2012 MT NG Program Evaluation - mt2012ngprogramevaluation (Montana; Natural Gas State Program Evaluation)

MT NG Program Evaluation, 2012, page 1Official PDF1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2012 Natural Gas State Program Evaluation for MONTANA 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: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 1#

MT NG Program Evaluation, 2012, page 22012 Natural Gas State Program Evaluation -- CY 2012 Natural Gas State Agency: Montana Rating: Agency Status: Date of Visit: 05/14/2013 - 05/16/2013 Agency Representative: Joel Tierney, Pipeline Safety Program Manager PHMSA Representative: Rex Evans Commission Chairman to whom follow up letter is to be sent: Name/Title: W. A. (Bill) Gallagher, Chairman Agency: Montana Public Service Commission Address: 1701 Prospect Avenue City/State/Zip: Helena, MT 59620 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 2012 (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 15 15 C Program Performance 43 41 D Compliance Activities 15 14 E Incident Investigations 5 5 F Damage Prevention 8 8 G Field Inspections 11 11 H Interstate Agent State (If Applicable) 0 0 I 60106 Agreement State (If Applicable) 0 0 TOTALS 107 104 State Rating................................................................................................................................................... 97.2 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 2#

MT NG Program Evaluation, 2012, page 3PART A - Progress Report and Program Documentation Review Points(MAX) Score 1 Accuracy of Jurisdictional Authority and Operator/Inspection Units Data - Progress Report Attachment 1 (A1a) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Jurisdictional authority and other information on Attachment 1 correct 1 1 2 Review of Inspection Days for accuracy - Progress Report Attachment 2 (A1b) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 107 Inspection Days accurate 1 1 3 Accuracy verification of Operators and Operators Inspection Units in State - Progress Report Attachment 3 (A1c) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Operator information appears accurate 1 1 4 Were all federally reportable incident reports listed and information correct? - Progress Report Attachment 4 (A1d) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Information correct, no reportable incidents 1 1 5 Accuracy verification of Compliance Activities - Progress Report Attachment 5 (A1e) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Compliance information appeared accurate from information reviewed in inspection reports 1 1 6 Were pipeline program files well-organized and accessible? - Progress Report 2 2 Attachment 6 (A1f, A4) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: I was able to find everything needed and all in electronic files. was in process of altering database. Needs to make sure all information available and should be able to find last inspection and should not purge files too soon. 7 Was employee listing and completed training accurate and complete? - Progress Report Attachment 7 (A1g) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No issues 1 1 8 Verification of Part 192,193,198,199 Rules and Amendments - Progress Report Attachment 8 (A1h) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No issues 1 1 9 List of Planned Performance - Did state describe accomplishments on Progress Report in detail - Progress Report Attachment 10 (H1-3) 1 1 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 3#

MT NG Program Evaluation, 2012, page 4Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No issues. Additional engineer approved by legislature and hired. 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: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 4#

MT NG Program Evaluation, 2012, page 5PART B - Program Inspection Procedures Points(MAX) Score 1 Standard Inspections (B1a) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: document 2 2 Minimal inspection procedures. Will try and send Joel information from other programs to possibly enhance his 3 page 2 IMP Inspections (including DIMP) (B1b) 1 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Should address ongoing efforts on an annual basis. See comments 3 OQ Inspections (B1c) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Should include information as to what they do with operators on an on-going basis. see comments 1 1 4 Damage Prevention Inspections (B1d) 1 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Briefly mentioned. This should be expanded upon in procedures. 5 On-Site Operator Training (B1e) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Only briefly mentioned and should be expanded upon 1 1 6 Construction Inspections (B1f) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Information should be expanded. See comments 1 1 7 Incident/Accident Investigations (B1g) 2 2 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Information should include on how they decide whether or not to investigate and should be expanded. 8 Does inspection plan address inspection priorities of each operator, and if necessary each 6 6 unit, based on the following elements? (B2a-d, G1,2,4) Yes = 6 No = 0 Needs Improvement = 1-5 a. Length of time since last inspection 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) DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 5#

MT NG Program Evaluation, 2012, page 6f. Are inspection units broken down appropriately? Yes No Needs Improvement Evaluator Notes: Procedures should address any reinspection due to operating history and what decisions are made as far as when inspections are conducted. See general comments 9 General Comments: Info Only Info Only Info Only = No Points Evaluator Notes: Some time needs to be spent on enhancing inspection procedures, including addition of inspection forms, operator information and each inspection area in more detail. Will try and send Joel information and examples from other programs. Will give until next reporting period to improve in all areas. Total points scored for this section: 15 Total possible points for this section: 15 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 6#

