspection report describes the status of deficiencies found in previous inspections. Deficiency information is entered into the inspection database which can be used to report the status of probable violations. 15 Has the State issued compliance actions for all probable violations discovered? (Note : PHMSA representative 1 1 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: Upon a review of randomly selected inspection reports, all inspections that discovered probable violations were followed up with written notifications of non compliance. The KPSC issued 75 compliance actions during 2009. 16 Did the state follow its written procedures for reviewing compliance actions and follow-up to determine that 1 1 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: Upon a review of randomly selected inspection report files, follow up inspection documentation was present to indicate that corrective actions had taken place or another follow up inspection was scheduled for a later date when corrective actions were not completed. 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: A show cause hearing was requested in 2008 for an enforcement action started in 2007. There were no show cause hearings sought during 2009. 18 Did the state adequately document the resolution of probable violations? (Chapter 5.1 (6)) Previous Question 1 1 D(1).7 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: Yes. The KPSC had completed DTR's from operators in its files. The KPSC also documents the date that operators corrective actions were accepted by the KPSC. This date is entered into the inspection database. 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 .5 .5 SLR Notes: Upon a review of randomly selected inspection files, non compliance letters were addressed to company officers of private companies and highest public official of publicly owned operators. 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: Operators are given an opportunity to provide information that disputes that a probable violation did not occur. If not satisfied with pipeline safety's decision an operator can petition the Commissioners for a "show cause" hearing. 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: 1 NA DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 8

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 1 NA SLR Notes: 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: 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: 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: 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: 27 Part B: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: The KPSC has generally complied with the requirements of Part B. Total points scored for this section: 24.5 Total possible points for this section: 24.5 DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY 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: The KPSC is 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: The KPSC 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? Previous Question D(3).3 Yes = 1 No = 0 SLR Notes: The KPSC is 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 SLR Notes: The KPSC 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? Previous Question D(3).5 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: The KPSC is 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: The KPSC is 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: The KPSC is not an interstate agent. 1 NA 8 Part C: General Comments/Regional Observations Info Only = No Points SLR Notes: The KPSC is not an interstate agent. Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY 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 1 1 SLR Notes: The KPSC followed the procedures to cooperate with PHMSA in the investigation of reportable incidents during the two incidents that occurred in 2009. The KPSC kept the Southern Region Office informed of the facts surrounding the incident and the status of its investigation. 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 .5 .5 SLR Notes: There was not an occasion to interface with the NTSB during 2009. The KPSC exhibited knowledge of the MOU between PHMSA and the NTSB. The KPSC understands the agreement of cooperation within the MOU. 3 Did the state keep adequate records of incident notifications received? Previous Question E.3 Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: the log. Yes. The KPSC maintains a log of telephonic reports. The two incidents occurring in 2009, Owensboro, KY and Whitley, KY. The incidents were found on The log is used to to ensure that operators file written reports of the incident within the required timeframe. It is also used to track the KPSC's investigation findings and follow up on any non-compliance issues found. 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 1 1 SLR Notes: The incident on Citipower, LLC's pipeline occurring on September 1, 2009 near Whitley, KY was investigated by telepone interviews and obtaining written communication and operator investigation report. The earth work contractor working for McCreary County did not make a request to Kentucky one call center or the operator for a locate. The other incident reported in 2009 was investigated in the field by the KPSC. 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 Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement SLR Notes: The incident that occured in Whitley, KY was investigated through telephone interviews and documentation forwarded from the operator. The cause was clear that the excavator had failed to request a locate through the Kentucky one call center. No probable violations were found. The incident that occurred in Owensboro, KY was investigated in the field and from documentation requested of the operator. A vehicle left the roadway and struck an aboveground regulator station. The escaping gas ingnited and contributed to the fatality of the vehicle's driver. The regulator station was barricaded with steel pipe but the vehicle still impacted the aboveground piping. No probable violations were found that contributed to the incident. The KPSC was concerned about the amount time taken to stop the flow of gas through the regulator station. The KPSC recommended that the operator have piping schematics available to its emergency response personnel indicating valves to be used to shut down the flow of gas. 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: There were no probable violations found from investigating the two reportable incidents that occurred during 2009. 1 1 DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 11

