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1200 New Jersey Avenue SE
Washington DC 20590

U.S. Department
of Transportation

Pipeline and Hazardous Materials
Safety Administration

November 28, 2017
VIA CERTIFIED MAIL AND FAX TO: (403) 920-2200

Mr. Russell K. Girling
President and Chief Executive Officer
TransCanada Corporation
450 1 Street, S.W.
Calgary, Alberta T2P 5H1
CPF No. 3-2017-5008H

Dear Mr. Girling:
Enclosed is a Corrective Action Order (CAO) issued in the above-referenced case to your
subsidiary, TransCanada Oil Pipeline Operations, Inc. It finds that continued operation of the
company's Keystone 30 -inch Phase 1 crude-oil pipeline between the Ludden and Ferney pump
stations near Amherst, South Dakota, is or would be hazardous to life, property, and the
environment without immediate corrective actions. The CAO requires TransCanada to take
certain corrective actions to protect the public, property, and the environment from a hazardous
condition resulting from the pipeline leak initially reported to the National Response Center on
November 16, 2017. Service is being made by certified mail and facsimile. Your receipt of this
Corrective Action Order constitutes service of that document under 49 C.F.R. § 190.5. The
terms and conditions of this Order are effective upon receipt.
We look forward to the successful resolution of the concerns arising out of this accident to
ensure the safe operation of this TransCanada facility. Please direct any questions on this matter
to Allan Beshore, Region Director, Central Region, OPS, at (816) 329-3811.
Sincerely,

Alan K. Mayberry
Associate Administrator
for Pipeline Safety
Enclosure: Corrective Action Order and Copy of 49 C.F.R. § 190.233

 cc:

Ms. Linda Daugherty, Deputy Associate Administrator for Field Operations, OPS
Mr. Allan Beshore, Region Director, OPS
Mr. Lee Romack, Manager US Regulatory Compliance, TransCanada Corporation, 700
Louisiana Street, Houston, TX 77002
Ms. Sonya Kirby, Vice President, Pipeline Safety & Compliance, TransCanada
Corporation, 700 Louisiana Street, Houston, TX 77002

 PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION
OFFICE OF PIPELINE SAFETY
WASHINGTON, D.C. 20590

In the Matter of

TransCanada Oil Pipeline Operations, Inc.,
Respondent.

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CPF No. 3-2017-5008H

CORRECTIVE ACTION ORDER
Purpose and Background:

This Corrective Action Order (Order) is being issued under authority of 49 U.S.C. § 60112 to
require TransCanada Oil Pipeline Operations, Inc. (TC or Respondent), to take necessary
corrective actions to protect the public, property, and the environment from potential hazards
associated with a release from its 30 -inch crude oil transmission pipeline near Amherst, South
Dakota (Failure). The Failure occurred on the approximately 46.8 -mile pipeline segment
referred to as "the Keystone 30 -inch Phase 1 Line" that runs between the Ludden Pump Station
and Ferney Pump Station (Affected Segment). The Affected Segment is part of TC's existing
Keystone Pipeline, which is a 2,687 -mile hazardous liquid pipeline system between Hardisty,
Alberta, Canada and Patoka, Illinois, and Port Arthur, Texas.' This Order finds that continued
operation of the Affected Segment without corrective action is or would be hazardous to life,
property, or the environment and requires Respondent to take immediate action to ensure its safe
operation.
On November 16, 2017, TC notified the National Response Center (NRC) of a crude -oil release
from its 30 -inch pipeline near Amherst, South Dakota. TC's Keystone Pipeline Supervisory
Control and Data Acquisition (SCADA) system detected a drop in pipeline pressure and an
increase in flow rate on the line at 5:33 am CST. According to documents under review by
PHMSA, the TC Control Center (Control Center) initiated shut down and isolation of the
pipeline at 5:36 AM CST following the SCADA release indication. The initial release estimate
was 5,000 barrels (210,000 gallons). Further review has resulted in an unconfirmed lower spill
estimate. On November 26, 2017, TC excavated the failed section of pipe and metallurgists
identified a rupture originating at the 12:00 o'clock position.

Pursuant to 49 U.S.C. § 60117, the Pipeline and Hazardous Materials Safety Administration
(PHMSA), Office of Pipeline Safety (UPS), initiated an investigation immediately following
notice of the incident. The preliminary findings of the agency's ongoing investigation are as

follows:
'http://www.transcanada.comloil-pipelines.html (last accessed November 27, 2017).