MT NG Program Evaluation, 2012, page 7PART C - Program Performance Points(MAX) Score 1 Was ratio of Total Inspection person-days to total person days acceptable? (Director of State Programs may modify with just cause) Chapter 4.3 (A12) Yes = 5 No = 0 5 5 A. Total Inspection Person Days (Attachment 2): 107.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 0.83 = 183.52 Ratio: A / B 107.00 / 183.52 = 0.58 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 Evaluator Notes: Information reviewed and confirmed inspection person-days applicable to inspectors on staff resulted in full points 2 Has each inspector and program manager fulfilled the T Q Training Requirements? (See 5 5 Guidelines for requirements) Chapter 4.4 (A8-A11, G19) 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 Evaluator Notes: Joel has completed all training and serves as general lead until new inspectors complete training which is on track 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 (A5) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues. Joel has been part of program for many years. 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 (A6-7) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Deficiencies were address and letter was received dated day after letter sent 2 2 5 Did State hold PHMSA TQ Seminar in Past 3 Years? Chapter 8.5 (A3) Yes = 2 No = 0 Evaluator Notes: No issues, last one was in Feb 2012, next scheduled for Feb 2014 2 2 6 Did state inspect all types of operators and inspection units in accordance with time intervals established in written procedures? Chapter 5.1 (B3) Yes = 5 No = 0 Needs Improvement = 1-4 5 3 Evaluator Notes: Master meters are not being inspected and only encouraged to become non-jurisdictional. Master Meter issue needs to be addressed with correspondence to those identified. DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 7#

MT NG Program Evaluation, 2012, page 87 Did inspection form(s) cover all applicable code requirements addressed on Federal Inspection form(s)? Did State complete all applicable portions of inspection forms? Chapter 5.1 (B4-5) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Uses federal form, no issues 2 2 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 (B7) Yes = 1 No = 0 Evaluator Notes: No cast iron 1 NA 9 Did the state review operator procedures for surveillance of cast iron pipelines, including appropriate action resulting from tracking circumferential cracking failures, study of leakage history, or other unusual operating maintenance condition? (Note: See GPTC Appendix G-18 for guidance) (NTSB) Chapter 5.1 (B8) Yes = 1 No = 0 Evaluator Notes: No cast iron 1 NA 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 (B9) Yes = 1 No = 0 Evaluator Notes: This issue is addressed with supplemental inspection questions 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 (B10,E5) Yes = 1 No = 0 Evaluator Notes: addressed with supplemental inspection questions. 1 1 12 Has the state reviewed Operator Annual reports, along with Incident/Accident reports, for accuracy and analyzed data for trends and operator issues? Data Initiative (G6-9,G16) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Information is monitored on spreadsheets for trends. 2 2 13 Did state input all applicable OQ, IMP inspection results into federal database in a timely manner? This includes replies to Operator notifications into IMDB database. Chapter 5.1 (G10-12) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues, database review indicates inspections are being uploaded 2 2 14 DUNS: 809588692 2012 Natural Gas State Program Evaluation Has state confirmed intrastate transmission operators have submitted information into NPMS database along with changes made after original submission? (G14) Yes = 1 No = 0 Needs Improvement = .5 1 1 Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 8#

MT NG Program Evaluation, 2012, page 9Evaluator Notes: No issues 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 (I1-3) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: D & A inspections are being conducted as required 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 (I4-7) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: OQ is being reviewed. Should review program status and shared operators with other states to ensure programs are up to date 17 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). 49 CFR 192 Subpart 0 (I8-12) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: really only has one operator (Northwestern Energy) who has IMP programs. Information has been exchanged and progress reviewed, recommend more in depth review and more official periodic updates from the operator. 18 Is state verifying operator's gas distribution integrity management Programs (DIMP)? This should include a review of DIMP plans, along with monitoring progress. In addition, the review should take in to account program review and updates of operators plan(s). 49 CFR 192 Subpart P DIMP ? First round of program inspections should be complete by December 2014 2 2 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues, on targe to complete by end of 2014 19 Is state verifying operators Public Awareness programs are up to date and being followed. State should also verify operators have evaluated Public Awareness programs for effectiveness as described in RP1162. 49 CFR 192.616 (I13-16) PAPEI Effectiveness Inspections should be complete by December 2013 2 2 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues, on target to complete by end of year 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). (G20-21) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Participation in Montana Utility Coordinating council. working on posting information to website. no current issues DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 9#

