# 2009 NC NG Program Evaluation - nc2009ngprogramevaluation (North Carolina; Natural Gas State Program Evaluation)

- **operation:** document
- **citation:** PHMSA nc2009ngprogramevaluation
- **title:** 2009 NC NG Program Evaluation - nc2009ngprogramevaluation (North Carolina; Natural Gas State Program Evaluation)
- **source type:** inspection
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** historical
- **official:** true
- **published on:** 2009-01-01
- **effective on:** Not available
- **summary:** 2009 PHMSA natural gas program evaluation for North Carolina.
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1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2009 Natural Gas State Program Evaluation for NORTH CAROLINA UTILITIES COMMISSION Document Legend PART: O -- Representative Date and Title Information A -- General Program Qualifications B -- Inspections and Compliance - Procedures/Records/Performance C -- Interstate Agent States D -- Incident Investigations E -- Damage Prevention Initiatives F -- Field Inspection G -- PHMSA Initiatives - Strategic Plan H -- Miscellaneous I -- Program Initiatives DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 1

2009 Natural Gas State Program Evaluation -- CY 2009 Natural Gas State Agency: North Carolina Rating: Agency Status: Date of Visit: 10/25/2010 - 10/28/2010 Agency Representative: Chris Isley, Director, Pipeline Safety PHMSA Representative: Don Martin, State Programs Office Coordinator Commission Chairman to whom follow up letter is to be sent: Name/Title: Edward S. Finley, Jr.,, Chairman Agency: North Carolina Utility Commission Address: 430 North Salisbury Street- Dobbs Building City/State/Zip: Raleigh, North Carolina 27603-5918 60105(a): Yes 60106(a): No Interstate Agent: No INSTRUCTIONS: Complete this evaluation in accordance with the Procedures for Evaluating State Pipeline Safety Program. The evaluation should generally reflect state program performance during CY 2009 (not the status of performance at the time of the evaluation). All items for which criteria have not been established should be answered based on the PHMSA representative's judgment. A deficiency in any one part of a multiple part question should be scored as needs improvement. Determine the answer to the question then select the appropriate point value. If a state receives less then the maximum points, include a brief explanation in the space provided for general comments/regional observations. If a question is not applicable to a state, select NA. Please ensure all responses are COMPLETE and ACCURATE, and OBJECTIVELY reflect state program performance. Increasing emphasis is being placed on performance. This evaluation together with selected factors reported in the state's annual certification/agreement attachments provide the basis for determining the state's pipeline safety grant allocation. Field Inspection (PART F): The field inspection form used will allow different areas of emphasis to be considered for each question. Question 13 is provided for scoring field observation areas. In completing PART F, the PHMSA representative should include a written summary which thoroughly documents the inspection. Scoring Summary PARTS Possible Points Points Scored A General Program Qualifications 26 26 B Inspections and Compliance - Procedures/Records/Performance 25 25 C Interstate Agent States 0 0 D Incident Investigations 7 7 E Damage Prevention Initiatives 9 8 F Field Inspection 12 12 G PHMSA Initiatives - Strategic Plan 9.5 9.5 H Miscellaneous 3 3 I Program Initiatives 9 9 TOTALS 100.5 99.5 State Rating................................................................................................................................................... 99.0 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 2

