# 2013 MT NG Program Evaluation - mt2013ngprogramevaluation (Montana; Natural Gas State Program Evaluation)

- **operation:** document
- **citation:** PHMSA mt2013ngprogramevaluation
- **title:** 2013 MT NG Program Evaluation - mt2013ngprogramevaluation (Montana; Natural Gas State Program Evaluation)
- **source type:** inspection
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2013-01-01
- **effective on:** Not available
- **summary:** 2013 PHMSA natural gas program evaluation for Montana.
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- **source url:** https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/subdoc/1056/mt2013ngprogramevaluation.pdf
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1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2013 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 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 1

2013 Natural Gas State Program Evaluation -- CY 2013 Natural Gas State Agency: Montana Rating: Agency Status: 60105(a): Yes 60106(a): No Interstate Agent: No Date of Visit: 07/28/2014 - 07/31/2014 Agency Representative: Joel Tierney, Program Manager: Elizabeth Kamback, John Torske PHMSA Representative: Rex Evans Commission Chairman to whom follow up letter is to be sent: Name/Title: Mr. W. A. (Bill) Gallagher, Chairman Agency: Montana Public Service Commission Address: 1701 Prospect Avenue City/State/Zip: Helena, MT 59620-2601 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 2013 (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 14 C Program Performance 43 41 D Compliance Activities 15 13 E Incident Investigations 4 4 F Damage Prevention 8 8 G Field Inspections 11 10 H Interstate Agent State (If Applicable) 0 0 I 60106 Agreement State (If Applicable) 0 0 TOTALS 106 100 State Rating................................................................................................................................................... 94.3 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA 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 (A1a) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Information listed appears correct 1 1 2 Review of Inspection Days for accuracy - Progress Report Attachment 2 (A1b) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: The data listed appears accurate based on inspection report review 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: Information appears correct and matches pipeline data mart 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: There were no incidents in CY2013 - no issues 1 1 5 Accuracy verification of Compliance Activities - Progress Report Attachment 5 (A1e) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Information appears correct taken from their Access database 1 1 6 Were pipeline program files well-organized and accessible? - Progress Report Attachment 6 (A1f, A4) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: All information electronic 2 2 7 Was employee listing and completed training accurate and complete? - Progress Report Attachment 7 (A1g) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: TQ provided info appears correct 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) Yes = 1 No = 0 Needs Improvement = .5 1 1 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 3

Evaluator Notes: No issues 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 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 4

PART B - Program Inspection Procedures Points(MAX) Score 1 Standard Inspections (B1a) Yes = 2 No = 0 Needs Improvement = 1 2 1 Evaluator Notes: A great deal of progress has been made on updating and enhancing program procedures. Now improvement is needed in finalizing and finishing this update including adding information regarding inspection activities. This should include what items are included and to be looked at during standard inspection including an appropriate amount of field verification of compliance records. 2 IMP Inspections (including DIMP) (B1b) 1 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Pages 7-8. Recommend inclusion of an annual review of large operators DIMP and IMP plans 3 OQ Inspections (B1c) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Page 9 - recommend more specific procedure for plan and overall requalification review 1 1 4 Damage Prevention Inspections (B1d) 1 1 Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: Page 14 plan 5 On-Site Operator Training (B1e) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: page 7 1 1 6 Construction Inspections (B1f) Yes = 1 No = 0 Needs Improvement = .5 Evaluator Notes: page 6 of plan 1 1 7 Incident/Accident Investigations (B1g) 2 2 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: page 13 of plan 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 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 5