MT NG Program Evaluation, 2012, page 1021 Did state execute appropriate follow-up actions to Safety Related Condition (SRC) Reports? Chapter 6.3 (B6) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: no SRC's during past year 1 NA 22 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? (G13) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: yes, part of supplemental questions to inspection form 1 1 23 Did the state participate in/respond to surveys or information requests from NAPSR or PHMSA? (H4) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No issues 1 1 24 General Comments: Info Only = No Points Evaluator Notes: Info Only Info Only Total points scored for this section: 41 Total possible points for this section: 43 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 10#

MT NG Program Evaluation, 2012, page 11PART D - Compliance Activities Points(MAX) Score 1 Does the state have written procedures to identify steps to be taken from the discovery to 4 4 resolution of a probable violation? Chapter 5.1 (B12-14, B16, B1h) 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: Information reviewed indicates that the compliance process is being fully completed, although no civil penalties. Compliance process is codified in MT adminstrative rules. 2 Did the state follow compliance procedures (from discovery to resolution) and adequately 4 4 document all probable violations, including what resolution or further course of action is needed to gain compliance? Chapter 5.1 (B11,B18,B19) Yes = 4 No = 0 Needs Improvement = 1-3 a. Were compliance actions sent to company officer or manager/board member if municipal/government system? Yes No Needs Improvement b. Were probable violations documented? Yes No Needs Improvement c. Were probable violations resolved? Yes No Needs Improvement d. Was the progress of probable violations routinely reviewed? Yes No Needs Improvement Evaluator Notes: Compliance information in files appears to be following procedures and resolution of issues appear to be addressed. 3 Did the state issue compliance actions for all probable violations discovered? (B15) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Inspection reports reviewed appear to have compliance issues addressed 2 2 4 Did compliance actions give reasonable due process to all parties? Including "show cause" hearing if necessary. (B17, B20) Yes = 2 No = 0 Evaluator Notes: No issues 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) (B27) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: 2 2 Joel is familiar with process, possible civil penalties were addressed in compliance correspondence with operators. 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: No fines have been issued can not demonstrate compliance has ever reached this level 1 0 7 General Comments: Info Only = No Points Evaluator Notes: Info Only Info Only DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 11#

MT NG Program Evaluation, 2012, page 12Total points scored for this section: 14 Total possible points for this section: 15 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 12#

MT NG Program Evaluation, 2012, page 13PART E - Incident Investigations Points(MAX) Score 1 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 (A2,D1-3) 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: No issues. 2 If onsite investigation was not made, did state obtain sufficient information from the operator and/or by other means to determine the facts to support the decision to not go on-site? Chapter 6 (D4) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No issues, no incidents in 2012 1 1 3 Were all incidents investigated, thoroughly documented, and with conclusions and 3 NA recommendations? (D5) 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: No 2012 incidents 4 Did the state initiate compliance action for violations found during any incident/accident investigation? (D6) Yes = 1 No = 0 Evaluator Notes: No incidents in 2012 1 NA 5 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 (D7) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: No issues 1 1 6 Does state share lessons learned from incidents/accidents? (sharing information, such as: at NAPSR Region meetings, state seminars, etc) (G15) Yes = 1 No = 0 Evaluator Notes: No issues. Information shared at NAPSR meetings 1 1 7 General Comments: Info Only = No Points Evaluator Notes: DUNS: 809588692 2012 Natural Gas State Program Evaluation Info Only Info Only Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 13#

MT NG Program Evaluation, 2012, page 14No incidents in 2012. Discussed being prepared when incidents occurred and emphasized new inspectors follow checklist in the event of an incident and reach out for help if needed. Joel has previous incident experience and no issues found. Total points scored for this section: 5 Total possible points for this section: 5 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 14#

MT NG Program Evaluation, 2012, page 15PART F - Damage Prevention Points(MAX) Score 1 Has the state reviewed directional drilling/boring procedures of each pipeline operator or its contractor to determine if they include actions to protect their facilities from the dangers posed by drilling and other trench less technologies? NTSB (E1) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: This is part of supplemental checklist. no issues 2 2 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? (E2) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues. part of supplemental checklist 2 2 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.) (E3) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes, state associate member of Mt. Utility Coordinating council. CGA regional group being formed 2 2 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? (This can include DIRT and other data shared and reviewed by the pipeline safety program) (E4,G5) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Mt. Utility Coordinating council collects data. No issues 2 2 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: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 15#

