# 2017 MI NG Program Evaluation - mi-2017-gas-program-evaluation (Michigan; Natural Gas State Program Evaluation)

- **operation:** document
- **citation:** PHMSA mi-2017-gas-program-evaluation
- **title:** 2017 MI NG Program Evaluation - mi-2017-gas-program-evaluation (Michigan; Natural Gas State Program Evaluation)
- **source type:** inspection
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2017-01-01
- **effective on:** Not available
- **summary:** 2017 PHMSA natural gas program evaluation for Michigan.
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- **source url:** https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/subdoc/3591/mi-2017-gas-program-evaluation.pdf
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1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2017 Gas State Program Evaluation for MICHIGAN PUBLIC SERVICE 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: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 1

2017 Gas State Program Evaluation -- CY 2017 Gas State Agency: Michigan Rating: Agency Status: Date of Visit: 07/09/2018 - 07/20/2018 Agency Representative: Mr. David Chislea Manager, Gas Operations PHMSA Representative: Clint Stephens Commission Chairman to whom follow up letter is to be sent: Name/Title: Ms. Sally A. Talberg, Chairman Agency: Michigan Public Service Commission Address: 7109 West Saginaw Highway City/State/Zip: Lansing, Michigan 48917 60105(a): Yes 60106(a): No Interstate Agent: Yes 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 2017 (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 49 49 D Compliance Activities 15 14 E Incident Investigations 11 11 F Damage Prevention 8 8 G Field Inspections 12 12 H Interstate Agent State (If Applicable) 7 7 I 60106 Agreement State (If Applicable) 0 0 TOTALS 125 124 State Rating................................................................................................................................................... 99.2 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE 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 Evaluator Notes: Reviewed Attachment 1 of Progress Report, compared with office records, and found data to be accurate. 1 1 2 Review of Inspection Days for accuracy - Progress Report Attachment 2 Yes = 1 No = 0 Needs Improvement = .5 1 1 Evaluator Notes: Reviewed Attachment 2 of Progress Report, compared with office records, and found inspection days to be accurate. 3 Accuracy verification of Operators and Operators Inspection Units in State - Progress 1 1 Report Attachment 3 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Reviewed Attachment 3 of Progress Report compared with office records, and found Operators and Inspection Units to be accurate. 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: Yes. Reviewed Attachment 4 of Progress Report and found federally reportable incidents listed to be accurate based on comparison of data in PDM. 5 Accuracy verification of Compliance Activities - Progress Report Attachment 5 1 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Reviewed Attachment 5 of Progress Report and found Compliance Activities data to be off by +/- 10 on accuracy of number corrected during calendar year and number corrected at end of calendar year. 6 Were pipeline program files well-organized and accessible? - Progress Report Attachment 6 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. Pipeline program files are stored in the S Drive (electronically) and gas safety database. 2 2 7 Was employee listing and completed training accurate and complete? - Progress Report 1 1 Attachment 7 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes. Reviewed Attachment 7 of Progress Report and found employee listing and completed training accurate based on comparing information in the T&Q database. 8 Verification of Part 192,193,198,199 Rules and Amendments - Progress Report Attachment 8 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 1 Sections 3 and 6 - Michigan's request for rulemaking was approved in 2016 and a revised rulemaking request was approved in September 2017. The MPSC has subsequently issued an order in Case No. U-17826 in February 2018 as part of the DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 3

