Enforcement of Integrity Management Rule

1. Enforcement of Integrity Management Rule Workshop on the Integrity Management Rule for Large Liquid Pipelines Chris Hoidal, Director OPS Western Region August 7, 2001

2. Preface… • Rule has Prescriptive & Performance-based Requirements • New Challenges for Inspection and Enforcement • Drawing on Broad Organizational Experience and Expertise • Our Approach is Evolving

3. Enforcement of Prescriptive Requirements • Prescriptive Requirements Define Clearly Required Actions & Time Frames • Segment Identification • Baseline Assessment Plan and Framework Preparation • Baseline Assessment Methods & Schedules • Mitigation/Repair Time Frames • Re-assessment Intervals

4. Enforcement of Prescriptive Requirements, cont. • Enforcement Instruments the Same as for Standard Inspections • Warning Letter • Notice of Amendment • Notice of Probable Violation • Compliance Order • Corrective Action Order • Civil Penalties Commensurate with Severity and Safety Significance of Violation

5. Enforcement of Performance-Based Requirements • Performance-based Requirements Involve Development of IM Programs • In-Line Inspection Results Review and Data Integration • Risk Analysis • Risk-based Decision Making (e.g., EFRDs) • There are a Variety of Acceptable Processes • OPS needs a Different Approach for such Requirements

6. Guiding Principles for Performance-Based Requirement Enforcement • Objective: Foster Continuous Improvement of IM Programs, Processes & Tools • No Rigid “Standard” for IM Program Acceptance • Structured Inspection Protocols will Focus on Basic Requirements & Operator Efforts to Comply • Inspection Protocols Will Evolve with Time

7. Promote Continuous Improvement • Operator Periodically Evaluates IM Program & Implements Improvements • Operator Analyzes Incident Root Causes & Implements Lessons Learned • Operator Implements New Consensus Standards • OPS Feedback & Observations from Inspections • Operator Awareness of Industry Best Practices & New Technology

8. Example General Content • Is Process Documented? • Is Process Implemented as Described? • Does Process Use All Relevant Inputs? • Is Process Logical, Technically Correct, and Adequate to Produce Desired Results? • Are Results Documented and Communicated?

9. OPS Process Implemented in Stages • Initial Review Focused on Framework Completeness • “Success” in Initial Review Will Not Imply Long-term “Acceptability”of Operator’s IM Program or its Processes • Subsequent Reviews Will Examine Operator Implementation Against Plan in Framework • Will Examine IM Process Improvements & Effectiveness • Feedback and Expectations Customized to Operator Program Maturity

10. Feedback & Enforcement for Performance-Based Requirements • Verbal Communication During Exit Interview • Notice of Amendment to Direct Changes & Improvements to IM Processes • NOPV/Compliance Orders for Non-Compliance or for Unresponsive Operators

11. Civil Penalties • OPS will work with companies who evidence good faith in attempting to comply • This rule is a strong step forward in the effort to improve safety and will be enforced to assure compliance • Large civil penalties can be expected for willful probable violations

12. Summary • Committed to Strong and Fair Inspection and Enforcement • Continuous Improvement is Expected • OPS Role Will Be Supportive • We’re Still Learning