PART A - General Program Qualifications Points(MAX) Score 1 Did the state submit complete and accurate information on the attachments to its most current 60105(a) Certification/60106 (a) Agreement? (NOTE: PHMSA Representative to verify certification/agreement attachments by reviewing appropriate state documentation. Score a deficiency in any one area as "needs improvement". Attachment numbers appear in parenthesis) Previous Question A.1, Items a-h worth 1 point each Yes = 8 No = 0 Needs Minor Improvement = 3-7 Needs Major Improvement = 2 a. State Jurisdiction and agent status over gas facilities (1) b. Total state inspection activity (2) c. Gas facilities subject to state safety jurisdiction (3) d. Gas pipeline incidents (4) e. State compliance actions (5) f. State record maintenance and reporting (6) g. State employees directly involved in the gas pipeline safety program (7) h. State compliance with Federal requirements (8) SLR Notes: Yes. All entries appeared to be complete and accurate based upon information contained in the NCUC's documentation. 8 8 2 Did the state have an adequate mechanism to receive operator reporting of incidents to ensure state compliance with 60105(a) Certification/60106(a) Agreement requirements (fatality, injury requiring hospitalization, property damage exceeding $50,000 - Mechanism should include receiving "after hours" reports)? (Chapter 6) Previous Question A.2 Yes = 1 No = 0 SLR Notes: The Director - Pipeline Safety maintains a log of incidents that are telephonically reported. 1 1 3 Has the state held a pipeline safety TQ seminar(s) in the last 3 years? (NOTE: Indicate date of last seminar or if state requested seminar, but T&Q could not provide, indicate date of state request for seminar. Seminars must be held at least once every 3 calendar years.) (Chapter 8.5) Previous Question A.4 Yes = 2 No = 0 SLR Notes: Yes. The NCUC conducted a regulations update seminar involving PHMSA's Training and Qualifications staff in 2007 and 2010. 2 2 4 Were pipeline safety program files well-organized and accessible?(NOTE: This also includes electronic files) (Chapter 5) Previous Question A.5 Yes = 1 No = 0 1 1 SLR Notes: easily obtained. The files are maintained in a lockable file cabinet near the Director's office. The files were well organized and information required for the evaluation was 5 Did state records and discussions with the state pipeline safety program manager indicate adequate knowledge of PHMSA program and regulations? (Chapter 4.1, Chapter 8.1) Previous Question A.6 Yes = 2 No = 0 Needs Improvement = 1 2 2 SLR Notes: regulations. Yes. The Director exhibited a good understanding of the PHMSA's requirements for a state pipeline safety program and was knowledgable of pipeline safety 6 Did the state respond in writing within 60 days to the requested items in the Chairman's letter following the Region's last program evaluation? (No response is necessary if no items are requested in letter and mark "Yes") (Chapter 8.1) Previous Question A.8 Yes = 1 No = 0 SLR Notes: There were no items in the Chairperson's letter that required a response. 1 1 7 What actions, if necessary, did the State initiate as a result of issues raised in the Chairperson's letter from the previous year? Did actions correct or address deficiencies from previous year's evaluation? (No response is necessary if no items are requested in letter and mark "Yes") (Chapter 8.1) Previous Question A.8/A.9 Yes = 1 No = 0 DUNS: 780414723 2009 Natural Gas State Program Evaluation 1 1 North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 3

SLR Notes: There were no issues identified in the Chairperson's letter that required action by the NCUC. Personnel and Qualifications 8 Has each inspector fulfilled the 3 year TQ training requirement? If No, has the state been granted a waiver regarding TQ courses by the Associate Administrator for Pipeline Safety? (NOTE: If the State has new inspectors who have not attended all TQ courses, but are in a program which will achieve the completion of all applicable courses within 3 years of taking first course (5 years to sucessfully complete), or if a waiver has been granted by the applicable Region Director for the state, please answer yes.) (Chapter 4.4) Previous Question A.10 Yes = 3 No = 0 3 3 SLR Notes: Yes. All inspectors on the NCUC staff have completed the required Training and Qualifications courses for natural gas pipeline safety. 9 Brief Description of Non-TQ training Activities: Info Only = No Points For State Personnel: No outside training was attended during 2009. For Operators: No training was provided for operators during 2009. For Non-Operator Entities/Parties, Information Dissemination, Public Meetings: No trainining was provided to non-operator parties during 2009. The NCU did disseminate information at damage prevention meetings and local utility coordinating committee meetings. SLR Notes: See comments above. Info Only Info Only 10 Did the lead inspectors complete all required T&Q OQ courses and Computer Based Training (CBT) before conducting OQ Inspections? (Chapter 4.4.1) Previous Question A.12 Yes = 1 No = 0 SLR Notes: Yes. All NCUC inspectors have completed the OQ training requirements taught by PHMSA's Office of Training and Qualifications. 1 1 11 Did the lead inspectors complete all required TQ Integrity Management (IMP) Courses/Seminars and CBT before conducting IMP Inspections? (Chapter 4.4.1) Previous Question A.13 Yes = 1 No = 0 1 1 SLR Notes: Management Courses. Yes. The NCUC has assigned integrity management inspection responsibilities to Steve Hurbanak and John Hall. Both have completed the TQ Integrity 12 Was the ratio acceptable of Total inspection Person-days to Total Person-days charged to the program by state inspectors? (Region Director may modify points for just cause) (Chapter 4.3) Previous Question B.12 Yes = 5 No = 0 5 5 A. Total Inspection Person Days (Attachment 2): 473.00 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 3.83 = 843.33 Ratio: A / B 473.00 / 843.33 = 0.56 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 SLR Notes: Yes. The NCUC had 473 inspection person days during calendar year 2009. The MPSC assigned 3.83 person years to the natural gas program during 2009. The resulting inspection person days to person years ratio is 0.56 which exceeds the minimum ratio of 0.38. 13 SLR Notes: DUNS: 780414723 2009 Natural Gas State Program Evaluation Have there been modifications or proposed changes to inspector-staffing levels? (If yes, describe) Previous Question B.13 Info Only = No Points Info Only Info Only North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 4