process to promulgate the rules governing gas pipeline safety in Michigan. This rulemaking process will include adoption of the 2015 amendments, 80 FR 168 and 80 FR 12779, and the 2017 amendments, 81 FR 70989, 81 FR 91860, and 82 FR 7972. 9 List of Planned Performance - Did state describe accomplishments on Progress Report in 1 1 detail - Progress Report Attachment 10 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Attachment 10 ? Two inspectors advanced from State Qualification Category II to I. Second supervising engineer position filled in March 2017, and two new safety engineers were hired in 2017. Considerable amount of inspection days spent on construction activity. 10 General Comments: Info Only = No Points Evaluator Notes: There were no issues in Part A of the evaluation. Info Only Info Only Total points scored for this section: 10 Total possible points for this section: 10 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE 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: Procedures are contained in sections 2.10, 2.11 Part #1, 2.16, and 2.17. 2 2 2 IMP and DIMP 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: Procedures are contained in sections 2.10, 2.11 Part #4, 2.16, and 2.17. 1 1 3 OQ 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: Procedures are contained in sections 2.10, 2.11 Part #5, 2.16, and 2.17. 1 1 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: Procedures are contained in sections 2.10, 2.11 Part #7, 2.16, and 2.17. 1 1 5 Any operator training conducted should be outlined and appropriately documented as needed. Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Procedures are contained in sections 2.10, 2.11 Part #3, 2.16, and 2.17. 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: Procedures are contained in sections 2.10, 2.11 Part 2, 2.16, and 2.17. Under Rule 460.20502 requires operators to report construction projects. 7 Does inspection plan address inspection priorities of each operator, and if necessary each 6 6 unit, based on the following elements? Yes = 6 No = 0 Needs Improvement = 1-5 a. Length of time since last inspection (Within five year interval) Yes No Needs Improvement DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 5

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: Procedures are contained in section 3.1 of the Michigan Operation Procedures. 8 General Comments: Info Only = No Points Evaluator Notes: There were no issues in Part B of the evaluation. Info Only Info Only Total points scored for this section: 13 Total possible points for this section: 13 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE 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 A. Total Inspection Person Days (Attachment 2): 861.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 9.14 = 2010.07 Ratio: A / B 861.00 / 2010.07 = 0.43 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 Evaluator Notes: Attachment 7 ? Ratio: A/B = 861/220*9.14 = 861/2010 = .428 >= .38. There were no issues. 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: - DJC/TJB/HAD/KRF/BAG/NJM/EMM/PDS/TRW ? Core Classes completed. - PDS/EMM/BAG ? OQ Lead. - KRF/NJM/DJC/HAD ? IMP - KRF/NJM/HAD/TRW ? DIMP Lead. - DJC/NJM/TRW/BAG ? Root Cause. - TRW/TJB ? CRM Lead. Kristen Lawless and Derrick Schimming completed two core courses. (Started courses in 2017) Karen Krueger completed core courses in 2018. Jefferey Quirante failed one core course PL3257 (5/23/18). Recommend the MPSC allow staff to complete all T&Q courses for Natural Gas, such as OQ, IMP, DIMP. This would provide the MPSC with staff that is qualified to perform all inspections as lead in case they decide to resign, fired, or due to attrition. 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 Evaluator Notes: Yes, program manager displays adequate knowledge of PHMSA program and regulations. 2 2 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. Chairman letter was sent September 8, 2017 and response was received on October 31, 2017. There were no issues. DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 7

5 Did State conduct or participate in pipeline safety training session or seminar in Past 3 Years? Chapter 8.5 Yes = 1 No = 0 Evaluator Notes: Yes. Previous seminar was held in September 26-28, 2016; the next seminar is scheduled for 2019. 1 1 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. Reviewed numerous distribution and transmission inspections reports from 2017, and previous inspection that determined they were performed within time intervals established in 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 covered all applicable code requirements as outlined by the MPSC inspection checklist for Cycle 'A' (1st and 2nd cycle) in CY2017. All applicable portions of inspection forms were completed; however, documentation was not adequate on some of the inspection form to determine all pipeline regulatory areas were inspected. The inspection was performed against DTE Gas Company ? Cadillac Distribution in CY2017. The MPSC has put in place a process to have supervisory staff review inspection reports, and have established a spreadsheet which outlines the process to determine N/A, N/C, and Unsatisfactory on the inspection forms. 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: Yes. Verified in Cycle "A" of 2013, and during 4 -year interval for Cycle "A" in 2017. 1 1 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: Yes. Verified in Cycle "A" of 2013, and during 4 -year interval for Cycle "A" in 2017. 1 1 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 Evaluator Notes: Yes. Verified in cycle "H" of last half of 2016, and previously 4-year interval for Cycle 'H" in 2012. 1 1 11 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? Chapter 5.1 Yes = 1 No = 0 Evaluator Notes: Yes. Verified during Cycle 'A,' in First Half 2013, and being inspected in First Half 2018 Cycle 'C'. DUNS: 1486742650000 2017 Gas State Program Evaluation 1 1 Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 8

