1. U.S. DOT Pipeline and Hazardous Materials Safety Administration Pipeline Safety Reauthorization September 16, 2015 - 1 -

2. Overview Reauthorization Mandates & Recommendations Regulatory Update –Integrity Verification Program Safety Management Systems and Safety Culture –API RP 1173 - 2 -

3. Congressional Reauthorization Congress Reauthorizes the Federal Pipeline Safety Program Every 4 years. (Due in 2016) State Pipeline Safety Program Certification Agreements are reauthorized as part of larger package. (50 million grant program) Reauthorization is the Congressional “Performance Appraisal” of an Agency Good job = “Clean” bill Poor job = New ways to improve (OUCH!) - 3 -

4. W hy should you care about reauthorization? Flashback to January 2010… “Window” was open, and our performance had been good Everyone was generally happy with PHMSA – Congress Inspector General (Exec Branch’s internal auditor), General Accounting Office (Congress’ auditor), National Transportation Safety Board - 4 -

5. April 20, 2010

7. Congress and the Public did not distinguish between an offshore drilling incident and onshore pipelines. They saw Big Oil and Gas hurting people and the environment.

8. Salt Lake City June 11, 2010

10. Marshal, MI July 26, 2010

12. San Bruno, CA September 2010

15. Philadelphia, PA January 19, 2011 - 15 -

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17. Allentown, PA February 2011 - 17 -

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19. Chicago, IL November 13, 2011 - 19 -

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21. The Fallout A spate of tragic and highly visible accidents in 2010 -2011. A polarized political environment, and a rabid media We appeared ineffective and too close to industry Congress reauthorized PHMSA in late 2011, with a ton of new mandates, little time, and no new resources. We DON’T want this to happen in 2016. p.s. What is a mandate? - 21 -

22. 2011 Act Mandates 42 mandates and 6 actions in Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 Completed 26 mandates and 2 actions Includes 9 required studies (Leak Detection, Cover over Buried Pipelines, R&D, Diluted Bitumen, Cast Iron, Damage Prevention, Expansion of IMP, Gathering Lines, etc. Other topics include: MAOP Records Verification, Rpting of Any Exceedance of MAOP, Tests to Confirm Material Strength of Previously Untested GT in HCAs, 1 hr Notification of Incidents, Automatic/Remote Shut-off Valves, EFVs, Biofuels, CO2, Updated Mapping, Cost Recovery for Design Reviews, Limitation on IBR, Tribal Consultation, Increased Civil Penalties, etc. http://phmsa.dot.gov/pipeline/psa/phmsa-progress-tracker- chart - 22 -

23. NTSB Recommendations 39 NTSB recommendations: Investigations – 17 open/9 Closed –Excess flow valves –ASV/RSVS –Communication –Removal of Grandfather clause, etc. 22 from the Gas IM Study 21 open/ 1 closed –State Programs –NPMS –Threat identification and risk assessment –Data - 23 -

24. GAO Audits & Recommendations 7 Recommendations/ 1 Closed Completed: Whether transmission should be redefined from 20% to 30% SMYS (No recs) Completed: Unregulated Gathering Lines –2 recommendations, 1 closed: related to collecting data and information sharing. Completed: Diversity in the Industry Workforce (No recs) Completed: Operator’s Response to Emergencies –2 recs related to improving incident response data and assisting operators in decisions about automated valves. Completed: 7- year reassessment interval –2 recommendations related to risk based inspection intervals Completed: Oil and Gas Transportation –1 recommendation related to gathering lines - 24 -

25. IG Audits & Recommendations Completed: Hazardous Liquid IMP –9 recommendations, 7 closed: Recs were related to various issues including IM measures, better identification/validation of operator risk assessments, improved data analysis Completed: State Program Oversight –7 recommendations, 7 closed: Recs were related to procedures and guidelines, training, and the formula - 25 -

26. State Regulated Entities Growing Recognition of the State Role in Pipeline Safety –DOT/IG Top 10 Management Challenge –NTSB Integrity Management Audit –Data: 75% of all human consequences at State level –States Lead on Issue of Damage Prevention –Drive for More Prescriptive Rulemaking Methane Emission Reduction – From All Sources –Keeping it in the Pipe Pressure on Infrastructure Modernization –High risk pipe replacement: http://opsweb.phmsa.dot.gov/pipeline_replacement/ –Innovative rate recovery: https://www.aga.org/sites/default/files/agastatereplacementactivity.docx - 26 -