There were no changes in staffing levels during 2009. A vacant position was filled during the year. The NCUC has a staffing level of four inspectors and a program manager. 14 Part-A General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: The NCUC has generally complied with the requirements of Part A of this evaluation. Total points scored for this section: 26 Total possible points for this section: 26 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 5

PART B - Inspections and Compliance - Procedures/Records/ Performance Points(MAX) Score Inspection Procedures 1 Does the State have a written inspection plan to complete the following? (all types of operators including LNG) 6.5 6.5 (Chapter 5.1) Previous Question B.1 + Chapter 5 Changes + Incorporate LNG Yes = 6.5 No = 0 Needs Improvement = 50% Deduction a Standard Inspections (Including LNG) (Max points = 2) b IMP Inspections (Including DIMP) (Max points = .5) c OQ Inspections (Max points = .5) d Damage Prevention (Max points = .5) e On-Site Operator Training (Max points = .5) f Construction Inspections (Max points = .5) g Incident/Accident Investigations (Max points = 1) h Compliance Follow-up (Max points = 1) Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement SLR Notes: The NCUC has written inspection procedures to conduct its program. Operators of pipeline facilities and LNG facilities are scheduled to be inspected annually. Inspection Units are scheduled to be inspected annually. Standard inspections (including Damage Prevention), Operation and Maintenance procedures, OQ Protocol 9 and Drug and Alcohol Field Inspections are performed annually. Construction, incident investigations and compliance followup are scheduled on an "as needed basis". All IMP Plans have been reviewed. IMP follow up inspections are scheduled as needed. 2 Did the written Procedures for selecting operators adequately address key concerns? (Chapter 5.1) Previous 2 2 Question B.2, items a-d are worth .5 point each Yes = 2 No = 0 Needs Improvement = 50% Deduction a Length of time since last inspection Yes No Needs Improvement b History of Operator/unit and/or location (including leakage , incident and compliance history) Yes No Needs Improvement c Type of activity being undertaken by operator (construction etc) Yes No Needs Improvement d For large operators, rotation of locations inspected Yes No Needs Improvement SLR Notes: Yes. All of the factors above are considered; however, the length of time since the last inspection is the primary consideration given to scheduling inspections. The NCUC inspects each operator and inspection unit annually. Inspection Performance 3 Did the state inspect all types of operators and inspection units in accordance with time intervals established in its written procedures? (Chapter 5.1) Previous Question B.3 Yes = 2 No = 0 2 2 SLR Notes: Yes. NCUC inspection records indicate that all operators and inspection units were inspected during 2009. The NCUC's procedures require that each operator and unit be inspected annually. 4 Did the state inspection form cover all applicable code requirements addressed on the Federal Inspection forms? (Chapter 5.1 (3)) Previous Question B.4 Yes = 1 No = 0 1 1 SLR Notes: The NCUC uses the federal form for LNG and IMP inspections. The standard inspection form was developed by the NCUC by revising the federal form. Operation and maintenance procedures are not reviewed during each unit inspection of an operator. The Operation and Maintenance Procedures related questions were removed from the federal form. They are included when an Operation and Maintenance Procedures review is conducted. The NCUC uses a form it developed for construction inspections. 5 Did state complete all applicable portions of inspection forms? (Chapter 5.1 (3)) Previous Question B.5 Yes = 1 No = 0 SLR Notes: Upon a review of randomly selected inspection reports, all applicable portions of the inspection forms were completed. 1 1 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 6

