2010 NV NG Program Evaluation - nv2010ngprogramevaluation (Nevada; Natural Gas State Program Evaluation)

NV NG Program Evaluation, 2010, page 1Official PDF1200 New Jersey Avenue SE Washington DC 20590 U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 2010 Natural Gas State Program Evaluation for PUBLIC UTILITIES COMMISSION NEVADA 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: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 1#

NV NG Program Evaluation, 2010, page 22010 Natural Gas State Program Evaluation -- CY 2010 Natural Gas State Agency: Nevada Rating: Agency Status: Date of Visit: 09/26/2011 - 09/30/2011 Agency Representative: Clark Stoner, Program Manager PHMSA Representative: Rex Evans Commission Chairman to whom follow up letter is to be sent: Name/Title: Crystal Jackson, Executive Director Agency: Public Utilities Commission of Nevada Address: 1150 East William Street City/State/Zip: Carson City, NV 89701 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 2010 (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 24 B Inspections and Compliance - Procedures/Records/Performance 22.5 20.5 C Interstate Agent States 0 0 D Incident Investigations 7 7 E Damage Prevention Initiatives 9 9 F Field Inspection 11 10 G PHMSA Initiatives - Strategic Plan 9.5 9 H Miscellaneous 3 3 I Program Initiatives 9 8.5 TOTALS 97 91 State Rating................................................................................................................................................... 93.8 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 2#

NV NG Program Evaluation, 2010, page 3PART A - General Program Qualifications Points(MAX) Score 8 7 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: Compliance Action Data was not correct, carry-over from previous year was not shown on previous year evaluation. Also compliance actions for Newmont/ Twin cities were not reflected on compliance action listing. 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: Amended rules in 2010 to match PHMSA reporting requirements. After-hours call list provided to operators. No issue 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: Last seminar was in July 2009. On pending list for August 2012 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 0 SLR Notes: Advised during previous evaluation that all files need to be housed in one place. Staff struggled in producing documents requested and it didnt appear all staff was aware how to access files. Written correspondence was still kept in paper files. Some time needs to be spent analyzing how they keep files and organizing so a third party can easily review. 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 SLR Notes: No issues 2 2 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: Yes, Letter was dated November 30, 2010 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 DUNS: 878878743 2010 Natural Gas State Program Evaluation 1 1 Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 3#

NV NG Program Evaluation, 2010, page 4Yes = 1 No = 0 SLR Notes: They have scheduled the recommended training, which was addressed in letter. Further training is needed for next cycle. 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 SLR Notes: Review of all transcripts appear that all core courses have been taken. 3 3 9 Brief Description of Non-TQ training Activities: Info Only = No Points For State Personnel: For Operators: For Non-Operator Entities/Parties, Information Dissemination, Public Meetings: They give training classes through NRGA on locator and excavator training. Info Only Info Only SLR Notes: 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: It appears lead has completed. They should all take OQ seminar course that is listed and review TQ courses in whole. 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: Clark has completed main courses. They need to review entire curriculum and get signed up for necessary courses. Listing of courses need was sent to staff. 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 A. Total Inspection Person Days (Attachment 2): 696.10 B. Total Inspection Person Days Charged to the Program (220 X Inspection Person Years) (Attachment 7): 220 X 5.25 = 1155.00 Ratio: A / B 696.10 / 1155.00 = 0.60 If Ratio >= 0.38 Then Points = 5, If Ratio < 0.38 Then Points = 0 Points = 5 SLR Notes: No issues. 696 person days/1155=.6 5 5 13 DUNS: 878878743 2010 Natural Gas State Program Evaluation Have there been modifications or proposed changes to inspector-staffing levels? (If yes, describe) Previous Info Only Info Only Question B.13 Info Only = No Points Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 4#

NV NG Program Evaluation, 2010, page 5SLR Notes: They are in process of replacing inspector vacancy in Las Vegas 14 Part-A General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: Training curriculum needs reviewed in detail for OQ and IMP courses that are needed to become a fully qualified inspector. Total points scored for this section: 24 Total possible points for this section: 26 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 5#