27. Rulemaking Miscellaneous Rulemaking (Final Rule) Standards Update (Final Rule) Excavation Damage Prevention (Final Rule) Plastic Pipe (NPRM) Operator Qualification, Cost Recovery and Other Pipeline Safety Proposed Changes (NPRM) EFV Expansion beyond Single Family Residences (NPRM) Safety of Gas Transmission and Gathering Lines (NPRM) Safety of On-Shore Hazardous Liquid Pipelines (NPRM) Rupture Detection and Valve Rule (NPRM) - 27 -

28. - 28 - Current Rulemakings in Process Safety of On-Shore Hazardous Liquid Pipelines (NPRM stage – not yet issued)  NPRM moved past DOT  ANPRM published 10/18/2010  Major topics under consideration: Assessments beyond High Consequence Areas (HCAs) Leak detection beyond HCAs Repair criteria in HCA and non-HCA areas Piggability of lines Reporting requirements for Gathering lines Gravity Line exception

29. Current Rulemakings in Process Safety of Gas Transmission and Gathering Lines (NPRM stage – not yet issued)  NPRM moved past DOT  ANPRM Published 8/25/2011  Major Topics under consideration: Expansion of IM requirements beyond HCA’s Repair criteria for both HCA and non-HCA areas Assessment methods Corrosion control Gas gathering Assessment methods for GT Lines (NACE petition) IVP – Grandfathered pipe/pipe records/legacy pipe/pipe tested below 1.1 MAOP - 29 -

30. Current Rulemakings in Process Excavation Damage Prevention (Final Rule stage)  Final Rule published 7/23/2015  Effective date 1/1/2016  Adv. Committee approval vote December 2012  NPRM published 4/2/2012  Major Topic Enforce damage protection laws in States that have inadequate enforcement to protect safety. Complies with PIPE’s Act 60114(f). - 30 -

31. Current Rulemakings in Process Miscellaneous Rulemaking (Final Rule stage)  Final Rule published 3/11/2015  Effective date 10/1/2015  Immediate compliance authorized  Received three petitions for reconsideration  NPRM published 11/29/2011  Major Topics performance of post-construction inspections leak surveys of Type B onshore gas gathering lines requirements for qualifying plastic pipe joiners regulation of ethanol transportation of pipe - 31 -

32. Current Rulemakings in Process EFV Expansion beyond Single Family Residences (NPRM stage)  NPRM published 7/15/2015; Comment period ended 9/14/2015  ANPRM published 11/25/2011  Major Topics Rule will propose to require EFVs for: –branched service lines serving more than one single family residence –multi-family residential dwellings –commercial buildings - 32 -

33. Current Rulemakings in Process Operator Qualification, Cost Recovery and Other Pipeline Safety Proposed Changes (NPRM stage)  NPRM published 7/10/15; comment period ended 9/8/2015  This rule will address reauthorization issues related to: Operator Qualification for new construction Incident Reporting Cost Recovery Assessment methods for HL lines (NACE petition) Renewal process for special permits API 1104 and in-service welding - 33 -

34. Current Rulemakings in Process Plastic Pipe (NPRM stage)  NPRM published May 21, 2015; Comment period ended 7/31/2015  Address the following plastic pipe topics: Authorized use of PA12 AGA petition to raise D.F. from 0.32 to 0.40 for PE pipe Enhanced Tracking and traceability Miscellaneous revisions for PE and PA11 pipelines Additional provisions for fittings used on plastic pipe - 34 -

35. Current Rulemakings in Process Rupture Detection and Valve Rule (NPRM stage – not yet issued)  This rule would establish and define rupture detection and response time metrics including the integration of Automatic Shutoff Valves (ASV) and Remote Control Valve (RCV) placement as necessary, with the objective of improving overall incident response