6 Did the state initiate appropriate follow-up actions to Safety Related Condition Reports? (Chapter 6.3) Previous Question B.6 Yes = .5 No = 0 SLR Notes: There were no safety related condition reports filed by an intrastate operator in North Carolina during 2009. .5 .5 7 Did the state review operator procedures for determining if exposed cast iron pipe was examined for evidence of graphitization and if necessary remedial action was taken? (NTSB) Previous Question B.7 Yes = .5 No = 0 SLR Notes: All cast iron mains in North Carolina have been replaced. .5 .5 8 Did the state review operator procedures for surveillance of cast iron pipelines, including appropriate action resulting from tracking circumferential cracking failures, study of leakage history, or other unusual operating maintenance condition? (Note: See GPTC Appendix G-18 for guidance) (NTSB) Previous Question B.8 Yes = .5 No = 0 SLR Notes: All cast iron mains in North Carolina have been replaced. .5 .5 9 Did the state review operator emergency response procedures for leaks caused by excavation damage near buildings and determine whether the procedures adequately address the possibility of multiple leaks and underground migration of gas into nearby buildings Refer to 4/12/01 letter from PHMSA in response to NTSB recommendation P-00-20 and P-00-21? (NTSB) Previous Question B.9 Yes = .5 No = 0 .5 .5 SLR Notes: The NCUC reviews operators' procedures during an annual Operation and Maintenance inspection. The NCUC has checked all operators' procedures to insure that leak repair procedures include this requirement. 10 Did the state review operator records of previous accidents and failures including reported third party damage and leak response to ensure appropriate operator response as required by 192.617? (NTSB) Previous Question 1 1 B.10 Yes = 1 No = 0 SLR Notes: Yes. The NCUC's standard inspection form includes a section on Part 192.617 requirements. The form is used for all annual standard inspections. Compliance - 60105(a) States 11 Did the state adequately document sufficient information on probable violations? (Chapter 5.2) Previous 1 1 Question B.14 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: Yes. Upon a review of randomly selected inspection report files, all reports containing probable violations documented the actions or lack of actions that the operator took that caused the probable violations. 12 Does the state have written procedures to identify the steps to be taken from the discovery to the resolution of a 1 1 probable violation as specified in the "Guidelines for State Participating in the Pipeline Safety Program"? (Chapter 5.1) Previous Question D(1).1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: Yes. The NCUC requires that a written notification be provided to an operator when a non-compliance is found. The NCUC requires that the operator respond in writing, within 30 days, describing its corrective action plans. The NCUC follows up with operators until corrective action is completed. 13 Does the state have written procedures to notify an operator when a noncompliance is identified as specified in the "Guidelines for States Participating in the Pipeline Safety Program"? (Chapter 5.1(4)) Previous Question D 1 1 (1).2 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: Yes. The operator is notified as soon as a probable violation is discovered. The initial nofication is followed by notification in writing. The operator has 30 days to respond the NCUC's written notification. DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 7