7 Did the state assist region office by taking appropriate follow-up actions related to the operator incident reports .5 0 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: Needs Improvement. According to the Online Data Entry System (ODES), there were nine (9) outstanding Incident Reports passed to Kentucky for follow- up and closure recommendation to PHMSA; seven (7) were from 2006 through 2009 and were tagged as "apparent cause of incident not specified." The KPSC should set a priority to follow up on the incident reports to obtain closure of the reports. 8 Part D: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: Question D.7 - According to the Online Data Entry System (ODES), there were nine (9) outstanding Incident Reports passed to Kentucky for follow-up and closure recommendation to PHMSA; seven (7) were from 2006 through 2009 and were tagged as "apparent cause of incident not specified." The KPSC should set a priority to follow up on the incident reports to obtain closure of the reports. 0.5 points could not be given on Question D.7. Total points scored for this section: 6.5 Total possible points for this section: 7 DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY 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: Yes. The KPSC has verified that operators have included directional/boring procedures in their Operation and Maintenance Procedures. The KPSC initiated these reviews prior to 2007 and continues them during its inspection of operators' operation and maintenance procedures. 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: Yes. During standard inspections, the KPSC reviews operators' damage prevention programs and verifies from operator records that the damage prevention programs are being followed. The KPSC covers these requirements on the portion of the inspection form covering Part 192.614. 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: Jason Brangers represents NAPSR on the CGA Best Practices Committee. The KPSC has added an item on the federal standard inspection form to promote best practices to operators. The KPSC promoted the best practices in presentations at industry gatherings. 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: Kentucky 811 receives "damage tickets" when a damage occurs and the operator requests a relocate. Trends and statistics concerning damages are discussed during KY811 board meetings, in which the PSC participates. KY 811 enters this information into the DIRT reporting system and has had virtual private DIRT for KY since October 2007. Operators are encouraged to input damage information into DIRT. Information collected by Kentucky 811 shows an increase in membership and a decrease in damages in recent years. 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 2 2 SLR Notes: The KPSC reviews operator's records on leaks and failures upon completing 192.617 requirements portion of the federal inspection form. 6 Part E: General Comments/Regional Observations Info Only = No Points SLR Notes: Info Only Info Only The KPSC is generally complying with the other requirements contained in Part E of this evaluation. Total points scored for this section: 9 Total possible points for this section: 9 DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 13

PART F - Field Inspection Points(MAX) Score 1 Operator, Inspector, Location, Date and PHMSA Representative Info Only = No Points Info Only Info Only Name of Operator Inspected: Columbia Gas (Frankfort and Maysville Areas) Name of State Inspector(s) Observed: Steven Samples and Joel Grugin Location of Inspection: Field Inspection of the Frankfort and Maysville Area Date of Inspection: 8/10-11/2010 Name of PHMSA Representative: Dale Bennett SLR Notes: representative. Joel Grugin and Steve Samples took turns leading the inspection for the KPSC. The operator was represented by its operations supervisor and compliance 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: Yes. The operator was notified on 7/21/2010, prior to the inspection. Operator's representatives were present during 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 2 2 SLR Notes: Yes. The KPSC inspector used the federal inspection form for gas distribution operators. The form was the latest version that was revised in March, 2010. 4 Did the inspector thoroughly document results of the inspection? Previous Question F.3 Yes = 2 No = 0 2 2 SLR Notes: Yes. The inspector marked the "check off" columns for each item on the federal form. If unsatisfactory was checked, an explanation of the non compliance issue was provided in the comments sections. 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: Yes. The inspector checked that the operator representatives had testing equipment for odorant checks, voltmeters, half cells for cathodic protection readings and leak detection equipment for finding leaks. The inspector checked records to verify that testing equipment met manufacturer's recommendations for calibration of the instruments. 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: The KPSC conducted a standard inspection of Columbia Gas distribution facility. The inspection was conducted on August 10th and 11th. 7 Did the inspector adequately review the following during the field portion of the state evaluation? (check all that apply on list) New 2008, comprehensive question worth 2 points total Yes = 2 No = 0 Needs Improvement = 1 2 2 a. Procedures b. Records c. Field Activities/Facilities DUNS: 098099674 2009 Natural Gas State Program Evaluation Kentucky KENTUCKY PUBLIC SERVICE COMMISSION, Page: 14

d. Other (Please Comment) SLR Notes: The KPSC reviewed the operator's procedures, operation and maintenance records and observed test readings taken in the field. The KPSC covered records and readings in the field on Tuesday, August 10th. On the day of the evaluation observation, August 11th, the KPSC reviewed additional records and the operator's procedures manual. 8 Did the inspector have adequate knowledge of the pipeline safety program and regulations? (Liaison will document reasons if unacceptable) Previous Question F.8 Yes = 2 No = 0 2 2 SLR Notes: Qualification training facility. Yes. Both inspectors have several years experience in gas pipeline operations experience and have taken a number of classes at PHMSA's Training and 9 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) Previous Question F.10 Yes = 1 No = 0 SLR Notes: Yes. The KPSC inspectors provided the operator's representatives with a briefing of his findings for the two day inspection. 1 1 10 During the exit interview, did the inspector identify probable violations found during the inspections? Previous 1 1 Question F.11 Yes = 1 No = 0 SLR Notes: Yes. The KPSC lead inspector described the probable violations that were found during the inspection. The KPSC inspector also provided an explanation of the written notification that would be sent and the follow up process until the corrections actions are verified. 11 What did the inspector observe in the field? (N
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