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, the MPSC is reviewing operator annual reports for accuracy and data is analyzed. Incident/Accident reports are reviewed monthly in the PDM, and a spreadsheet is established to track the reports. The spreadsheet is emailed to AID (Accident Investigation Division) monthly. 13 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 1 1 Evaluator Notes: Yes. Verified during Cycle 'D,' last inspected in Second Half 2014. Currently being inspected in 2018 (2nd Half). 14 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. Verified in Cycle "H" second half of 2016, which was previously performed in 4-year interval in second half of 2012. Did use abbreviated D&A inspection form in 2016. 15 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. OQ inspections were verified starting late in 2015 through 2016. Scheduled again for 2019 (Cycles 'E' and 'F') 16 Is state verifying operator's gas transmission integrity management programs (IMP) are 2 2 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). (Are the State's largest operators programs being contacted or reviewed annually? Are replies to Operator IM notifications addressed? (formerly part of Question C-13)). 49 CFR 192 Subpart 0 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. TIMP (HDQ) Inspections were completed in 2014/2015/2016. TIMP for Large Operators ("Big 4") was in 2014 and is occurring in 2018. Also, receiving ILI updates from DTE and CE to facilitate annual field inspections. MPSC holds an annual communications meeting in the beginning of the year with the "Big 4" operators (DTE, Consumers, Semco, and Michigan Gas Utilities) to discuss ongoing IM projects. 17 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). (Are the State's largest operators programs being contacted or reviewed annually?). 49 CFR 192 Subpart P Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. DIMP (HDQ) DIMP inspections were completed first between March 2012 and October 2013. Second round Inspections were completed in 2016 (Large Operators) and 2017 (Small Operators). Also, receive main-replacement program projects annually for DTE and CE to facilitate inspections. MPSC holds an annual communications meeting in the beginning of the year with the "Big 4" operators (DTE, Consumers, DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 9

Semco, and Michigan Gas Utilities) to discuss ongoing IM projects 18 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. PAPEI Effectiveness Inspections should be conducted every four years by operators. 49 CFR 192.616 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. - PAP inspections were completed first between 2011 and 2013. - Second round was completed in Second Half 2016. - Recent PAP inspections are entered into IA. - Prior PAP inspections are entered into the PAPEI DB. 2 2 19 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 MPSC utilizes its website, annual meeting with large operators, and power point presentation posted on website. Public does not have access to inspection reports on the website. The MPSC is looking at making available compliance actions for the public within an estimate 2 year time frame. 20 Did state execute appropriate follow-up actions to Safety Related Condition (SRC) 1 1 Reports? Chapter 6.3 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes. The MPSC has taken appropriate follow-up actions to Safety Related Condition Reports. There were four open SRCRs at the time of the evaluation. 21 Did the State ask Operators to identify any plastic pipe and components that has shown a record of defects/leaks and what those operators are doing to mitigate the safety concerns? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes. Verified in Cycle "A" first half 2013, and the 4-year interval of first of 2017. 1 1 22 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. The MPSC did participate to surveys or information request from NAPSR or PHMSA. 1 1 23 If the State has issued any waivers/special permits for any operator, has the state verified 1 1 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: There are four active waiver/special permits being monitored by the MPSC. List was requested from MPSC and reviewed for status. There were no issues. 24 Did the state attend the National NAPSR Board of Directors Meeting in CY being evaluated? No = 0 Needs Improvement = .5 Yes = 1 Evaluator Notes: DUNS: 1486742650000 2017 Gas State Program Evaluation 1 1 Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 10