14 Does the state have a written procedure for routinely reviewing the progress of compliance actions to prevent delays or breakdowns of the enforcement process, as required by the "Guidelines for States Participating in the Pipeline Safety Program"? (Chapter 5.1(5)) Previous Question D(1).3 Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: The NCUC maintains a log of inspections that found probable violations. The Administrative Assistant monitors the status of operators' responses to insure that operators are following up within the 30 day response period. The Administrative Assistant informs the NCUC staff on operators' progress. 15 Has the State issued compliance actions for all probable violations discovered? (Note : PHMSA representative 1 1 has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation) Previous Question D(1).4 Yes = 1 No = 0 SLR Notes: Upon a review of the NCUC's 2009 inspection log, written notification was sent for all inspections that discovered probable violations. 16 Did the state follow its written procedures for reviewing compliance actions and follow-up to determine that 1 1 prompt corrective actions were taken by operators, within the time frames established by the procedures and compliance correspondence, as required by the "Guidelines for States Participating in the Pipeline Safety Program"? Previous Question D(1).5 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: Yes. The NCUC's procedures provide operators with 30 days to respond to written notifications of probable violations. The NCUC reviewed the responses to written notifications during 2008. The actions taken by operators were reviewed by the NCUC. 17 If compliance could not be established by other means, did state pipeline safety program staff request formal action, such as a "Show Cause Hearing" to correct pipeline safety violations? (check each states enforcement procedures) Previous Question D(1).6 No = 0 Yes = 1 SLR Notes: All non-complaince issues found during 2009 were corrected by the operators. 1 1 18 Did the state adequately document the resolution of probable violations? (Chapter 5.1 (6)) Previous Question D(1).7 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: The NCUC reviewed the operators' responses to written notifications to determine if the proper corrective actions were taken. 1 1 19 Were compliance actions sent to a company officer? (manager or board member if municipal/government system) (Chapter 5.1(4)) Previous Question D(1).8 Yes = .5 No = 0 SLR Notes: Yes. All of the inspection reports that were randomly selected for review had letters addressed to the company officer. .5 .5 20 Did the compliance proceedings give reasonable due process to all parties? (check each states enforcement procedures) Previous Question D(1).9 Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: Commissioners of the NCUC. Yes. Operators are given the opportunity to provide evidence that a probable violation did not take place and can present its case in a hearing before the Compliance - 60106(a) States 21 Did the state use the current federal inspection form(s)? Previous Question D(2).1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: 1 NA 22 Are results adequately documented demonstrating inspection units were reviewed in accordance with state inspection plan? Previous Question D(2).2 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: DUNS: 780414723 2009 Natural Gas State Program Evaluation 1 NA North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 8

23 Were any probable violations identified by state referred to PHMSA for compliance? (NOTE: PHMSA representative has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation.) Previous Question D(2).3 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: 24 Did the state immediately report to PHMSA conditions which may pose an imminent safety hazard to the public or to the environment? Previous Question D(2).4 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: 25 Did the state give written notice to PHMSA within 60 days of all probable violations found? Previous Question D(2).5 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: 26 Did the state initially submit adequate documentation to support compliance action by PHMSA on probable violations? Previous Question D(2).6 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: 27 Part B: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: The NCUC generally complied with the requirements of Part B. Total points scored for this section: 25 Total possible points for this section: 25 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 9

PART C - Interstate Agent States Points(MAX) Score 1 Did the state use the current federal inspection form(s)? Previous Question D(3).1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: The NCUC is not an interstate agent. 1 NA 2 Are results documented demonstrating inspection units were reviewed in accordance with "PHMSA directed inspection plan"? Previous Question D(3).2 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: The NCUC is not an interstate agent. 1 NA 3 Did the state submit documentation of the inspections within 60 days as stated in its latest Interstate Agent Agreement form? Previous Question D(3).3 Yes = 1 No = 0 SLR Notes: The NCUC is not an interstate agent. 1 NA 4 Were any probable violations identified by state referred to PHMSA for compliance? (NOTE: PHMSA representative has discretion to delete question or adjust points, as appropriate, based on number of probable violations; any change requires written explanation.) Previous Question D(3).4 Yes = 1 No = 0 SLR Notes: The NCUC is not an interstate agent. 1 NA 5 Did the state immediately report to PHMSA conditions which may pose an imminent safety hazard to the public or to the environment? Previous Question D(3).5 Yes = 1 No = 0 Needs Improvement = .5 1 NA SLR Notes: The NCUC is not an interstate agent. 6 Did the state give written notice to PHMSA within 60 days of all probable violations found? Previous Question D(3).6 Yes = 1 No = 0 SLR Notes: The NCUC is not an interstate agent. 1 NA 7 Did the state initially submit documentation to support compliance action by PHMSA on probable violations? Previous Question D(3).7 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: The NCUC is not an interstate agent. 1 NA 8 Part C: General Comments/Regional Observations Info Only = No Points SLR Notes: The NCUC is not an interstate agent. Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 10