MT NG Program Evaluation, 2012, page 16PART G - Field Inspections Points(MAX) Score 1 Operator, Inspector, Location, Date and PHMSA Representative Info Only = No Points Name of Operator Inspected: Northwestern Energy Name of State Inspector(s) Observed: Elizabeth Kamback, Joel Tierney Location of Inspection: Great Falls, MT Date of Inspection: May 15-16, 2013 Name of PHMSA Representative: Rex Evans Evaluator Notes: Partial Standard Inspection was performed on NW Energy Great Falls Division. Info Only Info Only 2 Was the operator or operator's representative notified and/or given the opportunity to be present during inspection? (F2) Yes = 1 No = 0 Evaluator Notes: We met with operator 1 1 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) (F3) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Standard Inspection form used 2 2 4 Did the inspector thoroughly document results of the inspection? (F4) 2 2 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues 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.) (F5) Yes = 1 No = 0 Evaluator Notes: No issues, all office time 1 1 6 Did the inspector adequately review the following during the field portion of the state evaluation? (check all that apply on list) (F7) Yes = 2 No = 0 Needs Improvement = 1 a. Procedures b. Records c. Field Activities d. Other (please comment) Evaluator Notes: Information reviewed was adequate. 2 2 7 Did the inspector have adequate knowledge of the pipeline safety program and regulations? (Evaluator will document reasons if unacceptable) (F8) DUNS: 809588692 2012 Natural Gas State Program Evaluation 2 2 Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 16#

MT NG Program Evaluation, 2012, page 17Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: No issues with Joel, this was one of Elizabeth's first inspection. Used opportunity to talk about various issues that arise during inspections and gave pointers on things to look for. 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) (F9) Yes = 1 No = 0 Evaluator Notes: Yes, for information reviewed during our time there. 1 1 9 During the exit interview, did the inspector identify probable violations found during the inspections? (if applicable) (F10) Yes = 1 No = 0 Evaluator Notes: 1 NA Further investigation needed on some corrosion readings, not ready at that time to address any possible violations. 10 General Comments: What did the inspector observe in the field? (Narrative description of field observations and how inspector performed) Best Practices to Share with Other States - (Field - could be from operator visited or state inspector practices) 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 E. Vault Maintenance F. Welding DUNS: 809588692 2012 Natural Gas State Program Evaluation Info Only Info Only Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 17#

MT NG Program Evaluation, 2012, page 18G. OQ - Operator Qualification H. Compliance Follow-up I. Atmospheric Corrosion J. Other Evaluator Notes: Office evaluation of records and procedures only DUNS: 809588692 2012 Natural Gas State Program Evaluation Total points scored for this section: 11 Total possible points for this section: 11 Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 18#

MT NG Program Evaluation, 2012, page 19PART H - Interstate Agent State (If Applicable) Points(MAX) Score 1 Did the state use the current federal inspection form(s)? (C1) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 2 Are results documented demonstrating inspection units were reviewed in accordance with "PHMSA directed inspection plan"? (C2) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 3 Did the state submit documentation of the inspections within 60 days as stated in its latest Interstate Agent Agreement form? (C3) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 4 Were probable violations identified by state referred to PHMSA for compliance? (NOTE: PHMSA representative has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation.) (C4) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 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? (C5) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 6 Did the state give written notice to PHMSA within 60 days of all probable violations found? (C6) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 7 Did the state initially submit documentation to support compliance action by PHMSA on probable violations? (C7) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 8 General Comments: Info Only = No Points Evaluator Notes: State is not an interstate agent. N/A Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 19#

MT NG Program Evaluation, 2012, page 20PART I - 60106 Agreement State (If Applicable) Points(MAX) Score 1 Did the state use the current federal inspection form(s)? (B21) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 2 Are results documented demonstrating inspection units were reviewed in accordance with state inspection plan? (B22) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 3 Were any probable violations identified by state referred to PHMSA for compliance? (NOTE: PHMSA representative has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation.) (B23) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 4 Did the state immediately report to PHMSA conditions which may pose an imminent safety hazard to the public or to the environment? (B24) Yes = 1 No = 0 Needs Improvement = .5 1 NA Evaluator Notes: 5 Did the state give written notice to PHMSA within 60 days of all probable violations found? (B25) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 6 Did the state initially submit adequate documentation to support compliance action by PHMSA on probable violations? (B26) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: 1 NA 7 General Comments: Info Only = No Points Evaluator Notes: N/A Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 809588692 2012 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 20#