Yes. David Chislea attended the national meeting September 25-29, 2017. Regional meeting attended May 15-19, 2017. 25 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: Discussed with the MPSC Program Performance Metrics through 2017. There were no negative trends identified; however, would need to continue monitor data for any changes in trends. 26 Discussion with State on accuracy of inspection day information submitted into State 1 1 Inspection Day Calculation Tool (SICT) Has the State updated SICT data? No = 0 Yes = 1 Evaluator Notes: Discussed with the MPSC the accuracy of the CY2017 Inspection Person-Days from SICT tool was 872; whereas, the field inspection activity from Attachment 2 of Progress Report totaled 861. The MPSC stated they would have no problem meeting the SICT tool calculation number. 27 Did the State verify Operators took appropriate action regarding Pipeline Flow Reversals, Product Changes and Conversions to Service? See ADP-2014-04 Needs Improvement = .5 No = 0 Yes = 1 1 1 Evaluator Notes: This item is being inspected in inspection cycle 'D.' Currently 2018 2nd Half. 28 General Comments: Info Only = No Points Evaluator Notes: Info Only Info Only The following issues were identified in Part C of the evaluation: - Recommend the MPSC allow staff to complete all T&Q courses for Natural Gas, such as OQ, IMP, DIMP. This would provide the MPSC with staff that is qualified to perform all inspections as lead in case they decide to resign, fired, or due to attrition. - All applicable portions of inspection forms were completed; however, documentation was not adequate on the inspection form to determine all pipeline regulatory areas were inspected. The inspection was performed against DTE Gas Company ? Cadillac Distribution in CY2017. The MPSC has put in place a process to have supervisory staff review inspection reports, and have established a spreadsheet which outlines the process to determine N/A, N/C, and Unsatisfactory on the inspection forms. Total points scored for this section: 49 Total possible points for this section: 49 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 11

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 c. Procedures regarding closing outstanding probable violations Yes No Needs Improvement Evaluator Notes: Yes. - Section 5.3 (Written NC Letter) of the PG. Also, Sections 2.16 (Exit Interview - 30-day briefing) and 2.17 (Post- Inspection ? 90-day Notification); - Section 5.9 (Follow-up) and Section 5.5 (resolution of NC) of the PG. Also, status spreadsheet work (NJM); and - Section 5.5 (Resolution of NC) and Section 5.10 (Verification). 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. 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. Within 30 days, conduct a post-inspection briefing with the owner or operator of the gas or hazardous liquid pipeline facility inspected outlining any concerns; and Yes No Needs Improvement f. Within 90 days, to the extent practicable, provide the owner or operator with written preliminary findings of the inspection. Yes No Needs Improvement Evaluator Notes: Upon review of inspection reports compliance actions were sent to company officials, probable violations were documented; however, there is an issue with resolving open violations; however, the MPSC has process in place periodically (quarterly review) outstanding probable violations. The MPSC has met the 30/90-day requirement, and has process in place to meet deadline. 3 Did the state issue compliance actions for all probable violations discovered? Yes = 2 No = 0 Needs Improvement = 1 2 2 Evaluator Notes: Yes. Upon review of inspection reports the MPSC issued compliance actions for all probable violations discovered. 4 Did compliance actions give reasonable due process to all parties? Including "show cause" hearing if necessary. Yes = 2 No = 0 Evaluator Notes: A "show cause" hearing was issued for Consumer Gas in 2017. The issue has been resolved. Procedure included in section 5.8 of MPSC Inspection Plan. 2 2 5 Is the program manager familiar with state process for imposing civil penalties? Were 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 2 2 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 12

Evaluator Notes: Yes. The program manager is familiar with state process for imposing civil penalties. There was a total of $193,000 civil penalties assessed in 2017, and $168,000 collected in 2017. 6 Can the State demonstrate it is using their enforcement fining authority for pipeline safety violations? Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Yes. There was a total of $193,000 civil penalties assessed in 2017, and $168,000 collected in 2017. 1 1 7 General Comments: Info Only Info Only Info Only = No Points Evaluator Notes: There is an issue with resolving open violations; however, the MPSC has process in place periodically (quarterly review) outstanding probable violations. Total points scored for this section: 14 Total possible points for this section: 15 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 13