PART D - Incident Investigations Points(MAX) Score 1 Are state personnel following the procedures for Federal/State cooperation in case of an incident? (See Appendix in "Guidelines for States Participating in the Pipeline Safety Program") (Chapter 6.1) Previous Question E.1 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: Yes. The NCUC exhibited knowledge of the cooperation that is required with the Guidelines. 1 1 2 Are state personnel familiar with the jurisdictional authority and Memorandum of Understanding between NTSB and PHMSA? (See Appendix in "Guidelines for States Participating in the Pipeline Safety Program") (Chapter 6 ? Appendix D) Previous Question E.2 Yes = .5 No = 0 .5 .5 SLR Notes: Yes. The NCUC Director of Pipeline Safety exhibited knowledge of the requirements contained in the Memorandum of Understanding between PHMSA and the NTSB. There were no occasions in 2009 where the NTSB was involved in an incident investigation being handled by the NCUC. 3 Did the state keep adequate records of incident notifications received? Previous Question E.3 Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: office. There was one reportable incident that occurred in North Carolina during 2009. A file is established for each incident that is reported or investigated by the NCUC. A file is created regardless of whether it meets the federal reporting thresholds. Official written investigation reports are filed in the Chief Clerk's 4 If an onsite investigation of an incident was not made, did the state obtain sufficient information by other means to determine the facts and support the decision not to go on-site? Previous Question E.4 Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: Yes. The NCUC usually investigates incidents caused by third party through telephone conversations with the operator and one call center written documentation taken by the operator. 5 Were investigations thorough and conclusions and recommendations documented in an acceptable manner? Previous Question E.5, comprehensive question worth 2 points total Yes = 2 No = 0 Needs Improvement = 1 a. Observations and Document Review 2 2 b. Contributing Factors c. Recommendations to prevent recurrences where appropriate Yes No Needs Improvement Yes No Needs Improvement Yes No Needs Improvement SLR Notes: The NCUC did not produce a formal investigation report for the one incident that occurred during 2009. It was obvious from operator documentation that the incident was caused by lightening during a thunderstorm. 6 Did the state initiate enforcement action for violations found during any incident investigation(s)? Previous Question E.6 Variation Yes = 1 No = 0 Needs Improvement = .5 1 1 SLR Notes: There was one reportable incident during 2009. The incident was caused by lighting that hit a regulator station. There were no probable violations found. 7 Did the state assist region office by taking appropriate follow-up actions related to the operator incident reports .5 0.5 to ensure accuracy and final report has been received by PHMSA? (validate annual report data from operators concerning incidents/accidents and investigate discrepancies) (Chapter 6) Previous Question E.7/E.8 Yes = .5 No = 0 SLR Notes: The Southern Region Office reported in an email dated 11/12/2010 that the NCUC had complied with requirement satisfactory during 2009. 8 Part D: General Comments/Regional Observations Info Only = No Points SLR Notes: DUNS: 780414723 2009 Natural Gas State Program Evaluation Info Only Info Only North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 11

The NCUC has generally complied with the requirements of Part D of this evaluation. Total points scored for this section: 7 Total possible points for this section: 7 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 12