 CPF No. 3-2017-5008
Page 2
Preliminary Findings:
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TC initially reported the incident to the NRC at 9:15 am CST (local time) on November
16, 2017 (NRC Report No. 1197446), indicating the quantity released as 5,000
barrels (210,000 gallons). An updated report was provided to the NRC at 11:25 am
CST on November 18, 2017 (NRC Report No. 1197610), indicating no change.
On November 16, 2017, at 5:33 am CST (according to pressure data reviewed by
PHMSA), Respondent's Control Center identified a pressure and flow deviation. TC
initiated shut-down of the entire pipeline at 5:36 am CST. The release location is in a
rural agricultural area located between 5th Street and 116th Street in Marshall County,
South Dakota, approximately three miles southeast of Amherst (Failure Site). The
Failure Site is located at Mile Post (MP) 234.2, approximately 17 miles downstream of
the Ludden pump station. There are approximately 23.8 miles between the Ludden
pump station upstream of the Failure Site and the nearest block valve downstream of
the Failure Site.
On November 26, 2017, TC and PHMSA identified the source of the release. The
characteristics of mechanical damage from original construction.
Preliminary information indicates the Failure may have been caused by mechanical
damage to the pipeline and coating associated with a weight installed on the pipeline in
2008. Weights are placed on the pipeline in areas where water could potentially result
in buoyancy concerns.

rupture has

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TC, after consultation with PHMSA, has removed the portion of pipe containing the
failure location and will ship it to the National Transportation Safety Board's (NTSB)
metallurgical lab in Virginia for testing.

The Keystone Pipeline moves crude oil from Hardisty, Alberta, Canada to Patoka,
Illinois, and to Port Arthur, Texas. This 30 -inch Phase 1 portion of the system
consists of a 1,082 -mile -long pipeline, 23 pump stations, a terminal facility in
Patoka, Illinois, and related facilities that start at the Canadian Border in North
Dakota and traverse the midwestern states of South Dakota, Nebraska, Kansas and
Missouri, terminating in Patoka, Illinois. It was constructed from June 2008 until
March 2010.
The specific pipeline section that failed was installed in 2008 as part of Spread 2A.
The pipe is 30 inches in diameter and constructed of API 5L X-70 line pipe
manufactured by Berg Steel Pipe Corporation. The pipe has a double -submerged
arc welded (DSAW) seam and is coated with a fusion bond epoxy coating.

PHMSA issued a special permit to TC for construction and operation of the Keystone
Pipeline on April 30, 2007, allowing the pipeline to be operated at a stress level of 80
percent of the steel pipe's specified minimum yield strength (SMYS), as opposed to the
normal operating pressure for hazardous liquid pipelines of 72 percent of SMYS under

 CPF No. 3-2017-5008
Page 3
49 CFR 195.106 (Special Permit). The Special Permit contained 51 conditions and was
designed to provide for a level of safety equal to, or greater than, the regulations in
effect at the time by requiring TC to more closely inspect and monitor the pipeline over
its operational life than similar pipelines installed without a special permit. The Special
Permit remains in effect for the life of the Keystone Pipeline unless suspended,
modified or terminated by PHMSA.

PHMSA issued a Corrective Action Order (CPF No. 3-2016-5003H) to TC on April 9,
2016, due to a leak in a cracked tie-in weld. This Order was closed on March 30, 2017,
after TC had completed all the required corrective actions.

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Keystone Pipeline traverses several High Consequence Areas (HCA), as defined under
49 C.F.R. § 195.450, and navigable rivers. The nearest HCA "could-affect" pipeline
segment is approximately 6.5 miles upstream of the Failure Site.

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TC was operating a cleaning tool (pig) and SmartBall® in the Keystone Pipeline at the
time of the release. Both tools passed the Failure Site prior to the rupture without
identifying any oil leakage from the pipeline at this location. There is no indication the
tools contributed to the release.

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Removal of crude oil from the spill area is underway. Various state agencies and
numerous contractors working on behalf of the operator, as well as other operating
personnel, are performing clean-up, remediation, and monitoring activities.

The PHMSA failure investigation is on -going and information could change. This
order may be amended based on further findings during the invetigation.