e. Process to identify high-risk inspection units that includes all threats - (Excavation Damage, Corrosion, Natural Forces, Outside Forces, Material and Welds, Equipment, Operators and any Other Factors) f. Are inspection units broken down appropriately? Evaluator Notes: This information page 17-19 of plan Yes No Needs Improvement Yes No Needs Improvement 9 General Comments: Info Only = No Points Evaluator Notes: enhancements needed Info Only Info Only The MTPSC procedures had been updated since last evaluation. Should work on some fine tuning and permanent format Total points scored for this section: 14 Total possible points for this section: 15 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA 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 (A12) Yes = 5 No = 0 5 5 A. Total Inspection Person Days (Attachment 2): 151.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 1.68 = 369.60 Ratio: A / B 151.00 / 369.60 = 0.41 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 Evaluator Notes: They met person days per-person year requirement here although overall man days were not met on progress report 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: No other outside training. Both John and Elizabeth are in process of completing all of "other" than core course and being very aggressive in doing so. No issues. 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 here 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 2 2 Evaluator Notes: State did respond within 60 days, they are also addressing issue with Master meter operators. Addressing, but issue is still pending. Full points on this question but will address Master meter issue in question C6 5 Did State hold PHMSA TQ Seminar in Past 3 Years? Chapter 8.5 (A3) Yes = 2 No = 0 Evaluator Notes: TQ seminar was conducted in 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: Again, two point deduction here due to no inspections on Master Meter operators. There are seven master meter operators all behind NW Energy. They are in process of attempting to get NW to take over these - will require some commission actions. DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 7

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 (B4-5) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: PHMSA form 2 is primary inspection form used, plus they have supplemental checklist which takes care of various program evaluation related questions. No issues. 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 on supplemental checklist 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: also addressed on supplemental checklist 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 kept on spreadsheets and monitored 2 2 13 Did state input all applicable OQ, IMP inspection results into federal database in a timely 2 2 manner? This includes replies to Operator notifications into IMDB database. Chapter 5.1 (G10-12) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Information appears timely in OQ, IMP information is limited due to limited applicability of IMP operators and limited HCA's. Also told them since they are leaning toward using Inspection Assistant, that they can use it for these filings. DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 8

14 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 Evaluator Notes: No issues 1 1 15 Is the state verifying operators are conducting drug and alcohol tests as required by regulations? This should include verifying positive tests are responded to in accordance with program. 49 CFR 199 (I1-3) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: D & A inspections are being conducted. 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 regularly reviewed. Recommend a thorough documented plan review to ensure all employees and contractors are qualified and requalified. 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: Only one really operator NW Energy with HCA and program in state. Again, recommend annual review and official plan reviews and made part of procedures. 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: appear on target to be complete by Dec 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: all appear to have been completed by end of 2013 20 Does the state have a mechanism for communicating with stakeholders - other than state pipeline safety seminar? (This should include making enforcement cases available to public). (G20-21) Yes = 1 No = 0 Needs Improvement = .5 DUNS: 809588692 2013 Natural Gas State Program Evaluation 1 1 Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 9

Evaluator Notes: enforcement cases would be made publicly available through docket on website. 21 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 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: part of supplemental checklist 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 If the State has issued any waivers/special permits for any operator, has the state verified conditions of those waivers/special permits are being met? This should include having the operator amend procedures where appropriate. Info Only = No Points Evaluator Notes: Info Only Info Only They have a plastic pipe PA-12 waiver, and waiver on atmospheric corrosion leak survey intervals. 25 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 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 10

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 3 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: Procedure for penalty process is codified in MT administrative rules. After review of follow-up process there is a need to make sure they can easily identify any outstanding compliance issues, also making it clear when compliance issues are closed along with making sure all information is attached to compliance responses and responses meet intended compliance issues discovered. 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: The compliance information reviewed appeared to be addressed in an appropriate manner and compliance issues resolved. 3 Did the state issue compliance actions for all probable violations discovered? (B15) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: inspection records reviewed had compliance letters issued for all issues discovered. 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: Montana administrative code provides necessary due process 2 2 5 Is the program manager familiar with state process for imposing civil penalties? Were 2 2 civil penalties considered for repeat violations (with severity consideration) or violations resulting in incidents/accidents? (describe any actions taken) (B27) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Yes, program manager is familiar. Civil penalties on compliance activities reviewed did not appear to warrant severity consideration 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 and no demonstration of use of fining authority 1 0 7 General Comments: Info Only Info Only DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 11

Info Only = No Points Evaluator Notes: DUNS: 809588692 2013 Natural Gas State Program Evaluation Total points scored for this section: 13 Total possible points for this section: 15 Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 12