PART E - Damage Prevention Initiatives Points(MAX) Score 1 Has the state reviewed directional drilling/boring procedures of each pipeline operator or its contractor to determine if they include actions to protect their facilities from the dangers posed by drilling and other trench less technologies? Previous Question B.11 Yes = 2 No = 0 Needs Improvement = 1 2 2 SLR Notes: Yes. This item is covered when the NCUC conducts a review of operators' Operation and Maintenance Procedures that are required under 192.605. All operators do have procedures that are established to protect their underground pipelines when directional drilling or boring is being performed near pipelines. 2 Did the state inspector check to assure the pipeline operator is following its written procedures pertaining to notification of excavation, marking, positive response and the availability and use of the one call system? New 2008 Yes = 2 No = 0 2 2 SLR Notes: Yes. Locating records are reviewed when the NCUC conducts a standard inspection of pipeline operators. This area is covered when the inspector is reviewing operators' damage prevention programs required by 192.614. 3 Did the state encourage and promote the adoption of the Common Ground Alliance Best Practices document to 2 2 its regulated companies as a means of reducing damages to all underground facilities? Previous Question A.7 Yes = 2 No = 0 Needs Improvement = 1 SLR Notes: Yes. The NCUC promoted the Common Ground Alliance Best Practices document with operators. The NCUC encourages operators to adopt and support implementation of best practices in their operations and other stakeholders such as the state's One Call System. The NCUC staff participate in local utility coordinating committee meetings that are sponsored by the North Carolina One Call System. 4 Has the agency or another organization within the state collected data and evaluated trends on the number of pipeline damages per 1,000 locate requests? New 2008 Yes = 1 No = 0 SLR Notes: No. There are no mandatory requirements for facility owners to report damages to the One Call Center. 1 0 5 Did the state review operators' records of accidents and failures due to excavation damage to ensure causes of failure are addressed to minimize the possibility of recurrence as required by 192.617? Yes = 2 No = 0 2 2 SLR Notes: The NCUC reviews operators' records of incidents, leaks and failures when it covers 192.617 requirements as part of the standard inspection of an operator each year. The NCUC looks for trends and common causes to identify improvements in the operators' procedures. 6 Part E: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: question. Question E.4 - There are no mandatory requirements for facility owners to report damages to the One Call Center. One point could not be given for this Total points scored for this section: 8 Total possible points for this section: 9 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 13

PART F - Field Inspection Points(MAX) Score 1 Operator, Inspector, Location, Date and PHMSA Representative Info Only = No Points Info Only Info Only Name of Operator Inspected: Piedmont Natural Gas Name of State Inspector(s) Observed: Steve Wood Location of Inspection: Reidsville, NC Date of Inspection: 10/26/2010 Name of PHMSA Representative: Don Martin SLR Notes: The NCUC began a standard inspection of Piedmont Natural Gas's (PNG) Reidsville District on Monday, October 25th. The inspection was scheduled to cover approximately seven days. The inspector's inspection activities were observed on Tuesday, October 26th by Don Martin. Steve Wood of the NCUC staff was conducting the inspection. On the day of the observation, the NCUC inspector was reviewing the inspection of critical valves, over pressure control testing and visual inspection of above ground pipeline crossings of streams. 2 Was the operator or operator's representative notified and/or given the opportunity to be present during inspection? New 2008 Yes = 1 No = 0 SLR Notes: Yes. The operator was notified of the inspection prior to October 11th ( two weeks prior to the inspection). 1 1 3 Did the inspector use an acceptable inspection form/checklist and was the form/checklist used as a guide for the inspection? (New regulations shall be incorporated) Previous Question F.2 Yes = 2 No = 0 2 2 SLR Notes: The inspector was utilizing the NCUC's standard inspection form. The NCUC inspection form is a version of the federal form that has been altered to remove items related to operation and maintenance procedure requirements. 4 Did the inspector thoroughly document results of the inspection? Previous Question F.3 Yes = 2 No = 0 2 2 SLR Notes: observed on October 26th. The NCUC inspector had completed the inspection at the time of the evaluation observation. The inspector did document inspection results that were 5 Did the inspector check to see if the operator had necessary equipment during inspection to conduct tasks viewed? (Maps, pyrometer, soap spray, CGI, etc.) New 2008 Yes = 1 No = 0 1 1 SLR Notes: Yes. The NCUC inspector checked the operator's gages used to take pressure readings during the testing of overpressure protection facilities. The inspector verified any calibration requirements for the gages. 6 What type of inspection(s) did the state inspector conduct during the field portion of the state evaluation? (i.e. Standard, Construction, IMP, etc) New 2008 Info Only = No Points SLR Notes: This inspection was a standard inspection excluding the review of operating procedures. Info Only Info Only 7 Did the inspector adequately review the following during the field portion of the state evaluation? (check all that apply on list) New 2008, comprehensive question worth 2 points total Yes = 2 No = 0 Needs Improvement = 1 a. Procedures b. Records DUNS: 780414723 2009 Natural Gas State Program Evaluation 2 2 North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 14