Determination of Necessity for Corrective Action Order and Right to Hearing:

Section 60112 of Title 49, United States Code, provides for the issuance of a Corrective Action
Order requiring corrective action, which may include the suspended or restricted use of a
pipeline facility, physical inspection, testing, repair, replacement, or other action, as appropriate.
The basis for making the determination that a pipeline facility is hazardous and requiring
corrective action is set forth both in the above-referenced statute and 49 C.F.R. 190.233, a
copy of which is enclosed.
Section 60112 and the regulations promulgated thereunder provide for the issuance of a
Corrective Action Order without prior opportunity for notice and hearing, upon a finding that
failure to issue the Order expeditiously will likely result in serious harm to life, property or the
environment. In such cases, an opportunity for a hearing will be provided as soon as practicable
after the issuance of the Order.
After evaluating the foregoing preliminary findings of fact, I find that the continued operation of
the Affected Segment without corrective measures is or would be hazardous to life, property and
the environment. Furthermore, after considering the age of the pipe, the circumstances

 CPF No. 3-2017-5008
Page 4
surrounding the Failure, the hazardous nature of the product being transported, the pressure
required for transporting the material, the other recent failure of the Keystone Pipeline in April
2016, the unusual characteristics of the pipe and other equipment used in the Keystone Pipeline
and the associated Special Permit issued to ensure its safety, the uncertainties as to the cause of
the Failure and the ongoing investigation to determine its cause, I find that a failure to issue this
Order expeditiously to require immediate corrective action would result in likely serious harm to
life, property, and the environment.
Accordingly, this Corrective Action Order mandating immediate corrective action is issued
without prior notice and opportunity for a hearing. The terms and conditions of this Order are
effective upon receipt.

Within 10 days of receipt of this Order, Respondent may request a hearing, to be held as soon as
practicable, by notifying the Associate Administrator for Pipeline Safety in writing, with a copy
to the Director, Central Region, PHMSA (Director). If a hearing is requested, it will be held
telephonically or in-person in Kansas City, Missouri.
After receiving and analyzing additional data in the course of this investigation, PHMSA may
identify other corrective measures that need to be taken. Respondent will be notified of any
additional measures required and amendment of this Order will be considered. To the extent
consistent with safety, Respondent will be afforded notice and an opportunity for a hearing prior
to the imposition of any additional corrective measures.
Required Corrective Actions:

Pursuant to 49 U.S.C. 60112, I hereby order TC to immediately take the following corrective
actions with respect to the Affected Segment:
1. Shutdown ofthe Affected Segment. The 30" Keystone Pipeline from Ludden Pump
Station (MP 216.7) to Ferney Pump Station (MP 263.5), defined above as the Affected
Segment, is being returned to service. The Deputy Associate Administrator has provided
written approval of a Return-to -Service Plan under this Order.
2. Return -to -Service Plan. The Return-to -Service Plan shall be comprised of a Repair Plan
and a Restart Plan. Respondent has submitted the Return -to -Service Plan to the Central
Region Director for approval. The Repair Plan documents the procedures and scope of
work for repairing the Keystone Pipeline. The Restart Plan includes provisions for
increased patrolling of the Affected Segment during restart and for 72 hours following
restart. The Deputy Associate Administrator, on behalf of the Director, has authorized
TC to return the Affected Segment to service, whereby the pressure on the Affected
Segment shall be limited to a maximum discharge pressure set -point at the Ludden pump
station of 1046 psig. Additionally, Line Pressure Control settings have been temporarily
reduced to a Maximum Operating Pressure (MOP) of 1152 psig from the US/Canadian
border to the Freeman (South Dakota) Pump Station. These pressure restrictions shall
remain in effect until removed in accordance with Paragraph 5 below.

 CPF No. 3-2017-5008
Page 5
3. Testing of Failed Pipeline Section. Respondent is delivering the failed section of pipe to
the NTSB laboratory in Virginia for metallurgical analysis and testing as soon as
possible. Chain-of-custody shall be documented when handling and transporting the
failed pipe section and other evidence from the Failure Site. TC shall provide PHMSA
with the opportunity to have a representative be present for any metallurgical testing
performed, regardless of location.
4. Remedial Work Plan. Within 120 days following receipt of this Order, TC must submit
a Remedial Work Plan (RWP) to the Director for approval. The plan must provide for
the verification of the integrity of the Affected Segment and must address all factors
known or suspected in the Failure, including, but not be limited to, the integration of the

following information, conducted and documented in accordance with sound engineering
principles, as follows:
A. A review of records for the entire construction Spread 2A, in-line inspection
reports, and any other data pertinent to the analysis of the failed pipe;
B. A proposal to analyze available data on other weight locations, for similar
characteristics as the Failure location;
C. The performance of internal inspections with technologies appropriate to identify
mechanical damage and/or crack indications with similar characteristics to those