NV NG Program Evaluation, 2010, page 6PART 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 (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: Need improvement on construction inspection procedures and examine inspection form content used during construction. These should identify things viewed during inspection process such as EFV installation, depth of cover, etc. Remainder of procecures should also be examined for process. 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: Identified in 6.2 of procedures. Two operators make up almost all of inspection units with Southwest Gas and NV Energy. 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 SLR Notes: No issues discovered during file review. 2 2 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 SLR Notes: They primarily use federal inspection forms. No issues. 1 1 5 Did state complete all applicable portions of inspection forms? (Chapter 5.1 (3)) Previous Question B.5 1 0 Yes = 1 No = 0 SLR Notes: During review of NV Energy inspections for CY2009 and CY2010, it was discovered that all portions of the field inspection activities were not complete. The inspection form showed many areas of the field inspection as "not checked" and upon file review there were no other field review activities completed during the CY2009 CY2010 time frame. 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: DUNS: 878878743 2010 Natural Gas State Program Evaluation .5 NA Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 6#

NV NG Program Evaluation, 2010, page 7N/A 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: No cast iron according to staff .5 NA 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: No cast iron per staff .5 NA 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 SLR Notes: They indicated review of this in procedures review of SWG and NV Energy. Recommended again to add to checklist .5 .5 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 B.10 Yes = 1 No = 0 SLR Notes: They indicated review of this in procedures review of SWG and NV Energy. Recommended again to add to checklist 1 1 Compliance - 60105(a) States 11 Did the state adequately document sufficient information on probable violations? (Chapter 5.2) Previous Question B.14 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: documentation appeared adequate 1 1 12 Does the state have written procedures to identify the steps to be taken from the discovery to the resolution of a 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: Procedures ok 1 1 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).2 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: No issues 1 1 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 SLR Notes: No issues. They have docketed process. Recommend tracking sheet. 1 1 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 7#

NV NG Program Evaluation, 2010, page 815 Has the State issued compliance actions for all probable violations discovered? (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(1).4 Yes = 1 No = 0 SLR Notes: No issues found during review. 1 1 16 Did the state follow its written procedures for reviewing compliance actions and follow-up to determine that 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 1 1 SLR Notes: No issues 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: N/A - Resolution prior to formal hearing needed 1 NA 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: Probably violations in 2010 indicate adequate resolution 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 .5 0 SLR Notes: Compliance letter to US Gypsum was not sent to company officer. Reminded of this requirement and of Guidelines. Should also amend procedures. 20 SLR Notes: No issues 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 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 SLR Notes: Are results adequately documented demonstrating inspection units were reviewed in accordance with state inspection plan? Previous Question D(2).2 Yes = 1 No = 0 Needs Improvement = .5 1 NA 23 SLR Notes: 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 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 8#

NV NG Program Evaluation, 2010, page 924 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 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) Info Only = No Points Info Only NA SLR Notes: 28 Part B: General Comments/Regional Observations Info Only = No Points Info Only NA SLR Notes: Total points scored for this section: 20.5 Total possible points for this section: 22.5 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 9#

NV NG Program Evaluation, 2010, page 10PART 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 1 NA SLR Notes: 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 1 NA SLR Notes: 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 1 NA SLR Notes: 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 1 NA SLR Notes: 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: 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: 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: 1 NA 8 Part C: General Comments/Regional Observations Info Only = No Points SLR Notes: Not an interstate agent Info Only Info Only Total points scored for this section: 0 Total possible points for this section: 0 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 10#

NV NG Program Evaluation, 2010, page 11PART 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: Discussion - no issues 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 SLR Notes: Discussion - no issues .5 .5 3 Did the state keep adequate records of incident notifications received? Previous Question E.3 Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: Yes, in file. Recommend tracking spreadsheet 1 1 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 SLR Notes: No issues 1 1 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: Although final reports for two incidents in CY2010 have not been completed, review of collection of documents appear to show adequate progress with needed documentation. Files reviewed no issues 6 Did the state initiate enforcement action for violations found during any incident investigation(s)? Previous Question E.6 Variation Yes = 1 No = 0 Needs Improvement = .5 SLR Notes: No issues - pending actions after final report 1 1 7 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 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: No issues .5 0.5 8 Part D: General Comments/Regional Observations Info Only = No Points SLR Notes: No issues, although it seems that final reports on incidents in CY2010 are delayed and could be finalized sooner. Info Only Info Only DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 11#

NV NG Program Evaluation, 2010, page 12Total points scored for this section: 7 Total possible points for this section: 7 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 12#