PART 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 reportable incidents in CY2013 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 incidents to have reviewed. 4 Did the state initiate compliance action for violations found during any incident/accident investigation? (D6) Yes = 1 No = 0 Evaluator Notes: no applicable for CY2013 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: None 1 NA 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 1 1 7 General Comments: Info Only = No Points Evaluator Notes: DUNS: 809588692 2013 Natural Gas State Program Evaluation Info Only Info Only Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 13

Total points scored for this section: 4 Total possible points for this section: 4 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 14

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 (E1) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: no issues - part of supplemental checklist 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 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: part of Montana Utility Coordinating council. Joel on board. 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: Yes, MT Coordinating Council collects and analyzes trends. Also on annual reports now. 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 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 15

PART G - Field Inspections Points(MAX) Score 1 Operator, Inspector, Location, Date and PHMSA Representative Info Only = No Points Name of Operator Inspected: Northwestern Energy - Bozeman Montana Name of State Inspector(s) Observed: Elizabeth Kamback, John Torske, Joel Tierney Location of Inspection: Bozeman Office Date of Inspection: July 30-31, 2014 Name of PHMSA Representative: Rex Evans Evaluator Notes: Primarily observed procedure and record audit of Bozeman inspection unit of Northwestern Energy Info Only Info Only 2 Was the operator or operator's representative notified and/or given the opportunity to be 1 1 present during inspection? (F2) Yes = 1 No = 0 Evaluator Notes: Operator Present - Heather Benn supervisor, Pat Patterson - local Mgr, Leonard LeVeaux Mgr Integrity and DOT Coordinator Devin McCarthy 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: PHMSA Form 2 used - no issues. 2 2 4 Did the inspector thoroughly document results of the inspection? (F4) 2 2 Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: Information during time observed appears to have been thorough documented. Will ask for inspection report when complete and review during next site visit. 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 - only viewed office portion during this visit. 1 1 2 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: Recommend improvement in the evaluation of what records are viewed and how many records are necessary to ensure compliance. The Bozeman inspection unit had not been inspected for four years and although it appeared the operator was compliant with records reviewed - not enough records were reviewed for the time period. Should consider doing all of DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 16

Northwest Energy records annually at a central location since most of records are kept electronically. Also see if operator can perform queries to have multiple years of records to determine trends and identify possible compliance issues. Should make sure review of short main sections for cathodic protection is adequately reviewed to make sure 10% are done each year and in ten years. Should also amend inspection procedures to make sure an adequate amount of time is spent in field verifying compliance records are correct. 7 Did the inspector have adequate knowledge of the pipeline safety program and 2 2 regulations? (Evaluator will document reasons if unacceptable) (F8) Yes = 2 No = 0 Needs Improvement = 1 Evaluator Notes: adequate knowledge of the program and regulations are not an issue, rethinking inspection approach is necessary as discussed in previous question. 8 Did the inspector conduct an exit interview? (If inspection is not totally complete the 1 1 interview should be based on areas covered during time of field evaluation) (F9) Yes = 1 No = 0 Evaluator Notes: No issues - summary for any issues for time attended was complete. Full audit was not finished during time frame visited. 9 During the exit interview, did the inspector identify probable violations found during the inspections? (if applicable) (F10) Yes = 1 No = 0 Evaluator Notes: None found during review 1 NA 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 DUNS: 809588692 2013 Natural Gas State Program Evaluation Info Only Info Only Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 17

z. Prevention of Accidental Ignition A. Repairs B. Signs C. Tapping D. Valve Maintenance E. Vault Maintenance F. Welding G. OQ - Operator Qualification H. Compliance Follow-up I. Atmospheric Corrosion J. Other Evaluator Notes: Total points scored for this section: 10 Total possible points for this section: 11 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 18

PART 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: This section is not applicable, not an interstate agent Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 19

PART 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: section not applicable Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 809588692 2013 Natural Gas State Program Evaluation Montana MONTANA PUBLIC SERVICE COMMISSION, Page: 20
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