of the Failure; and
D. Utilizing all information gained through history review, operational experience,
the failure investigation, and root cause analysis, integrate all available data and
implement a RWP designed to prevent reoccurrence.
5. Removal of Pressure Restriction. The Director may allow the removal or modification
of the pressure restrictions described above upon a written request from TC
demonstrating that restoring the pipeline to its pre -Failure operating pressure is justified,

based on a reliable engineering analysis showing that the pressure increase is safe and
considering all known defects, anomalies, and operating parameters of the Keystone
Pipeline.
6. Root Cause Failure Analysis. Within 90 days following receipt of the metallurgical
analysis from NTSB, complete a root cause failure analysis (RCFA) and submit a final
report of this RCFA to the Director. The RCFA must be supplemented/facilitated by an

independent third party acceptable to the Director and must document the decision
making process used in the analysis and all factors contributing to the Failure. The final
report must include findings and any lessons learned and whether the findings and any
lessons learned are applicable to other locations on the Keystone Pipeline.
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7. Order Revisions. Upon approval by the Director, the RWP shall automatically be
incorporated into this Order and shall be revised as necessary to incorporate the results of
actions undertaken pursuant to this Order and, whenever necessary, to incorporate new
information obtained during the failure investigation and remedial activities. TC must
submit any such plan revisions to the Director for prior approval. The Director may
approve plan elements incrementally.

 CPF No. 3-2017-5008
Page 6
8. Implementation ofApproved Work Plan. TC must implement the RWP as approved by
the Director, including any revisions to the plan.
9.

Quarterly Reports. TC must submit quarterly reports to the Director that:

a. Include all available data and results of the testing and evaluations required by
this Order; and
b. Describe the progress of the repairs or other remedial actions being undertaken
under this Order. The first quarterly report for the period from November 16,
2017, through March 31, 2018 shall be due by April 15, 2018.
The Director may grant an extension of time for compliance with any of the terms of this Order
upon a written request timely submitted demonstrating good cause for an extension.
With respect to each submission under this Order that requires the approval of the Director, the
Director may: (a) approve, in whole or part, the submission; (b) approve the submission on
specified conditions; (c) modify the submission to cure any deficiencies; (d) disapprove, in
whole or in part, the submission, directing that Respondent modify the submission; or (e) any
combination of the above. In the event of approval, approval upon conditions, or modification
by the Director, Respondent shall proceed to take all action required by the submission as
approved or modified by the Director. If the Director disapproves all or any portion of the
submission, Respondent shall correct all deficiencies within the time specified by the Director,
and resubmit it for approval. If a resubmitted item is disapproved in whole or in part, the
Director may again require Respondent to correct the deficiencies in accordance with the
foregoing procedure, and the Director may otherwise proceed to enforce the terms of this Order.
Be advised that all material you submit in response to this enforcement action is subject to being
made publicly available. If you believe that any portion of your responsive material qualifies for
confidential treatment under 5 U.S.C. § 552(b), along with the complete original document you
must provide a second copy of the document with the portions you believe qualify for
confidential treatment redacted and an explanation of why you believe the redacted information
qualifies for confidential treatment under 5 U.S.C. § 552(b).
In your correspondence on this matter, please refer to "CPF No. 3-2017-500811" and for each
document you submit, please provide a copy in electronic format whenever possible. The
actions required by this Order are in addition to and do not waive any requirements that apply to
the Keystone Pipeline under 49 C.F.R. Parts 190 through 199, the Special Permit, under any
other order issued to Respondent under authority of 49 U.S.C. Chapter 601, or under any other
provision of Federal or State law.

TC may appeal any decision of the Director to the Associate Administrator for Pipeline Safety.
Decisions of the Associate Administrator shall be final.
Failure to comply with this Order may result in the assessment of civil penalties and in referral to
the Attorney General for appropriate relief in United States District Court pursuant to
49 U.S.C. § 60120.

 CPF No. 3-2017-5008
Page 7
Failure to comply with this Order may result in the assessment of civil penalties and in referral to
the Attorney General for appropriate relief in United States District Court pursuant to
49 U.S.C. § 60120.

The terms and conditions of this Order are effective upon service in accordance with 49 C.F.R.
190.5.

NOV 2 8 217
an K. Mayberry
Associate Administrat
for Pipeline Safety

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Date Issued