NV NG Program Evaluation, 2010, page 13PART 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: Procedures in place for SWG and NV Energy. Recommend again on checklist 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: No issues, they continue to do this 3 Did the state encourage and promote the adoption of the Common Ground Alliance Best Practices document to its regulated companies as a means of reducing damages to all underground facilities? Previous Question A.7 Yes = 2 No = 0 Needs Improvement = 1 2 2 SLR Notes: Active in NRCGA no issues 4 Has the agency or another organization within the state collected data and evaluated trends on the number of pipeline damages per 1,000 locate requests? New 2008 Yes = 1 No = 0 1 1 SLR Notes: They collect and analyze this data 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: All damages review. Great deal of time focused on this area, no issues 6 Part E: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: Total points scored for this section: 9 Total possible points for this section: 9 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 13#

NV NG Program Evaluation, 2010, page 14PART 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: NV Energy - Reno, NV Name of State Inspector(s) Observed: Jason Dunphy Location of Inspection: Reno, NV Date of Inspection: 09/28/2011 Name of PHMSA Representative: Rex Evans SLR Notes: jurisdictional. Started day observing Regulator station inspection. Review inspection records in office and went out on possible incident, preliminarily determined non- 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: Operator personnel were present during entire day, headed by Jay Wiggins 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 SLR Notes: No issues, laptop based 2 2 4 Did the inspector thoroughly document results of the inspection? Previous Question F.3 Yes = 2 No = 0 SLR Notes: Results of inspection were documented. Entire inspection not complete but no issues 2 2 5 Did the inspector check to see if the operator had necessary equipment during inspection to conduct tasks viewed? (Maps, pyrometer, soap spray, CGI, etc.) New 2008 Yes = 1 No = 0 SLR Notes: No issues 1 1 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: Regulator Station, Maintenance record review and incident investigation 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 c. Field Activities/Facilities d. Other (Please Comment) 2 1 SLR Notes: DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 14#

NV NG Program Evaluation, 2010, page 15No issues with procedure and field activity review. Needs improvement on record review. Corrosion records - dates were reviewed, but corrosion readings were not reviewed thoroughly. Needs to ask for data. Isolated services - did not determine number in order to determine compliance of 10%. Needs to be more thorough 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 SLR Notes: Apparent adequate knowledge, but inspector needs to be more thorough in record analysis. See previous question. 2 2 9 Did the inspector conduct an exit interview? (If inspection is not totally complete the interview should be based on areas covered during time of field evaluation) Previous Question F.10 Yes = 1 No = 0 SLR Notes: Inspection was not totally complete. No issues. 1 1 10 During the exit interview, did the inspector identify probable violations found during the inspections? Previous Question F.11 Yes = 1 No = 0 SLR Notes: N/A None found 1 NA 11 What did the inspector observe in the field? (Narrative description of field observations and how inspector performed) Info Only = No Points SLR Notes: See notes on F1 Info Only Info Only 12 SLR Notes: N/A Best Practices to Share with Other States - (Field - could be from operator visited or state inspector practices) Info Only = No Points 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 p. MOP q. MAOP r. Moving Pipe s. New Construction Info Only Info Only DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 15#

NV NG Program Evaluation, 2010, page 16t. 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: 14 Part F: General Comments/Regional Observations Info Only = No Points SLR Notes: See previous DUNS: 878878743 2010 Natural Gas State Program Evaluation Info Only Info Only Total points scored for this section: 10 Total possible points for this section: 11 Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 16#

NV NG Program Evaluation, 2010, page 17PART 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 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 have process in procedures. They do analysis on the two operators. No issues 1.5 1.5 2 Are inspection units broken down appropriately? (see definitions in Guidelines) Yes = .5 No = 0 SLR Notes: With two operators making up 99% of business. Units appear to be broken down appropriately. .5 0.5 3 Consideration of operators DIMP Plan? (if available and pending rulemaking) Info Only = No Points Info Only Info Only SLR Notes: 4 Does state inspection process target high risk areas? Yes = .5 No = 0 SLR Notes: No issues. THey target Damage Prevention issues, PVC and Aldyl with SWG and issues with NV Energy .5 0.5 Use of Data to Help Drive Program Priority and Inspections 5 Does state use data to analyze effectiveness of damage prevention efforts in the state? (DIRT or other data, etc) Yes = .5 No = 0 SLR Notes: Ken Jones analyzes this data and very involved. .5 0.5 6 Has state reviewed data on Operator Annual reports for accuracy? Yes = .5 No = 0 SLR Notes: Yes, annual reports are included in review. .5 0.5 7 Has state analyzed annual report data for trends and operator issues? Yes = .5 No = 0 SLR Notes: Yes, see previous. No issues .5 0.5 8 Has state reviewed data on Incident/Accident reports for accuracy? Yes = .5 No = 0 SLR Notes: No issues .5 0.5 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 17#