c. Field Activities/Facilities d. Other (Please Comment) SLR Notes: The NCUC inspector reviewed all regulatory requirements involved in a standard inspection of an operator except for a review of operation and maintenance procedures required by 192.605. The NCUC conducts a seperate inspection to review operators' operation and maintenance procedures. The NCUC reviews a limited number of procedures when conducting a standard inspection of an inspection unit. 8 Did the inspector have adequate knowledge of the pipeline safety program and regulations? (Liaison will document reasons if unacceptable) Previous Question F.8 Yes = 2 No = 0 2 2 SLR Notes: Training and Qualifications. Steve Wood was well versed in the minimum pipeline safety standards contained in Part 192. Mr. Wood has completed all of the required trainiing at 9 Did the inspector conduct an exit interview? (If inspection is not totally complete the interview should be based on areas covered during time of field evaluation) Previous Question F.10 Yes = 1 No = 0 1 1 SLR Notes: The inspector provided a briefing for the inspection portion conducted on October 26. The inspector will provide a full briefing during the exit interview at the completion of the inspection. 10 During the exit interview, did the inspector identify probable violations found during the inspections? Previous 1 1 Question F.11 Yes = 1 No = 0 SLR Notes: The inspector informed the operator personnel that he did not find any probable violations during the inspection portion conducted on October 26. 11 What did the inspector observe in the field? (Narrative description of field observations and how inspector Info Only Info Only performed) Info Only = No Points SLR Notes: On the day of the evaluation observation, the inspector observed overpressure protection facility testing, valve inspections and visually inspected the condition of two above ground mains at stream crossings. 12 Best Practices to Share with Other States - (Field - could be from operator visited or state inspector practices) Info Only = No Points SLR Notes: There were no best practices identified that warrant discussion with other stakeholders. Info Only Info Only 13 Field Observation Areas Observed (check all that apply) 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 DUNS: 780414723 2009 Natural Gas State Program Evaluation Info Only Info Only North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 15

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 G. OQ - Operator Qualification H. Compliance Follow-up I. Atmospheric Corrosion J. Other SLR Notes: The items checked above were stated as the areas to be covered during the entire inspection. All of these items were not covered during the evaluation observation that occurred on October 26. 14 Part F: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: The NCUC generally complied with the requirements of Part F of this evaluation. Total points scored for this section: 12 Total possible points for this section: 12 DUNS: 780414723 2009 Natural Gas State Program Evaluation North Carolina NORTH CAROLINA UTILITIES COMMISSION, Page: 16

PART G - PHMSA Initiatives - Strategic Plan Points(MAX) Score Risk base Inspections - Targeting High Risk Areas 1 Does state have process to identify high risk inspection units? Yes = 1.5 No = 0 1.5 1.5 Risk Factors (criteria) to consider may include: Miles of HCA's, Geographic area, Population Density Length of time since last inspection History of Individual Operator units (leakage, incident and compliance history, etc.) Threats - (Excavation Damage, Corrosion, Natural Forces, Other Outside Forces, Material or Welds, Equipment, Operations, Other) SLR Notes: The NCUC does not have a formal process to quantify a ranking based upon the relative risks of each pipeline operator's systems. The NCUC assigns operators within a geographical area to each inspector responsible for the geographic area. Inspectors are encouraged to consider risks based upon the factors above when they schedule inspections and to provide a focus on inspections on high risk concerns. Without the use of a formal process to quantify risk, the NCUC has determined that pipeline safety can be improved if master meter facilities can be acquired by local distribution companies. North Carolina has reduced the number of Master Meter operators to four at the end of 2009 and. 2 Are inspection units broken down appropriately? (see defini
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