36. Current Rulemakings in Process Rupture Detection and Valve Rule (NPRM stage – not yet issued)  This rule responds to: Requirements of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (The Act): Section 4: ASV/RCV or equivalent technology be installed on newly constructed or entirely replaced natural gas and hazardous liquid transmission pipelines 2 years after the act was issued Section 8: Require operators of hazardous liquid pipeline facilities to use leak detection systems and establish standards for their use. The Act also mandated two studies of leak detection and response, one by the GAO, and one by PHMSA. Two NTSB Recommendations related to valves and leak detection

37. Current Rulemakings in Process Future Actions  State Decertification rulemaking  Standards Update rulemaking

38. Integrity Verification Program Drivers: Incidents (San Bruno and Marshall, MI) directly led to NTSB recommendations and Congressional mandates. Basic premise – companies don’t know their pipe as well as they should and assumptions are not conservative enough. IVP is designed to: –Verify records and MAOP; –Confirm material strength of untested lines; –Help with deletion of the grandfather clause; –Verify seam stability via 1.25 x MAOP; and –Move towards making all lines piggable. - 38 -

39. Pipeline Infrastructure (% by Decade in USA) - 39 - 39

40. Basic Principles of IVP Approach IVP is based on 4 principles 1.Apply to higher risk locations – High Consequence Areas (HCAs) and Moderate Consequence Areas (MCAs) 2.Screen segments for categories of concern (e.g., “Grandfathered” segments) 3.Assure adequate material and documentation 4.Perform assessments to establish MAOP 40

41. Why Implement a Safety Management System (API 1173) Why Implement a Safety Management System (API 1173) - 41 -

42. (It’s not about Compliance) It’s About Getting to Zero and Improving Performance - 42 -

43. We believe SMS concepts will improve safety through organizational and cultural change. We are implementing SMS concepts within PHMSA. - 43 -

44. We embrace SMS and all of the other safety improvements not because they are easy or save money. We do it because it is the right thing to do. - 44 -

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46. Thank you! - 46 -

47. Bonus Slides - 47 -

48. Description of Regulated Industry Pipeline Facilities by System Type – data as-of 2/2/2015 System TypeMiles% Miles# Operators Hazardous Liquid 192,388 6,970 Tanks 7% 442 Gas Transmission 302,81111%993 Gas Gathering 17,4371%357 Gas Distribution (Mains & Services ) 2,149,29181%1,371 Total 2,661,927100% Some Operators have multiple System Types Liquefied Natural Gas 133 Plants 203 Tanks83

49. Safety Trends and Leading Causes 49 All Reported – everything operators report Serious – fatality or injury requiring in-patient hospitalization, but Fire First excluded. Fire First are gas distribution incidents with a cause of “Other Outside Force Damage” and sub-cause of “Nearby Industrial, Man-made, or Other Fire/Explosion” Significant include any of the following, but Fire First excluded: 1. Fatality or injury requiring in-patient hospitalization 2. $50,000 or more in total costs, measured in 1984 dollars 3. Highly volatile liquid (HVL) releases of 5 barrels or more 4. Non-HVL liquid releases of 50 barrels or more 5. Liquid releases resulting in an unintentional fire or explosion

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52. Serious Incidents All System Type rises slightly in 2014 52 29 each in CY 201490% Gas Distribution 7% Gas Transmission 3% LNG data as-of 2/2/2015

53. Significant Incidents All System Types rises slightly in 2014 53 310 in CY 201421% Gas Dist3% Gas Gather 25% Gas Trans50% Haz Liq 1% LNG data as-of 5/18/2015

54. Gas Distribution Significant Incidents - 54 - CY 2014 Leading Causes: Excavation Damage Other Outside Force Damage Other data as-of 2/2/2015

55. Gas Gathering Significant Incidents - 55 - CY 2014 Leading Causes: Corrosion Material/Weld/Equipment Failure Other data as-of 2/2/2015

56. Interstate Gas Transmission Significant Incidents - 56 - Top 3 Causes: Equipment, Corrosion, Pipe/Weld Failure data as-of 2/27/2015

57. Intrastate Gas Transmission Significant Incidents - 57 - Top 3 Causes: Equipment, Corrosion, Excavation Damage data as-of 2/27/2015

58. Hazardous Liquid and Carbon Dioxide Significant Incidents - 58 - Top 2 Causes: Equipment Failure and Corrosion data as-of 2/27/2015