NV NG Program Evaluation, 2010, page 189 Does state do evaluation of effectiveness of program based on data? (i.e. performance measures, trends, etc.) Yes = .5 No = 0 SLR Notes: Data evaluated and analyzed and effectiveness trends reviewed. .5 0.5 10 Did the State input all operator qualification inspection results into web based database provided by PHMSA in a timely manner upon completion of OQ inspections? Previous Question B.15 Yes = .5 No = 0 .5 0 SLR Notes: review. OQ reports have been uploaded. Did not see anything for largest operators SWG and NV. These should be reviewed and analyzed as to adequacy of OQ 11 SLR Notes: Did the State submit their replies into the Integrity Management Database (IMDB) in response to the Operators notifications for their integrity management program? Previous Question B.16 Yes = .5 No = 0 .5 NA 12 Have the IMP Federal Protocol forms been uploaded to the IMDB? Previous Question B.17 .5 0.5 Yes = .5 No = 0 SLR Notes: Previous protocols had been uploaded for NV and SWG. There Newmont Energy should have protocol A completed although determination no HCA had previously occurred. They should analyze need for any field verification forms that should be uploaded,etc. 13 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? Previous Question B.18 Yes = .5 No = 0 SLR Notes: Both SWG and NV Energy part of PPDC submissions .5 0.5 14 SLR Notes: No issues Has state confirmed transmission operators have submitted information into National Pipeline Mapping System (NPMS) database along with any changes made after original submission? Yes = .5 No = 0 .5 0.5 Accident/Incident Investigation Learning and Sharing Lessons Learned 15 Has state shared lessons learned from incidents/accidents? (i.e. NAPSR meetings and communications) Yes = .5 No = 0 SLR Notes: Yes, via NAPSR .5 0.5 16 Does the State support data gathering efforts concerning accidents? (Frequency/Consequence/etc) .5 0.5 Yes = .5 No = 0 SLR Notes: No issues 17 Does state have incident/accident criteria for conducting root cause analysis? Info Only = No Points SLR Notes: Info Only Info Only 18 DUNS: 878878743 2010 Natural Gas State Program Evaluation Does state conduct root cause analysis on incidents/accidents in state? Info Only Info Only Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 18#

NV NG Program Evaluation, 2010, page 19Info Only = No Points SLR Notes: 19 Has state participated on root cause analysis training? (can also be on wait list) Yes = .5 No = 0 .5 0.5 SLR Notes: They have been enrolled in course, but not yet taken. Several staff scheduled for May 2012 in Sacramento. Transparency - Communication with Stakeholders 20 Other than pipeline safety seminar does State communicate with stakeholders? (Communicate program data, pub awareness, etc.) Yes = .5 No = 0 .5 0.5 SLR Notes: Heavy involvement in NRCGA 21 Does state share enforcement data with public? (Website, newsletters, docket access, etc.) Yes = .5 No = 0 .5 0.5 SLR Notes: Cases docketed. No issues 22 Part G: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: Total points scored for this section: 9 Total possible points for this section: 9.5 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 19#

NV NG Program Evaluation, 2010, page 20PART H - Miscellaneous Points(MAX) Score 1 What were the major accomplishments for the year being evaluated? (Describe the accomplishments, NAPSR Activities and Participation, etc.) Yes = .5 No = 0 .5 0.5 SLR Notes: Again, reduction in Damages. Sent Data requests to major operators on MAOP after San Bruno. They hosted NAPSR Region mtg in CY2010. They developed inspection database. 2 What legislative or program initiatives are taking place/planned in the state, past, present, and future? (Describe initiatives (i.e. damage prevention, jurisdiction/authority, compliance/administrative, etc.) Yes = .5 No = 0 .5 0.5 SLR Notes: CY2010 they updated regulations. One-call enforcement with fines adopted. 3 Any Risk Reduction Accomplishments/Projects? (i.e. Cast iron replacement projects,bare steel,third-party damage reductions, etc.) Yes = .5 No = 0 .5 0.5 SLR Notes: PVC and Aldyl for SWG and Blackwrap steel for NV Energy in progress 4 Did the state participate in/respond to surveys or information requests from NAPSR or PHMSA? Yes = 1 No = 0 1 1 SLR Notes: No issues. 5 Sharing Best Practices with Other States - (General Program) Yes = .5 No = 0 .5 0.5 SLR Notes: 6 Part H: General Comments/Regional Observations Info Only = No Points Info Only Info Only SLR Notes: Total points scored for this section: 3 Total possible points for this section: 3 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 20#

