U.S. DOT/PHMAS - Decision Letter

Page 1of Transportation U.S. Department 1200 New Jersey Avenue, SE Materials Safety Pipeline and Hazardous DEC 5 2008 Washington, D.C. 20590 Administration Mr. M. Dwayne Burton Vice President, Gas Pipeline Operations and Engineering Kinder Morgan, Inc. One Allen Center 500 Dallas Street, Suite 1000 Houston, TX 77002 Docket No. PHMSA-2007-27842 Dear Mr. Burton: On April 4, 2007, you wrote to the Pipeline and Hazardous Materials Safety Administration (PHMSA) requesting a waiver of compliance from the Federal pipeline safety regulations in 49 CFR §§ 192.111 and 192.201 for approximately 500-miles of proposed interstate natural gas transmission pipeline. This pipeline will be operated by Midcontinent Express Pipeline, LLC (MEP), a jointly owned subsidiary of Kinder Morgan Energy Partners, L.P., and Energy Transfer Partners L.P. The new pipeline will originate in Bryan County, Oklahoma, and run southeasterly through Texas, Louisiana and Mississippi to existing facilities in Choctaw County, Alabama. On October 13, 2008, PHMSA published the final rule, Standards for Increasing the Maximum Allowable Operating Pressure for Gas Transmission Pipelines, which becomes effective 30 days after publication. The rule covers the requirements for any pipeline to operate at a design factor of up to 0.80 in Class 1 areas. PHMSA is proceeding with issuing the Midcontinent Express Pipeline special permit as a result of the thorough analysis contained in the Special Permit Analysis and Findings document, prepared well in advance of the final rule. Moreover, since the Midcontinent Express pipeline varies from certain provisions of the final rule, this special permit is necessary to cover all requested variances from regulations and required conditions, and is consistent with, or more stringent than, prior grants of special permit for existing pipelines. PHMSA is granting this waiver through the enclosed special permit, which allows MEP to design, construct and operate the MEP pipeline in Class 1 locations, using a design factor in § 192.111 up to 0.80 and at stress levels up to 80% of the specified minimum yield strength (SMYS). This would result in a maximum allowable operating pressure (MAOP) of 1,480 psig. This special permit also allows MEP to design, install and operate pressure relief and limiting devices on the MEP pipeline, with a capacity that would ensure the pressure in Class 1 location pipeline segments would not exceed 104% of the MAOP, or the pressure that produces a hoop stress of 83.2% SMYS in the event an overpressure situation develops. This special permit has conditions and limitations and provides some relief from the Federal pipeline safety regulations for the MEP pipeline, while ensuring that pipeline safety is not compromised.#

Page 2Mr. M. Dwayne Burton Docket No. PHMSA-2007-27842 My staff would be pleased to discuss this special permit or any other regulatory matter with you. John Gale, Director of Regulations, (202-366-0434), may be contacted on regulator natters and Alan Mayberry, Director of Engineering and Emergency Support (202-366-5124) may be contacted on matters specific to this special permit. Sincerely, Direse Jeffrey D. Wiese Associate Administrator for Pipeline Safety Enclosure: Special Permit#