PART E - Incident Investigations Points(MAX) Score 1 Does the state have written procedures to address state actions in the event of an incident/ accident? Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. Procedures are included on Chapter 6 and 7 in the MPSC Operating Procedures. 2 2 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. Incident/Accident notifications are logged into the MPSC database for CY2017. Procedure for receiving calls in Section 6.7 of the PG, and records of notifications in Section 6.6 of the PG. MOU between PHMSA and NTSB is reference in the PG (Appendix K), and the Cooperation agreement is in Section 7.3. 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: There was an incident with Northern Natural Gas where the MPSC did not go on-site to the incident because operator failed to report the incident. The MPSC did thoroughly document the investigation. 4 Were all incidents investigated, thoroughly documented, and with conclusions and 3 3 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: Reviewed incident reports from Consumer Gas in CY2017 which were investigated and thoroughly documented; however, recommendations by MPSC did not prevent recurrences. There were two instances (Consumer Gas) that pipeline may not have been pigged properly (debris in pipeline). 5 Did the state initiate compliance action for violations found during any incident/accident 1 1 investigation? Yes = 1 No = 0 Evaluator Notes: Yes. The MPSC issued compliance actions for violations found during the CY2017. There were at least six incidents that had compliance actions issued. 6 Did the state assist Region Office or Accident Investigation Division (AID) 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 MPSC has been taking appropriate follow-up actions to assist AID with incident/accidents reports. DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 14

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 MPSC shares lessons learned during operator monthly meetings and during the NAPSR State of State address. 8 General Comments: Info Only Info Only Info Only = No Points Evaluator Notes: Recommendations by MPSC did not prevent recurrences of incidents. There were two instances (Consumer Gas) that pipeline may not have been pigged properly (debris in pipeline). Total points scored for this section: 11 Total possible points for this section: 11 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 15

PART 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: Yes. Verified during Cycle "H" second half of 2016. 2 2 2 Did the state inspector verify pipeline operators are following their written procedures 2 2 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. Verified during Cycle 'H,' last inspected in Second Half 2016, is a damage prevention topic. Verify through examples in these cases. Damage Prevention enforcement for incidents. Increased focus on damage prevention topics. Damage Prevention (Interim) procedures. 3 Did the state encourage and promote practices for reducing damages to all underground 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. - In 2014 Michigan passed an updated damage prevention Act (Act 174). - JMQ's role. KML field enforcement. Notifications (Damage bulletins from operators) - MDPB attendance. (JMQ/KML/DJC) - Communications Meeting (2018) - 2015 DJC presentation at the Renter's Association Meeting. - Staff annually attends paradigm meetings. - Damage Prevention procedures. (Interim) have been developed and are available on the S Drive:. 2 2 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 MPSC is collecting data from operator annual reports and pipeline data from its jurisdictional operators (like DIRT). 5 General Comments: Info Only = No Points Evaluator Notes: There were no issues in Part F of the evaluation. Info Only Info Only Total points scored for this section: 8 Total possible points for this section: 8 DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 16

PART G - Field Inspections Points(MAX) Score 1 Operator, Inspector, Location, Date and PHMSA Representative Info Only = No Points Name of Operator Inspected: Consumers Energy Co. and DTE Gas Co. Name of State Inspector(s) Observed: Karen Krueger Location of Inspection: Livonia, MI; Royal Oak, MI; and Ypsilanti, MI Date of Inspection: July 17 - 19, 2018 Name of PHMSA Representative: Clint Stephens Evaluator Notes: Info Only Info Only The MPSC performed a 2018 2nd Half inspection which included leak surveys, patrols, valve maintenance, and odorization. 2 Was the operator or operator's representative notified and/or given the opportunity to be present during inspection? Yes = 1 No = 0 1 1 Evaluator Notes: Yes. The operators' representative was notified and given the opportunity to be present during the inspection. 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 an in-house leak survey, valve test and odorization records form; and 2018 2nd Half inspection checklist. The forms were used as a guide for the inspections. 4 Did the inspector thoroughly document results of the inspection? Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes. The inspector thoroughly documented results of the inspection. 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: 1 1 Yes. The inspector verified operator had system maps, FI unit, and odorator during the leak survey and odorization test. 2 2 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: Yes. The inspector reviewed leak survey procedures and records, patrol records, odorization records and procedures, and valve maintenance records and procedures. Also, the inspector observed mobile leak survey, odrant test, and valve test. DUNS: 1486742650000 2017 Gas State Program Evaluation Michigan MICHIGAN PUBLIC SERVICE COMMISSION, Page: 17

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: Yes. The inspector showed adequate knowledge of the pipeline safety program and regulations. 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. An exit interview was conducted after the inspections. 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: Yes. The inspector identified numerous probable violations found during the inspections. 1 1 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 B. Signs C. Tapping D. Valve Maintenance Info Only Info Only DUNS: 1486742650000 2017 Gas State Program Evaluation
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