NV NG Program Evaluation, 2010, page 21PART I - Program Initiatives Points(MAX) Score Drug and Alcohol Testing (49 CFR Part 199) 1 Has the state verified that operators have drug and alcohol testing programs? Yes = 1 No = 0 SLR Notes: NV Energy, SWG and Newmont Mining only operators requiring D & A. 1 1 2 Is the state verifying that operators are conducting the drug and alcohol tests required by the operators program (random, post-incident, etc.) Yes = .5 No = 0 SLR Notes: Newmont has not been verified, US Gypsum line is idle. They need to ensure Newmont is following appropriate D & A Activities. .5 0 3 Is the state verifying that any positive tests are responded to in accordance with the operator's program? Yes = .5 No = 0 SLR Notes: Credit for SWG and NV Energy. .5 0.5 Qualification of Pipeline Personnel (49 CFR Part 192 Subpart N) 4 Has the state verified that operators have a written qualification program? Yes = 1 No = 0 SLR Notes: Yes, an updated full plan review would be prudent and suggested during last review 1 1 5 Has the state reviewed operator qualification programs for compliance with PHMSA rules and protocols? Yes = .5 No = 0 SLR Notes: Yes, see previous question. .5 0.5 6 Is the state verifying that persons who perform covered tasks for the operator are qualified in accordance with the operator's program? Yes = .5 No = 0 SLR Notes: OQ Form 15 has been filled out on several operators. They should review their OQ activities in entirety. .5 0.5 7 Is the state verifying that persons who perform covered task for the operator are requalified at the intervals specified in the operator's program? Yes = .5 No = 0 SLR Notes: See previous. Process should be reviewed in its entirety. .5 0.5 Gas Transmission Pipeline Integrity Management (49 CFR Part 192 Subpart O) 8 Has the state verified that all operators with transmission pipelines have either adopted an integrity management program (IMP), or have properly determined that one is not required? Yes = 1 No = 0 1 1 SLR Notes: courses are completed. This has been verified. They should time time to review activities in this area including field verification inspections along with making sure training 9 Has the state verified that in determining whether a plan is required, the operator correctly calculated the potential impact radii and properly applied the definition of a high consequence area? Yes = .5 No = 0 .5 0.5 SLR Notes: DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 21#

NV NG Program Evaluation, 2010, page 22part of original inspections. 10 Has the state reviewed operator IMPs for compliance with Subpart O? (In accordance with State Inspection plan) Yes = .5 No = 0 SLR Notes: See previous. .5 0.5 11 Is the state monitoring operator progress on the inspections, tests and remedial actions required by the operator's IMP, including that they are being done in the manner and schedule called for in its IMP? Yes = .5 No = 0 .5 0.5 SLR Notes: Some monitoring has been done, but state needs to review this activity and make sure appropriate inspection forms are completed along with making sure all IMP training is fully completed. 12 SLR Notes: No issues Is the state verifying that operators are periodically examining their transmission line routes for the appearance of new HCAs? Yes = .5 No = 0 .5 0.5 Public Awareness (49 CFR Section 192.616) 13 Has the state verified that each operator has developed a continuing public awareness program? (due date was 6/20/06 for most operators, 6/20/07 for certain very small operators,6/13/08 for master meters) Yes = .5 No = 0 SLR Notes: No issues. .5 0.5 14 SLR Notes: No issues Has the state reviewed the content of these programs for compliance with 192.616 (by participating in the Clearinghouse or by other means)? Yes = .5 No = 0 .5 0.5 15 SLR Notes: No issues. Is the state verifying that operators are conducting the public awareness activities called for in its program? Yes = .5 No = 0 .5 0.5 16 Is the state verifying that operators have evaluated their Public Awareness programs for effectiveness as described in RP1162? Info Only = No Points SLR Notes: No issues. Info Only Info Only 17 Part I: General Comments/Regional Observations Info Only = No Points SLR Notes: See previous notes in IMP activities. A thorough review should be completed of IMP inspections, activities and overall training. Info Only Info Only Total points scored for this section: 8.5 Total possible points for this section: 9 DUNS: 878878743 2010 Natural Gas State Program Evaluation Nevada PUBLIC UTILITIES COMMISSION NEVADA, Page: 22#